This is a roundup post that discusses four different standard-essential patent (SEP) disputes and multiple jurisdictions. Quick links:
GenghisComm (not an Avanci licensor) sues Avanci licensee Toyota over SEPs
KPN defended one of patents-in-suit against Ericsson earlier this month
1. Optis v. Apple FRAND ruling could be delayed by Justice Marcus Smith's new merger case (Microsoft-ActivisionBlizzard)
It's been almost a year since the Optis Wireless v. Apple trial in the High Court of Justice in London, but no decision has come down yet. In a similar case, InterDigital v. Lenovo, it took Justice Mellor similarly long as those FRAND (fair, reasonable, and non-discriminatory) rate-setting cases are incredibly labor-intensive for the courts adjudicating them.
The judge presiding over the FRAND part of the Optis v. Apple case is Mr Justice Marcus Smith, whose reputation extends not only to patent but also competition law: he is the President of the Competition Appeal Tribunal (CATribunal, or just CAT) of the United Kingdom.
It is not unusual for judges to divide their time between two courts. In fact, numerous European patent judges are doing so now between national courts and the Unified Patent Court (UPC). Since a few days ago, Mr Justice Smith is presiding over an antitrust case that is by far the biggest in the CAT's history, not only in terms of what's at stake (Microsoft's $68.7 billion purchase of Activision Blizzard) but also the enormous public and media attention--and on top of all of that, it's a matter that the UK's Prime Minister (who stressed the CMA's responsibility for growth and investment), Chancellor of the Exchequer, and its Parliament's Business and Trade Committee are concerned about.
Microsoft filed its appeal of a Competition & Markets Authority (CMA) merger-blocking decision on Wednesday evening UK time. Mr Justice Smith published the summary of the grounds of appeal (PDF) approximately 48 hours later and scheduled a case management conference for Tuesday (May 30). I already predicted at the beginning of this month that he would personally preside over that ultra-high-profile appeal. After yesterday's publication of the summary of the appeal, I commented on the grounds of appeal in a 40-part Twitter thread and added some further commentary on the comity part.
I'll live-tweet about the case management conference on Tuesday.
The deal has been cleared by the regulators who decided the matter for 38 countries (30 of them European Economic Area member states), with a collective population of 2.4 billion and aggregate GDP of $45 trillion, so if not for the CMA's absurd ruling, the deal could actually close now. But the CMA's leadership would like their agency--which the CAT has to overrule fairly often if one considers the deferential standard of review called Judicial Review--to be the world's policeman for major mergers, especially major tech mergers. There is profound concern in the UK over the CMA's eccentricities and regulatory overreach, and the CAT is now called upon to restore sanity and curb megalomania.
The CMA is now an outlier on the global stage. The only regulator to agree with them is the FTC, which under its current leadership opposes virtually any merger it gets to review and openly admits it doesn't care about losing in court all the time. The CMA decision is so clearly biased and incorrect that more and more people are wondering whether the reason is not just regulatory hubris or a lack of understanding of the technology markets involved, but whether it is even attributable (at least in part) to bad faith. My personal opinion is that a good-faith merger decision where the regulator looks at all of the evidence with an open mind and strives faithfully to apply the law to the facts definitely looks different.
There are mistakes that can be adequately explained with a lack of diligence (the CMA totally embarrassed not only itself but the UK and its government when the provisional findings--the equivalent of the Statement of Objections in the EU--subtracted only one year of costs from five years of benefits. The CMA corrected that mistake after Microsoft pointed it out, and revised the provisional findings. That was almost certainly just a lack of diligence. But the final decision just showed that before the merger review even started in earnest they must have been hellbent on blocking the merger. After they had to give up their primary theory of harm (vertical foreclosure affecting Sony in the videogame console market) and even prior to that realized they had to drop a "conglomerate" theory (involving Windows (an open platform), Azure (an easily substitutable commodity), the Xbox, and Activision Blizzard's games), they simply shoehorned those failed theories of harm into a "cloud gaming" theory of harm.
Weeks before Microsoft filed its appeal, the gamer community had already identified and discussed plenty of issues on Twitter and discussion boards. The decision is not just flawed or extremely wrong. It's a lot worse than that.
Against that background, gamers and other observers of the process can't be blamed for asking questions about the impartiality of the person who according to what a reporter from a major news agency told me "basically made the decision for the CMA": the agency's Senior Director of Mergers, Colin Raftery. Only because I wanted my many Twitter followers with an interest in that merger topic to understand that an unbalanced panel might respond to a historic speech by EU antitrust chief Magrethe Vestager on the same day, I mentioned--and proved based on a LinkedIn screenshot--that Mr. Rafferty started his career and spent seven years at Cleary Gottlieb Steen & Hamilton, a firm that has been consistently adverse to Microsoft for decades and is representing the most vocal critic of the Activision deal--Sony Interactive Entertainment--in its worldwide complaints, also in the UK. Cleary also advises Google, the other (and less vocal) complainant, but not in this context it seems. That factoid was picked up by Windows Central, and other media reported as well. On social media (Twitter, TikTok etc.) there was widespread outrage. My personal opinion is that none of us knows what Mr. Raftery's personal relationship with the Cleary lawyers opposing the deal on Sony's behalf--and with Sony's executives--is, so the truth could be anything from reassuring to mildly disconcerting to problematic.
It turned out that Mr. Raftery was previously instrumental to a merger-blocking decision that favored a former client. And it doesn't look good that the CMA takes an extreme position on a vertical merger now (Microsoft-ActivisionBlizzard) while it allowed Sony to make a horizontal acquisition of particular relevance to the UK market.
It now befalls Mr Justice Smith and his CATribunal to ensure a legally correct outcome and to restore the general public's confidence in the UK regulatory process. The fact that the first case management conference already takes place a few days later suggests that he wants to adjudicate the matter as swiftly as possible, which is in everyone's interest except Cleary and two of its clients, and CMA officials who may hope that the merger will be abandoned before their mistakes and their abuse of power won't be exposed.
People are already talking about a novelization or a documentary about that merger, given that some of what has happened here amounts to truth being stranger than fiction. I guess some of my blog posts and tweets about the case will come in handy if and when that happens. Those of you who have practiced law before Mr Justice Smith, or know him as a colleague, can already think about which Hollywood actor might play him.
2. GenghisComm (not an Avanci licensor) sues Avanci licensee Toyota over SEPs
There isn't much happening anymore in terms of automotive SEP litigation. Avanci has licensed the vast majority of car makers, Continental finally gave up its U.S. federal antitrust litigation against Avanci and some of its licensors (continuing only its Delaware state law action against Nokia), and Telit dropped a lawsuit that had been brought by Thales in Munich against Avanci and Nokia.
While the European Commission doesn't seem to appreciate the contribution of patent pools to the licensing process the way it used to do, Avanci's success has made it part of the solution. Recently even Samsung--one of the world's largest implementers of cellular standards--joined Avanci as a licensor at no extra cost to licensees.
A few SEP holders--some of which are non-practicing entities--still aren't Avanci licensors. One such company is GenghisComm Holdings, which on Wednesday filed a SEP infringement lawsuit in the Eastern District of Texas against Toyota:
When it comes to comparable licenses, Toyota will be able to point to the license it has taken from Avanci, paying $15 per car for the vast majority of 4G SEPs. GenghisComm is presumably suing for the purpose of extracting a substantially higher royalty rate relatieve to the strength of its portfolio. Maybe the plan is to benefit from the unpredictability of patent damages verdicts.
3. Nokia invalidated OPPO patent-in-suit
About two weeks ago I reported on the (appealable) revocation of two Nokia patents as a result of OPPO's challenges. For the sake of complete reporting, I'd like to add that this month a written decision (PDF) also came down in an opposition proceeding in which Nokia has achieved the (equally appealable) revocation of an OPPO patent-in-suit: EP3563600 on "separate configuration of numerology-associated resources." the oral hearing took place on March 23.
4. KPN defended one of its patents-in-suit against Ericsson earlier this month
Here's a follow-up to the post of a few days ago on Ericsson obtaining the invalidation (by the USPTO's PTAB) of one of KPN's patents-in-suit. I hadn't previously commented on that dispute, so now I'd like to provide a bit more context.
Of the three patents-in-suit from KPN's first case against Ericsson in the Eastern District of Texas,
one (RE'089) was invalidated as I reported,
one was never challenged through an IPR petition (U.S. Patent No. 8,881,235 on "service-based authentication to a network"), and
a third one, U.S. Patent No. 9,253,637 on a "telecommunications network and method for time-based network access", was deemed valid by the PTAB in a May 12, 2023 decision (IPR2022-00069).
A second KPN v. Ericsson case is also pending in the same district (i.e., before Judge Rodney Gilstrap):
According to the docket, the trial will begin on April 1, 2024 with jury selection.
