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ANTITRUST, PATENT LICENSING, AND FRAND
OECD June 2019
Herbert Hovenkamp
Professor / University of Pennsylvania Law
School / The Wharton School
PART I:
A PRIMER ON
ANTITRUST AND
PATENT
LICENSING
UNDER U.S.
LAW
Basic Patent Licensing Provision: 35 U.S.C. §261:
Patents treated as personal property capable of being
transferred or licensed
Authorizes the right to grant exclusive licenses, and with
domestic territorial restrictions (“to the whole or any part
of the United States”)
Other types of restrictions on distribution not expressly
authorized (but mostly treated under rule of reason – e.g.,
Field-of-Use restrictions (General Talking Pictures)
However, conditional refusals are covered by both the
Sherman Act and the Clayton Act
Patent Misuse Reform Act, 35 U.S.C.
§271(d)(5) (1988) – patent Ties
 Patent ties and Power:
 “No patent owner otherwise entitled to relief for infringement or
contributory infringement of a patent shall be denied relief or deemed guilty
of misuse or illegal extension of the patent right by reason of his having … (5)
conditioned the license of any rights to the patent or the sale of the patented
product on the acquisition of a license to rights in another patent or purchase
of a separate product, unless, in view of the circumstances, the patent owner
has market power in the relevant market for the patent or patented product
on which the license or sale is conditioned.”
 Does not apply to copyright or trademark ties
Patent Misuse Reform Act, 35 U.S.C.
§271(d)(4) (1988) – unconditional refusals to
license
 “No patent owner otherwise entitled to relief for
infringement or contributory infringement of a
patent shall be denied relief or deemed guilty of
misuse or illegal extension of the patent right by
reason of his having… refused to license or use
any rights to the patent….
Conditional Refusal to License (tying and
exclusive dealing)
 Clayton Act §3 makes it unlawful to sell a good “whether patented or
unpatented” on the “condition or understanding that the lessee or purchaser
shall not use or deal in the goods … of a competitor.” Provided, that the
effect “may be to substantially lessen competition or tend to create a
monopoly in any line of commerce.” [15 U.S.C. §14]
 Addressed under about the same standards under §1 of the Sherman Act and,
if monopoly power and exclusion are present, §2 of the Sherman Act
 §271(d) adds a market power requirement for unlawful patent ties (Illinois
Tool Works)
Product Market Restraints
 The Patent Act’s protection of licensing does not
necessarily extend to product market restraints
 Product Price Fixing (Bement v. National Harrow, 1902)
(GE, 1926)
 DOJ strenuously opposed GE rule and tried to get it
overturned; courts narrowed it
 Location clauses respecting products; still unlawful per se
if they are both horizontal and naked
 However, in some cases (e.g., pharma patents) a restraint
on the patent right may be equivalent to a restraint on
the product
Pay-For-Delay
 In form, an agreement to license a patent, with production to commence in
the future
 In effect, a Product Market Restraint to the extent that the generic cannot
enter the product market without the patent license
 Closest analogy: product market division
 Inferring patent weakness from size of reverse payment
 Naked or Ancillary?
 Was Justice Breyer application of Rule of Reason too lenient?
PAY FOR DELAY EQUILIBRIUM SETTLEMENT:
"SCOPE OF THE PATENT”
 A: Margin
 B. = Patent expiration date; "scope of the patent" as measured by Duration
 B-C = Price when only first generic is producing (duopoly)
 C: end of 180 day exclusivity; anyone can enter; depending on conditions
equilibrium price approaches marginal cost
Patent Pools and Cross Licensing
 Traditional rationale: justifiable for complements
but not substitutes
 Pooling of substitutes leads to collusion, and no
gains from joint use
 Pooling of complements facilitates joint
production
 Pooling of complements addresses royalty
“stacking” issue
 “blocking” patents are necessarily complements
CRITIQUE OF TRADITIONAL RATIONALES
FOR POOLING
 Not very realistic in modern high tech markets
where patents are complex and have
numerous claims
 Many patents behave as both complements
and substitutes
 Today, a better justification: transaction
clearing device, addressing problems of
boundary ambiguity and probabilistic validity
Patent pools, miscellaneous problems
 Use to exclude (e.g, Singer) – pools need not include
anyone, but they cannot exclude anticompetitvely
 Some pools, such as those setting industry standards,
may have a duty not to exclude unreasonably
 One problem: in cross licensing, high per unit
royalties can change fixed costs to variable costs and
thus increase product prices without need for price
fixing.
 Tying claims against pools – mainly involve non-
foreclosing ties and “unwanted tied product,” so no
injury to competition
License Agreements that “Manipulate”
the Royalty Base
 Royalties measured by unpatented output
 Royalties on total output, whether
patented or unpatented
 Reach Through Royalties (frequently for
research tools or other intermediate goods)
 Post-expiry royalties
Post-Expiry Royalties: Brulotte & Kimble
 Justice Douglas in Brulotte: analogous to per se tying: royalties during
patent term=tying product; post-expiration royalties=tied product;
Kimble adheres on stare decisis
 Patentee may charge any royalty it wants, but only for the life of a
patent
 A periodic payment could be: 1) per use royalties for a patent or other
IP right; 2) installment payments for a loan; 3) per use equipment
rental
 Multiple IP rights: 1) patentee can charge full royalty as long as one
out of many patent remains; 2) but must pro-rate royalty if one
patent plus several nonpatent rights.
 Brulotte and large pools (revolving door of incoming and expiring
patents)
Patent Exhaustion
 Relation to licensing: the violation of a license restriction
can be patent infringement, which can be enforced either
by a breach of contract action for violation of the license
agreement, or a patent infringement suit.
 Involves patentee’s power to impose a restriction on a
product embodying the patent that has been sold and
enforce it via a patent infringement suit
 (in the U.S., often justified by considerations of
federalism) – i.e., differences between the (federal) law
of patents and the (state) law of “patented things”
Patent exhaustion and federalism
 Chaffee v. Boston Belting (1859): “[b]y a valid sale and
purchase, the patented machine becomes the private individual
property of the purchaser, and is no longer protected by the
laws of the United States, but by the laws of the State in which
it is situated.”
 --e.g., White dissent in A.B.Dick: effect of majority holding “is
to destroy, in a very large measure, the judicial authority of the
states by unwarrantedly extending the Federal judicial power. .
. .”
 E.g., by sustaining a patent tie via an infringement suit (Henry
v. A.B. Dick) the Court was effectively preempting state
antitrust law that would have condemned that very tie.
PART II: FRAND
LICENSING:
ANTITRUST VS.
CONTRACT OR
EQUITABLE
APPROACHES
In the first instance, FRAND
obligations are Contractual, and
patent law is of course also relevant
Under U.S. patent law, no general
obligation to license, so a simple
refusal is lawful (35 U.S.C. § 271(d)(4)
Does not apply to conditional refusals
to license: see Clayton Act §3 (15
U.S.C. §14) (tying and exclusive
dealing)
FRAND duties to license
1. For simple refusals to license, the question
reduces to interpretation of the FRAND
commitment; a violation can violate antitrust law
too if it causes unreasonable market exclusion or
a restraint of trade.
2. Other doctrines such as equitable estoppel may
come into play if the owner of FRAND-
encumbered patents is seen as making
commitments that it subsequently attempts to
repudiate
Conditional Refusal to License
1. Conditional refusals to license are separately
addressable under antitrust law; Clayton Act
standard is more aggressive than Sherman Act
standard.
2. Antitrust laws are not limited by privity of contract –
the private enforcement grant reaches to “any
person who shall be injured in his business or
property by reason of anything forbidden in the
antitrust laws”; the statute is even enforceable by
those who clearly agreed to the condition.
3. Conditional refusals fall into the general realm of
tying and exclusive dealing – that is, limiting the
licensee’s ability to purchase from a competitor or
the patentee
Violation of FRAND agreements
as Antitrust Violation?
 Ninth Circuit: Qualcomm’s FRAND commitments include obligation to license
to all comers, even if they are competitors. Microsoft Corp. v. Motorola, Inc.,
696 F.3d 872, 875 (9th Cir. 2012).
 Purpose of standard setting organization is to “establish technical
specifications to ensure that products from different manufacturers are
compatible with each other.” Undermined if owner of FRAND-encumbered
patents could selectively refuse to license them based on the degree of
competition between patentee and prospective licensee.
 Is violation of a FRAND commitment merely a breach of contract, or an
“unfair method of competition”?
 Very likely an antitrust violation under a “restraint of trade” standard, which
looks for evidence of higher prices and reduced output. See FTC v.
Qualcomm,N.D.Cal. Nov. 6, 2018, 2018 WL 5848999
FRAND and injunctions
 Even in the absence of a FRAND obligation,
patentee is not necessarily entitled to an
injunction (eBay v. Mercantile Exchange, 547 U.S.
388 (2006).
 One important question: what is the patentee’s
primary expectation with respect to profits:
--.e.g, a non-practicing entity’s (NPEs) expectation
is from licensing royalties, so ordinarily a damage
remedy would be adequate (U.S. trend toward
applying eBay to NPEs)
FRAND patents and Injunctions, con’t
 A FRAND commitment entails that the patentee’s primary
expectation of returns for uses by others is FRAND
royalties; so entitlement to injunction is less than it would
be for non-FRAND-encumbered patents
 Injunction should not be available until it becomes clear
that a firm intends to practice a patent without paying or
a competent tribunal has decided that royalties are due
and determined the amount
 Meanwhile, realistic methods must be put into place for a
neutral determination of royalties, and payment into
escrow pending determination.
BUNDLING AND FRAND PATENTS
 Tying as FRAND evasion or as an ANTITRUST
violation
 E.G., Qualcomm’s “no license, no chips” policy.
 In unrestrained market a firm cannot ordinarily
extract additional profits by tying (in the absence
of price discrimination)
Tying to Evade Price Regulation of
FRAND Ceiling
 --- one area where leverage is both possible and harmful:
bundling to evade the FRAND royalty ceiling (cf. tying and rate
regulation avoidance)
 --- “administrative leverage” – by threatening to withhold one
product unless a firm comes to an agreement on the other one;
end run around need to obtain a royalty determination from a
neutral tribunal
 See FTC v. Qualcomm, Inc., 2017 WL 2774406 (N.D.Cal. June
26, 2017) (denying motion to dismiss claim of unlawfully tying
license to chips; it might violate Sec. 5 of FTC Act because the
practice violates both sections of the Sherman Act); and “harms
the competitive process”
 While not a Sherman Act case, the Sherman Act dicta may open
the way for private lawsuits
Bundling and Regulatory Avoidance
 FRAND obligation as a type of price regulation
 Tying can transfer surplus to an unregulated
product and permit evasion of FRAND rates as set
by a tribunal
 E.g., regulated firm ties a hardware item, which
it then sells for more than the market price; or
alternatively, uses threatened denial of access to
the hardware to force acquiescence on royalty
demand
BUNDLING AS REGULATORY AVOIDANCE
 E.G., rate regulated telephone company bundles its
unregulated telephone instrument and charges an
overcharge to offset the lower regulated rates
 This ability is a principal rationale for requiring
“unbundled access” in utility or other price regulated
markets
 FRAND as commitment to provide unbundled access
 In addition, power to withhold chips discourages
potential licensees from pursuing neutral
determination of FRAND royalties, leading to
excessive royalties (FTC Complaint, Qualcomm)
FRAND, BUNDLING, AND “MISUSE”
 Patent “Misuse”: Historically used in the
U.S. as an alternative to tying law (e.g.,
Motion Picture Patents; Morton Salt v.
Suppiger)
 Fell into disrepute because of significant
overreaching
 Entirely judge made, and emanating from
patent law, not antitrust law
PATENT MISUSE REMEDIES
 Generally not an affirmative cause of action (no
treble damages), but rather a defense to an
infringement suit
 Historical remedy: patent becomes unenforceable
against anyone until the misuse is “purged”
 Patent Act limits misuse claims [35 USC §271d],
but only in select areas: (1) simple refusal to
license; (2) tying in absence of market power; (3)
enforcing rules against contributory infringement
FRAND, bundling and private antitrust
enforcement under U.S. Law
 Private parties in the United States cannot enforce the
FTC Act, but they can enforce both the Sherman and
Clayton Acts, as well as state antitrust law
 Treble Damages plus Attorneys Fees; Does not apply to
“misuse” claims
 Plaintiffs could be either producers under FRAND licenses
or end users; no privity of contract requirement (“anyone
who is injured in his business or property”); could also be
someone who was denied a hardware product for failure
to accede to excessive royalty demands.
FRAND ANTITRUST VIOLATIONS AND
INDIRECT PURCHASERS
 Indirect Purchaser Rule – applies only to damages (not to
requests for injunctions), and only to federal actions;
many states, such as California, permit indirect purchaser
damage suits; recent decision in Apple v. Pepper changed
none of this.
 Qualcomm Antitrust Litigation, 292 F.Supp.3d 948 (N.D.
Cal. 2018) permitting indirect purchasers to sue under
California Cartwright Act for coercing exclusive dealing in
claims involving standard essential patents); significantly,
plaintiffs could certify a nationwide class if sufficient
California contacts; damages permitted for plaintiffs in
those states permitting indirect purchaser claims
 END

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Licensing of IP rights and competition law – HOVENKAMP – June 2019 OECD discussion

  • 1. ANTITRUST, PATENT LICENSING, AND FRAND OECD June 2019 Herbert Hovenkamp Professor / University of Pennsylvania Law School / The Wharton School
  • 2. PART I: A PRIMER ON ANTITRUST AND PATENT LICENSING UNDER U.S. LAW Basic Patent Licensing Provision: 35 U.S.C. §261: Patents treated as personal property capable of being transferred or licensed Authorizes the right to grant exclusive licenses, and with domestic territorial restrictions (“to the whole or any part of the United States”) Other types of restrictions on distribution not expressly authorized (but mostly treated under rule of reason – e.g., Field-of-Use restrictions (General Talking Pictures) However, conditional refusals are covered by both the Sherman Act and the Clayton Act
  • 3. Patent Misuse Reform Act, 35 U.S.C. §271(d)(5) (1988) – patent Ties  Patent ties and Power:  “No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having … (5) conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.”  Does not apply to copyright or trademark ties
  • 4. Patent Misuse Reform Act, 35 U.S.C. §271(d)(4) (1988) – unconditional refusals to license  “No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having… refused to license or use any rights to the patent….
  • 5. Conditional Refusal to License (tying and exclusive dealing)  Clayton Act §3 makes it unlawful to sell a good “whether patented or unpatented” on the “condition or understanding that the lessee or purchaser shall not use or deal in the goods … of a competitor.” Provided, that the effect “may be to substantially lessen competition or tend to create a monopoly in any line of commerce.” [15 U.S.C. §14]  Addressed under about the same standards under §1 of the Sherman Act and, if monopoly power and exclusion are present, §2 of the Sherman Act  §271(d) adds a market power requirement for unlawful patent ties (Illinois Tool Works)
  • 6. Product Market Restraints  The Patent Act’s protection of licensing does not necessarily extend to product market restraints  Product Price Fixing (Bement v. National Harrow, 1902) (GE, 1926)  DOJ strenuously opposed GE rule and tried to get it overturned; courts narrowed it  Location clauses respecting products; still unlawful per se if they are both horizontal and naked  However, in some cases (e.g., pharma patents) a restraint on the patent right may be equivalent to a restraint on the product
  • 7. Pay-For-Delay  In form, an agreement to license a patent, with production to commence in the future  In effect, a Product Market Restraint to the extent that the generic cannot enter the product market without the patent license  Closest analogy: product market division  Inferring patent weakness from size of reverse payment  Naked or Ancillary?  Was Justice Breyer application of Rule of Reason too lenient?
  • 8. PAY FOR DELAY EQUILIBRIUM SETTLEMENT: "SCOPE OF THE PATENT”  A: Margin  B. = Patent expiration date; "scope of the patent" as measured by Duration  B-C = Price when only first generic is producing (duopoly)  C: end of 180 day exclusivity; anyone can enter; depending on conditions equilibrium price approaches marginal cost
  • 9. Patent Pools and Cross Licensing  Traditional rationale: justifiable for complements but not substitutes  Pooling of substitutes leads to collusion, and no gains from joint use  Pooling of complements facilitates joint production  Pooling of complements addresses royalty “stacking” issue  “blocking” patents are necessarily complements
  • 10. CRITIQUE OF TRADITIONAL RATIONALES FOR POOLING  Not very realistic in modern high tech markets where patents are complex and have numerous claims  Many patents behave as both complements and substitutes  Today, a better justification: transaction clearing device, addressing problems of boundary ambiguity and probabilistic validity
  • 11. Patent pools, miscellaneous problems  Use to exclude (e.g, Singer) – pools need not include anyone, but they cannot exclude anticompetitvely  Some pools, such as those setting industry standards, may have a duty not to exclude unreasonably  One problem: in cross licensing, high per unit royalties can change fixed costs to variable costs and thus increase product prices without need for price fixing.  Tying claims against pools – mainly involve non- foreclosing ties and “unwanted tied product,” so no injury to competition
  • 12. License Agreements that “Manipulate” the Royalty Base  Royalties measured by unpatented output  Royalties on total output, whether patented or unpatented  Reach Through Royalties (frequently for research tools or other intermediate goods)  Post-expiry royalties
  • 13. Post-Expiry Royalties: Brulotte & Kimble  Justice Douglas in Brulotte: analogous to per se tying: royalties during patent term=tying product; post-expiration royalties=tied product; Kimble adheres on stare decisis  Patentee may charge any royalty it wants, but only for the life of a patent  A periodic payment could be: 1) per use royalties for a patent or other IP right; 2) installment payments for a loan; 3) per use equipment rental  Multiple IP rights: 1) patentee can charge full royalty as long as one out of many patent remains; 2) but must pro-rate royalty if one patent plus several nonpatent rights.  Brulotte and large pools (revolving door of incoming and expiring patents)
  • 14. Patent Exhaustion  Relation to licensing: the violation of a license restriction can be patent infringement, which can be enforced either by a breach of contract action for violation of the license agreement, or a patent infringement suit.  Involves patentee’s power to impose a restriction on a product embodying the patent that has been sold and enforce it via a patent infringement suit  (in the U.S., often justified by considerations of federalism) – i.e., differences between the (federal) law of patents and the (state) law of “patented things”
  • 15. Patent exhaustion and federalism  Chaffee v. Boston Belting (1859): “[b]y a valid sale and purchase, the patented machine becomes the private individual property of the purchaser, and is no longer protected by the laws of the United States, but by the laws of the State in which it is situated.”  --e.g., White dissent in A.B.Dick: effect of majority holding “is to destroy, in a very large measure, the judicial authority of the states by unwarrantedly extending the Federal judicial power. . . .”  E.g., by sustaining a patent tie via an infringement suit (Henry v. A.B. Dick) the Court was effectively preempting state antitrust law that would have condemned that very tie.
  • 16. PART II: FRAND LICENSING: ANTITRUST VS. CONTRACT OR EQUITABLE APPROACHES In the first instance, FRAND obligations are Contractual, and patent law is of course also relevant Under U.S. patent law, no general obligation to license, so a simple refusal is lawful (35 U.S.C. § 271(d)(4) Does not apply to conditional refusals to license: see Clayton Act §3 (15 U.S.C. §14) (tying and exclusive dealing)
  • 17. FRAND duties to license 1. For simple refusals to license, the question reduces to interpretation of the FRAND commitment; a violation can violate antitrust law too if it causes unreasonable market exclusion or a restraint of trade. 2. Other doctrines such as equitable estoppel may come into play if the owner of FRAND- encumbered patents is seen as making commitments that it subsequently attempts to repudiate
  • 18. Conditional Refusal to License 1. Conditional refusals to license are separately addressable under antitrust law; Clayton Act standard is more aggressive than Sherman Act standard. 2. Antitrust laws are not limited by privity of contract – the private enforcement grant reaches to “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws”; the statute is even enforceable by those who clearly agreed to the condition. 3. Conditional refusals fall into the general realm of tying and exclusive dealing – that is, limiting the licensee’s ability to purchase from a competitor or the patentee
  • 19. Violation of FRAND agreements as Antitrust Violation?  Ninth Circuit: Qualcomm’s FRAND commitments include obligation to license to all comers, even if they are competitors. Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 875 (9th Cir. 2012).  Purpose of standard setting organization is to “establish technical specifications to ensure that products from different manufacturers are compatible with each other.” Undermined if owner of FRAND-encumbered patents could selectively refuse to license them based on the degree of competition between patentee and prospective licensee.  Is violation of a FRAND commitment merely a breach of contract, or an “unfair method of competition”?  Very likely an antitrust violation under a “restraint of trade” standard, which looks for evidence of higher prices and reduced output. See FTC v. Qualcomm,N.D.Cal. Nov. 6, 2018, 2018 WL 5848999
  • 20. FRAND and injunctions  Even in the absence of a FRAND obligation, patentee is not necessarily entitled to an injunction (eBay v. Mercantile Exchange, 547 U.S. 388 (2006).  One important question: what is the patentee’s primary expectation with respect to profits: --.e.g, a non-practicing entity’s (NPEs) expectation is from licensing royalties, so ordinarily a damage remedy would be adequate (U.S. trend toward applying eBay to NPEs)
  • 21. FRAND patents and Injunctions, con’t  A FRAND commitment entails that the patentee’s primary expectation of returns for uses by others is FRAND royalties; so entitlement to injunction is less than it would be for non-FRAND-encumbered patents  Injunction should not be available until it becomes clear that a firm intends to practice a patent without paying or a competent tribunal has decided that royalties are due and determined the amount  Meanwhile, realistic methods must be put into place for a neutral determination of royalties, and payment into escrow pending determination.
  • 22. BUNDLING AND FRAND PATENTS  Tying as FRAND evasion or as an ANTITRUST violation  E.G., Qualcomm’s “no license, no chips” policy.  In unrestrained market a firm cannot ordinarily extract additional profits by tying (in the absence of price discrimination)
  • 23. Tying to Evade Price Regulation of FRAND Ceiling  --- one area where leverage is both possible and harmful: bundling to evade the FRAND royalty ceiling (cf. tying and rate regulation avoidance)  --- “administrative leverage” – by threatening to withhold one product unless a firm comes to an agreement on the other one; end run around need to obtain a royalty determination from a neutral tribunal  See FTC v. Qualcomm, Inc., 2017 WL 2774406 (N.D.Cal. June 26, 2017) (denying motion to dismiss claim of unlawfully tying license to chips; it might violate Sec. 5 of FTC Act because the practice violates both sections of the Sherman Act); and “harms the competitive process”  While not a Sherman Act case, the Sherman Act dicta may open the way for private lawsuits
  • 24. Bundling and Regulatory Avoidance  FRAND obligation as a type of price regulation  Tying can transfer surplus to an unregulated product and permit evasion of FRAND rates as set by a tribunal  E.g., regulated firm ties a hardware item, which it then sells for more than the market price; or alternatively, uses threatened denial of access to the hardware to force acquiescence on royalty demand
  • 25. BUNDLING AS REGULATORY AVOIDANCE  E.G., rate regulated telephone company bundles its unregulated telephone instrument and charges an overcharge to offset the lower regulated rates  This ability is a principal rationale for requiring “unbundled access” in utility or other price regulated markets  FRAND as commitment to provide unbundled access  In addition, power to withhold chips discourages potential licensees from pursuing neutral determination of FRAND royalties, leading to excessive royalties (FTC Complaint, Qualcomm)
  • 26. FRAND, BUNDLING, AND “MISUSE”  Patent “Misuse”: Historically used in the U.S. as an alternative to tying law (e.g., Motion Picture Patents; Morton Salt v. Suppiger)  Fell into disrepute because of significant overreaching  Entirely judge made, and emanating from patent law, not antitrust law
  • 27. PATENT MISUSE REMEDIES  Generally not an affirmative cause of action (no treble damages), but rather a defense to an infringement suit  Historical remedy: patent becomes unenforceable against anyone until the misuse is “purged”  Patent Act limits misuse claims [35 USC §271d], but only in select areas: (1) simple refusal to license; (2) tying in absence of market power; (3) enforcing rules against contributory infringement
  • 28. FRAND, bundling and private antitrust enforcement under U.S. Law  Private parties in the United States cannot enforce the FTC Act, but they can enforce both the Sherman and Clayton Acts, as well as state antitrust law  Treble Damages plus Attorneys Fees; Does not apply to “misuse” claims  Plaintiffs could be either producers under FRAND licenses or end users; no privity of contract requirement (“anyone who is injured in his business or property”); could also be someone who was denied a hardware product for failure to accede to excessive royalty demands.
  • 29. FRAND ANTITRUST VIOLATIONS AND INDIRECT PURCHASERS  Indirect Purchaser Rule – applies only to damages (not to requests for injunctions), and only to federal actions; many states, such as California, permit indirect purchaser damage suits; recent decision in Apple v. Pepper changed none of this.  Qualcomm Antitrust Litigation, 292 F.Supp.3d 948 (N.D. Cal. 2018) permitting indirect purchasers to sue under California Cartwright Act for coercing exclusive dealing in claims involving standard essential patents); significantly, plaintiffs could certify a nationwide class if sufficient California contacts; damages permitted for plaintiffs in those states permitting indirect purchaser claims  END