Governmental and private antitrust actions against technology companies expanded in 2018 and 2019, particularly relative to electronics and pharmaceutical companies. This post provides an overview of several important decisions relative to those sectors. Consistent with the purpose of the antitrust laws, the decisions below have a common theme of protecting competition, and thus ultimately consumers, from abusive marketplace conduct by those with monopoly power.
The court noted that Illinois Brick did not wipe out consumer antitrust suits against monopolistic retailers from whom the consumers purchased goods or services at higher-than-competitive prices. This decision has a direct impact on Amazon’s app store, which restricts access to many Android apps, including those made by Google such as the Chrome app.
Qualcomm’s licensing practices were not helped by its trial presentation. The court also rejected much of the testimony by Qualcomm execs, deeming their contemporaneous (and contradictory) emails more persuasive than their “practiced narratives” delivered on direct.
The injunction imposed by the court requires Qualcomm to (a) stop conditioning the supply of modem chips on a customer’s patent license status and negotiate (or re-negotiate) license terms with customers under conditions free from the threat of lack of access to or discriminatory provision of chip supply; (b) make exhaustive standards-essential patent (“SEP”) licenses available to modem-chip suppliers on fair, reasonable, and non-discriminatory (“FRAND”) terms; and (c) stop express or de facto exclusive dealing arrangements for the supply of modem chips. Qualcomm was also ordered to submit to a seven-year compliance and monitoring period with the FTC.
This decision is the latest setback for Qualcomm for its licensing practices. Qualcomm was fined $1.1B by the European Commission in January 2018 for its rebate-focused exclusive supply agreement relative to modem chips. Similar to the FTC action, the EC case involved Qualcomm agreeing to make payments to Apple for the privilege of being Apple’s exclusive supplier of chipsets in its iPhone and iPad devices. These decisions underscore the need for a close antitrust review of patent licenses where SEP patents are involved.
The FTC filed an amicus brief arguing that HWA claims enjoy no special immunity under Noerr-Pennington from being challenged as shams. This filing was part of the FTC’s efforts to challenge to patent suits filed by pharma companies for the purpose of delaying the introduction of generic drugs. The court denied the motion to dismiss, ruling that “the court may infer that Takeda's decision to file this suit is objectively and subjectively baseless, as well as motivated by anticompetitive purposes.” The court also ruled that antitrust injury was adequately pled by the assertions that but for the patent suit, the FDA would have promptly approved the amended ANDA. The importance of this ruling is that the Paragraph IV Certification will provide no Noerr-Pennington shield to abusive ANDA suits.