Maybe it's time for Qualcomm to rethink how it approaches standard-setting organizations.  In a decision today, the Third Circuit reversed in part a district court's dismissal of rival Broadcom's antitrust claims, finding that Broadcom had adequately pleaded actions by Qualcomm that, if true, would constitute an antitrust violation.

The facts of the case are similar to those in a recent case in California federal court (blogged about here), in that they deal with Qualcomm's interactions with standard-setting groups.  In this case, Qualcomm allegedly made intentional misrepresentations to a standard-setting group that led to a standard being adopted that arguably infringed Qualcomm patents.  Once the standard was adopted, Qualcomm changed its stance regarding the terms on which it would license the patented technology.  As stated by the court (after describing other cases of similar conduct where antitrust violations were found):

We hold that (1) in a consensus-oriented private standardsetting environment, (2) a patent holder’s intentionally false promise to license essential proprietary technology on FRAND [Fair, Reasonable, And Non-Discriminatory] terms, (3) coupled with an SDO’s [Standards Determining Organization's] reliance on that promise when including the technology in a standard, and (4) the patent holder’s subsequent breach of that promise, is actionable anticompetitive conduct. This holding follows directly from established principles of antitrust law and represents the emerging view of enforcement authorities and commentators, alike. Deception in a consensus-driven private standard-setting environment harms the competitive process by obscuring the costs of including proprietary technology in a standard and increasing the likelihood that patent rights will confer monopoly power on the patent holder.

As a result, if the allegations are true, Qualcomm could be subject to antitrust liability for these actions under § 2 of the Sherman Act for unlawful monopolization.  The court also held that Broadcom stated a claim for attempted monopolization, but the dismissal of other claims was affirmed.  All in all, it's been a bad month for Qualcomm in its legal wrangling with Broadcom.

To read the full decision in Broadcom Corp. v. Qualcomm Inc., click here.

Overruling a nearly century old decision, the Supreme Court Thursday held that a manufacturer may, in some instances, enter into a vertical agreement with its retailers to set minimum retail prices for the manufacturer's goods.  The court overruled the venerable decision in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911), which held that such agreements were a per se violation of Section 1 of the Sherman Act.

Instead, the Court, in a 5-4 decision, overruled Dr. Miles, and held that such agreements are subject to "rule of reason" analysis.  The justification for doing so was that such arrangements can have both procompetitive effects as well as anticompetitive ones, and as a result should not be illegal in all cases as mandated by the per se rule.

In dissent, Justice Breyer, joined by Justices Stevens, Souter, and Ginsburg, did not think Dr. Miles should have been overruled.  This was in part because of the rule of stare decisis and in part because of the expense and difficulty of using the rule of reason analysis to "separate the beneficial sheep from the antitrust goats." 

Interesting tidbit:  Justice Kennedy, who wrote the majority opinion, was in the majority of all of the Supreme Court's 5-4 decisions this term, and only dissented in 2 of the 71 cases in which he participated. 

To read the full decision in Leegin Creative Leather Prods., Inc. v. PSKS, Inc., click here.

Further commentary from various sources:

Antitrust & Competiton Policy Blog

Law.com

Wall Street Journal  

Wall Street Journal law blog

University of Chicago Faculty law blog

ACS Blog

Update (7/6):  Law.com offers this piece regarding the tough Supreme Court term for antitrust plaintiffs.

What do Dippin' Dots, the little beads of ice cream sold at fairs, stadiums, and malls, have to do with patent and antitrust law? For the Federal Circuit, they presented the "close case" where a patent holder can be found to have engaged in inequitable conduct during prosecution of the patent but is not liable for a Walker Process antitrust claim by an infringement defendant. This is possible based on the differing standards of proof required by the infringement defendant, as explained by the Federal Circuit in the case. While both inequitable conduct and a Walker Process antitrust claim require proof that the patent holder either misrepresented or failed to disclose to the patent office something material to patentability and that it was done with intent to deceive. However, if evidence of one is scant, an inequitable conduct claim can still be proven if evidence of the other is strong; not so with a Walker Process claim. More details of the case after the jump.

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