[Openstds] [Fwd: Appeals Court in Qualcomm Case Holds Deceptive Conduct in Standard Setting can Violate Antitrust Laws]

[Susy Struble]

-------- Original Message --------
Subject: 	Appeals Court in Qualcomm Case Holds Deceptive Conduct in 
Standard Setting can Violate Antitrust Laws
Date: 	Thu, 06 Sep 2007 11:44:34 -0400
From: 	andrew.updegrove at gesmer.com
To: 	andrew.updegrove at gesmer.com



A US Federal Appeals court has held that deceptive conduct in the standard
setting process can violate the antitrust laws that regulate the creation
of monopolies.  The decision comes only a day after the close of the voting
in a contentious vote in ISO/IEC JTC1 over adoption of Microsoft's OOXML
standard.  That vote was marred by accusations in many countries around the
world of overly aggressive conduct upon the part of Microsoft alleges, but
has not substantiated, similar charges against opponents of OOXML.

The ruling reverses a lower court decision in a closely-watched case
involving telecom technology giants Qualcomm Incorporated and Broadcom
Corporation.  In the dispute, Broadcom accused Qualcomm of volunteering
inclusion of its technology in a cellphone chip set standard, pledging to
license that technology on "fair and reasonable non-discriminatory" (FRAND)
terms - and then overcharging its competitors after the marked became
"locked in" through adoption of the standard.

Qualcomm already had a 90% market share in such chipsets, and Broadcom
alleged that Broadcom had planned from the start to perpetuate its monopoly
by putting other implementers at a price disadvantage.

A lower court had ruled that standards, by definition, create monopolies,
thus making the antitrust rules inapplicable.  It also declined to
determine what "reasonable" terms might be.  The appellate court disagreed
on both counts, pointing out that not all standards require patent
licenses, and therefore do not necessarily create monopolies - especially
if patents to avoid are made known in advance.  In doing so, the court made
new law on the subject.  It also found sufficient precedent to accept the
challenge of ruling on what constitutes reasonability, given sufficient
facts to work with.

More generally, the opinion is the latest in a string of court and
regulatory holdings and pronouncements that recognize the importance of the
standard setting process and its reliance on good-faith conduct, and
demonstrate a willingness to step in when participants engage in deceptive
conduct.

Various "friend of the court" briefs were filed in connection with the
appeal, including one I co-authored on behalf of several standard setting
organizations.

Further details and analysis are here:
http://www.consortiuminfo.org/standardsblog/article.php?story=2007090607324049

As always, please let me know if you would like to be removed from this
list.

Andrew Updegrove
Gesmer Updegrove LLP
40 Broad Street
Boston, MA  02109
v:  617/350-6800
f:  617/350-6878
http://www.gesmer.com
http://www.consortiuminfo.org



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