{"id":2366,"date":"2020-09-15T13:47:54","date_gmt":"2020-09-15T13:47:54","guid":{"rendered":"https:\/\/live-cornell-law-review.pantheonsite.io\/?p=2366"},"modified":"2026-05-27T17:40:27","modified_gmt":"2026-05-27T17:40:27","slug":"frand-and-antitrust","status":"publish","type":"post","link":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/2020\/09\/15\/frand-and-antitrust\/","title":{"rendered":"FRAND and Antitrust"},"content":{"rendered":"\n<p>&nbsp;Standard Setting Organizations (SSOs) create technology standards in order to ensure product or service quality, promote compatibility and interoperability of networked products, and facilitate the competitive development of new technologies.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_1');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_1');\" ><sup id=\"footnote_plugin_tooltip_2366_1_1\" class=\"footnote_plugin_tooltip_text\">1<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">1. On the role of the antitrust laws in standard setting, see 2 HERBERT HOVENKAMP ET AL., IP AND ANTITRUST: AN ANALYSIS OF ANTITRUST PRINCIPLES APPLIED TO INTELLECTUAL PROPERTY LAW, \u00a7 35 (3d ed. 2015&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_1');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_1').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_1', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Standard-setting in patent-rich environments often requires participants to disclose relevant patents that they own and license patents essential to the standard to all participants on fair, reasonable, and nondiscriminatory (FRAND) terms. A statement issued in December 2019 by three federal agencies acknowledges the value of FRAND commitments and described them as occurring:&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>where a patent holder has voluntarily agreed to make available a license for the patent on reasonable and non-discriminatory (RAND) terms or fair, reasonable, and nondiscriminatory (FRAND) terms while participating in standards-setting activities at a standards-developing organization (SDO).<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_2');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_2');\" ><sup id=\"footnote_plugin_tooltip_2366_1_2\" class=\"footnote_plugin_tooltip_text\">2<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">2. UNITED STATES PATENT AND TRADEMARK OFFICE, NAT\u2019L INST. STANDARDS TECH. &amp; DEP\u2019T OF JUSTICE, POLICY STATEMENT ON REMEDIES FOR STANDARDS-ESSENTIAL PATENTS SUBJECT TO VOLUNTARY F\/RAND COMMITMENTS&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_2');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_2').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_2', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p><\/blockquote>\n\n\n\n<p>As the statement indicates, the essence of FRAND is that it is the product of a voluntary agreement among the participants, requiring them to make their patents available on FRAND terms.&nbsp;<\/p>\n\n\n\n<p>Antitrust best achieves its purpose when it takes markets as it finds them, and then protects them from threats to competition. The antitrust tribunal must understand the market before it and the rationales and effects of its various rules. Then it considers whether a challenged restraint might operate anticompetitively so as to cause unnecessary consumer harm. For more than a century, antitrust jurisprudence has approached markets in this way. For example, Justice Brandeis\u2019s opinion in the <em>Board of Trade <\/em>case<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_3');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_3');\" ><sup id=\"footnote_plugin_tooltip_2366_1_3\" class=\"footnote_plugin_tooltip_text\">3<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">3. Chi. Bd. of Trade v. United States, 246 U.S. 231 (1918).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_3').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_3', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> began by describing the Board\u2019s operation as a market. From that point the Court\u2019s job was to ascertain whether the challenged rule operated anticompetitively to undermine this purpose.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_4');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_4');\" ><sup id=\"footnote_plugin_tooltip_2366_1_4\" class=\"footnote_plugin_tooltip_text\">4<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">4. <em>Id. <\/em>at 239\u201340 (explaining how the purpose of the challenged \u201ccall\u201d rule operated to protect the integrity of the Board\u2019s price making). The Court dismissed the complaint.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_4').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_4', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  In the <em>NCAA <\/em>case nearly seventy years later it did the same thing\u2014acknowledging the valuable market created by this joint venture of colleges to promote amateur intercollegiate athletics. It condemned a restraint on competition that reduced output and harmed consumers and was not central to the NCAA\u2019s purpose.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_5');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_5');\" ><sup id=\"footnote_plugin_tooltip_2366_1_5\" class=\"footnote_plugin_tooltip_text\">5<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">5. NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85 (1984) (striking down rule limiting the number of times a school could have its games televised).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_5').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_5', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> The list of cases in which the Supreme Court has followed this template so as to protect the competitive integrity of standard setting or other collaborative market processes is long.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_6');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_6');\" ><sup id=\"footnote_plugin_tooltip_2366_1_6\" class=\"footnote_plugin_tooltip_text\">6<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">6. See, e.g., Allied Tube &amp; Conduit Corp. v. Indian Head, 486 U.S. 492 (1988) (anticompetitive agreement in context of building materials standard setting); Am. Soc\u2019y Mch. Eng\u2019rs v. Hydrolevel&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_6');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_6').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_6', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>In a particularly myopic decision involving the FRAND process, the Ninth Circuit made no attempt to understand that process or how the antitrust laws could be used to protect it from anticompetitive restraints.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_7');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_7');\" ><sup id=\"footnote_plugin_tooltip_2366_1_7\" class=\"footnote_plugin_tooltip_text\">7<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">7. Qualcomm, Inc. v. FTC, 969 F.3d 974, 2020 WL 4591476 (9th Cir. Aug. 11, 2020).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_7').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_7', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  That was not entirely the court\u2019s fault. Part of the blame lies with the Antitrust Division of the Justice Department, which intervened in the proceeding and seemed more intent on protecting Qualcomm than the competitive integrity of the FRAND process.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_8');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_8');\" ><sup id=\"footnote_plugin_tooltip_2366_1_8\" class=\"footnote_plugin_tooltip_text\">8<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">8. <em>See <\/em>United States\u2019 Statement of Interest Concerning Qualcomm\u2019s Motion for Partial Stay of Injunction Pending Appeal, <em>Qualcomm, Inc.<\/em>, 2020 WL 4591476 (No. 19-16122), 2019 WL 3306496.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_8').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_8', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>While the FRAND process has been highly productive, it is also fragile. Firms are tempted to make commitments at the beginning when the incentive to join is large, but renege on them later when they can profit by doing so. At least in this particular case, private FRAND enforcement had not worked very well. Qualcomm had been able to violate FRAND commitments in order to exclude rivals and obtain higher royalties than FRAND would permit, largely with impunity. Other firms will very likely follow Qualcomm\u2019s lead. If that happens the FRAND system will fall apart, doing irreparable injury to the modern wireless telecommunications network or, at the very least, diminishing the leadership role of the United States in preserving effective network competition.&nbsp;<\/p>\n\n\n\n<p>While governments can be heavily involved in standard setting,<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_9');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_9');\" ><sup id=\"footnote_plugin_tooltip_2366_1_9\" class=\"footnote_plugin_tooltip_text\">9<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">9. 2 HOVENKAMP ET AL., IP AND ANTITRUST, <em>supra <\/em>note 1, \u00a7 35.01[C][1].<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_9').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_9', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> the implementation of technical standards in information technologies is largely the work of private actors. Government involvement is limited mainly to enforcement of contract, intellectual property, or antitrust law. As private actors, those involved in standard setting or compliance are fully subject to the federal antitrust laws.&nbsp;<\/p>\n\n\n\n<p>This Article addresses one question: when is an SSO participant\u2019s violation of a FRAND commitment an antitrust violation, and if it is, of what kind and what are the implications for remedies? It warns against two extremes. One is thinking that any violation of a FRAND commitment is an antitrust violation&nbsp;as well. In the first instance FRAND obligations are contractual, and most breaches of contract do not violate any antitrust law. The other extreme is thinking that, because a FRAND violation is a breach of contract, it cannot also be an antitrust violation. The question of an antitrust violation does not depend on whether the conduct breached a particular agreement but rather on whether it caused competitive harm. This can happen because the conduct restrained trade under section 1 of the Sherman Act, was unreasonably exclusionary under section 2 of the Sherman Act, or amounted to an anticompetitive condition or understanding as defined by section 3 of the Clayton Act.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_10');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_10');\" ><sup id=\"footnote_plugin_tooltip_2366_1_10\" class=\"footnote_plugin_tooltip_text\">10<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">10. See Clayton Act \u00a7 3, 15 U.S.C. \u00a7 14 (2018) (condemning certain sales \u201con the condition, agreement, or understanding\u201d that the buyer will not deal in the goods of a competitor). Section 5 of the&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_10');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_10').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_10', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  The end goal is to identify practices that harm competition, thereby injuring consumers.&nbsp;<\/p>\n\n\n\n<p>The Ninth Circuit\u2019s <em>Qualcomm <\/em>decision will make antitrust violations in the context of FRAND licensing much more difficult to prove, even in cases where anticompetitive behavior and consumer harm seem clear.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_11');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_11');\" ><sup id=\"footnote_plugin_tooltip_2366_1_11\" class=\"footnote_plugin_tooltip_text\">11<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">11. See Qualcomm Inc., 969 F.3d 974, 1003, 2020 WL 4591476 (declin[ing] to ascribe antitrust liability in . . . dynamic and rapidly changing technology markets without clearer proof of anticompetitive&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_11');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_11').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_11', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Indeed, in this case the court itself acknowledged the harm to consumers but appeared to think that they were not entitled to protection.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_12');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_12');\" ><sup id=\"footnote_plugin_tooltip_2366_1_12\" class=\"footnote_plugin_tooltip_text\">12<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">12. <em>See <\/em>discussion <em>infra <\/em>notes 13\u201314 and accompanying text.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_12').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_12', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> If this decision stands, FRAND obligations will to a larger extent have to be settled through private litigation and the federal antitrust enforcement agencies will have a diminished role. Anticompetitive behavior by one firm that is not effectively disciplined will lead others to do the same thing.&nbsp;<\/p>\n\n\n\n<p>Not only did the Ninth Circuit reject application of the antitrust laws in this case, it also appeared to repudiate antitrust\u2019s consumer welfare principle, saying:&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>. . . [T]he district court correctly defined the relevant markets as \u201cthe market for CDMA modem chips and the market for premium LTE modem chips.\u201d Nevertheless, its analysis of Qualcomm\u2019s business practices and their anticompetitive impact looked beyond these markets to the much larger market of cellular services generally. Thus, a substantial portion of the district court\u2019s ruling considered alleged economic harms to OEMs\u2014who are Qualcomm\u2019s <em>customers<\/em>, not its competitors\u2014resulting in higher prices to consumers. These harms,&nbsp;even if real, are not \u201canticompetitive\u201d in the antitrust sense\u2014 at least not <em>directly<\/em>\u2014because they do not involve restraints on trade or exclusionary conduct in \u201cthe area of effective competition.\u201d<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_13');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_13');\" ><sup id=\"footnote_plugin_tooltip_2366_1_13\" class=\"footnote_plugin_tooltip_text\">13<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">13.  <em>Qualcomm<\/em>, 969 F.3d at 992 (emphasis in original) (citation omitted).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_13').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_13', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p><\/blockquote>\n\n\n\n<p>The quotation is from the Supreme Court\u2019s decision in <em>Ohio v. American Express Co.<\/em>,<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_14');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_14');\" ><sup id=\"footnote_plugin_tooltip_2366_1_14\" class=\"footnote_plugin_tooltip_text\">14<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">14. 138 S. Ct. 2274, 2285 (2018).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_14').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_14', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> where the Supreme Court said only that a relevant market is \u201cthe area of effective competition.\u201d The Ninth Circuit panel apparently believed that antitrust harm could occur only to producers inside the relevant market, which typically excludes most customers. The Ninth Circuit did not quote the Supreme Court\u2019s decision one year later in <em>Apple&nbsp;v. Pepper<\/em>,<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_15');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_15');\" ><sup id=\"footnote_plugin_tooltip_2366_1_15\" class=\"footnote_plugin_tooltip_text\">15<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">15. 149 S. Ct. 1514 (2019).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_15').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_15', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> that \u201cEver since Congress overwhelmingly passed and President Benjamin Harrison signed the Sherman Act in 1890, \u2018protecting consumers from monopoly prices\u201d has been \u201cthe central concern of antitrust.\u2019\u201d<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_16');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_16');\" ><sup id=\"footnote_plugin_tooltip_2366_1_16\" class=\"footnote_plugin_tooltip_text\">16<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">16. <em>Id. <\/em>at 1525 (quoting 2A PHILLIP E. AREEDA &amp; HERBERT HOVENKAMP, ANTITRUST<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_16').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_16', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>The very reason we condemn restraints under the antitrust laws is because they result in lower output and higher prices, harming consumers. The Ninth Circuit panel appeared to believe that higher prices for OEMs\u2014that is, the manufacturer customers who purchase chips for inclusion in their devices\u2014 is not the kind of injury that concerns the antitrust laws. Rather, it must be harm to competitors.&nbsp;<\/p>\n\n\n\n<p>Customers are often, even typically, not producers in the relevant market. Nevertheless, they are clearly antitrust\u2019s protected class. For example, while exclusive dealing in the first instance might deny selling opportunities to a rival producer, we condemn it because it threatens price increases to their buyers and those who purchase from them. Indeed, the reason we have market power requirements in antitrust cases in the first place is to distinguish harms to rivals that are likely to result in market price increases from those that are not. Competitor exclusion in a competitive market is not an antitrust violation because, while it injures the competitor is does no consumer harm. That is the all-important difference between business torts and antitrust law.&nbsp;<\/p>\n\n\n\n<p>Patent holders who participate in SSOs generally agree to provide timely disclosure of their patents or patent applications that are reasonably expected to read on the participants\u2019 technology.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_17');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_17');\" ><sup id=\"footnote_plugin_tooltip_2366_1_17\" class=\"footnote_plugin_tooltip_text\">17<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">17. On SSO members\u2019 duty to disclose, see, for example, Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1015\u201319 (Fed. Cir. 2008) (holding that Qualcomm breached its duty to disclose patents that&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_17');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_17').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_17', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  They also agree in advance to license their patents thought to be essential to the standard on FRAND terms.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_18');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_18');\" ><sup id=\"footnote_plugin_tooltip_2366_1_18\" class=\"footnote_plugin_tooltip_text\">18<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">18. Questions about measurement of FRAND royalties have produced significant case law and literature but are outside the scope of this Article. For good discussions, see Jorge L. Contreras, Fixing FRAND:&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_18');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_18').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_18', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  The Patent Act itself does not impose this obligation. Patentees who are not involved in SSOs have no obligation other than market pressures to submit their patents to a standard or engage in FRAND licensing.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_19');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_19');\" ><sup id=\"footnote_plugin_tooltip_2366_1_19\" class=\"footnote_plugin_tooltip_text\">19<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">19. <em>See <\/em>35 U.S.C. \u00a7 271(d)(4) (2018).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_19').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_19', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>In networked technologies, however, these market pressures can be substantial. For example, if a patentee refuses to commit its patented technology to an industry standard, the SSO is likely to adopt a different standard that is not believed to infringe those patents.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_20');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_20');\" ><sup id=\"footnote_plugin_tooltip_2366_1_20\" class=\"footnote_plugin_tooltip_text\">20<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">20. See D. Scott Bosworth et al., FRAND Commitments and Royalties for Standard Essential Patents, in COMPLICATIONS AND QUANDARIES IN THE ICT SECTOR: STANDARD ESSENTIAL PATENTS AND COMPETITION ISSUES 19,&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_20');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_20').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_20', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Or if a patentee refuses to commit to license a patent to all comers on a nondiscriminatory basis, then the SSO may respond by seeking an alternative standard.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_21');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_21');\" ><sup id=\"footnote_plugin_tooltip_2366_1_21\" class=\"footnote_plugin_tooltip_text\">21<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">21. <em>See <\/em>Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 876 (9th Cir. 2012) (\u201cMicrosoft II\u201d) (citing Lemley, <em>Standard-Setting Organizations<\/em>, <em>supra <\/em>note 17 at 1902, 1906).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_21').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_21', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> These actions are driven by the SSO\u2019s goal of competitive creation of a technology when interoperability among&nbsp;diverse producers is a necessary component. Just as any producer, firms involved in the implementation of networked technology seek to minimize their costs by avoiding unnecessary or unnecessarily costly patents. Such avoidance is a socially valuable form of cost minimization.&nbsp;<\/p>\n\n\n\n<p>The FRAND obligation generally requires patentees to license freely to all qualified participants, whether or not they are competitors of the patent holder.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_22');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_22');\" ><sup id=\"footnote_plugin_tooltip_2366_1_22\" class=\"footnote_plugin_tooltip_text\">22<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">22. The IP policy of the Telecommunications Industry Association: stated: \u201cA license under any Essential Patent(s), the license rights which are held by the undersigned Patent Holder, will be made&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_22');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_22').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_22', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Further, they must settle royalty disputes in a reasonable manner\u2014if necessary, through a third party, such as a court or arbitrator.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_23');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_23');\" ><sup id=\"footnote_plugin_tooltip_2366_1_23\" class=\"footnote_plugin_tooltip_text\">23<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">23. See, e.g., HTC Corp. v. Telefonaktiebolaget LM Ericsson, 2019 WL 277479, at 3\u20135 (E.D. Tex. Jan. 22, 2019) (discussing duty to arbitrate), appeal dismissed, 2019 WL 4126536 (5th Cir. June 18, 2019);&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_23');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_23').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_23', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  If reference to an arbitrator is contractually specified, such agreements may also be subject to compulsory arbitration under the Federal Arbitration Act.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_24');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_24');\" ><sup id=\"footnote_plugin_tooltip_2366_1_24\" class=\"footnote_plugin_tooltip_text\">24<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">24. 9 U.S.C. \u00a7\u00a7 1\u20132 (2018); <em>see, e.g.<\/em>, <em>ASUS Computer<\/em>, 2015 WL 5186462, at *2\u20133 (discussing the Federal Arbitration Act). <em>See generally <\/em>Contreras &amp; Newman, <em>supra <\/em>note 23, <em>passim <\/em>(same).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_24').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_24', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>The FRAND system facilitates competition by assuring new firms as well as existing ones that they will be able to operate on the networked technology. Royalties to the owners of these patents are generally measured by the value that the contributed patent makes to the standard.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_25');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_25');\" ><sup id=\"footnote_plugin_tooltip_2366_1_25\" class=\"footnote_plugin_tooltip_text\">25<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">25. See, e.g., Microsoft III, 795 F.3d at 1040 (considering \u201cthe objective value each [patent] contributed to each standard, given the quality of the technology and the available alternatives as well&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_25');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_25').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_25', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Importantly, tribunals seek to measure these values \u201cex ante,\u201d or prior to the patent\u2019s adoption into a standard and at a time when there is a fuller range of competitive alternatives.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_26');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_26');\" ><sup id=\"footnote_plugin_tooltip_2366_1_26\" class=\"footnote_plugin_tooltip_text\">26<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">26. See, e.g., Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009) (\u201cThe hypothetical negotiation tries, as best as possible, to recreate the ex ante licensing negotiation&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_26');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_26').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_26', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Once the standard is adopted and implementers have incorporated it into their own technologies, a standard essential patent is likely to be in a much stronger position, approaching monopoly in some cases.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_27');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_27');\" ><sup id=\"footnote_plugin_tooltip_2366_1_27\" class=\"footnote_plugin_tooltip_text\">27<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">27. <em>See <\/em>Carl Shapiro, <em>Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting<\/em>, 1 INNOVATION POL\u2019Y &amp; ECON. 119, 122\u201324. (2000).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_27').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_27', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Patents that are committed in this way are described as \u201cstandard essential patents\u201d (SEPs), or as being \u201cFRAND encumbered.\u201d<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_28');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_28');\" ><sup id=\"footnote_plugin_tooltip_2366_1_28\" class=\"footnote_plugin_tooltip_text\">28<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">28. <em>E.g<\/em>., FTC v. Qualcomm, Inc., 2017 WL 2774406, at *6 (N.D. Cal. June 26, 2017).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_28').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_28', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Qualcomm was able to evade this \u201cex ante\u201d requirement by insisting on purchaser acceptance of a license on its own terms before it would sell chips.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_29');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_29');\" ><sup id=\"footnote_plugin_tooltip_2366_1_29\" class=\"footnote_plugin_tooltip_text\">29<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">29. <em>See <\/em>discussion <em>infra <\/em>text at notes 103\u201304.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_29').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_29', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>Having a patent declared standard essential can increase its value considerably, mainly because the promise of a license at a reasonable rate steers developmental decision making in favor of that particular technology. When a firm makes a commitment to develop its products under a particular standard, it wants assurance that it will have a durable right to operate under that standard at reasonable royalty rates. This process naturally leads to the creation of considerable path dependence in standards. It encourages firms to develop their own technology in ways that ensure interoperability but that can be costly to reverse after the fact.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_30');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_30');\" ><sup id=\"footnote_plugin_tooltip_2366_1_30\" class=\"footnote_plugin_tooltip_text\">30<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">30. Cotter, Hovenkamp, &amp; Siebrasse, supra note 25, at 1562\u201363. On path dependence, see Steven N. Durlauf, Path Dependence, in THE NEW PALGRAVE DICTIONARY OF ECONOMICS 10094 (3d ed. 2018); Douglas&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_30');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_30').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_30', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>This phenomenon of increased value for SEPs also motivates patent owning firms to \u201cover-claim\u201d\u2014that is, to assert that patents are standard essential when subsequent litigation or evaluation determines that they are not. While FRAND agreements require participants to declare relevant patents thought to be essential, the rate of actual declaration far exceeds any rational boundary. As many as one-third to more than half of declared SEPs are very likely not essential to the standard for which they were declared,<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_31');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_31');\" ><sup id=\"footnote_plugin_tooltip_2366_1_31\" class=\"footnote_plugin_tooltip_text\">31<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">31. See Robin Stitzing, Pekka Saaskilahti, Jimmy Royer &amp; Marc Van Audenrode, Over-Declaration of Standard Essential Patents and Determinants of Essentiality fig. 1(Sept. 4, 2018),&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_31');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_31').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_31', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> and allegations about the practice of over-declaring are currently being litigated as potential antitrust violations.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_32');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_32');\" ><sup id=\"footnote_plugin_tooltip_2366_1_32\" class=\"footnote_plugin_tooltip_text\">32<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">32. Lenovo (United States), Inc. v. Interdigital Tech. (IDC), case 1:20-cv-00593LPS (D. Del. April 9, 2020) (complaint, alleging over-declaring by IDC). See also&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_32');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_32').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_32', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  In fact, overall infringement rates for SEP patents are not materially different from those for non-SEP patents.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_33');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_33');\" ><sup id=\"footnote_plugin_tooltip_2366_1_33\" class=\"footnote_plugin_tooltip_text\">33<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">33. Mark A. Lemley &amp; Timothy Simcoe, How Essential are Standard-Essential Patents?, 104 CORNELL L. REV. 607, 627 (2019). The authors conclude that findings of infringement of SEP and non-SEP patents&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_33');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_33').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_33', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  A declaration of non-infringement means that, although the patent might be valid, it does not in fact read on the defendant\u2019s particular device or process. In effect, the patent is not a part of the defendant\u2019s technology, and thus cannot be essential. The problem is exacerbated by the fact that, for the most part, SSOs have no process up front for reviewing or questioning individual participants\u2019 declarations that a patent they are offering is in fact both valid and standard essential.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_34');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_34');\" ><sup id=\"footnote_plugin_tooltip_2366_1_34\" class=\"footnote_plugin_tooltip_text\">34<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">34. <em>See id. <\/em>at 610.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_34').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_34', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>Ex ante, a patent may offer one of many alternative technological paths to a certain goal. However, ex post, after a standard has been adopted and others have developed their technologies in reliance, the range of acceptable alternatives&nbsp;can decrease dramatically. As a result, the patent whose path is adopted becomes much more valuable.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_35');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_35');\" ><sup id=\"footnote_plugin_tooltip_2366_1_35\" class=\"footnote_plugin_tooltip_text\">35<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">35. See Jay P. Kesan &amp; Carol M. Hayes, FRAND\u2019s Forever: Standards, Patent Transfers, and Licensing Commitments, 89 IND. L.J. 231, 233\u201335 (2014); William&nbsp;F. Lee &amp; A. Douglas Melamed,&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_35');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_35').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_35', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  In that case, a firm\u2019s ability to evade the FRAND obligation by charging selectively higher royalties to some licensees or conditioning licenses on the purchase of other technology can be extremely lucrative for the patentee but costly to implementers of the standard and disruptive of the SSO\u2019s developmental goals.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_36');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_36');\" ><sup id=\"footnote_plugin_tooltip_2366_1_36\" class=\"footnote_plugin_tooltip_text\">36<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">36. See, e.g., FTC v. Qualcomm, Inc., 411 F. Supp. 3d 658, 785\u201387 (N.D. Cal. 2019) (finding that defendant attempted to leverage higher royalty rates by taking advantage of ex post SEP status plus its&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_36');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_36').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_36', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  In its <em>Qualcomm <\/em>decision noted above, the Ninth Circuit did not indicate any awareness of these motivations or their potential for harm.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_37');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_37');\" ><sup id=\"footnote_plugin_tooltip_2366_1_37\" class=\"footnote_plugin_tooltip_text\">37<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">37. <em>See <\/em>discussion <em>supra <\/em>notes 7\u201310 and accompanying text.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_37').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_37', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>In general, the goal of FRAND is to make patents available to participants at a price equivalent to what the patent would have been worth in the more competitive market prior to the time it was declared essential. The relevant question is what was the value of the patent\u2019s contribution to the standard at a time when competitive alternatives may have been available, as opposed to a later time when other firms have dedicated themselves to the standard?<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_38');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_38');\" ><sup id=\"footnote_plugin_tooltip_2366_1_38\" class=\"footnote_plugin_tooltip_text\">38<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">38. <em>See <\/em>Cotter, Hovenkamp &amp; Siebrasse, <em>supra <\/em>note 25, at 1517\u201329.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_38').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_38', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>This approach is simply a variant of the proposition that even a monopoly market can be made competitive if we require competing firms to bid for the opportunity to be the monopolist.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_39');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_39');\" ><sup id=\"footnote_plugin_tooltip_2366_1_39\" class=\"footnote_plugin_tooltip_text\">39<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">39. See Erik Hovenkamp, Tying, Exclusivity, and Standard-Essential Patents, 19 COLUM. SCI. &amp; TECH. L. REV. 79, 90 (2017); Harold Demsetz, Why Regulate Utilities?, 11 J.L. &amp; ECON. 55, 58 (1968);&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_39');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_39').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_39', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Even though a natural monopoly entity such as a public utility has the market power of any monopolist, someone must still choose who gets to be the monopolist.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_40');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_40');\" ><sup id=\"footnote_plugin_tooltip_2366_1_40\" class=\"footnote_plugin_tooltip_text\">40<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">40. On whether the large internet platforms are natural monopolies, see Herbert Hovenkamp, Antitrust and Platform Monopoly, 130 YALE L.J. (forthcoming 2021),&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_40');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_40').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_40', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  The winner will be the firm that promises the most competitive behavior, provided that it can be held to that commitment. Once the auction is over and the winner has been selected, however, it will have an incentive to renege on its auction promise and charge whatever&nbsp;price its newly acquired monopoly status provides. FRAND creates similar incentives, as the <em>Qualcomm <\/em>case illustrates.&nbsp;<\/p>\n\n\n\n<p>Alternative proposals to the effect that the FRAND patentee and the licensee should split the difference between value to the patentee and value to the implementer<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_41');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_41');\" ><sup id=\"footnote_plugin_tooltip_2366_1_41\" class=\"footnote_plugin_tooltip_text\">41<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">41. See, e.g., J. Gregory Sidak, What Makes FRAND Fair? The Just Price Contract Formation, and the Division of Surplus from Voluntary Exchange, 4 CRITERION&nbsp;J. INNOVATION 701, 727\u201331 (2019)&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_41');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_41').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_41', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> improperly take an ex post rather than ex ante view of value and asks the royalty tribunal to divide evenly the difference between the seller\u2019s (patentee\u2019s) willingness to accept and the buyer\u2019s (licensee\u2019s) willingness to pay <em>after <\/em>FRAND status has been established. That may be a useful way of thinking about price in a bilateral monopoly,<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_42');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_42');\" ><sup id=\"footnote_plugin_tooltip_2366_1_42\" class=\"footnote_plugin_tooltip_text\">42<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">42. The traditional solutions to the bilateral monopoly problem are ones in which output is joint maximizing but price is indeterminate within a significant range. See Roger D. Blair, David L. Kaserman,&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_42');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_42').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_42', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> but only after the bilateral monopoly has formed. The competitive solution is to give the seller the price it would have obtained in a competitive market, which is manifestly not an even division of the surplus. Rather, it is a competitive return to the seller.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_43');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_43');\" ><sup id=\"footnote_plugin_tooltip_2366_1_43\" class=\"footnote_plugin_tooltip_text\">43<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">43. <em>E.g.<\/em>, Demsetz, <em>supra <\/em>note 39, at 65; Posner, <em>supra <\/em>note 39, at 111 (stating that franchise bidding leads to \u201ca price that will not include any monopoly toll\u201d).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_43').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_43', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>The SEP process has produced several disputes. Often these are simply about the size of the royalty and how it must be measured. However, patentees may also attempt to evade the general FRAND requirements that a SEP must be licensed without condition to all users of the standard and on nondiscriminatory terms. Some owners of SEPs who also make products that practice them may prefer not to license a particular patent to anyone. Or they may impose exclusive dealing or loyalty discount requirements on licensees.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_44');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_44');\" ><sup id=\"footnote_plugin_tooltip_2366_1_44\" class=\"footnote_plugin_tooltip_text\">44<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">44. On these practices when involving SEPs, see Erik Hovenkamp, Tying, Exclusivity, supra note 39, at 107\u201309; A. Douglas Melamed &amp; Carl Shapiro, How Antitrust Law Can Make FRAND Commitments More&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_44');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_44').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_44', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Alternatively, the owner of a FRAND-encumbered patent may tie it to an unregulated device. While FRAND license rates are determined by a third-party tribunal, product prices are not. By tying a patent license to its own manufactured device, the patentee might be able to obtain its full post-commitment monopoly return. In that case the seller can obtain an overcharge on the device that operates to offset the reduced FRAND royalty. This use of tying in this way to avoid regulated rates is well known in antitrust.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_45');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_45');\" ><sup id=\"footnote_plugin_tooltip_2366_1_45\" class=\"footnote_plugin_tooltip_text\">45<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">45. On the use of tying arrangements for rate regulation avoidance, see 9 PHILLIP E. AREEDA &amp; HERBERT HOVENKAMP, ANTITRUST LAW \u00b6 1715b, (4th ed. 2018). On this use in the context of FRAND, see&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_45');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_45').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_45', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  The owner of a FRAND patent may also refuse to license it to competitors in the market for devices that practice the patent, once again in violation of its FRAND obligation to license to all qualified users on nondiscriminatory terms.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_46');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_46');\" ><sup id=\"footnote_plugin_tooltip_2366_1_46\" class=\"footnote_plugin_tooltip_text\">46<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">46. <em>See supra <\/em>note 22.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_46').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_46', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>. The result is reduced competition in the downstream market for devices or processes that employ the patent at issue, and in extreme cases even the creation of monopoly.&nbsp;<\/p>\n\n\n\n<p>While these various attempts to evade FRAND obligations very likely breach the patentee\u2019s contractual obligations, only a subset also constitute antitrust violations. This does not mean that the standard-setting and FRAND process in which the conduct occurred is irrelevant to antitrust analysis. To the contrary, as in any antitrust case, it forms part of the market environment in which conduct must be evaluated. In her 2019 <em>Qualcomm <\/em>decision, Judge Lucy Koh addressed tying and exclusive dealing claims under general antitrust principles, and refusal to deal claims under the standards that the Supreme Court had developed in its <em>Aspen<\/em><sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_47');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_47');\" ><sup id=\"footnote_plugin_tooltip_2366_1_47\" class=\"footnote_plugin_tooltip_text\">47<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">47. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_47').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_47', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> and <em>Trinko<\/em><sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_48');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_48');\" ><sup id=\"footnote_plugin_tooltip_2366_1_48\" class=\"footnote_plugin_tooltip_text\">48<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">48. Verizon Commc\u2019ns, Inc. v. Law Offices of Curtis V. Trinko, LLP 540 U.S. 398 (2004).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_48').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_48', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> decisions.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_49');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_49');\" ><sup id=\"footnote_plugin_tooltip_2366_1_49\" class=\"footnote_plugin_tooltip_text\">49<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">49. FTC v. Qualcomm Corp., 411 F. Supp. 3d 658, 696\u201397 (N.D. Cal. 2019).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_49').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_49', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Although her opinion devoted considerable space to the importance of standard essential patents and the relevance of FRAND commitments, she addressed the antitrust claims by applying well established antitrust principles that require a showing of restraint of trade or anticompetitive exclusion.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_50');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_50');\" ><sup id=\"footnote_plugin_tooltip_2366_1_50\" class=\"footnote_plugin_tooltip_text\">50<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">50. <em>See infra <\/em>text accompanying notes 98\u2013107; <em>see also <\/em>2 HOVENKAMP ET AL., IP&nbsp;AND ANTITRUST, <em>supra <\/em>note 1, \u00a7 35.05.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_50').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_50', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  Nevertheless, anticompetitive effects become more transparent when one views the extent to which they undermined an output- and innovation-enhancing joint enterprise whose social value was not being called into question.&nbsp;<\/p>\n\n\n\n<p>SSOs operated by multiple firms are joint ventures.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_51');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_51');\" ><sup id=\"footnote_plugin_tooltip_2366_1_51\" class=\"footnote_plugin_tooltip_text\">51<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">51. For treatment of SSOs as joint ventures, see 13 AREEDA &amp; HOVENKAMP, <em>supra <\/em>note 1, Ch. 22B, 22C; Melamed &amp; Shapiro, <em>supra <\/em>note 28, at 2119.<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_51').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_51', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  For bona fide joint ventures that are not simply fronts for cartels, the purpose of the antitrust laws is not to destroy the venture or undermine its purpose, but rather to evaluate how the challenged restraint operates within the venture and condemn unreasonably harmful restraints.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_52');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_52');\" ><sup id=\"footnote_plugin_tooltip_2366_1_52\" class=\"footnote_plugin_tooltip_text\">52<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">52. <em>See <\/em>7 PHILLIP E. AREEDA &amp; HERBERT HOVENKAMP, ANTITRUST LAW, Ch. 15 (4th ed. 2017).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_52').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_52', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  For example, when the Supreme Court struck down the NCAA joint venture\u2019s limitation on nationally televised football games, the purpose and effect were to make the NCAA behave more competitively, in the process increasing its output.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_53');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_53');\" ><sup id=\"footnote_plugin_tooltip_2366_1_53\" class=\"footnote_plugin_tooltip_text\">53<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">53. <em>See <\/em>NCAA v. Bd. of Regents of the Univ. of Okla., 468 U.S. 85, 120 (1984).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_53').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_53', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  SSOs should be addressed in the same manner. The goal of the standard setting venture is to facilitate competitive operation and entry, interoperability, as well as preserve appropriate competitive incentives for research and development.&nbsp;<\/p>\n\n\n\n<p>Antitrust analysis necessarily involves testing conduct against these goals, but only to the extent of looking for practices that are anticompetitive. This means it must identify practices that reduce market wide output unreasonably and increase prices, or that are unnecessarily exclusionary or harmful to consumers in other ways.&nbsp;<\/p>\n\n\n\n<p>A firm\u2019s violation of its FRAND commitment is very likely a breach of contract, as several decisions have held.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_54');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_54');\" ><sup id=\"footnote_plugin_tooltip_2366_1_54\" class=\"footnote_plugin_tooltip_text\">54<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">54. E.g., Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 889 (9th Cir. 2012); In re Innovatio IP Ventures, LLC Patent Litig., 921 F. Supp. 2d 903, 923 (N.D. Ill. 2013); see also Realtek Semiconductor&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_54');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_54').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_54', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  The FRAND contract is incomplete, in the sense that not every term is specified in detail. But participants are subject to a contractual duty to bargain in good faith, with some terms being filled in by courts or other tribunals as necessary. The breach of contract question does not depend on whether the conduct reduced market output or excluded a rival unreasonably. It certainly does not depend on the existence of any party\u2019s market power. Remedies are ordinarily contract damages or an injunction. Nonparties to the contract will typically be able to obtain relief only to the extent that they are third-party beneficiaries. However, the courts have had little difficulty concluding that participating members of the SSO are third-party&nbsp;beneficiaries of FRAND commitments.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_55');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_55');\" ><sup id=\"footnote_plugin_tooltip_2366_1_55\" class=\"footnote_plugin_tooltip_text\">55<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">55. See, e.g., Realtek Semiconductor Corp.,946 F. Supp. 2d at 1005\u201306 (holding that product developer was third-party beneficiary entitled to enforce FRAND obligation); Microsoft Corp. v. Motorola,&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_55');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_55').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_55', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  In all events, challengers will not be able to obtain antitrust law\u2019s treble damages unless they can prove an antitrust violation.&nbsp;<\/p>\n\n\n\n<p>Whether a firm\u2019s breach of a FRAND commitment also violates the antitrust laws depends on whether the conduct in question causes competitive harm of a sort that the antitrust laws recognize.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_56');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_56');\" ><sup id=\"footnote_plugin_tooltip_2366_1_56\" class=\"footnote_plugin_tooltip_text\">56<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">56. E.g., McGlinchy v. Shell Chem. Co., 845 F.2d 802, 813 (9th Cir. 1988) (finding that the supplier\u2019s breach of contract was not an antitrust violation because it did not cause competitive harm);&nbsp;&#x2026; <span class=\"footnote_tooltip_continue\"  onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_56');\">Continue reading<\/span><\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_56').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_56', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  In the case of section 1 of the Sherman Act<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_57');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_57');\" ><sup id=\"footnote_plugin_tooltip_2366_1_57\" class=\"footnote_plugin_tooltip_text\">57<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">57. 15 U.S.C. \u00a7 1 (2018).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_57').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_57', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> this requires a showing of a relevant agreement that is likely to reduce market output. If the conduct is reasonably ancillary to other arguably procompetitive activity, the court must also assess market power and anticompetitive effects. In the case of section 2 of the Sherman Act or section 3 of the Clayton Act, which reach mainly tying and exclusive dealing, it will require a showing of market power plus conduct that is unreasonably exclusionary.&nbsp;<\/p>\n\n\n\n<p>The antitrust harm results, not from the breach of the FRAND obligation per se. Rather, it results from the creation of monopoly and higher prices for consumers. The Ninth Circuit got this issue precisely wrong, holding that the district court incorrectly focused on downstream harm to buyers when it should have looked at harm to rivals.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_58');\" onkeypress=\"footnote_moveToReference_2366_1('footnote_plugin_reference_2366_1_58');\" ><sup id=\"footnote_plugin_tooltip_2366_1_58\" class=\"footnote_plugin_tooltip_text\">58<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">58. Qualcomm, Inc. v. FTC, 969 F.3d 974, 2020 WL 4591476 (9th Cir. Aug. 11, 2020).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_2366_1_58').tooltip({ tip: '#footnote_plugin_tooltip_text_2366_1_58', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script>  That confuses contract or tort law with antitrust law.&nbsp;<\/p>\n\n\n\n<p><em>To read more, click here: <\/em><a rel=\"noreferrer noopener\" href=\"https:\/\/live-cornell-law-review.pantheonsite.io\/wp-content\/uploads\/2020\/11\/Hovenkamp-final.pdf\" target=\"_blank\">FRAND and Antitrust<\/a>.<\/p>\n<div class=\"speaker-mute footnotes_reference_container\"> <div class=\"footnote_container_prepare\"><p><span role=\"button\" tabindex=\"0\" class=\"footnote_reference_container_label pointer\" onclick=\"footnote_expand_collapse_reference_container_2366_1();\">References<\/span><span role=\"button\" tabindex=\"0\" class=\"footnote_reference_container_collapse_button\" style=\"display: none;\" onclick=\"footnote_expand_collapse_reference_container_2366_1();\">[<a id=\"footnote_reference_container_collapse_button_2366_1\">+<\/a>]<\/span><\/p><\/div> <div id=\"footnote_references_container_2366_1\" style=\"\"><table class=\"footnotes_table footnote-reference-container\"><caption class=\"accessibility\">References<\/caption> <tbody> \r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_1');\"><a id=\"footnote_plugin_reference_2366_1_1\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>1<\/a><\/th> <td class=\"footnote_plugin_text\">On the role of the antitrust laws in standard setting, see 2 HERBERT HOVENKAMP ET AL., IP AND ANTITRUST: AN ANALYSIS OF ANTITRUST PRINCIPLES APPLIED TO INTELLECTUAL PROPERTY LAW, \u00a7 35 (3d ed. 2015 &amp; 2020 Supp.) [hereinafter HOVENKAMP ET AL., IP AND ANTITRUST]; 13 PHILLIP E. AREEDA &amp; HERBERT HOVENKAMP, ANTITRUST LAW \u00b6\u00b6 2230\u201335 (4th ed. 2019).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_2');\"><a id=\"footnote_plugin_reference_2366_1_2\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>2<\/a><\/th> <td class=\"footnote_plugin_text\">UNITED STATES PATENT AND TRADEMARK OFFICE, NAT\u2019L INST. STANDARDS TECH. &amp; DEP\u2019T OF JUSTICE, POLICY STATEMENT ON REMEDIES FOR STANDARDS-ESSENTIAL PATENTS SUBJECT TO VOLUNTARY F\/RAND COMMITMENTS 1 n.2 (2019), <span class=\"footnote_url_wrap\">https:\/\/www.<\/span> uspto.gov\/sites\/default\/files\/documents\/SEP%20policy%20statement%20 signed.pdf [<span class=\"footnote_url_wrap\">https:\/\/perma.cc\/RR85-YZKT]<\/span> [hereinafter POLICY STATEMENT]. The terms \u201cRAND\u201d and \u201cFRAND\u201d today are usually used interchangeably.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_3');\"><a id=\"footnote_plugin_reference_2366_1_3\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>3<\/a><\/th> <td class=\"footnote_plugin_text\">Chi. Bd. of Trade v. United States, 246 U.S. 231 (1918).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_4');\"><a id=\"footnote_plugin_reference_2366_1_4\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>4<\/a><\/th> <td class=\"footnote_plugin_text\"><em>Id. <\/em>at 239\u201340 (explaining how the purpose of the challenged \u201ccall\u201d rule operated to protect the integrity of the Board\u2019s price making). The Court dismissed the complaint.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_5');\"><a id=\"footnote_plugin_reference_2366_1_5\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>5<\/a><\/th> <td class=\"footnote_plugin_text\">NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85 (1984) (striking down rule limiting the number of times a school could have its games televised).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_6');\"><a id=\"footnote_plugin_reference_2366_1_6\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>6<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See, e.g.<\/em>, Allied Tube &amp; Conduit Corp. v. Indian Head, 486 U.S. 492 (1988) (anticompetitive agreement in context of building materials standard setting); Am. Soc\u2019y Mch. Eng\u2019rs v. Hydrolevel Corp., 456 U.S. 556 (1982) (anticompetitive manipulation of standard setting process); Goldfarb v. Va. State Bar, 421 U.S. 773 (1975) (use of lawyer ethics rules to fix price of title search); Radiant Burners, Inc.&nbsp;v. People\u2019s Gas Light &amp; Coke Co., 364 U.S. 656 (1961) (sustaining allegation that standard setting organization used process anticompetitively to exclude product without regard to merit); United States v. Am. Med. Ass\u2019n, 317 U.S. 519 (1943) (government suit against AMA for standard opposing prepaid health care); <em>see also <\/em>O\u2019Bannon v. NCAA, 802 F.3d 1049 (9th Cir. 2015), <em>cert. denied<\/em>, 137 S. Ct. 277 (2016) (striking down NCAA rule limiting athlete compensation); Wilk v. Am. Med. Ass\u2019n, 719 F.2d 207 (7th Cir.1983) (striking down AMA standard intended to exclude chiropractors).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi\" ><a id=\"footnote_plugin_reference_2366_1_7\" class=\"footnote_backlink\" onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_7');\"><span class=\"footnote_index_arrow\">&#8593;<\/span>7,<\/a> <a id=\"footnote_plugin_reference_2366_1_58\" class=\"footnote_backlink\" onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_58');\"><span class=\"footnote_index_arrow\">&#8593;<\/span>58<\/a><\/th> <td class=\"footnote_plugin_text\">Qualcomm, Inc. v. FTC, 969 F.3d 974, 2020 WL 4591476 (9th Cir. Aug. 11, 2020).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_8');\"><a id=\"footnote_plugin_reference_2366_1_8\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>8<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>United States\u2019 Statement of Interest Concerning Qualcomm\u2019s Motion for Partial Stay of Injunction Pending Appeal, <em>Qualcomm, Inc.<\/em>, 2020 WL 4591476 (No. 19-16122), 2019 WL 3306496.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_9');\"><a id=\"footnote_plugin_reference_2366_1_9\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>9<\/a><\/th> <td class=\"footnote_plugin_text\">2 HOVENKAMP ET AL., IP AND ANTITRUST, <em>supra <\/em>note 1, \u00a7 35.01[C][1].<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_10');\"><a id=\"footnote_plugin_reference_2366_1_10\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>10<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>Clayton Act \u00a7 3, 15 U.S.C. \u00a7 14 (2018) (condemning certain sales \u201con the condition, agreement, or understanding\u201d that the buyer will not deal in the goods of a competitor). Section 5 of the Federal Trade Commission Act is said to reach everything that the Sherman Act reaches plus some additional conduct, but we look mainly at Sherman and Clayton Act standards. 15 U.S.C. \u00a7 45; <em>see <\/em>FTC v. Brown Shoe Co., 384 U.S. 316 (1966).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_11');\"><a id=\"footnote_plugin_reference_2366_1_11\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>11<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See Qualcomm Inc.<\/em>, 969 F.3d 974, 1003, 2020 WL 4591476 (declin[ing] to ascribe antitrust liability in . . . dynamic and rapidly changing technology markets without clearer proof of anticompetitive effect\u201d).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_12');\"><a id=\"footnote_plugin_reference_2366_1_12\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>12<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>discussion <em>infra <\/em>notes 13\u201314 and accompanying text.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_13');\"><a id=\"footnote_plugin_reference_2366_1_13\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>13<\/a><\/th> <td class=\"footnote_plugin_text\"> <em>Qualcomm<\/em>, 969 F.3d at 992 (emphasis in original) (citation omitted).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_14');\"><a id=\"footnote_plugin_reference_2366_1_14\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>14<\/a><\/th> <td class=\"footnote_plugin_text\">138 S. Ct. 2274, 2285 (2018).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_15');\"><a id=\"footnote_plugin_reference_2366_1_15\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>15<\/a><\/th> <td class=\"footnote_plugin_text\">149 S. Ct. 1514 (2019).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_16');\"><a id=\"footnote_plugin_reference_2366_1_16\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>16<\/a><\/th> <td class=\"footnote_plugin_text\"><em>Id. <\/em>at 1525 (quoting 2A PHILLIP E. AREEDA &amp; HERBERT HOVENKAMP, ANTITRUST<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_17');\"><a id=\"footnote_plugin_reference_2366_1_17\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>17<\/a><\/th> <td class=\"footnote_plugin_text\">On SSO members\u2019 duty to disclose, see, for example, Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1015\u201319 (Fed. Cir. 2008) (holding that Qualcomm breached its duty to disclose patents that reasonably might be necessary to practice the standard); Apple Inc. v. Samsung Elecs. Co., 2012 WL 1672493, at *13 (N.D. Cal. May 14, 2012) (holding that Apple sufficiently pled that Samsung breached its duty to disclose intellectual property rights to the SSO); Joseph Farrell et al., <em>Standard Setting, Patents, and Hold-up<\/em>, 74 ANTITRUST L.J. 603, 628 (2007) (showing that SSOs may provide that \u201cif members . . . do not \u2018adequately and timely disclose\u2019 essential patents, then those patents must be licensed royalty-free.\u201d) (citation omitted); Mark A. Lemley, <em>Intellectual Property Rights and Standard-Setting Organizations<\/em>, 90 CALIF. L. REV. 1889, 1919\u201321 (2002) (exploring the application of disclosure obligations and equitable estoppel in the SSO context) [hereinafter <em>Standard-Setting Organizations<\/em>]; Peter S. Menell, <em>Economic Analysis of Network Effects and Intellectual Property<\/em>, 34 BERKELEY TECH.&nbsp;L.J. 219, 301\u201302 (2019) (comparing two cases alleging that SSO members breached their disclosure duties);. However, establishing antitrust liability for failure to disclose has proven difficult. <em>See, e.g.<\/em>, Rambus Inc. v. FTC, 522 F.3d 456, 469 (D.C. Cir. 2008) (finding no antitrust liability for failure to predisclose that simply increased prices but did not exclude a known technology); Wi-LAN Inc. v. LG Elecs., Inc., 382 F. Supp. 3d 1012, 1023 (S.D. Cal. 2019) (\u201cAllegations of anticompetitive conduct based [on] a fraudulent FRAND declaration theory also must satisfy [a] heightened pleading standard.\u201d).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_18');\"><a id=\"footnote_plugin_reference_2366_1_18\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>18<\/a><\/th> <td class=\"footnote_plugin_text\">Questions about measurement of FRAND royalties have produced significant case law and literature but are outside the scope of this Article. For good discussions, see Jorge L. Contreras, <em>Fixing FRAND: A Pseudo-Pool Approach to Standards-Based Patent Licensing<\/em>, 79 ANTITRUST L.J. 47, 78\u201387 (2013); Jorge L. Contreras, <em>Global Rate Setting: A Solution for Standards-Essential Patents<\/em>, 94 WASH. L. REV. 701, 713\u201322 (2019). <em>See generally <\/em>Norman V. Siebrasse &amp; Thomas&nbsp;F. Cotter, <em>The Value of the Standard<\/em>, 101 MINN. L. REV. 1159 (2017).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_19');\"><a id=\"footnote_plugin_reference_2366_1_19\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>19<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>35 U.S.C. \u00a7 271(d)(4) (2018).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_20');\"><a id=\"footnote_plugin_reference_2366_1_20\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>20<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>D. Scott Bosworth et al., <em>FRAND Commitments and Royalties for Standard Essential Patents<\/em>, <em>in <\/em>COMPLICATIONS AND QUANDARIES IN THE ICT SECTOR: STANDARD ESSENTIAL PATENTS AND COMPETITION ISSUES 19, 26 (A. Bharadwaj et al. eds., 2018).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_21');\"><a id=\"footnote_plugin_reference_2366_1_21\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>21<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 876 (9th Cir. 2012) (\u201cMicrosoft II\u201d) (citing Lemley, <em>Standard-Setting Organizations<\/em>, <em>supra <\/em>note 17 at 1902, 1906).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_22');\"><a id=\"footnote_plugin_reference_2366_1_22\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>22<\/a><\/th> <td class=\"footnote_plugin_text\">The IP policy of the Telecommunications Industry Association: stated: \u201cA license under any Essential Patent(s), the license rights which are held by the undersigned Patent Holder, will be made available to all applicants under terms and conditions that are reasonable and non-discriminatory.\u201d FTC v. Qualcomm, Inc., 2018 WL 5848999, at *3 (N.D. Cal. Nov. 6, 2018); <em>accord Microsoft II<\/em>, 696 F.3d at 876; <em>id. <\/em>at 885 (stating that FRAND obligation requires firm to license to \u201call comers\u201d); <em>see also <\/em>Microsoft Corp. v. Motorola, Inc., 795 F.3d 1024, 1031 (9th Cir. 2015) (\u201cMicrosoft III\u201d) (\u201c[A]n SEP holder <em>cannot <\/em>refuse a license to a manufacturer who commits to paying the RAND rate.\u201d(emphasis added) ); FTC v. Qualcomm, Inc., 411 F. Supp. 3d 658, 671\u201372 (N.D. Cal. 2019) (\u201cFor example, under the intellectual property policy of the Telecommunications Industry Association (\u2018TIA\u2019), a SSO, a SEP holder must commit to TIA that \u2018A license under any Essential Patent(s), the license rights which are held by the undersigned Patent Holder, will be made available to all applicants under terms and conditions that are reasonable and non-discriminatory.\u2019\u201d (quoting <em>Qualcomm, Inc.<\/em>, 2018 WL 5848999, at *3).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_23');\"><a id=\"footnote_plugin_reference_2366_1_23\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>23<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See, e.g.<\/em>, HTC Corp. v. Telefonaktiebolaget LM Ericsson, 2019 WL 277479, at 3\u20135 (E.D. Tex. Jan. 22, 2019) (discussing duty to arbitrate), <em>appeal dismissed<\/em>, 2019 WL 4126536 (5th Cir. June 18, 2019); Interdigital Tech. Corp. v. Pegatron Corp., 2016 WL 234433, at *10 (N.D. Cal. Jan. 20, 2016) (compelling arbitration); ASUS Comput. Int\u2019l v. InterDigital, Inc., 2015 WL 5186462, at *7 (N.D. Cal. Sep. 4, 2015) (similar); <em>see also <\/em>HOVENKAMP, ET AL., IP AND ANTITRUST, <em>supra <\/em>note 1, \u00a7 35.05; Jorge L. Contreras &amp; David L. Newman, <em>Developing a Framework for Arbitrating Standard-Essential Patent Disputes<\/em>, 2014 J. DISP. RESOL. 23, 26\u201329 (2014); Mark A. Lemley &amp; Carl Shapiro, <em>A Simple Approach to Setting Reasonable Royalties for Standard-Essential Patents<\/em>, 28 BERKELEY TECH. L.J. 1135, 1152\u201360 (2013). <em>See generally <\/em>J. Gregory Sidak, <em>Mandating Final-Offer Arbitration of FRAND Royalties for Standard-Essential Patents<\/em>, 18 STAN. TECH. L. REV. 1 (2014) (discussing Lemley-Shapiro arbitration).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_24');\"><a id=\"footnote_plugin_reference_2366_1_24\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>24<\/a><\/th> <td class=\"footnote_plugin_text\">9 U.S.C. \u00a7\u00a7 1\u20132 (2018); <em>see, e.g.<\/em>, <em>ASUS Computer<\/em>, 2015 WL 5186462, at *2\u20133 (discussing the Federal Arbitration Act). <em>See generally <\/em>Contreras &amp; Newman, <em>supra <\/em>note 23, <em>passim <\/em>(same).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_25');\"><a id=\"footnote_plugin_reference_2366_1_25\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>25<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See, e.g<\/em>., <em>Microsoft III<\/em>, 795 F.3d at 1040 (considering \u201cthe objective value each [patent] contributed to each standard, given the quality of the technology and the available alternatives as well as the importance of those technologies to Microsoft\u2019s business\u201d); <em>see also <\/em>Thomas F. Cotter, Erik Hovenkamp &amp; Norman Siebrasse, <em>Demystifying Patent Holdup<\/em>, 76 WASH. &amp; LEE L. REV. 1501, 1507\u201308 (2019) (royalties generally reflect \u201cthe technology\u2019s economic value\u201d).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_26');\"><a id=\"footnote_plugin_reference_2366_1_26\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>26<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See, e.g<\/em>., Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009) (\u201cThe hypothetical negotiation tries, as best as possible, to recreate the <em>ex ante <\/em>licensing negotiation scenario and to describe the resulting agreement. In other words, if infringement had not occurred, willing parties would have executed a license agreement specifying a certain royalty payment scheme.\u201d); Microsoft Corp. v. Motorola, Inc., 2013 WL 2111217, at *17\u201320 (W.D. Wash. Apr. 25, 2013) (\u201cThis approach attempts to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before infringement began.\u201d).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_27');\"><a id=\"footnote_plugin_reference_2366_1_27\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>27<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>Carl Shapiro, <em>Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting<\/em>, 1 INNOVATION POL\u2019Y &amp; ECON. 119, 122\u201324. (2000).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_28');\"><a id=\"footnote_plugin_reference_2366_1_28\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>28<\/a><\/th> <td class=\"footnote_plugin_text\"><em>E.g<\/em>., FTC v. Qualcomm, Inc., 2017 WL 2774406, at *6 (N.D. Cal. June 26, 2017).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_29');\"><a id=\"footnote_plugin_reference_2366_1_29\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>29<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>discussion <em>infra <\/em>text at notes 103\u201304.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_30');\"><a id=\"footnote_plugin_reference_2366_1_30\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>30<\/a><\/th> <td class=\"footnote_plugin_text\">Cotter, Hovenkamp, &amp; Siebrasse, <em>supra <\/em>note 25, at 1562\u201363. On path dependence, see Steven N. Durlauf, <em>Path Dependence<\/em>, <em>in <\/em>THE NEW PALGRAVE DICTIONARY OF ECONOMICS 10094 (3d ed. 2018); Douglas Puffert, <em>Path Dependence in Technical Standards<\/em>, <em>in <\/em>THE NEW PALGRAVE DICTIONARY OF ECONOMICS 10106, 10106\u201313 (3d ed. 2018). On standardization and path dependence, see generally Joseph Farrell and Garth Saloner, <em>Standardization, Compatibility, and Innovation<\/em>, 16 RAND J. ECON. 70 <em>passim <\/em>(1985).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_31');\"><a id=\"footnote_plugin_reference_2366_1_31\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>31<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>Robin Stitzing, Pekka Saaskilahti, Jimmy Royer &amp; Marc Van Audenrode, Over-Declaration of Standard Essential Patents and Determinants of Essentiality fig. 1(Sept. 4, 2018), <span class=\"footnote_url_wrap\">https:\/\/papers.ssrn.com\/sol3\/papers.cfm?ab<\/span> stract_id=2951617 [<span class=\"footnote_url_wrap\">https:\/\/perma.cc\/B9BQ-EV9C];<\/span> <em>see also <\/em>CYBER CREATIVE INST. CO., EVALUATION OF LTE ESSENTIAL PATENTS DECLARED TO ETSI 19\u201321 (2013), <span class=\"footnote_url_wrap\">http:\/\/www.cybersoken.com\/file\/lte03EN.pdf<\/span> [<span class=\"footnote_url_wrap\">https:\/\/perma.cc\/4VP6-264A]<\/span> (concluding that roughly 56% of patents declared essential to ETSI standard were in fact so and showing that there was also a wide range among individual companies). For good commentary, see Jorge L. Contreras, <em>Essentiality and Standards-Essential Patents<\/em>, <em>in <\/em>THE CAMBRIDGE HANDBOOK OF TECHNICAL STANDARDIZATION LAW: COMPETITION, ANTITRUST, AND PATENTS 209, 226 (Jorge L. Contreras ed., 2017).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_32');\"><a id=\"footnote_plugin_reference_2366_1_32\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>32<\/a><\/th> <td class=\"footnote_plugin_text\">Lenovo (United States), Inc. v. Interdigital Tech. (IDC), case 1:20-cv-00593LPS (D. Del. April 9, 2020) (complaint, alleging over-declaring by IDC). <em>See also <\/em><span class=\"footnote_url_wrap\">https:\/\/www.essentialpatentblog.com\/2020\/04\/lenovo-motorola-file-antitrustclaims-against-interdigitals-standards-setting-participation-and-patent-licensing-practice-lenovo-v-interdigital\/<\/span> (last visited Aug. 8, 2020) (discussing the case).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_33');\"><a id=\"footnote_plugin_reference_2366_1_33\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>33<\/a><\/th> <td class=\"footnote_plugin_text\">Mark A. Lemley &amp; Timothy Simcoe, <em>How Essential are Standard-Essential Patents?<\/em>, 104 CORNELL L. REV. 607, 627 (2019). The authors conclude that findings of infringement of SEP and non-SEP patents occur at about the same rate, roughly 30%. As a result, SEPs \u201cdon\u2019t seem to be all that essential, at least when they make it to court.\u201d <em>Id. <\/em>at 608.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_34');\"><a id=\"footnote_plugin_reference_2366_1_34\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>34<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See id. <\/em>at 610.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_35');\"><a id=\"footnote_plugin_reference_2366_1_35\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>35<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>Jay P. Kesan &amp; Carol M. Hayes, <em>FRAND\u2019s Forever: Standards, Patent Transfers, and Licensing Commitments<\/em>, 89 IND. L.J. 231, 233\u201335 (2014); William&nbsp;F. Lee &amp; A. Douglas Melamed, <em>Breaking the Vicious Cycle of Patent Damages<\/em>, 101 CORNELL L. REV. 385, 404\u201309 (2016); Mark A. Lemley &amp; Carl Shapiro, <em>Patent Holdup and Royalty Stacking<\/em>, 85 TEX. L. REV. 1991, 1994\u20132010 (2007).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_36');\"><a id=\"footnote_plugin_reference_2366_1_36\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>36<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See, e.g.<\/em>, FTC v. Qualcomm, Inc., 411 F. Supp. 3d 658, 785\u201387 (N.D. Cal. 2019) (finding that defendant attempted to leverage higher royalty rates by taking advantage of ex post SEP status plus its threat to withhold products from licensee who challenged the higher rates).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_37');\"><a id=\"footnote_plugin_reference_2366_1_37\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>37<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>discussion <em>supra <\/em>notes 7\u201310 and accompanying text.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_38');\"><a id=\"footnote_plugin_reference_2366_1_38\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>38<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>Cotter, Hovenkamp &amp; Siebrasse, <em>supra <\/em>note 25, at 1517\u201329.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_39');\"><a id=\"footnote_plugin_reference_2366_1_39\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>39<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>Erik Hovenkamp, <em>Tying, Exclusivity, and Standard-Essential Patents<\/em>, 19 COLUM. SCI. &amp; TECH. L. REV. 79, 90 (2017); Harold Demsetz, <em>Why Regulate Utilities?<\/em>, 11 J.L. &amp; ECON. 55, 58 (1968); Richard A. Posner, <em>The Appropriate Scope of Regulation in the Cable Television Industry<\/em>, 3 BELL J. ECON. &amp; MGMT. SCI. 98, 110\u201311 (1972); Oliver E. Williamson, <em>Franchise Bidding for Natural Monopolies\u2014 in General and with Respect to CATV<\/em>, 7 BELL J. ECON. 73, 76\u201377 (1976).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_40');\"><a id=\"footnote_plugin_reference_2366_1_40\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>40<\/a><\/th> <td class=\"footnote_plugin_text\">On whether the large internet platforms are natural monopolies, see Herbert Hovenkamp, <em>Antitrust and Platform Monopoly<\/em>, 130 YALE L.J. (forthcoming 2021), <span class=\"footnote_url_wrap\">https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3639142.<\/span><\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_41');\"><a id=\"footnote_plugin_reference_2366_1_41\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>41<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See, e.g.<\/em>, J. Gregory Sidak, <em>What Makes FRAND Fair? The Just Price Contract Formation, and the Division of Surplus from Voluntary Exchange<\/em>, 4 CRITERION&nbsp;J. INNOVATION 701, 727\u201331 (2019) (analyzing difference surplus splits).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_42');\"><a id=\"footnote_plugin_reference_2366_1_42\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>42<\/a><\/th> <td class=\"footnote_plugin_text\">The traditional solutions to the bilateral monopoly problem are ones in which output is joint maximizing but price is indeterminate within a significant range. <em>See <\/em>Roger D. Blair, David L. Kaserman, &amp; Richard E. Romano, <em>A Pedagogical Treatment of Bilateral Monopoly<\/em>, 55 S. ECON. J. 831, 834 (1989). However, Nash-Cournot bargaining theory predicts that under a wide range of assumptions bargaining will lead to an even split of the difference. That makes it critical that the proper beginning parameters of bargaining be settled. The split prior to a SEP declaration will occur at a lower place than it will ex post because the patentee\u2019s (seller\u2019s) reservation price will be lower. <em>See <\/em>Gordon C. Rausser, Johan Swinnen, &amp; Pinhas Zusman, <em>The Nash Solution to the Bargaining Problem<\/em>, <em>in <\/em>POLITICAL POWER AND ECONOMIC POLICY: THEORY, ANALYSIS AND EMPIRICAL APPLICATIONS 30\u201349 (2011). For a comprehensive empirical survey of experimental tests, see Po-Hsuan Lin et al., General Economic Principles of Bargaining and Trade: Evidence from 2000 Classroom Experiments (Sept. 15, 2018) (unpublished manuscript), <span class=\"footnote_url_wrap\">https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3250495.<\/span><\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_43');\"><a id=\"footnote_plugin_reference_2366_1_43\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>43<\/a><\/th> <td class=\"footnote_plugin_text\"><em>E.g.<\/em>, Demsetz, <em>supra <\/em>note 39, at 65; Posner, <em>supra <\/em>note 39, at 111 (stating that franchise bidding leads to \u201ca price that will not include any monopoly toll\u201d).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_44');\"><a id=\"footnote_plugin_reference_2366_1_44\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>44<\/a><\/th> <td class=\"footnote_plugin_text\">On these practices when involving SEPs, see Erik Hovenkamp, <em>Tying, Exclusivity, supra <\/em>note 39, at 107\u201309; A. Douglas Melamed &amp; Carl Shapiro, <em>How Antitrust Law Can Make FRAND Commitments More Effective<\/em>, 127 YALE L.J. 2110, 2126\u201328 (2018).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_45');\"><a id=\"footnote_plugin_reference_2366_1_45\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>45<\/a><\/th> <td class=\"footnote_plugin_text\">On the use of tying arrangements for rate regulation avoidance, see 9 PHILLIP E. AREEDA &amp; HERBERT HOVENKAMP, ANTITRUST LAW \u00b6 1715b, (4th ed. 2018). On this use in the context of FRAND, see Hovenkamp, <em>supra <\/em>note 39, at 102\u2013105; Melamed &amp; Shapiro, <em>supra <\/em>note 44, at 28.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_46');\"><a id=\"footnote_plugin_reference_2366_1_46\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>46<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See supra <\/em>note 22.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_47');\"><a id=\"footnote_plugin_reference_2366_1_47\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>47<\/a><\/th> <td class=\"footnote_plugin_text\">Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_48');\"><a id=\"footnote_plugin_reference_2366_1_48\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>48<\/a><\/th> <td class=\"footnote_plugin_text\">Verizon Commc\u2019ns, Inc. v. Law Offices of Curtis V. Trinko, LLP 540 U.S. 398 (2004).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_49');\"><a id=\"footnote_plugin_reference_2366_1_49\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>49<\/a><\/th> <td class=\"footnote_plugin_text\">FTC v. Qualcomm Corp., 411 F. Supp. 3d 658, 696\u201397 (N.D. Cal. 2019).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_50');\"><a id=\"footnote_plugin_reference_2366_1_50\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>50<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See infra <\/em>text accompanying notes 98\u2013107; <em>see also <\/em>2 HOVENKAMP ET AL., IP&nbsp;AND ANTITRUST, <em>supra <\/em>note 1, \u00a7 35.05.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_51');\"><a id=\"footnote_plugin_reference_2366_1_51\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>51<\/a><\/th> <td class=\"footnote_plugin_text\">For treatment of SSOs as joint ventures, see 13 AREEDA &amp; HOVENKAMP, <em>supra <\/em>note 1, Ch. 22B, 22C; Melamed &amp; Shapiro, <em>supra <\/em>note 28, at 2119.<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_52');\"><a id=\"footnote_plugin_reference_2366_1_52\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>52<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>7 PHILLIP E. AREEDA &amp; HERBERT HOVENKAMP, ANTITRUST LAW, Ch. 15 (4th ed. 2017).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_53');\"><a id=\"footnote_plugin_reference_2366_1_53\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>53<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See <\/em>NCAA v. Bd. of Regents of the Univ. of Okla., 468 U.S. 85, 120 (1984).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_54');\"><a id=\"footnote_plugin_reference_2366_1_54\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>54<\/a><\/th> <td class=\"footnote_plugin_text\"><em>E.g<\/em>., <em>Microsoft <\/em>Corp. v. Motorola, Inc., 696 F.3d 872, 889 (9th Cir. 2012); <em>In re <\/em>Innovatio IP Ventures, LLC Patent Litig., 921 F. Supp. 2d 903, 923 (N.D. Ill. 2013); <em>see also <\/em>Realtek Semiconductor Corp. v. LSI Corp., 946 F. Supp. 2d 998, 1005, 1008 (N.D. Cal. 2013) (holding that FRAND commitment was an enforceable contract precluding patentee from bringing ITC claim for infringement before it offered a license).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_55');\"><a id=\"footnote_plugin_reference_2366_1_55\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>55<\/a><\/th> <td class=\"footnote_plugin_text\"><em>See, e.g<\/em>., Realtek Semiconductor Corp.,946 F. Supp. 2d at 1005\u201306 (holding that product developer was third-party beneficiary entitled to enforce FRAND obligation); Microsoft Corp. v. Motorola, Inc., 864 F. Supp. 2d 1023, 1032\u201333&nbsp;(W.D. Wash. 2012) (similar); Apple, Inc. v. Motorola Mobility, Inc., 2012 WL 5416941, at *4 (W.D. Wis. Oct. 29, 2012) (similar).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_56');\"><a id=\"footnote_plugin_reference_2366_1_56\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>56<\/a><\/th> <td class=\"footnote_plugin_text\"><em>E.g<\/em>., McGlinchy v. Shell Chem. Co., 845 F.2d 802, 813 (9th Cir. 1988) (finding that the supplier\u2019s breach of contract was not an antitrust violation because it did not cause competitive harm); Orion Pictures Distribution Corp. v. Syufy Enters., 829 F.2d 946, 949 (9th Cir. 1987) (finding that although defendant\u2019s conduct was a breach of contract, it did not violate the antitrust laws in the absence of market power).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_2366_1('footnote_plugin_tooltip_2366_1_57');\"><a id=\"footnote_plugin_reference_2366_1_57\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>57<\/a><\/th> <td class=\"footnote_plugin_text\">15 U.S.C. \u00a7 1 (2018).<\/td><\/tr>\r\n\r\n <\/tbody> <\/table> <\/div><\/div><script type=\"text\/javascript\"> function footnote_expand_reference_container_2366_1() { jQuery('#footnote_references_container_2366_1').show(); jQuery('#footnote_reference_container_collapse_button_2366_1').text('\u2212'); } function footnote_collapse_reference_container_2366_1() { jQuery('#footnote_references_container_2366_1').hide(); jQuery('#footnote_reference_container_collapse_button_2366_1').text('+'); } function footnote_expand_collapse_reference_container_2366_1() { if (jQuery('#footnote_references_container_2366_1').is(':hidden')) { footnote_expand_reference_container_2366_1(); } else { footnote_collapse_reference_container_2366_1(); } } function footnote_moveToReference_2366_1(p_str_TargetID) { footnote_expand_reference_container_2366_1(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } } function footnote_moveToAnchor_2366_1(p_str_TargetID) { footnote_expand_reference_container_2366_1(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } }<\/script>","protected":false},"excerpt":{"rendered":"<p>This Article addresses one question: when is a Standard Setting Organization (SSO) participant\u2019s violation of a FRAND commitment an antitrust violation, and if it is, of what kind and what are the implications for remedies? It warns against two extremes. One is thinking that any violation of a FRAND commitment is an antitrust violation as well. In the first instance FRAND obligations are contractual, and most breaches of contract do not violate any antitrust law. The other extreme is thinking that, because a FRAND violation is a breach of contract, it cannot also be an antitrust violation. The question of an antitrust violation does not depend on whether the conduct breached a particular agreement but rather on whether it caused competitive harm. This can happen because the conduct restrained trade under section 1 of the Sherman Act, was unreasonably exclusionary under section 2 of the Sherman Act, or amounted to an anticompetitive condition or understanding as defined by section 3 of the Clayton Act. The end goal is to identify practices that harm competition, thereby injuring consumers. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[14,719,13],"tags":[],"class_list":["post-2366","post","type-post","status-publish","format-standard","hentry","category-articles","category-print-volume-105","category-archives"],"acf":[],"_links":{"self":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/posts\/2366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/comments?post=2366"}],"version-history":[{"count":1,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/posts\/2366\/revisions"}],"predecessor-version":[{"id":5364,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/posts\/2366\/revisions\/5364"}],"wp:attachment":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/media?parent=2366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/categories?post=2366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/tags?post=2366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}