Federal Court Rules Deception in Standard Setting can Violate Antitrust Laws
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While many of us have been preoccupied with the OOXML vote, the rest of the world has naturally been continuing to go about its business. One piece of business that took an interesting turn in the last few days is a ruling by a Federal Appellate Court in the United States that breaks new ground in protecting the integrity of the standard setting system. The ruling may also have relevance to the regrettable conduct witnessed in the recent OOXML vote.
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The underlying facts at issue involved Qualcomm's participation in the creation of the Universal Mobile Telecommunications System (UTMS) standard, which was under development in the European Telecommunications Standards Institute, more commonly known as ETSI. Qualcomm volunteered technology owned by it for inclusion in the standard, and in return agreed that it would freely license any patent claims that it owned that would be infringed by implementing the standard. Specifically, Qualcomm made the traditional pledge to license its patent claims on "fair, reasonable and non-discriminatory" (or FRAND) terms.
After the standard was adopted and began to be implemented, Broadcom alleged that Qualcomm, which had a 90% market share of the type of chipsets that would implement the standard, sought to maintain its monopoly position by requiring other chipset vendors to pay unreasonably high royalties on Qualcomm's patents, thus putting them in an inferior competitive position. The court below held that the creation of a standard inherently creates a monopoly around the technology in question, but the Appellate Court disagreed - and held that such deceptive conduct can violate the antitrust laws regulating monopolies. Full Story |
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