Contributions

Deciphering Non-Discriminatory Licensing Terms Under a FRAND Commitment

by Arielle Kop­pell1

As tech­nol­o­gy becomes increas­ing­ly sophis­ti­cat­ed, the need for them to be inter­op­er­a­ble around a sin­gle stan­dard becomes increas­ing­ly impor­tant to con­sumers. At the same time, inter­op­er­abil­i­ty presents impor­tant antitrust and con­trac­tu­al issues. Numer­ous intel­lec­tu­al prop­er­ty hold­ers around the globe have achieved the pin­na­cle of prof­itabil­i­ty on their patents: being incor­po­rat­ed into a stan­dard by a stan­dard-set­ting orga­ni­za­tion (SSO) due to the inno­va­tions pre­sent­ed by their patent­ed tech­nol­o­gy. In order to be incor­po­rat­ed, patent hold­ers will fre­quent­ly make vol­un­tary com­mit­ments to the stan­dard-set­ting orga­ni­za­tion, promis­ing to abide by a “FRAND” com­mit­ment in how they sub­se­quent­ly license their patent, there­after known as a stan­dard-essen­tial patent (SEP). A FRAND com­mit­ment requires the patent hold­er to engage in fair, rea­son­able, and non-dis­crim­i­na­to­ry con­duct in the price and con­duct by which it licens­es its SEP. In addi­tion to secur­ing these com­mit­ments, the major­i­ty of stan­dard-set­ting orga­ni­za­tions issue pol­i­cy state­ments that sup­port firms’ rights to gain access to the patent­ed tech­nolo­gies that are required for them to achieve stan­dard com­pli­ance.2

While what con­sti­tutes fair and rea­son­able con­duct under a FRAND com­mit­ment in set­ting licens­ing fees has been expound­ed upon in Amer­i­can and Euro­pean com­pe­ti­tion law, the extent to which a SEP hold­er can dis­crim­i­nate in how it licens­es to sup­pli­ers with­out vio­lat­ing its com­mit­ment is less appar­ent.3 For instance, it is unclear whether a SEP hold­er is oblig­at­ed to license the patent at issue on a stand­alone basis, should the licensee request it, or whether the patent hold­er can bun­dle its SEP with non-SEPs, licens­ing at the tech­nol­o­gy port­fo­lio lev­el.4

This Con­tri­bu­tion will argue that a SEP hold­er should be able to arrange dif­fer­en­tial licens­ing terms for ver­ti­cal­ly inte­grat­ed and non-ver­ti­cal­ly inte­grat­ed licensee coun­ter­parts, regard­less of whether that makes them sim­i­lar­ly sit­u­at­ed. Fur­ther, this Con­tri­bu­tion will argue that it is legal for a SEP hold­er to require its licensees to pur­chase tied non-SEP com­po­nents when those non-SEP com­po­nents are col­lat­er­al input or func­tion­al­ly relat­ed to the SEP.

* * * * *

There is wide­spread dis­agree­ment about what the “non-dis­crim­i­na­to­ry” prin­ci­ple of FRAND com­mit­ments requires of SEP hold­ers in their licens­ing prac­tices. Sev­er­al com­men­ta­tors believe that it requires all imple­menters of the stan­dard to be offered licens­es to the SEP and all sim­i­lar­ly sit­u­at­ed firms to pay the same roy­al­ty rate.5 Jus­tice Birss of the High Court of Jus­tice of Eng­land and Wales sup­port­ed this view in Unwired Plan­et v. Huawei, rea­son­ing that a FRAND roy­al­ty rate should be set based on the val­ue of the SEP rather than by the licensee’s char­ac­ter­is­tics, such as its size.6 Still, he lim­it­ed the abil­i­ty for future licensees to chal­lenge a license alleged­ly grant­ed under FRAND terms upon learn­ing that a sim­i­lar­ly sit­u­at­ed licensee was charged less, absent a com­pet­i­tive dis­tor­tion between the two licensees.7 Par­al­lel analy­sis drove the judg­ment of the Court of Jus­tice of the Euro­pean Union in MEO v. Autori­dade da Con­cor­rên­cia, which found that price dis­crim­i­na­tion by a dom­i­nant firm is pro­hib­it­ed as an Arti­cle 102© TFEU vio­la­tion when it tends to dis­tort com­pe­ti­tion in a down­stream mar­ket.8

Oth­ers dis­agree, writ­ing that non-dis­crim­i­na­tion should not be read as an inflex­i­ble com­mit­ment for SEP hold­ers to license at iden­ti­cal terms to all poten­tial licensees.9 These courts and com­men­ta­tors have inter­pret­ed non-dis­crim­i­na­tion as to allow a SEP hold­er to charge dif­fer­ent roy­al­ty rates to licensees based on their size or mar­ket share, requir­ing those who sell more SEP-incor­po­rat­ing prod­ucts to pay high­er lev­els of roy­al­ties.10 Dis­agree­ment over how to inter­pret the non-dis­crim­i­na­tion prong of FRAND com­mit­ments is only fur­ther com­pli­cat­ed by a wide range of per­spec­tives on which fac­tors are rel­e­vant to find licensees sim­i­lar­ly sit­u­at­ed.11

Fur­ther, this area of debate does not speak direct­ly to how the non-dis­crim­i­na­tion prong of FRAND applies to SEP hold­ers engag­ing in dif­fer­en­tial licens­ing prac­tices and offer­ing dif­fer­ent non-price licens­ing terms across their licensees.12 For instance, a SEP hold­er may choose to selec­tive­ly license its SEPs to non-ver­ti­cal­ly inte­grat­ed firms that it does not direct­ly com­pete with (firms that arguably incor­po­rate the stan­dard by using the SEP to cre­ate a stan­dard-com­pli­ant sec­ondary prod­uct that the patent-hold­er does not pro­duce). Licens­ing only at the end-user prod­uct lev­el is not uncom­mon amongst tech­nol­o­gy firms, but there is a dearth of judi­cial author­i­ty jus­ti­fy­ing whether this prac­tice con­forms to or departs from the firm’s FRAND com­mit­ment.13 Set­ting licens­ing prac­tices that allow the SEP hold­er to exclu­sive­ly license at the end lev­el in a sup­ply chain affords them the oppor­tu­ni­ty to max­i­mize the prof­its they can earn from roy­al­ties while avoid­ing trig­ger­ing the patent exhaus­tion doc­trine. They jus­ti­fy their abil­i­ty to con­strain access to their SEP by claim­ing that their direct com­peti­tors who are not ver­ti­cal­ly inte­grat­ed down­stream are not imple­menters of the stan­dard.14

Com­po­nent mak­ers (direct com­peti­tors of the SEP hold­ers) may argue that under the stan­dard-set­ting organization’s IPR poli­cies, they should receive a license that pro­vides them with the full make, sell, and use rights over the patent and that, due to patent exhaus­tion doc­trine, they should be able to re-sell the patent to down­stream cus­tomers. In response, the SEP firm may attempt to set dif­fer­en­tial roy­al­ties based on the types of end-prod­ucts sold by the licensee firms into which the patent will be incor­po­rat­ed. The licensee firms would argue that such con­duct is incon­sis­tent with the FRAND com­mit­ment under the spir­it of the entire mar­ket val­ue and small­est saleable unit rules, which serve to pre­vent the roy­al­ty amount award­ed to the SEP firm from being based on a func­tion of the end-prod­uct price (which can be dis­tort­ed by unre­lat­ed fac­tors) rather than the true val­ue of the patent itself.15

The entire mar­ket val­ue rule bars a plain­tiff from seek­ing dam­ages based on the entire end-prod­uct price in a patent infringe­ment case and requires their proof to instead focus on the val­ue of the patent to the “small­est saleable patent-prac­tic­ing unit” (or com­po­nent) with­in the prod­uct, unless the patent­ed tech­nol­o­gy dri­ves demand for the whole prod­uct. Com­po­nent-mak­er (ver­ti­cal­ly-inte­grat­ed) licensees would argue based on the entire mar­ket rule that they are enti­tled to license at the lev­el of the small­est saleable unit (here, exclu­sive­ly the SEP). To the extent this rule sheds light on non-dis­crim­i­na­to­ry con­duct in the FRAND con­text, it would weigh against allow­ing the SEP firm to license only to non-ver­ti­cal­ly inte­grat­ed licensees.16 Licens­ing to a com­po­nent man­u­fac­tur­er rather than an end-user man­u­fac­tur­er would also low­er the like­li­hood that a SEP hold­er may try to exer­cise patent hold up and extract greater roy­al­ties from licensees, as it is more dif­fi­cult to deter­mine the val­ue of a patent to an end-user prod­uct man­u­fac­tur­er (due to the het­ero­gene­ity among end prod­ucts) than it would be for upstream com­po­nent man­u­fac­tur­ers.17

This analy­sis may be cor­rect under patent law, but many antitrust schol­ars and prac­ti­tion­ers apt­ly believe that FRAND com­mit­ments should not be gov­erned by patent law restric­tions and instead inter­pret­ed through con­tract law. It may seem to pri­or­i­tize form over sub­stance to require SEP firms to license on non-dis­crim­i­na­to­ry terms, but to then allow them to engage in price dis­crim­i­na­tion by impos­ing con­trac­tu­al restric­tions on their offered licens­es. Still, the FRAND com­mit­ment is gen­er­al­ly viewed as a con­tract between an SEP hold­er and SSO, with tech­nol­o­gy licensees and users play­ing the role of third-par­ty ben­e­fi­cia­ries and gov­erned by con­flict of law rules. For instance, though not a FRAND case, Jus­tice Thomas, writ­ing for the major­i­ty in Quan­ta Com­put­er v. LG Elec­tron­ics, not­ed that the Court’s exhaus­tion rul­ing (find­ing a patent holder’s attempt to restrict the scope of autho­rized re-sale inef­fec­tu­al) did not pre­clude argu­ments based on a strict­ly con­trac­tu­al the­o­ry of lia­bil­i­ty.18

In fact, every U.S. court that has addressed a claim for injunc­tive relief on a FRAND-com­mit­ted SEP has done so under con­tract law rather than antitrust law prin­ci­ples. Antitrust sanc­tions in fact may be harm­ful by over-deter­ring pro­com­pet­i­tive par­tic­i­pa­tion in SSOs as lia­bil­i­ty would turn upon whether a patent infringer was a tru­ly will­ing licensee – an unclear fac­tu­al deter­mi­na­tion that would make SEP firms more reluc­tant to incor­po­rate their patent into a stan­dard, know­ing they could not recoup their loss­es against patent infringers who use their tech­nol­o­gy with­out a valid license. The prospect of antitrust lia­bil­i­ty would also enable an infring­ing user to nego­ti­ate with the SEP firm in bad faith, under­stand­ing that its expo­sure is capped at the FRAND roy­al­ty rate and encour­age those users to engage in reverse-hold­out to defer pay­ment of FRAND roy­al­ty rates.19

Under antitrust prin­ci­ples, a SEP firm’s refusal to license on a port­fo­lio basis to ver­ti­cal­ly-inte­grat­ed licensees does not vio­late its FRAND com­mit­ment, and if it did, still does not con­sti­tute an antitrust vio­la­tion under U.S. law. Some allege that refusal to license at the com­po­nent lev­el results in the ver­ti­cal­ly inte­grat­ed SEP hold­er bundling its SEP com­po­nent with its port­fo­lio. Even if this licens­ing offer could indeed be char­ac­ter­ized as a bun­dle, the firm’s con­duct would not lead to fore­clo­sure of the com­po­nent mar­ket if the SEP firm did not assert its patents at the com­po­nent lev­el and licensed its port­fo­lio to end-user sup­pli­ers on FRAND terms irre­spec­tive of where they sourced their com­po­nents. The bun­dle offered by the SEP firm could be com­pet­i­tive­ly repli­cat­ed by end-user sup­pli­ers by mix­ing and match­ing the com­po­nents sold by non-inte­grat­ed com­po­nent sup­pli­ers and the patent port­fo­lio of the inte­grat­ed SEP firm. There­fore, the oth­er­wise legal­ly cog­niz­able the­o­ry of rais­ing rivals’ costs could not be employed by a non-ver­ti­cal­ly inte­grat­ed licensee, and no antitrust prob­lem would arise.20 More­over, to find a vio­la­tion of a FRAND com­mit­ment based on a SEP firm’s refusal to license rivals, a licensee plain­tiff would need to show that such refusal was anti­com­pet­i­tive on its own terms and is there­by unlike­ly to suc­ceed (since uni­lat­er­al refusals to license are vir­tu­al­ly always regard­ed as law­ful).21

The lat­est iter­a­tion of this issue is pre­sent­ed by the Fed­er­al Trade Commission’s com­plaint, filed in the U.S. Dis­trict Court of the North­ern Dis­trict of Cal­i­for­nia against Qual­comm in Jan­u­ary 2017. The Court denied Qualcomm’s motion to dis­miss in June 2017, writ­ing that Qual­comm licens­es its SEPs to orig­i­nal equip­ment man­u­fac­tur­ers (OEMs), but “refus­es” to license its SEPs to com­pet­ing modem chip man­u­fac­tur­ers.22 It held that the FTC ade­quate­ly alleged that Qual­comm has an antitrust duty to license its SEPs to modem chips com­peti­tors under Sec­tion 2 of the Sher­man Act and, by exten­sion, Sec­tion 5 of the FTC Act.23  Despite the imma­ture state of the law on this issue, the Court observed, notably, that “rec­og­niz­ing a[n antitrust] duty to deal in this case would not require courts to play a larg­er role in set­ting the terms of deal­ing than the role that courts already play in deter­min­ing appro­pri­ate roy­al­ties in patent cas­es.”24

Fol­low­ing this acknowl­edge­ment of a duty for a FRAND-com­mit­ted SEP hold­er to deal with all com­peti­tors based on Ver­i­zon Comm’s, Inc. v. Law Offices of Cur­tis v. Trinko25 as a viable the­o­ry of lia­bil­i­ty, the Court grant­ed the FTC’s motion for par­tial sum­ma­ry judg­ment on that the­o­ry in Novem­ber 2018.26 In its opin­ion, the Court wrote that Qualcomm’s FRAND com­mit­ments include an oblig­a­tion to license to all com­ers, includ­ing [direct­ly] com­pet­ing [OEMs].27 It also held that the non-dis­crim­i­na­to­ry prong of FRAND requires that SEP hold­ers not be enabled to selec­tive­ly license across its sup­ply chain to non-inte­grat­ed sup­pli­ers.28 Though it found Qualcomm’s con­duct vio­lat­ed Sec­tion 5 of the FTC Act, the Court’s analy­sis still most­ly drew upon con­trac­tu­al inter­pre­ta­tion of the SDOs’ IPR poli­cies.29 More­over, it is unclear how this judg­ment will impact the Depart­ment of Justice’s poli­cies on the issue, giv­en AAG Makan  Delrahim’s recent pub­lic com­ments that breach­es of a licens­ing com­mit­ment should not give rise to antitrust lia­bil­i­ty,30 that a refusal to license a valid patent should be per se legal, even if the patent is part of a stan­dard,31 and that agen­cies should not “trans­form com­mit­ments to license on FRAND terms into a com­pul­so­ry licens­ing scheme.”32

While SEP firms are required to license to sim­i­lar­ly-sit­u­at­ed licensees on non-dis­crim­i­na­to­ry terms, there is wide­spread dis­agree­ment over what con­sti­tutes sim­i­lar­ly-sit­u­at­ed licensees and what is meant by non-dis­crim­i­na­to­ry terms and con­di­tions. Under the terms of ETSI, an impor­tant SSO, licens­ing terms to inde­pen­dent licensees need not be iden­ti­cal in order to be non-dis­crim­i­na­to­ry. More­over, sim­i­lar­ly-sit­u­at­ed licensee analy­ses have been made in the past based on dif­fer­ences in out­put lev­els (through pro­duc­tion and/or sales), dif­fer­ences due to the out­come of a hypo­thet­i­cal pre-stan­dard set­ting bilat­er­al nego­ti­a­tion, and infor­ma­tion about (pri­or to the selec­tion of a stan­dard­ized tech­nol­o­gy) the incre­men­tal val­ue from the incor­po­rat­ed patent­ed tech­nol­o­gy accrued by each respec­tive firm com­pared to the next best alter­na­tive becom­ing incor­po­rat­ed. Anoth­er approach inter­prets the non-dis­crim­i­na­tion oblig­a­tion as applic­a­ble only to ver­ti­cal­ly-inte­grat­ed licen­sors (the final prod­uct price less the incre­men­tal cost of all non-SEP inputs).33 Under each of these inter­pre­ta­tions, offer­ing dif­fer­ent licens­ing terms to a non-inte­grat­ed ver­sus inte­grat­ed licensee would not nec­es­sar­i­ly engen­der a breach of non-dis­crim­i­na­to­ry con­duct required by a SEP firm’s FRAND com­mit­ment.

There are sev­er­al legit­i­mate busi­ness rea­sons that explain why tech­nol­o­gy firms com­mon­ly license at the end-user device lev­el, which may be accept­able to courts. For instance, in the telecom­mu­ni­ca­tions indus­try (encom­pass­ing 3G and 4G cel­lu­lar stan­dards), the nature of the tech­nol­o­gy does not relate to com­po­nents, but to sys­tems or net­works that they are designed to opti­mize. Firms also pre­fer to extract high­er roy­al­ties by licens­ing to end-prod­uct man­u­fac­tur­ers, help­ing them to avoid patent exhaus­tion. More­over, when a firm’s SEP com­po­nent is func­tion­al­ly relat­ed or con­nect­ed to its non-SEP com­po­nents, bundling them togeth­er in a license helps the firm reduce admin­is­tra­tive costs for itself and the licensees and increas­es its ease of ver­i­fy­ing the num­ber of units of its SEP-incor­po­rat­ed com­po­nents sold.34

* * * * *

When firms offer SEPs to licensees on a stand-alone basis on FRAND terms irre­spec­tive of whether they source oth­er com­po­nents from the SEP hold­er, and when those firms do not assert their SEPs at the com­po­nent lev­el, the firm’s pric­ing of its com­po­nent is effec­tive­ly con­strained by the prices offered by com­pet­ing non-inte­grat­ed com­po­nent man­u­fac­tur­ers. There­fore, no com­pet­i­tive dis­tor­tion occurs.35 Firms with SEPs can impose dif­fer­ent licens­ing terms on sim­i­lar­ly sit­u­at­ed inte­grat­ed and non-inte­grat­ed licensees with­out breach­ing their FRAND and sub­se­quent­ly engen­der­ing antitrust or con­trac­tu­al lia­bil­i­ty. In fact, open­ly acknowl­edg­ing the legal­i­ty of these already com­mon­ly prac­ticed, although legal­ly ambigu­ous, licens­ing activ­i­ties will like­ly spur indi­vid­ual firm and over­all indus­try inno­va­tion, and there­fore should be endorsed, rather than pro­hib­it­ed, by courts.

Notes:

1. Arielle Kop­pell is a 3L at New York Uni­ver­si­ty of Law. This piece is a com­men­tary on issues raised by the 2018 Glob­al Antitrust Insti­tute (GAI) Invi­ta­tion­al Moot Court Com­pe­ti­tion held by Antonin Scalia Law School in Wash­ing­ton D.C. The prob­lem pre­sent­ed a non-juris­dic­tion­al fact pat­tern rais­ing a num­ber of issues, includ­ing whether it is dis­crim­i­na­to­ry for a SEP hold­er to refuse to license a stan­dard essen­tial patent to non-ver­ti­cal­ly inte­grat­ed sup­pli­ers, result­ing in an antitrust law vio­la­tion or con­trac­tu­al breach of a FRAND com­mit­ment. It also raised the issue of whether licens­ing to sup­pli­ers at the tech­nol­o­gy port­fo­lio lev­el amounts to a breach of antitrust law. The views expressed in this arti­cle do not nec­es­sar­i­ly rep­re­sent the views of the author. Rather, this arti­cle is a dis­til­la­tion of the analy­sis the author rep­re­sent­ed at the GAI Invi­ta­tion­al, updat­ed to reflect sev­er­al doc­tri­nal and pol­i­cy shifts that have since occurred.

2. See Anne Layne-Far­rar & Koren W. Wong-Ervin, Stan­dard-Essen­tial Patents and Mar­ket Pow­er, at 37 (Geo. Mason L. & Econ. Res. Paper No. 16–47, 2016).

3. Whether licens­ing terms and fees are non-dis­crim­i­na­to­ry is a sep­a­rate inquiry from whether they are fair and rea­son­able. The non-dis­crim­i­na­to­ry FRAND analy­sis focus­es on dif­fer­ences in terms and fee arrange­ments offered by the SEP hold­er across licensees.

4. Id. at 38.

5. See Den­nis W. Carl­ton & Allan L. Shampine, An Eco­nom­ic Inter­pre­ta­tion of FRAND, 9 J. Com­pe­ti­tion L. & Econ. 531, 546 (2013).

6. See [2017] EWHC 711 (Pat) (Apr. 5, 2017) (here­inafter Unwired Plan­et) at ¶175, 806(8).

7. See Unwired Plan­et at ¶501.

8. See Case C-525/16, MEO v. Autori­dade da Cor­roncên­cia, ECLI:EU:C:2018:270 ¶24 (Apr. 19, 2018).

9. See Daniel A. Crane, Patent Pools, RAND Com­mit­ments, and the Prob­lem­at­ics of Price Dis­crim­i­na­tion, in Work­ing With­in the Bound­aries of Intel­lec­tu­al Prop­er­ty: Inno­va­tion Pol­i­cy for the Knowl­edge Soci­ety 371, 373 (Rochelle C. Drey­fuss et al. eds. 2010); see also U.S. Int’l Trade Comm’n, Ini­tial Deter­mi­na­tion of Admin­is­tra­tive Law Judge, In re Cer­tain Wire­less Devices with 3G Capa­bil­i­ties and Com­po­nents There­of, No. 337-TA-800 at 432 (A.L.J. Shaw July 29, 2013) (“The FRAND nondis­crim­i­na­tion require­ment … does not require uni­form treat­ment across licensees, nor does it require the same terms for every man­u­fac­tur­er or com­peti­tor.”).

10. See Jorge L. Con­tr­eras, A New Per­spec­tive on FRAND Roy­al­ties: Unwired Plan­et v. Huawei, at 5 (U. of Utah C. of L. Res. Paper No. 206, 2017); see also Carl­ton & Shampine, supra note 5, at 546 n.41 (“There is no con­sen­sus in the lit­er­a­ture as to whether FRAND should imply a uni­form roy­al­ty lev­el for all licensees [or whether dif­fer­ent roy­al­ties can be charged] depend­ing on each player’sbargaining pow­er and busi­ness fea­tures.”); St. Lawrence Com­muns. LLC v. Motoro­la Mobil­i­ty LLC, 2018 U.S. Dist. LEXIS 25229, 18 (E.D. Tex. 2018) (“[T]he Court is not per­suad­ed that … nego­ti­at­ing dif­fer­ent rates and terms for dif­fer­ent licensees when pre­sent­ed with dif­fer­ent cir­cum­stances … for a FRAND encum­bered patent [is patent mis­use].”); Richard J. Gilbert, Deal or No Deal? Licens­ing Nego­ti­a­tions in Stan­dard-Set­ting Orga­ni­za­tions, 77 Antitrust L. J. 855, 875–76 (2011) (“Non-dis­crim­i­na­tion … requires uni­form treat­ment for sim­i­lar­ly sit­u­at­ed licensees, rather than iden­ti­cal treat­ment.”) (rec­om­mend­ing that licensees be able to choose from the same sched­ule of roy­al­ties so they can select the com­bi­na­tion of licens­ing terms and non-FRAND con­sid­er­a­tion that max­i­mizes their val­ue).

11. See TCL Com­mun. Tech. Hold­ings, Lwtd. v. Tele­fon­ak­tiebo­laget LM Eric­s­son, No. SACV 14–341 JVS(DFMx), 2017 U.S. Dist. LEXIS 214003, at *100–04 (C.D. Cal. Nov. 8, 2017) (acknowl­edg­ing that experts define sim­i­lar­ly sit­u­at­ed firms as those at a sim­i­lar lev­el in the val­ue chain and equal­ly rea­son­ably well-estab­lished in the glob­al mar­ket, con­sid­er­ing (pri­mar­i­ly) their geo­graph­ic scope, required licens­es, and sales vol­ume; defin­ing them accord­ing­ly due to use of same tech­nol­o­gy and fac­tors such as over­all finan­cial suc­cess or risk, brand recog­ni­tion, oper­at­ing sys­tem of their device, or exis­tence of retail stores does not bear on the FRAND analy­sis of whether roy­al­ty rates for SEPs are dis­crim­i­na­to­ry); see also Unwired Plan­et ¶ 487 (find­ing that both par­ties’ analy­ses pre­sumed that “sim­i­lar­ly sit­u­at­ed par­ties, equivalent/ com­pa­ra­ble trans­ac­tions, and objec­tive jus­ti­fi­ca­tion were the same under the non-dis­crim­i­na­tion limb of FRAND as they are in com­pe­ti­tion law.”); see also Jorge L. Con­tr­eras & Anne Layne-Far­rar, Non-Dis­crim­i­na­tion and FRAND Com­mit­ments, in The Cam­bridge Hand­book of Tech­ni­cal Stan­dard­iza­tion Law 186, 202–03 (Jorge L. Con­tr­eras ed. 2018, forth­com­ing) (dis­cussing sim­i­lar­ly sit­u­at­ed licensees at Sec­tion 4).

12. Although ALJ Shaw com­ment­ed that “nondis­crim­i­na­tion analy­sis … requires an exam­i­na­tion of the whole of each license agree­ment, and not just the effec­tive roy­al­ty rate.” U.S. Int’l Trade Comm’n, supra note 9, at 432.

13. Con­tr­eras & Layne-Far­rar, supra note 11, at 2.

14. This jus­ti­fi­ca­tion was recent­ly decon­struct­ed and dis­missed in Fed­er­al Trade Com­mis­sion v. Qual­comm, Inc., No. 17-CV-00220-LHK (N.D. Cal. Nov. 6, 2018).

15. Id. at 7.

16. Id. at 6–7.

17. See Janusz Ordover & Allan Shampine, Imple­ment­ing the FRAND Com­mit­ment, The Antitrust Source 1, 4 (Oct. 2014).

18. See Karl D. Bel­gum, The Next Bat­tle Over FRAND: The Def­i­n­i­tion of FRAND Terms and Mul­ti-Lev­el Licens­ing, 39 New Mat­ter 2, 7–8 (Sum­mer 2014); see Quan­ta Com­put­er, Inc. v. LG Elec­tron­ics, Inc., 553 U.S. 617, 637, n.7 (2008).

19. Dou­glas H. Gins­burg, Koren W. Wong-Ervin, & Joshua D. Wright, The Trou­bling Use of Antitrust to Reg­u­late FRAND Licens­ing, 10 Com­pe­ti­tion Pol’y Int’l Antitrust Chron­i­cle 2, 6–7 (2015).

20. See gen­er­al­ly Jorge Padil­la & Koren W. Wong-Ervin, Port­fo­lio Licens­ing, at the End-User Device Lev­el: Ana­lyz­ing Refusals to License FRAND-Assured Stan­dard-Essen­tial Patents at the Com­po­nent Lev­el (Oct. 19, 2016), https://ssrn.com/abstract=2806688.

21. See Erik Hov­enkamp, Tying, Exclu­siv­i­ty, and Stan­dard-Essen­tial Patents, 14 Colum. Sci. & Tech. L. Rev. 79, 122 (2017).

22. Order Deny­ing Motion to Dis­miss, Fed­er­al Trade Com­mis­sion v. Qual­comm, Inc., 17-CB-00220-LHK, at 12–13 (N. D. Cal. Jun. 26, 2017).

23. Id. at 41–42, 46.

24. Id. at 45.

25. 540 U.S. 398 (2004).

26. Order Grant­i­ng FTC’s Motion for Par­tial Sum­ma­ry Judg­ment, Fed­er­al Trade Com­mis­sion v. Qual­comm, Inc., 17-CB-00220-LHK, at 1 (N. D. Cal. Nov. 6, 2018).

27. Id. at 17–18.

28. Id. at 19.

29. Id. at 13–17, 23–24.

30. Assis­tant Attor­ney Gen­er­al, Antitrust Law and Patent Licens­ing in the New Wild West,” Remarks at IAM’s Patent Licens­ing Con­fer­ence in San Fran­cis­co (Sept. 18, 2018) (avail­able at https://www.justice.gov/opa/speech/
assis­tant-attor­ney-gen­er­al-makan-del­rahim-deliv­ers-remarks-iam-s-patent-licens­ing).

31. Assis­tant Attor­ney Gen­er­al, “The ‘New Madi­son’ Approach to Antitrust and Intel­lec­tu­al Prop­er­ty Law” Keynote Address at Uni­ver­si­ty of Penn­syl­va­nia Law School (Mar. 16, 2018) (avail­able at https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-keynote-address-university).

32. Assis­tant Attor­ney Gen­er­al, Remarks at USC Gould School of Law’s Cen­ter for Transna­tion­al Law and Busi­ness Con­fer­ence (Nov. 10, 2017) (avail­able at https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-usc-gould-school-laws-center).

33. See Edward A. Gold & Scott Wein­gust, Explor­ing the Nondis­crim­i­na­to­ry Aspect of RAND Licens­ing Terms, Stout, Resius, Ross 1, 2–3 (Sept. 1, 2014).

34. Padil­la & Wong-Ervin, supra note 20 at 18.

35. Id. at 19.