Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Purported PAE opposes dismissal of its boycott, monopsonization claims against mobile device makers, (Nov 19, 2015)

By Linda O’Brien, J.D., LL.M.

In an action by a purported patent-assertion entity against mobile device manufacturers Motorola Mobility and Samsung Electronics for allegedly conspiring to fix the price of patent licenses, judgment on the pleadings of the entity’s antitrust claims would be inappropriate, according to an opposition to the defendants’ motion for judgment on the pleadings filed in the federal district court in Oakland, California (Cascades Computer Innovation LLC v. RPX Corporation, November 17, 2015).

Cascades Computer Innovation LLC controls a portfolio of patents, one of which allegedly optimizes the operation of the Android operating system for smartphones and tablet computers—U.S. Patent No. 7,065,750 (the ‘750 Patent). Cascade brought antitrust claims against Motorola Mobility and Samsung Electronics that manufacture a high percentage of all Android-compatible devices sold in the United States.

Cascades claimed that the manufacturers agreed to negotiate licenses for Cascades-controlled patents only through RPX Corp., a patent aggregator, which was formed to protect member manufacturers from allegedly baseless patent infringement claims brought by “patent-assertion entities” (PAEs), commonly called patent trolls.

In an amended complaint, Cascades brought four antitrust claims against Samsung and RPX, alleging: (1) a horizontal conspiracy to restrain trade in violation of Section 1 of the Sherman Act; (2) a vertical conspiracy to restrain trade in violation of Section 1; (3) a conspiracy to monopsonize in violation of Section 2; and (4) a separate Section 2 monopsonization claim against RPX. The antitrust action was stayed in March 2014, in light of patent litigation in the federal district court in Chicago testing the validity and infringement of the ‘750 patent.

On November 6, Samsung and RPX moved for judgment on the pleadings, arguing that, since a jury in the Illinois litigation found that Samsung did not infringe the patent-at-issue and all of the antitrust claims are based on patent infringement, the boycott and monopsonization claims should be dismissed.

According to the opposition, Cascade’s monopsony allegations are not dependent solely on the infringement of the ‘750 patent. The defendants’ formation of a “buyer-side” cartel was anticompetitive conduct that directly harmed Cascades’ ability to license not only the ‘750 patent but its entire portfolio of patents. The complaint clearly states that, although the ‘750 patent is presently of interest to the defendants, Samsung infringes at least one other patent relating to its DRAM products.

Licenses for its patent are valuable property rights. In a defined market for rights to Cascade’s entire portfolio, that market was harmed by RPX members insisting upon negotiating for rights to this portfolio only through RPX. When RPX completely withdrew its offer for a license to Cascade’s portfolio, competition in the market for all of Cascade’s patents was injured, the opposition contends.

Furthermore, the jury decision of non-infringement of the ‘750 patent does not preclude licensing and enforcement of the patent against other Android products. The defendants have ignored the complaint’s allegations that RPX and its members engaged in a conspiracy to impact Cascade’s ability to license all of its patents, not just the ‘750 patent. Judgment on the pleadings is inappropriate because, taking all of the allegations as true, judgment cannot be entered in favor of the defendants as a matter of law, the opposition concludes.

Attorneys: Martin L. Fineman (Davis Wright Tremaine LLP) and Raymond P. Niro (Niro, Haller & Niro) for Cascades Computer Innovation LLC. Michael W. Scarborough (Sheppard, Mullin, Richter & Hampton LLP) for Samsung Electronics Co., Ltd. Aaron T. Chiu (Latham & Watkins LLP) for RPX Corporation.

Companies: Cascades Computer Innovation LLC; RPX Corporation; Samsung Electronics Co., Ltd.

News: Antitrust CaliforniaNews