The ruling was handed down by the U.S. Circuit Court of Appeals for the 3rd Circuit, in one of the multiple, ongoing suits between Qualcomm Incorporated and Broadcom Corporation, involving the vast and lucrative market for next generation wireless telephones and related services. The litigation history to date is complex, so for current purposes I'll focus only on the central contention and related holdings that are of interest to the standards process, rather than on how the ruling fits into the past and future fortunes of the parties to the litigation.
[Recent decisions] reflect a growing awareness of the risks associated with deceptive conduct in the private standard setting process….
To guard against anticompetitive patent hold-up, most SDOs require firms supplying essential technologies for inclusion in a prospective standard to commit to licensing their technologies on FRAND terms…A firm’s FRAND commitment, therefore, is a factor – and an important factor – that the SDO will consider in evaluating the suitability of a given proprietary technology vis-à-vis competing technologies.
The specific holding on antitrust law reads as follows:
We hold that (1) in a consensus-oriented private standard-setting environment, (2) a patent holder’s intentionally false promise to license essential proprietary technology on FRAND terms, (3) coupled with an SDO’s reliance on that promise when including the technology in a standard, and (4) the patent holder’s subsequent breach of that promise, is actionable anticompetitive conduct. This holding follows directly from established principles of antitrust law and represents the emerging view of enforcement authorities and commentators alike. Deception in a consensus-driven private standard-setting environment harms the competitive process by obscuring the costs of including proprietary technology in a standard and increasing the likelihood that patent rights will confer monopoly power on the patent holder.
The big picture
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