RE: [PP-DIALOG] Application of per se rule to ex ante joint conduct

["Gil Ohana (gilohana)" <gilohana@xxxxxxxxx>]

Thanks Richard.  I'm not aware that the issue of royalty caps, which as
we both know is alive in ETSI, is on the IEEE-SA agenda.  I'm also not
aware that the rules changes that PatCom is being asked to consider, as
you put it, "rules that will invariably (at least allegedly) lead to
fixing of license terms by joint conduct."  PatCom is being asked to
consider rules that will give patricipants in standard-setting and
implementers of IEEE standards more information about what terms they
will have to accept to practice those standards.  I'm missing how that
leads to "fixing of license terms." 

On your suggestion regarding agenda efficiency and the views you ask me
to present, all I can say in response is that it was you, not me, that
posted the Golden Bridge opinion in what could be seen as an attempt to
raise in the minds of PatCom members the specter of antitrust risk as a
reason not to favor the ex ante proposals.  Further to my prior postings
in response, perhaps you can make your reasoning explicit.  You are a
leading practitioner that has been engaged in standard-setting and
antitrust issues since for a while, and your views would, I'm sure, be
illuminating.

Gil Ohana
Director, Antitrust and Competition
Cisco Systems, Inc.
300 E. Tasman Drive
MS 10/2
San Jose, CA 95134
United States of America
Phone: +1 408 525 2853
Mobile: +1 408 203 5301
E-mail: gilohana@cisco.com
 
     

-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@bingham.com] 
Sent: Thursday, March 09, 2006 3:44 PM
To: Gil Ohana (gilohana); PP-DIALOG@listserv.ieee.org
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct

I certainly agree wholeheartedly with your point that it is important to
consider how enforcement agencies will consider changes in SDO rules.
Some may be positive and some may be negative, as I understand has been
the reaction of the EC officials to certain positions in ETSI.

I am not too concerned with agenda efficiency, however.  I am more
concerned that whomever is making the decision does so on a fully
informed basis and not to advance a specific agenda.  

I think specifically when you get into issues such as royalty caps, and
rules that will invariably (at least allegedly) lead to fixing of
license terms by joint conduct, grave concerns should exist.  

Likewise, I would think that if agenda efficiency is the primary
motivating factor here, please do share with us your views how each of
the proposals that have been made will not conclusively allow any claim
of concerted action or an anticompetitive effect.  If you can do that by
first of next week, we will have a basis to continue the dialog.      

Richard S. Taffet, Esq.
Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022-4689
T: (212) 705-7729
F: (212) 702-3603
email: richard.taffet@bingham.com
cell: (914) 582-2477


-----Original Message-----
From: Gil Ohana (gilohana) [mailto:gilohana@cisco.com]
Sent: Thursday, March 09, 2006 6:17 PM
To: Taffet, Richard S.; PP-DIALOG@listserv.ieee.org
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct


Thanks Richard.  For better or worse, neither of us is a member of the
Patent Committee.  I'm hoping that the people that actually get to do
the voting are monitoring this list, and they would benefit from hearing
your views as to why the specific legal theory asserted by the plaintiff
in the Golden Bridge case you chose to post to the list is relevant to
the votes they will be asked to cast on the 27th.  They also may benefit
from understanding more generally, particularly in the wake of the
various statements regarding the issue of ex ante disclosure rules and
antitrust risks that have been made by the European Commission and the
leadership of both US federal antitrust agencies, what role
consideration of antitrust risk should play in their consideration of
the various proposals for the changes to the IEEE-SA rules involving ex
ante disclosure of licensing comitments.  

That is not an easy question, and it merits careful consideration from
the members of PatCom (after all, if you're right about the connection
you seem to posit between between ex ante rules and increased antitrust
risk, then IEEE-SA would seem to have a significant organizational
interest at stake in avoiding the "messy and unpredictable" process of
antitrust litigation).  I'm hoping that you share my goal of addressing
those issues in advance of the meeting so that we can proceed through
the agenda efficiently.

Best regards,

Gil Ohana
Director, Antitrust and Competition
Cisco Systems, Inc.
300 E. Tasman Drive
MS 10/2
San Jose, CA 95134
United States of America
Phone: +1 408 525 2853
Mobile: +1 408 203 5301
E-mail: gilohana@cisco.com
    

-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@bingham.com]
Sent: Thursday, March 09, 2006 2:57 PM
To: Gil Ohana (gilohana); PP-DIALOG@listserv.ieee.org
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct

Gil

What's your rush?  What conclusions will you draw?  I am not sure what
the basis will be to conclude anything one way or the other, or what
signficance it will have in what the IEEE is considering on the merits.
If there is a need for you to find out more information on a particular
schedule, give me a call and we can schedule a time to discuss each of
the proposals and each of their implications.  If it is important to
you, we can try to schedule such a call in advance of the March 27
meeting     Let me know.   

Richard S. Taffet, Esq.
Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022-4689
T: (212) 705-7729
F: (212) 702-3603
email: richard.taffet@bingham.com
cell: (914) 582-2477


-----Original Message-----
From: Gil Ohana (gilohana) [mailto:gilohana@cisco.com]
Sent: Thursday, March 09, 2006 5:28 PM
To: Taffet, Richard S.; PP-DIALOG@listserv.ieee.org
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct


Richard, why wait for the meeting?  You have the chance to enlighten all
of us now.  

To frame the question again, I'm not asking you generally for your view
of why ex ante disclosure rules increase the risk that SDOs and
companies participating in standard-setting will face antiturst
ligitation.  I'm going back to the Golden Bridge decision you chose to
bring to the attention to the list and asking you to explain which of
the specific rules changes that IEEE-SA's Patent Committee would
increase the risk that IEEE-SA or participants in IEEE-SA's technical
working groups would face group refusal to deal claims.  It's a simple
enough question, and if your response is that you'll need all the time
between now and March 27 to think of an answer, then we'll draw the
appropriate conclusions.  I'm optimistic (there I go again) that we
won't have to wait that long.


Gil Ohana
Director, Antitrust and Competition
Cisco Systems, Inc.
300 E. Tasman Drive
MS 10/2
San Jose, CA 95134
United States of America
Phone: +1 408 525 2853
Mobile: +1 408 203 5301
E-mail: gilohana@cisco.com
 
   

-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@BINGHAM.COM]
Sent: Thursday, March 09, 2006 2:14 PM
To: PP-DIALOG@listserv.ieee.org
Subject: Re: [PP-DIALOG] Application of per se rule to ex ante joint
conduct

I am sure the PatCom chair will afford us plenty of time to discuss how
the IEEE proposals could raise the same type of claims as alleged in the
Golden Bridges case.  I think you are also truly the optimist in
thinking that rules, which have already engendered significant debate
when merely being proposed, will lead to anything but more litigation.
Words have a funny way of being interpreted in interesting ways in the
context of lawsuits.    

Richard S. Taffet, Esq.
Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022-4689
T: (212) 705-7729
F: (212) 702-3603
email: richard.taffet@bingham.com
cell: (914) 582-2477


-----Original Message-----
From: Gil Ohana (gilohana) [mailto:gilohana@cisco.com]
Sent: Thursday, March 09, 2006 5:10 PM
To: Taffet, Richard S.; PP-DIALOG@listserv.ieee.org
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct


Thanks Richard.  Recognizing your point that the 3GPP standards are
being revised, what Golden Bridge has alleged is a group refusal to deal
by a number of large potential licensees, effectuated through an
informal agreement reached in what the opinion terms is an "offline
session."   I'm still not seeing the connection between any of the
proposed rules changes that IEEE-SA is considering and the conduct
alleged in Golden Bridge.  Nothing about, for example, permitting
patentees disclosing essential patents to an IEEE-SA working group to
state a "not to exceed" royalty or attaching to their LoA a binding
licensing commitment would in any way increase the exposure that IEEE-SA
or participants in IEEE-SA working groups face under the antitrust laws
from the kinds of claim asserted by Golden Bridge.  

So I go back to the point made in my earlier e-mail: are you just trying
to remind us that participants in standard-setting face antitrust risk?
Or are you trying to argue that there is something specific in the
proposed IEEE-SA rules changes that the Patent Committee is to consider
in a few weeks that increases the risk IEEE-SA and participants in
IEEE-SA standards working groups face from group refusal to deal claims?


It's easy enough to mention ex ante and antitrust risk in the same
sentence and hope that people associate the two.  But, after the
endorsement of ex ante disclosure rules provided both in Chairman
Majoras' speech and in the press release the European Commission issued
in December following the change to ETSI's rules, it would be helpful to
the debate if you could provide a more specific causal linkage between
the rules that IEEE-SA is considering adopting and increased antitrust
risk to IEEE-SA or its members.

One more thing: I agree with you that litigation is "messy and
unpredictable."  Of course, a major benefit of the adoption of ex ante
rules is that they avoid the need for companies seeking to implement a
standard to avoid the need to litigate patent disputes with patentees
that seek to define what a "reasonable" royalty is expansively.  Those
cases, too, can be "messy and unpredictable." 

Gil Ohana
Director, Antitrust and Competition
Cisco Systems, Inc.
300 E. Tasman Drive
MS 10/2
San Jose, CA 95134
United States of America
Phone: +1 408 525 2853
Mobile: +1 408 203 5301
E-mail: gilohana@cisco.com
 
 



-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@bingham.com]
Sent: Thursday, March 09, 2006 1:45 PM
To: Gil Ohana (gilohana); PP-DIALOG@listserv.ieee.org
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct

Not sure your very careful attempt to distinguish the import of this
case from the discussion of joint ex ante is terribly meaningful, or
would be found persuasive by either a court or a plaintiff's lawyer who
seeks to address ex ante conduct that eliminates the inclusion of a
patented technology in a standard or deprives a patent owner of
flexibility in licensing terms.    Not suggesting that the allegations
of the case have merit, but there are quite a number of companies that
now are spending a lot of money and time litigating for what might be
considered competitively benign conduct.  

Happy to discuss these points further, but one fact I think you will
agree is that especially in the 3GPP context, standards are continuously
being revised, and there is no simple conclusion that can be reached
when a standard is final.  So, in connection with this specific case,
the elimination of of Golden Bridge's technology was part of the
evolution of the 3GPP standard.  

Accordingly, the key take away might be that nice theories can always be
justified, but legal claims and litigation are messy and unpredictable
-- which leads to high costs and less efficiency in standards
development.
  
Speak to you soon.     

Richard S. Taffet, Esq.
Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022-4689
T: (212) 705-7729
F: (212) 702-3603
email: richard.taffet@bingham.com
cell: (914) 582-2477


-----Original Message-----
From: Gil Ohana (gilohana) [mailto:gilohana@cisco.com]
Sent: Thursday, March 09, 2006 4:34 PM
To: Taffet, Richard S.; PP-DIALOG@listserv.ieee.org
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct


Richard, thank you for providing the Golden Bridge opinion.  As I read
the opinion, it stands for the (uncontroversial) position that a group
refusal to deal among competitors that collectively have market power
can violate Section 1 of the Sherman Act.  Aside from the fact that the
particular group refusal to deal alleged happened in the context of
standard-setting, I'm having trouble understanding how the case relates
to (as the title of your e-mail states) "ex ante joint conduct".  Per
the facts of the opinion, the discussion among the defendants that led
to Golden Bridge's technology being dropped as an optional feature of
the 3GPP standard occurred after the 3GPP standard had already been
approved by 3GPP.  See Opinion at 2 ("In 1999 cPCH [Golden Bridge's
patented technology] was adopted by 3GPP as an optional part of the 3GPP
standard.").  The allegedly anticompetitive acts Golden Brdge is
complaining of did not occur until years later.
 
If your goal is to remind participants in IEEE standard-setting that
antitrust issues swirl around standard-setting, then the Golden Bridge
opionion is a useful reminder of that point.  But if (as I suspect from
the title of your e-mail) your goal is to suggest that the antitrust
risks standards bodies or their participants face are increased by the
adoption of those bodies of ex ante disclosure rules, then I must admit
that the support the Golden Bridge opinion provides for that proposition
is escaping me.

Gil Ohana
Director, Antitrust and Competition
Cisco Systems, Inc.
300 E. Tasman Drive
MS 10/2
San Jose, CA 95134
United States of America
Phone: +1 408 525 2853
Mobile: +1 408 203 5301
E-mail: gilohana@cisco.com
 
 

-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@BINGHAM.COM]
Sent: Thursday, March 09, 2006 11:27 AM
To: PP-DIALOG@listserv.ieee.org
Subject: [PP-DIALOG] Application of per se rule to ex ante joint conduct

The recent decision from the United States District Court for the
Eastern District of Texas is another example where joint ex ante
standards conduct relating to IP was alleged to violate the antitrust
laws, including under a per se theory.  In this case, defendants' motion
for summary judgment was denied, including on the ground that per se
treatment might be appropriate. Even without the issue of whether the
conduct should be considered under a per se or rule of reason approach,
the fact is the case is now going to trial and will involve all of the
costs and uncertainties that necessarily result.

   <<show_case_doc.pdf>> 

Richard S. Taffet, Esq.
Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022-4689
T: (212) 705-7729
F: (212) 702-3603
email: richard.taffet@bingham.com
cell: (914) 582-2477



========================================================================
====
Bingham McCutchen LLP Circular 230 Notice:   To ensure compliance with
IRS requirements, we inform you that any U.S. federal tax advice
contained in this communication is not intended or written to be used,
and cannot be used by any taxpayer, for the purpose of avoiding any
federal tax penalties.  Any legal advice expressed in this message is
being delivered to you solely for your use in connection with the
matters addressed herein and may not be relied upon by any other person
or entity or used for any other purpose without our prior written
consent.
========================================================================
====