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

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

Thanks Richard.  I appreciate the constructive tone of the dialogue we
are having, and hope (as I'm sure you do as well) that others are
finding it helpful as they prepare for the March 27 meeting.  I will
respond below to those of the specific points you raise that I can
fairly respond to.  I read many of your comments as directed elsewhere,
and I'll let others defend themselves. 

Best wishes for a restful weekend.  We've both earned it.

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: Friday, March 10, 2006 12:32 PM
To: PP-DIALOG@LISTSERV.IEEE.ORG
Subject: Re: [PP-DIALOG] Application of per se rule to ex ante joint
conduct

Gil

Thank you for your comments.

First, it may be that your perspective is focused narrowly on the agenda
posted for the March 27 meeting.  If so, I can see how you are having
trouble in understanding how the Golden Bridges decision may have an
impact on discussions at the IEEE PatCom, and how the decision may cause
some concern even with the issues that have been teed up for the next
meeting.

	<Gil Ohana response: I was focused narrowly on the agenda posted
for the March 27 meeting.  The point I was trying to make relative to
that agenda and the Golden Bridge case is that I don't see anything in
the various agenda items for the meeting that pertain to the ex ante
issue (items 6.2.6 and 6.2.8) that would either increase or decrease the
risk IEEE-SA and the various participants in IEEE-SA standard-setting
face from group refusal to deal claims.  Put simply, the fact that a
patent holder submits a licensing commitment containing detailed royalty
terms rather than a simple RAND commitment (which would be permitted
should PatCom and the other relevant IEEE-SA governance bodies approve
the rules change in item 6.2.6) neither increases nor decreases the
incentives that other participants in the setting of the relevant
standard to "gang up" on that prospective licensor in a way that might
give rise to an antitrust claim of the kind asserted in Golden Bridge.
Which brings me back to my first posting in response to your posting of
the case yesterday: the case is an instructive reminder of the antitrust
risks associated with standard-setting, but I don't see its relevance to
PatCom's consideration of any item on the March 27 agenda.>    

However, we certainly have no control over how the agenda is set, or how
the PatCom is going to tackle all of the issues that have been raised
over the past 9 to 10 months.  As you commented yesterday, neither you
nor I have any vote in what the PatCom does, and the Chair has made it
clear that he is not bound to abide by any consensus of interested
parties.  Accordingly, I think it is very important for all interested
parties and the IEEE organization to be sensitive to how specific issues
that might be on the instant agenda will lead to the discussion of
future issues that have already been identified and proposed for
discussion.  Included in this group of issues that may be discussed in
the future is a policy that would have license terms decided by "[a]
group of licensees negotiating collectively with owners of competiting
technologies."  (source: June 2005 submission to DOJ and FTC).  As you
pointed out in connection with that possibility there may be competitive
justifications for that type of arrangements, but whether there are or
not would not change the fact that a per se antitrust claim could be
asserted in connection with such conduct, and depending on the pleading
such a claim could very easily survive a motion to dismiss, or applying
the Golden Bridges' type of reasoning a motion for summary judgment.

	<Gil Ohana response: I have, as you know, more than a passing
familiarity with the June 2005 FTC/DOJ submission.  I also want to
emphasize that, whatever ex ante proponents have encouraged government
antitrust enforcers to say regarding the ex ante issue, my reading of
the agenda for the March 27 PatCom meeting is that the items pertaining
to the ex ante issue focus solely on (1) giving participants that
disclose essential patents the option of providing more detail relative
to their licensing commitments and (2) for those patentees that choose
to limit their commitment to RAND, defining the "reasonable" prong of
RAND to what is a reasonable royalty before a patent is included in a
standard.  IEEE-SA remains free to continue to prohibit the negotiation
of royalty rates within an IEEE-SA working group.  We can argue (we have
before, and probably will again) whether prohibiting negotiation either
violates antitrust laws or makes sense as a matter of public policy, but
nothing on the agenda for the March 27 meeting requires resolution of
either issue.  

At the risk of lily-gilding, let me make one more point: Ex ante
opponents are fond of arguing that disclosure is the first step down the
slippery slope toward negotiation (and now the further argument that
negotiation is a way-station toward compelled cumulative capped
royalties).  Suffice it to say in response that, if ex ante opponents
believe that current SDO rules (like IEEE-SA's rules) that prohibit
holders of disclosed essential patents from making licensing commitments
beyond RAND are effective, then the burden is on them to explain why
future SDO rules that would permit more detailed licensing commitments
(like the not-too-exceed option that would be permitted under the rules
change proposed at Agenda Item 6.2.6) but also prohibited negotiation
within the standards forum would not be just as effective.  As a wise
professor of mine once said in response to a similar "slippery slope"
argument, for every "slippery slope" there's a bright line.>     

So, I think it is reasonable to consider specific proposals that may be
discussed early in the process for some reason in the context of the
broader proposals that have been made and which underlie this effort.  I
do not think it is too far of a stretch to think that there is some plan
to establish positions, for example in connection with the LoA, that
will then compel policy changes that might not otherwise be supported if
addressed in the first instance from a full policy position.  Indeed,
the email from the PatCom chair to Larry Bassuk yesterday, as I
understand it, says exactly this -- that the LoA is not intended to be
amended to reflect current policy, but is to be used to drive future
changes in the policy.  I am not sure why it is not a legitimate
comment, as I believe Larry made, to suggest that this is not a proper
approach, but the Chair has indicated that he will not entertain such
discussion.  Putting aside whether this procedural step itself, coupled
with the indication that decisions will not be made based on a consensus
of interested parties, raises some issues, including as might be
asserted under an Allied Tube analysis, it does suggest that there may
be some strategy that is being pursued to progress the IEEE policy to
include matters not identified on the March 27 agenda.

	<Gil Ohana response: I'll let others respond to your comments
regarding the exchanges between Larry Bassuk and Don Wright.  I will
just say that a close cousin of the "slippery slope" is the "parade of
horribles".  Yes, it's possible that votes in favor of items 6.2.6 and
6.2.8 will create unstoppable momentum that will hurtle IEEE-SA
inexorably down the path toward collective negotiation or cumulative
capped royalties.  It's equally possible that the rules changes that are
on the agenda for the March 27 meeting, if they are accepted, are as far
as IEEE-SA goes in the direction of ex ante.  Ex ante opponents seem to
like to play up the former vision of the future.  Of course, we all know
that dipping our toes in swimming pools doesn't inevitably lead to cliff
diving.  Many of us manage to stop at swimming.>  

Included in such later to be addressed issues may be your proposal for
collective negotiation of license terms.  Whether such collective
negotiations occur ex ante (as I assume you would prefer) or ex post, it
would seem not to matter for the Golden Bridges' decision apply.   

Similarly, mandatory rate caps, which have also been proposed and is on
the agenda for the March 27 meeting, may foster a far greater likelihood
of claims such as is the subject of the Golden Bridges case.  Here, too,
I think you would agree from the perspective of antitrust counselling
that while justifications may be offered, the practical fact that even a
rule providing for voluntary rate caps could lead to uncontrolled
discussions (outside the meeting room as alleged in Golden Bridges) that
then are implemented in the meeting to set rates collectively.  Again,
the fact that justifications may exist and that a rule of reason
analysis should be applied, or that the rule is nominally voluntary, is
not going to stop a claim from being asserted or the possibility of a
court rejecting the justifications and application of the rule of
reason.  That risk, which as illustrated by Golden Bridges (as well as
the Conexant case in which TI prevailed but was still required to
litigate) is not fanciful or remote.  

	<Gil Ohana response: I think the agenda you are working from
must be different from the one posted on the IEEE-SA web site.  I don't
see anything in either points 6.2.6 or 6.2.8 that would permit, still
less require, "mandatory rate caps."  For what it's worth, I agree with
your prediction that the adoption by an SDO of mandatory rate caps could
give rise to antitrust risk for the SDO and its members.  We would also,
I suspect, both agree that if IEEE-SA were to adopt a rule that required
companies participating in IEEE-SA standard setting to agree on the
price they would charge for standards-compliant products, the Antitrust
Division would be over them like a cheap suit.  How either point is
helpful in deciding the narrow question of which way members of PatCom
should vote on items 6.2.6 and 6.2.8 from the March 27 agenda is still
escaping me.> 

When viewed in context the issue of whether to include the definition of
"reasonable rates, terms and conditions" as proposed, or any definition
of what reasonable rates and license terms will be, in an LoA also could
give rise to what may be alleged as a garden variety per se unlawful
antitrust violation. The proposed definition is particularly problematic
because it would impose a standard upon patent owners that is not
supported by law.  Notwithstanding that some commentators, as identified
by Scott Peterson, have discussed that from economists perspective it is
possible to identify value attributable to a patent itself and an
additional amount to the fact that the patented technology is
standardized, this assessment is not universally accepted, and it is the
very rare commentator that has suggested that patent owners should be
stripped of the value of their IP based upon such an analysis.  Nor
would this theory apply in each case, as you have acknowledged, for
example where there is only a single patented alternative under
consideration for standardization.  Such a step, even in the standards
context, also would be fundamentally contrary to patent law.

	<Gil Ohana response: I agree that, in applying the definition of
"reasonable" suggested in item 6.2.8, a court will face a challenging
task in disaggregating the reasonable value of a patented invention into
its ex post and ex ante value.  I'm not sure that task is any more
challenging than the one courts face today in applying the
Georgia-Pacific reasonableness factors.

	   I respectfully disagree that IEEE-SA's adoption of a
definition of "reasonable" that would require a court to undertake that
analysis is itself an antitrust violation, still less a "garden variety
per se unlawful" act.  I look forward to hearing a further elaboration
of your legal theory (as, I'm sure, will IEEE-SA's learned antitrust
counsel). 

	As to the comment regarding the adoption of such a definition of
"reasonable" having the effect of "stripp[ing]" the value of IP, I think
we're getting to the nub of the issue: I hope I'm not oversimplifying
complicated positions, but broadly speaking ex ante opponents see the
reasonable value of IP as including the value that IP derives solely
from its inclusion in a successful standard, and ex ante proponents
don't.  On the point about applying the definition of "reasonable" even
where there is no alternative technology, you may be missing the
language in the reading the proposed rules change in item 6.2.8 that
clearly states that one of the factors in the consideration of the
definition of "reasonable" is "any alternative technologies".>  

Accordingly, it is certainly conceivable that one could allege that an
SDOs adoption of such a rule constitutes concerted action (especially
where consensus is not the basis for the decision).  Moreover, because
the proposed definition only includes selective factors, and not many
other factors that would be relevant to a full determination of what a
willing licensor and willing licensee would agree to at the time of the
negotiations, it could be argued too that it is equivalent to a price
fixing agreement.  Again, the purpose of this point is not to say that
such a claim would necessarily succeed, but rather to point out that it
may survive a motion to dismiss.  This may not be a Golden Bridges' type
allegation, but I don't think the IEEE should be limiting itself to only
those type of antitrust theories.  (This comment also does not address
the fact that in my view, wearing an SDO hat, this is just bad policy
because it would impose a rigid definition that is not applicable to
many situations that arise in the standards process.)

	<Gil Ohana response: I'm interpeting your statement as focusing
on the antitrust risk you see as resulting to IEEE-SA from its adoption
of the definition of "reasonable" proposed in item 6.2.8.  It seems to
me that the argument proves too much.  If it raises antitrust concerns
for an SDO to seek to define "reasonable," why doesn't it raise
antitrust concerns for an SDO to require (as some do, though not ANSI
accredited SDOs) participants that disclose essential patents to commit
irrevocably to license those patents on RAND (or even RF) terms.  Why
doesn't it raise antitrust concerns for ANSI (and the hundreds of ANSI
accredited SDOs) to have rules that strongly disfavor the inclusion of
essential patents that are not subject to a prior RAND licensing
commitment in American National Standards?  

	Put another way, why is the adoption by an SDO of a RAND
licensing scheme not an antitrust violation, but an effort to define
RAND an antitrust violation?  What if IEEE-SA adopted a definition of
RAND that did nothing more than quote from Georgia-Pacific?  Would that
be an antitrust violation?  If not, how far is IEEE-SA free, in your
view, to deviate from current law?  If a court were to issue a decision
interpreting the Georgia-Pacific decision to mean that in assessing the
reasonableness of a royalty for a patent that had been disclosed to a
standards body the court would look to what a willing licensee would
have paid before the standard was adopted, would you take the position
that it raises antitrust concerns for IEEE-SA to adopt a rule that cited
the judge's decision as its favored view of what "reasonable" means?

	If your response to these questions is that  the reason the
existing RAND regime doesn't raise antitrust concerns is that (to
paraphrase Qualcomm's motion to dismiss in the ongoing Broadcom v.
Qualcomm case) such a regime imposes no constraint on a patent-holder's
right to set whatever terms it can command in the marketplace, then in
seeking to discourage adoption of 6.2.8, it seems to me that you will
have spoken volumes as to the urgent need for the change proposed in
6.2.6.> 

Likewise, although not related to the Golden Bridges' decision, the
approach of the LoA is problematic because it could have the exact
contrary effect than I had thought was intended.  Rather than providing
information early in the standards development process, it could result
in causing patent owners to wait until the very last minute to disclose
IP and to submit an LoA.  This likelihood is already more probable than
not because of the fact that any LoA will not be binding and
irrevocable.  The very real problem is that it may be impossible to
identify what is an "essential patent" until the standard is well along
the way to being final.  Accordingly, unless a patent owner wishes to
give a blanket license (which as proposed would apply to all essential
patents whether disclosed or not, which itself reflects a fundamental
change from the ANSI policy), it runs the risk of having to make
licensing commitments without even knowing whether its IP is essential.
If such IP is then subjected to a collective negotiation of terms or
mandatory rate caps, prices for non-essential competing patents would be
fixed as would rates for essential patents.  I think you do understand
the potential antitrust risk there.

	<Gil Ohana response: I think these are important considerations
for the debate.  The possible consequences you describe relative to the
later disclosure of patents are by no means fanciful.  Of course, if the
other participants in standard-setting are unwilling to "buy a pig in a
poke", if, in other words, they refuse to  continue to discuss the
inclusion of a specific feature in a standard unless and until the
proponent of that feature discloses both its patent position relative to
the feature and the irrevocable licensing commitment that the proponent
of the feature is willing to make, the proponent of the feature will
have a choice to make relative to the timing of its disclosure.  

	To anticipate your response, I don't view that as a choice
compelled by the collective bargaining power of potential licensees, any
more than my seeking to understand at an early stage of purchasing a car
what the price will be compels the dealer to stop talking about the
non-price reasons why I should buy today.  I suspect that, to go back to
the point you raised above regarding how the definition of "reasonable"
proposed in 6.2.8 will play out when there are or are not substitute
patents, patentees that face competition from substitute patents will be
most inclined to disclose their patents and state their terms early, and
those that don't will be able to wait. Innovation has its rewards.>  

Similarly, the proposed LoA's approach to Organizational Knowledge could
exacerbate these problems, especially for companies that themselves are
not members, but who's employees are members.  How would the concept of
Organizational Knowledge as proposed even apply in that circumstance?
Further, how could an employee who has nothing to do with licensing
issues or his employer's patent portfolio be in a position to bind his
company, much less affiliates, successors and assigns?

Further, the proposal to make the LoA binding by having it signed by the
IEEE also involves antitrust issues.  Such a step clearly would allow
the argument that the concerted action element of a Section 1 Sherman
Act claim is satisfied, and any anticompetitive effects achieved through
implementation of the LoAs, especially under a rule of reason analysis,
would require extensive analysis, and resulting costs and times.

	<Gil Ohana response: It's an interesting point, though one of
the issues that judges in cases where SDOs are named as defendants
struggle with is whether the SDO is a unitary actor incapable of
conspiring with itself under the Supreme Court's decision in Copperweld.
If you haven't read it already, you might want to look at the Ninth
Circuit's interesting opinion in Jack Russell Network of Northern
California v. American Kennel Club, Inc. I'm not sure how this plays out
in the antitrust case against IEEE-SA that you are hypothesizing, though
it would seem to me that IEEE-SA would have its own institutional
interests, separate from those of its members, in making LoAs
contractual.>

I hope these comments help you.  Please understand they are not being
offered for any purpose other than to express what I believe may result
in less efficient, and thereby less procompetitive, standards
development.  These are my views regarding the standards process, and
should not be ascribed to any particular company that I may or may not
represent.  I hope you take them in that way, and that you do not think
that they are offered to counterbalance your positions.  I do think it
would be a very bad result, however, if rules are adopted, no matter how
well intentioned, that will not accommodate all stakeholders' interests
in the IEEE type of open standards body, and that will give rise to even
the prospect of greater litigation risks, to say nothing of liability
risks.  I think this would be especially unfortunate if such rules are
adopted because of a flawed process or a failure to consider all of the
very complex variables that exists in standards development, as well as
in connection with the current state of technology, competition and
licensing.  

Look forward to seeing you soon. 

	<Gil Ohana response: I look forward to seeing you as well.>


           

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 7:27 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.  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.
========================================================================
====