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

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

Richard, gratuitous ad hominem attacks such as the statement that Bob
Skitol's views "typically ... do not reflect a positive contribution to
the effective development of standards" have no place in this dialogue.
You might (and apparently do) disagree with what Bob has to say, but
nothing either in Bob's posting to the IEEE PP-Dialog list or in his
many other contributions to the ex ante debate (to pick just one
example, his Antitrust Law Journal article of a few years ago) merits
your abusive language.  You owe Bob (and the other participants in this
list) an apology.

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: Monday, March 13, 2006 7:03 AM
To: PP-DIALOG@listserv.ieee.org
Subject: Re: [PP-DIALOG] Application of per se rule to ex ante joint
conduct

Bob's observations and comments are always interestin but, as those
below are, often times myopic and merely intended to advance the
positions of his client.  As a result, typically they do not reflect a
positive contribution to the effective development of standards.  

First, it must be remembered that Bob's position comes from the
perspective that the ANSI patent policy is somehow anticompetitive for
purposes of the antitrust laws.  This is a position that he has publicy
expressed at least at one public forum attended by representatives of
government antitrust enforcement agencies.  It is also the fundamental
basis for his argument below, and as he made to the FTC during his visit
with IEEE representatives (as reported by IEEE counsel's report of  the
Nov. 15, 2005 meeting), that somehow there is a problem with the ANSI
policy under the Supreme Court cases of Professional Engineers and
Hydrolevel because, as reported by IEEE counsel, "a collective decision
not to disclose price terms might create a Professional Engineers
problem [that is, an agreement to compete only on quality, not price]."
Bob's email below seems to think that this remains the case (e.g.,
"suppression" of information), but it seems that such alarmist and
inaccurate views have little place in a serious discussion.  While this
has been a point made regarding how the IEEE has operated, it is
certainly not the approach followed by other ANSI accredited committees,
and if this is the cause of Bob's concern, the IEEE's issuance of a
statement indicating a position that is more in line with ANSI policy
may suffice to relieve the distress and silly legal positions that he is
promoting here and to government enforcement agencies.      

It is also interesting that while Bob seems to think that there is a
legal risk because the IEEE is suppressing competition in the type of
licensing terms that may be offered, he has trouble seeing how adopting
the definition of "reasonable rates, terms and conditions," that is
being moved to be made part of the IEEE LoA based on the March 27
agenda, is simply to provide sunshine and light.  Clearly, the specific
definition has significant competitive implications by requiring the
defintion of reasonable to take place at a specific time in the
standards process.  While it is no secret that the definition is one
that favors Bob's position, and may be based on some economic
literature, it is not consistent with either patent or antitrust law.
Accordingly, without going further to argue the merits of the proposal
here (we hope there will be plenty of opportunity to do so
notwithstanding the comment by the IEEE PatCom's chair at the last ANSI
Patent Committee meeting that he is "violently" against a position that
reasonableness could be properly defined both ex ante and ex post), at a
very minimum the definition being proposed needs extensive vetting.

It is also odd that Bob would suggest that adoption of such a definition
would not raise the type of Professional Engineers and Hydrolevel issues
that he thinks exist based upon his misleading description of the
current type of open process that ASC's follow, and which a short
concise clarification of IEEE's policy could adopt as well (to the
extent there exists any confusion).  As commented, the proposed
definition will deprive IP owners of rights vested in them by the U.S.
Patent Act, that when pursued are entirely consistent with the U.S.
antitrust laws.  The definition of "reasonable" now being promoted by
what might be a small group  of participants in the IEEE process, which
may not represent a consensus of interested parties, would dramatically
alter such rights.  (I comment that it "might" or "may" be the result
such a proposal because there is no transparency regarding the source of
the proposal (or other proposals relating to the LoA, for example).)
Moreover, the PatCom chair has advised that decisions will not be made
based upon consensus.  Thus, the adoption of the proposed definition
could be viewed as the result of the concerted action by a handful of
participants and the IEEE leadership for purposes of advancing a
specific position that favors the proponents competitive advantage at
the expense of other participants' positions.  At a minimum, careful
consideration of such a possibility would seem to be in order.    

More specifically, the effect the proposed definition could be argued
will be to homogenize licensing terms, especially when there is no need
to do so under existing practices under the ANSI policy (which, again,
the IEEE could quickly clarify it supports).  The ANSI Policy followed
by most ASCs, not only encourages early disclosure of IP that may be
essential, but also recognizes, in the ANSI Guidelines, that such
disclosure allows for ex ante negotiations regarding specific license
terms.  Moreover, such negotiations occur.  Dick Holleman, formerly of
IBM, who was also very active in the IEEE, explained this reality in his
comments to the DOJ/FTC hearings.  I commend Bob to consider those.
Accordingly, imposing the type of definition being proposed by whomever
is the source would limit the flexibility of licensors to, it appears,
be required to adopt a licensing strategy favored by, I presume, the
undisclosed drafters of the proposal.  That limitation on competition in
licensing terms, I think if he were to look at it objectively, Bob would
agree raises the exact type of issues he claims to be concerned with.

Bob's comment that the specific proposals relating to the LoA are also
peculiar. It is odd that he can claim that imposing specific obligations
in the LoA will only concern unilateral conduct.  The adoption of the
requirements would be based on collective action, and the imposition of
such rules by the IEEE, again, raises the Hydrolevel issue.  Further,
the proposal (again made by some undisclosed contributor) that
signatures be provided not only by a patent owner, but also the IEEE,
further establishes the concerted nature of the "agreement."  

This does not even address the fact that the proposed LoA terms may have
the exact opposite effect than Bob would like or suggests -- they may
cause IP owners to delay filing an LoA or simply saying they won't
license.  This problem arises because, as is often the case, determining
essentiality cannot be achieved until a draft standard has reached some
high level of maturity so it is certain what the technical elements will
be.  Similarly, it may not be able to state that claims in a patent
application are essential because during prosecution the claims may
change dramatically.  Thus, under the proposed LoA, unless a patent
owner wishes to give a blanket LoA, it might not be able to state a
position ex ante.  This problem is exacerbated by the newly adopted
position that any LoA assurance will be binding and irrevoable.  (The
effect of this change illustrates the interconnection among all proposed
changes and the questionable approach of adopting changes piecemeal.)
Thus, this may force licensors to adopt a blanket license approach, but
if they do they will have to commit to license "all" essential patents,
even though the licensor may not even know about them or know what the
standard will be.  Then, if other proposals by Bob are adopted,
including the defnition of "reasonableness," a licensor will have to
state terms for patents that may not be essential at a time when it is
impossible to consider all relevant factors that go into a licensing
decision.    This is not consistent with the ANSI approach of having
assurances made once a patent that may be essential is disclosed.  These
problems also render the statement that no patent searches are necessary
meaningless.  If a patent owner did not do such a search and identify
essential patents it would run the risk of being accused of not
disclosing.  Timing will also be implicated because assuming the patent
owner wants to do a search it will need time.  It couldn't start too
early because it wouldn't know what the standard is, yet if it waits too
long it might not be able to getin its LoA.  A real conundrum.  So, here
again, the collective adoption of LoA requirements (proposed by some
unidentified source and being championed by the PatCom chair) could have
competitive effects not only on participants in the IEEE standards
development process but also on the process itself.

One last word about the concept of "Organizational Knowledge" that is in
the LoA.  This is a term that has no commen meaning and the one being
proposed may or may not be appropriate.  More significantly, however, it
is a concept that seems to be out of place in the IEEE and in the LoA.
While some companies may be IEEE members, in many other instances a
company will not be but its employees will be.  The proposed LoA does
not seem to distinguish these situations, and seems to require the
individual participant to still bind his/her employer.  I don't know how
that would work, and a collective attempt to enforce such a rule would
be another basis for a patent owner to claim that it is being deprived
of its rights under the Patent Act in a manner inconsistent with the
antitrust laws.  

Again, Bob's comments are always fun, but they really must be considered
in context.  Clearly there are all types of anticompetitive theories
that one can identify, and the fact that the theory doesn't fit into,
for example a "Golden Bridges" theory, doesn't mean that a good
plaintiff's lawyer or a court wouldn't find it colorable.  (Even Bob's
theory concerning the ANSI policy might be found colorable by someone,
but I don't know who.)  So, it is of little use to belittle any
legitimate point or to send the IEEE on a path that will only result in
increased litigation.  

I hope the opportunity is given at the March 27 meeting, and such
further meetings as may be necessary, to have all of these issues fully
considered and addressed in an open and transparent manner.  Thank you.


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: Skitol, Robert A. [mailto:Robert.Skitol@dbr.com]
Sent: Saturday, March 11, 2006 12:36 AM
To: Taffet, Richard S.; PP-DIALOG@LISTSERV.IEEE.ORG
Subject: RE: [PP-DIALOG] Application of per se rule to ex ante joint
conduct



       Richard conflates the idea of encouraging unilateral disclosure
of material license information -- the main proposal now before the
IEEE's PatCom -- with "collective negotiation" and "collusive" conduct
of the kind alleged in the Golden Bridges case, which nobody is now
advocating for the IEEE. There is no credible basis whatsoever for any
suggestion that the unilateral disclosure policy idea now before PatCom
would increase antitrust risk or any other litigation exposure to IEEE
or participants therein. To the extent the proposal would result in
participants' disclosures of more license information during standard
setting, it would do precisely what (a) Congress expressly encouraged
SDOs to do in its enactment of the SDOAA two years ago (see House
Report) and (b) both Assistant Attorney General Pate and FTC Chairman
Majoras expressly encouraged SDOs to do in their speeches within the
past year. Numerous published in-depth analyses (many cited in Chairman
Majoras's speech) confirm the complete antitrust legality as well as
affirmative desirability of more meaningful information disclosures
along these lines. I am unaware of even a single contrary analysis,
published or otherwise, that even begins to refute the supportive
literature on this subject. As already noted, both enforcement agencies
endorse the idea of an unqualifiedly "good" result from more rather than
less material information being available during a standard-setting
proceeding.

       Richard's suggestion of an antitrust problem with IEEE's adoption
of a definition of "reasonable" is equally vacuous. IEEE already
encourages patent owners to make RAND commitments. How can it suddenly
become an antitrust problem to explain or clarify what RAND is intended
to mean for this purpose? Is the world better off with controvery and
confusion over what RAND means? That is a formula for more litigation of
the sort that is already burdening IEEE and other SDOs' standards.

       The irony is that, while policy changes of the kind now under
consideration would entail no new legal risk of any kind, failure to act
on them would leave unaddressed the all-too-real existing risk of
abusive patent holdup conduct in connection with IEEE standards. This is
a reality of the status quo that has already generated litigation
messes, past and present. No need to get more specific about them unless
Richard wants to do so. Suffice it to say that failure to address in any
manner existing conditions enabling those disputes to have evolved and
enabling more such disputes to arise in the future is nothing less than
irresponsible.

       Instead of chasing antitrust ghosts boo-hooing about any move
forward, we should worry more about exposure from (a) continued
collective suppression of highly material license information during
standard setting; and (b) continued collective refusal to adopt measures
to prevent anticompetitive manipulations of IEEE processes. Grounds for
real concern on those fronts can be found in (a) United States v.
National Society of Professional Engineers, 435 U.S. 679 (1978); and (b)
American Society of Mechanical Engineers v. Hydrolevel Corp., 456 U.S.
556 (1982).
-----Original Message-----
From: Taffet, Richard S. [mailto:richard.taffet@BINGHAM.COM]
Sent: Friday, March 10, 2006 3:32 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.  

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.

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.

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.  

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.
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.)

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.  

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.

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.                                   

           

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



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