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Microsoft Antitrust Suit Against InterDigital Stands, Delaware Federal Judge Says

On April 13, 2016, the US District Court for the District of Delaware denied InterDigital’s motion to dismiss an antitrust suit filed by Microsoft (Microsoft Mobile, Inc. v. InterDigital, Inc., Case No. 15-cv-723-RGA).  In the suit, Microsoft alleged that InterDigital engaged in an unlawful scheme to acquire and exploit monopoly power over standard essential patents (SEPs) required for 3G and 4G cellular devices.  Specifically, Microsoft asserted that InterDigital falsely promised to license its 3G and 4G SEPs on Fair, Reasonable, and Non-Discriminatory (FRAND) terms in order to ensure its SEPs were included in standards set by the European Telecommunications Standards Institute (ETSI).  According to the complaint, InterDigital failed to live up to its commitment to FRAND licensing terms, and instead acquired monopoly power in the 3G and 4G cellular technology markets and used that power to demand supra-competitive royalties, “double-dip” royalty demands, and has pursued “baseless” International Trade Commission litigation against Microsoft and others.

In its motion to dismiss, InterDigital asserted that Microsoft failed to adequately plead a Sherman Act § 2 monopolization claim, namely that Microsoft failed to show that InterDigital possessed and exercised monopoly power and failed to adequately allege injury.  The court disagreed, finding Microsoft’s allegations to be materially similar to those found to be sufficient by the Third Circuit in Broadcom Corp. v. Qualcomm Inc. (2007).  With respect to monopoly power, the court found that Microsoft’s allegations as to the necessary technology standards, market entry barriers, and InterDigital’s market share to be sufficient.  The court found that allegations of an “intentional false promise” to license technology on FRAND terms, which was relied upon in selecting the technology for inclusion in mandatory standards, and breach of such promise was “sufficient to show anticompetitive conduct.”

As to injury, InterDigital asserted that its litigation activity was protected by the Noerr-Pennington doctrine.  The court held that injury was sufficiently pled, and that the Noerr-Pennington doctrine did not immunize InterDigital as its scheme, as alleged by Microsoft, would have been “ineffective without the threat of litigation” and therefore it was properly included in Microsoft’s anticompetitive scheme allegations.

This latest ruling demonstrates that prospective licensees may be able to raise antitrust claims against SEP holders when negotiations fail and litigation ensues.

© 2020 McDermott Will & EmeryNational Law Review, Volume VI, Number 109

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About this Author

William Diaz, McDermott Will Emery Law firm, Antitrust and Competition Lawyer
Partner

William Diaz is a partner in the law firm of McDermott Will & Emery LLP and is based in the Orange County office. He is a member of the Firm’s Antitrust & Competition practice group. His antitrust practice is focused on mergers and acquisitions, complex litigation, government investigations, and counseling on pricing, distribution, and consumer protection issues. 

949-757-7129
Associate

Emre N. Ilter is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C., office. He focuses his practice on complex commercial litigation and government investigations. Emre’s experience includes Section 337 actions at the U.S. International Trade Commission, domestic and international arbitration disputes, health care qui tam actions, congressional inquiries and mass tort litigation. Emre also has represented pro bono clients in a variety of matters, including asylum, intellectual property and appellate cases before federal and state courts.

202-756-8395