Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. The Federal Trade Commission has now formally asked Judge Lucy Koh not to stay her antitrust injunction against Qualcomm, with LG Electronics offering the perspective of a would-be competitor. I expect a decision in about five minutes. Meanwhile, the DOJ has had its say on a related consumer class action, and if antitrust chief Makan Delrahim was recused from Qualcomm matters before … well, he isn't now. Please lend me a few minutes, email me your own thoughts and follow me on Twitter.

FTC to Koh: Keep 5G Competitive

U.S. District Judge Lucy Koh's blockbuster antitrust ruling in FTC v. Qualcommcould reshape the wireless communications industry for years to come. But even the imminent decision on whether to stay her ruling pending appeal could implicate hundreds of millions in modem chip licensing fees.

This week the Federal Trade Commission pushed back on Qualcomm's bid for a stay, and got help from a licensee on the firing line. “At this very moment, LGE and Qualcomm are negotiating several new license agreements, for CDMA, 4G, and 5G, as well as a new chip purchase agreement,” Nathan Eimer of Eimer Stahl writes in a June 11 amicus curiae brief for LG Electronics. “Without the benefit of this court's injunction,” LG will have to negotiate from a position of “extreme weakness.”

Following a bench trial, Koh ordered Qualcomm last month to stop threatening to cut off chip supply to smartphone makers who balk at its licensing demands. Her order also compels Qualcomm to license its chip-making rivals on FRAND terms, refrain from striking exclusivity deals, and quit blocking licensees from cooperating with government investigations. Qualcomm asked Koh to stay her order pending appeal, saying it will be irreparably harmed if it's forced to renegotiate deals before the Ninth Circuit can weigh in.

In opposing, the FTC argues that timing is everything. “The appellate process could easily extend through the initial rollout of 5G technology,” the agency states in a brief signed by senior trial counsel Jennifer Milici. “A stay would allow Qualcomm time to use anticompetitive practices to entrench its monopoly power in modem-chip markets during this critical period.”

Milici dismissed Qualcomm's argument that hobbling it will threaten U.S. national security interests in developing 5G. “Qualcomm's argument that anything that diminishes its corporate profits would necessarily threaten national security is absurdly overbroad and contrary to Congress's determination, in enacting the Sherman Act, that competition furthers the public interest,” she writes.

LG, meanwhile, is reminding Koh—as if she needs reminding—that she found in her 233-page opinion that Qualcomm has at times cut off LG's chip supply, threatened to withdraw technical support, charged higher royalty rates when LG used a rival chip, and kicked back funds to LG if it purchased at least 85 percent of its chips from Qualcomm. Eimer states that Qualcomm's conduct has shut it out from the modem chip business, and without an injunction in place it will stay out.

“Because 'issuance of the stay will substantially injure' LGE, to say nothing of Qualcomm's other customers and competitors, the Court should decline to grant such an extraordinary remedy,” Eimer writes.

DOJ, Delrahim Back Qualcomm in Class Action

With the FTC trial over, the spotlight is shifting to the Ninth Circuit and Koh's related decision to certify a consumer class of 250 million smartphone purchasers under California's Cartwright Act.

First off, Qualcomm has made it official. Last fall, the company described Stromberg v. Qualcomm as “the largest and most heterogeneous class ever certified in this Circuit (and likely anywhere).” Now it's certain. Stromberg is the largest ever “in this circuit (or anywhere else in the United States),” Keker, Van Nest & Peters partner Bob Van Nest says in Qualcomm's June 3 merits brief.

Qualcomm continues to argue that Koh didn't take into account the multitude of cellphone brands, distribution channels, types of chip in each phone, or the price the consumer paid (if any). The company also says Koh improperly applied California law to many millions of purchasers who live in states that don't recognize antitrust damages for indirect purchasers.

Qualcomm is getting amicus support from the Washington Legal Foundation, the U.S. Chamber of Commerce and the Justice Department, this time with antitrust chief Makan Delrahim signing on.

WLF says Koh's order “runs roughshod over basic federalism principles.” WLF Chief Counsel Richard Samp further argues that, given the wide variety of cellphone products and methods of sale, it's not “realistic that this case could ever be tried in a single lifetime.”

I'm imagining Judge Koh reading this and thinking, “Let me tell you how many lifetimes I spent trying Apple v. Samsung.”

The Justice Department, which is joined by the states of Texas, Ohio and Louisiana, likewise argues that Koh has “allowed California to set antitrust policy for the entire nation.” The ruling is “an affront” to states that have concluded that indirect-purchaser suits lead to excessive litigation, duplicative remedies and other problems.

Delrahim did not appear on the brief submitted by the Justice Department in the FTC's case against Qualcomm. Sources “familiar with his thinking” told Vox Mediabefore his 2017 confirmation hearing that he would likely recuse himself from matters involving Qualcomm because of his representation of the company in private practice. But Delrahim's name appears at the top of Monday's filing, which is signed by Deputy Assistant AG Michael Murray.

With Delrahim or without him, DOJ is not supportive of the FTC's case. Though Koh issued her findings of fact and conclusions of law three weeks ago, Monday's DOJ filing refers to “the allegedly anticompetitive patent-licensing practices of Qualcomm” and says Qualcomm “purportedly licensed its cellular SEPs to OEMs under a so-called 'no license-no chips' policy.”

DOJ's brief observes in a footnote that the interaction of patent and antitrust law “is in flux,” and that theories of liability asserted against Qualcomm are “controversial” and grounded in “certain scholarly literature” from 2014. “More recent scholars have questioned their viability,” the brief states, citing a 2015 article and … Delrahim's own recent declaration of the “New Madison” approach to antitrust and IP law.

Nokia and Daimler's Global Chess Match

The pieces are starting to fly around the automobile connectivity chessboard.

Back in March, German auto maker Daimler and parts supplier Continentalcomplained to the European Commission that Nokia wouldn't license its standard-essential patents on FRAND terms. Nokia said the complaint was “simply the latest in a long series of actions to avoid taking a license,” and sued Daimler for patent infringement in German courts.

Continental hit back by suing Nokia, Conversant Wireless Licensing, Optis UP Holdings and the Avanci licensing platform in May, accusing them of collusively refusing to license their 2G, 3G and 4G SEPs at the supplier level. But instead of doing that in Germany, they sued in the San Jose Division of the Northern District of California, where Judge Koh just resolved a similar accusation against Qualcomm.

But Nokia has turned up the heat by seeking injunctions in the German suits that could disrupt Daimler's automobile production, according to Continental.

So Continental is now asking U.S. Magistrate Judge Nathanael Cousins to block those injunctions. The parts supplier moved on Wednesday for an anti-suit injunction that would put the German infringement suits on hold. Sheppard Mullin Richter & Hampton partner Steve Korniczky is using FTC v. Qualcomm as Exhibit A, pointing to Koh's finding that Nokia “follow[ed] Qualcomm's lead” in refusing to license at the supplier level.

Nokia, Korniczky writes, is trying to force Daimler to knuckle under before the court can rule that Nokia must make licenses available on FRAND terms to Continental, “similar to the relief granted by Judge Koh in the FTC v. Qualcomm matter.”

Korniczky has had success with this argument before. In 2015 he persuaded U.S. District Judge James Selna to issue an anti-suit injunction that blocked Ericssonfrom pursuing litigation against handset maker TCL Communications in France, the U.K., Brazil and Russia.

More recently some judges have been pouring cold water on anti-suit injunctions. Qualcomm lost a bid for one against Apple before Judge Gonzalo Curiel in 2017. Judge William Orrick III granted one to Samsung last year in its licensing dispute with Huawei, but the Federal Circuit sounded poised to overturn it during oral arguments last fall and Samsung settled a couple months later.

Alston & Bird partner Ryan Koppelman represents Nokia in the Northern District. Avanci, which has called Continental's suit “meritless,” recently substituted a Winston & Strawn team in place of attorneys at Baker McKenzie.

Whoops

At the same time I was tweaking the Supreme Court on Tuesday for its odd patent law citations, I was making some goofs of my own in an item about Viasat's IP suit against Acacia Communications.

I quoted Viasat attorney Ken Fitzgerald of Fitzgerald Knaier as asking for $13 million in unpaid royalties and $3.4 million in late fees. He actually asked for $34 million in unpaid royalties, and $13 million in late fees.

I also incorrectly described Christian Rasmussen as CEO of Acacia. He is a founder of the company, but not the CEO.

In Case You Missed It

Quick hits:

➤ What do Citizens United and Eric Schmidt's personality have to do with antitrust enforcement? Carr & Ferrell partner Gary Reback lays out his case against Google in a What's Next Q&A with my ALM colleague Alaina Lancaster.

➤ Senate Judiciary's IP Subcommittee held its third and final (for now) day of testimony on ideas for rewriting Section 101 of the Patent Act. My ALM colleague Caroline Spiezio has some highlights from in-house heavyweights at IBM and Qualcomm.

➤ It's official. Desmarais is open for business in San Francisco. My ALM colleagues Xiumei Dong and Jason Doiy have details from founder John Desmarais and Peter Magic, the firm's partner in charge of California growth.

That's all from Skilled in the Art this week. I'll see you all again on Tuesday.