Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. It's time for the Federal Trade Commission and U.S. District Judge Lucy Koh to duck and cover. The Justice and Defense departments are formally taking the position that forcing Qualcomm to license chip making rivals on FRAND terms—even if for just a year or twowould pose a threat way beyond the chip maker's royalties. So let's get right to it. As always, you can email me your own thoughts and follow me on Twitter.

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DOJ Goes Nuclear on Judge Koh, FTC

When Qualcomm asked U.S. District Judge Lucy Koh to stay her order cracking down on Qualcomm's licensing practices, LG Electronics supported the Federal Trade Commission's bid to implement the order immediately.

Now that Qualcomm is renewing its bid for a stay to the Ninth Circuit, some big guns are offering the wireless giant support.

Ericsson Inc., former Federal Circuit Chief Judge Paul Michel and the United States Justice Department—backed by a Defense Department official warning of risk to national security—are going to bat for Qualcomm at the Ninth Circuit.

“DoD firmly believes that any measure that inappropriately limits Qualcomm's technological leadership, ability to invest in research and development (R&D), and market competitiveness, even in the short-term, could harm national security,” Ellen Lord, under secretary of defense for acquisition and sustainment, states in a declaration submitted Tuesday to the appellate court.

Koh issued an injunction in May following a bench trial that would force Qualcomm to license rival chip suppliers on FRAND terms and renegotiate licenses with smartphone makers free from threats to disrupt their supply of modem chips.

Qualcomm is asking the Ninth Circuit to stay the injunction pending its appeal, saying it threatens to “fundamentally change the way it has done business for decades.”

Ericsson threw its support behind Qualcomm in a proposed amicus briefsubmitted Monday. Jonathan Massey of Massey & Gail wrote that an injunction will disrupt settled expectations just as the wireless industry is prepared to roll out the 5G standard.

“Without all the necessary elements of the 5G ecosystem available, the enormous amount of money, effort, and technological innovation that has been devoted to this effort over the last several years will be jeopardized,” Massey writes on Ericsson's behalf.

The Ninth Circuit just last year stayed an injunction that requires the operators of Salt Lake Comic Con to change its name and website registrations while they appeal a trademark judgment obtained by the San Diego Comic Convention, Massey points out. So too did the Ninth Circuit temporarily stay the 2011 district court injunction ending the military's “don't ask, don't tell policy” banning openly gay service members pending appeal. “By the same token, the district court's order in this case carries national security implications,” Massey writes.

Before Koh, the FTC turned the national security argument back around on Qualcomm, arguing that a stay would let it entrench its monopoly power during the 5G rollout. “Qualcomm's argument that anything that diminishes its corporate profits would necessarily threaten national security is absurdly overbroad” and contrary to the Sherman Act, the FTC's Jennifer Milici argued to Koh, who declined to enter a stay.

Now DoD and DOJ are formally throwing their support behind Qualcomm. “5G is globally acknowledged by all major international participants as the battleground of the future,” Lord writes in her declaration. “Allies such as France and Germany are also considering ways to limit Chinese vendor participation in core 5G network deployment, as is Japan.”

Lord says the Defense Department's “main concerns include the possibility of cyber espionage,” but DOJ's antitrust division is taking it a step further in its amicus submission.

“Nuclear security and the protection of the Nation's energy and nuclear infrastructure depend on secure and advanced wireless communications,” DOJ states in its amicus submission.

The brief is signed by Patrick Kuhlmann of the antitrust division. It appears that division chief Makan Delrahim, who worked as a lobbyist for Qualcomm in private practice, will be recused from the appeal.

Judge William Bryson

Who Speaks First on PTAB Constitutionality?

Does the PTAB have the authority to declare itself unconstitutional?

It's a question that's popped up a few times in Federal Circuit arguments the last few months as patent owners try to explore an opening the Supreme Court gave them in the 2018 Oil States decision.

The Supreme Court turned away a constitutional challenge to the America Invents Act in that case. But it raised the possibility that applying the AIA retroactively to patents issued before its 2011 enactment might present due process or takings concerns.

A common problem for patent owners is they didn't know to raise the retroactivity issue at the PTAB before the Supreme Court put it on everyone's radar. The Justice Department has argued before the Federal Circuit that patent owners have therefore forfeited the argument by raising it for the first time on appeal.

Judge William Bryson is the latest Federal Circuit judge to ask DOJ lawyers how that would have made any difference. Has DOJ “settled on a position,” he asked the department's Courtney Dixon during Wednesday's arguments in Chestnut Hill Sound v. Apple, as to whether the PTAB has the authority to rule on constitutional questions.

“I don't know if I'd go so far as to say waffling,” Bryson said. “But there's at least been for me a lack of precision and clarity as to the department's position.”

Dixon said the Justice Department has consistently argued that if an IPR poses genuine constitutional issues, the board can simply exercise its discretion not to institute proceedings in the first place.

“I've heard the department make that argument before,” Bryson said. “What I haven't heard is … can they take a case, and then decide the constitutional question front and center? Can an administrative agency issue an order saying that its own statute is unconstitutional, whether it's the NLRB, the Merit Systems Protection Board, or the [PTAB]?”

“I think declining to institute is a version of that your honor,” Dixon replied.

It didn't sound as if that satisfied Bryson. For now the question appears to be academic, as the court had zero questions on the merits of Chestnut Hill's retroactivity argument.

But Chief Judge Sharon Prost noted there's a case in the works—Agarwal v. TopGolf International—where the issue appears to be preserved. In that IPR, the PTAB let pro per patent owner Amit Agarwal file a one-page brief raising the retroactivity issue. “We have considered those arguments,” Judge Lora Green wrote, “but agree with Petitioner that the patent at issue here was subject to ex parte reexamination, and, therefore, the United States Patent and Trademark Office has always had the ability to look at the patentability of an issued United States Patent.”

In other words, the PTAB has ruled that retroactive application of the AIA is not unconstitutional. So the issue will be teed up to the Federal Circuit sooner or later.

Segway Seeks Return Trip at Federal Circuit

Things certainly can go wrong when courts rule without an opportunity for briefing. That appears to be one of the problems with a Federal Circuit decision on the International Trade Commission's authority to bind district courts in trademark cases.

I wrote about Swagway v. ITC a couple of months ago when the Federal Circuit ruled that ITC trademark infringement decisions don't have preclusive effect on parallel district court litigation. Matt Rizzolo and his Ropes & Gray colleagues were out quickly with a critique that Swagway creates a circuit split.

Now it turns out the ITC isn't taking Swagway lying down. The commission has joined hover board maker Segway in asking the court to reconsider the decision, which would permit Swagway (now known as Swagatron) to relitigate trademark infringement in New Jersey district court.

According to Segway and the ITC, Swagway first raised the preclusion issue at oral argument, in rebuttal no less. “Had the Commission the opportunity to brief the issue before the panel, the Commission would have explained that, under settled law, the question of preclusion was not properly before the Court, but rather is the province of the second court being asked to apply the preclusion,” writes Sidney Rosenzweig of the ITC general counsel's office.

Segway, which is represented by Greenberg Traurig, argues that preclusion should apply under the Supreme Court's B&B Hardware decision, plus decisions of the First, Second and Fourth circuits. The ITC adds that U.S. District Judge William Griesbach also applied preclusion in a 2017 case.

Swagway is represented by Mei & Mark. It argues that Segway is overstating the reach of B&B Hardware, and that Federal Circuit precedents on preclusion should control over regional circuit cases.

Sagway “did not conduct appeal by ambush” as Segway is claiming, Swagway adds in a brief signed by Mei & Mark's Larry Sandell. “Rather, the preclusive effect issue naturally became a focus of oral argument” after the court raised the issue sua sponte.

That's all from Skilled in the Art today. I'll see you all again on Friday.