FSA Amicus Brief – FTC v. Qualcomm US Court of Appeal for the Ninth Round

Brussels, October 8, 2020 – This case addresses whether a SEP holder that also competes in practicing the standardized technology may obtain and maintain market power by disregarding its own voluntary FRAND commitment to license all parties who wish to receive a license, including rivals.3 Because standard setting involves competitors coming together to select particular technologies over competing alternatives, it inherently involves anticompetitive risks. And, because patents confer the right to exclude, SEPs necessarily confer the power to exclude rivals market power that would not exist absent the standard—unless restrained.

The tool standard setting organizations (SSOs) use to prevent conferring this market power on SEP owners is a commitment to license those SEPs on FRAND terms. Unless that commitment requires a SEP owner to license all-comers, including rivals, it cannot do its job: stopping standardization of a technology from conferring the power to exclude rivals of the owner of that technology.

The law has long recognized these risks, and so requires that SSOs provide safeguards to facilitate standardization’s procompetitive benefits. Understanding the important role that FRAND commitments play in preventing anticompetitive effects from and protecting procompetitive benefits of standard setting explains why violating FRAND commitments can, in addition to creating contractual liability, exclude competitors in violation of the antitrust laws.