|The impact of the 9th Circuit Court of Appeals goes well beyond lifting a legal albatross from the shoulders of Qualcomm and its shareholders. It's not just that, as The Wall Street Journal put it, the panel "threw out" the lower court ruling, but more important, what the appellate panel said about competition, monopolies, and the differences between intellectual property issues and contracts.|
First of all, it's important to realize that, given the fatal errors in the lower court's decision, the appellate panel could have simply nullified the ruling in the space of a few paragraphs. Instead, the panel wrote a comprehensive, 56-page decision that explained in detail the nature of competition, how the Sherman antitrust law was designed to further, not restrain competition, or, as the panel put it, "hyper competitive" behavior. The panel reviewed the major precedents that framed its decision, providing future regulators, companies, law schools, and the public with a set of guidelines that should provide a basis for settling similar issues long before they even get to court.
The appellate court decision effectively rebuked literally every key point in the lower court's ruling, sending a clear message to Judge Koh and to the FTC, warning them not to do that again. The three judge panel also sent an implicit warning to Apple, which, though not a party to the lawsuit, may have played a major role in instigating it. The warning says in effect, you have no right to complain about using someone else's patents unless they charge you more than other licensees. And if you want to complain about how much you're paying, then that is a contractual, not a patent issue.
The panel also made it plain that whether patents are licensed and royalties are based on individual components or on the value of the entire device practicing those patents is acceptable, as long as the basis for licensing and charging royalties is consistent for every entity.
The real value of this decision, I believe, is not just that it preserved Qualcomm's business plan but that it set a precedent in statuary and case law that will answer many, if not most disputes of this nature in the future. And as an aside, the panel also put to rest the assumption by many observers that all judges and judgments are political in nature, depending on who appointed them or how they got to where they are. The panel showed once again that there is a difference between politically based decisions and simple ignorance.