Implications of the Third Circuit Decision

Implications: The Third Circuit has reinstated significant parts of BRCM's antitrust case against QCOM.  In this post, I sketch some implications of that decision.

Analysis: Last August, BRCM's antitrust case against QCOM was thrown out on the ground that, even if BRCM's allegations were true, there was no viable antitrust claim.  This week, the Third Circuit reversed, ruling that BRCM's allegations are sufficient to at least open the door to discovery.  Below, I offer some reactions to that decision.

1. The fact that the case was in part reinstated should not be a big surprise, because the lower court opinion dismissing the case was significantly flawed. Indeed, as I and many others remarked back then, the lower court focused too much on the fact that QCOM has valid patents and too little on the process by which QCOM allegedly gets those patents incorporated into important standards. The Third Circuit saw the same things that I and others saw, and that was the intuitive basis for the reversal.

2. The surprise here, however, is the timing. Back when this case was dismissed, many of us assumed that BRCM would never get to see the case through to completion. Surely, we thought, BRCM and QCOM will settle their many cases by the time the appeals court rules; thus, the antitrust appeal will never actually happen. That, obviously, has turned out to be an error. BRCM and QCOM have not been able to strike a deal with respect to the ITC and Santa Ana patents, and that now means that this appeal has had enough time to actually run its course.

3. That said, there are still 18-24 months on the clock, because the case now goes back to the district court for renewed discovery, new motions, and possibly a trial. So this case is back in the pile of things to watch, but a ruling is far from imminent.

4. BRCM and QCOM have already released dueling press releases summarizing the court decision. Neither is quite right. The reality of the decision is that BRCM had articulated the same basic allegations using a variety of different legal hooks. The lower court had ruled that none of the legal hooks were sufficient; the appeals court said some of them were. Importantly, however, BRCM really did not need all of those hooks. BRCM just needs enough hooks that it can (a) pursue discovery and (b) get meaningful remedies if its allegations hold true – and the decision from the appeal certainly leaves intact enough hooks to accomplish those goals. So QCOM is wrong to just count up the allegations and say that most were dismissed. That is factually true, sure, but of little moment. BRCM “won” in the sense that it will now have its day in court and, more important, have the next 12 months to use discovery to find information that might help make its case.

5. Lastly, the fight here is now squarely about RAND.  BRCM alleges that QCOM violates antitrust law by (a) promising RAND prices in order to get chosen as part of key standards but then (b) not living up to the RAND commitment.  QCOM obviously will defend by saying that it actually does live up to RAND.  Thus this case is tightly linked to the NOK cases which similarly turn on whether QCOM's practices are consistent with the RAND commitment.  The other BRCM cases are importantly different, in that they involve BRCM patents that were not promised to a standards body and hence are not subject to RAND.