Tag Archives: Department of Justice

Antitrust Attorney General suing AT&T supports patent monetization

Yesterday, United States Assistant Attorney General for Antitrust Division, Makan Delrahim, filed suit to stop the $85 billion AT&T-Time Warner merger, which previously had been progressing through regulatory approval. 

Almost at the same time, in a recent carefully crafted speech before a business and law audience, he outlined his preference for reliable patents and consistent, free-market enforcement. Putting a patent attorney in charge of antitrust may be the Trump administration’s best idea yet.

Delrahim’s remarks were delivered recently as part of the USC Gould School of Law’s Center for Transnational Law and Business Conference.

“Fresh thinking about the implications of SSOs [standards setting organizations] and the proper role of antitrust law is long overdue,” said Delrahim, who is the first patent attorney to head the Antitrust Division. “Bargaining over new and innovative technologies is a high stakes game, and each side has an incentive to use every means necessary to improve its end of the bargain.  In this game, the competitive market process should win.”

Well-Crafted

The thoughtful speech was welcome relief to IP holders, especially non-practicing entities whose primary business is patent licensing. However, some people thought the timing and intent of the remarks were more difficult to discern.

“Clearly he [Delrahim] is sending a message that the AG’s office, and perhaps the Trump administration, knows the difference between IP exclusivity, which is conducive to innovation and businesses, and anti-competitive behavior,” a significant patent holder told IP CloseUp.

It’s ironic that his comments were made just days before the DOJ’s decision to sue to stop the AT&T-Time Warner merger, or maybe not.

Yesterday the Department of Justice sued to block the AT&T-Time Warner merger, citing its anticompetitive nature and ability of the combined company “to drive up the cost of channels like HBO, CNN and TBS to rivals and ultimately to consumers.”

Senate Committee on the Judiciary documents submitted in support of Delrahim’s confirmation, show that he has worked in the White House as an advisor and has had a distinguished private legal career, often supporting acquirers in large transactions.

Delrahim emigrated from Iran with his family in the 1970s when he was ten years old to escape the political strife. After law school, he joined Patton Boggs. In 1998, Delrahim became a counsel to the United States Senate Committee on the Judiciary, working under Senator Orrin Hatch (R-UT). Jon Leibowitz, who was then a Democratic Senate aide and worked with Delrahim, remembered him as being a pragmatist.

His video recorded confirmation hearing, worth looking at. Delrahim’s testimony occurs approximately 52 minutes into the recording.

Not a Vigilante

CNN, which may have to be sold to permit the AT&T-TWC merger to go through, reported that “A long time colleague of Delrahim’s who says he is a liberal told CNNMoney that he can’t imagine that Delrahim ‘would engage in any type of vigilante justice to help the president in the deal…That’s just unfathomable to me.'”

Delrahim IP background and more enlightened approach to patents in the marketplace could go a long way to repairing the legislative and judicial hits that the patent system that has taken over the past six years.

“We don’t have the tools to know what the competitive royalty rate is,” concluded Delrahim in his USC speech, “—we’re not price regulators, after all—and if we inject antitrust law where it does not belong. It can actually subvert the competitive process and do serious harm to American consumers and to innovation itself… It’s time to correct this asymmetry to ensure that there are maximum incentives to innovate, and equally proper incentives to implement.”

For the text of Delrahim’s remarks, go here.

Image source: bostonherald.com; fortune.com

Silicon Valley Execs Collude to Steal from Engineers, says Pando Daily

Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by and reported in PandoDaily,

clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies Valleyjp1-videoSixteenByNine1050-v2ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations firm WPP. All told, the combined workforces of the companies involved totals well over a million employees.

The well cited and linked PandoDaily piece is worth reading. It sources a Department of Justice investigation. Pando, BTW, is owned by a group of Silicon Valley investors, mostly VCs, who may find it beneficial to spread the blame beyond the Bay Area.

International Business Times provided a chart showing some of the companies involved.

According to reports, damages in the case, which will be heard in San Jose starting May 27, could as high as $9 billion if the workers are able to prove that the Valley’s prominent technologies companies invoked an “overarching conspiracy” not to recruit or hire each others’ talent to hold down their mobility and pay. 

A lead story in The New York Times on February 28, “Engineers Allege Hiring Collusion in Silicon Valley,” took PandoDaily’s reporting a step further. The lead of the story could just as easily have been addressing the patent battles that have befallen patent holders and are currently being waged on Capitol Hill, where patent monetization is being characterized as a scourge that must be obliterated.

“SAN FRANCISCO — Tech companies love new ideas, unless they belong to someone else. Then any breakthroughs must be neutralized or bought. Silicon Valley executives know all too well that a competitor’s unchecked innovation can quickly topple the mightiest tech titan.”

The net-net: Most large tech players fear patents, and despite holding many, will do just about anything to weaken their impact. Hopefully, this will be a wake up call for lawmakers, the media and others.

The Times story goes on to report “Just how far Silicon Valley will go to remove competitive risks and how they are at the heart of a class-action lawsuit that accuses industry executives of agreeing between 2005 and 2009 not to poach one another’s employees… the case involves 64,000 programmers and seeks billions of dollars in damages. Its mastermind, court papers say, was the executive who was the most successful, most innovative and most concerned about competition of all — Steve Jobs.”

*****

Was it primarily Jobs or is it merely convenient to put the primary blame on him now that he is no longer present to defend himself?

“These guys have such an amazing sense of entitlement,” one prominent patent holder told me today. “Do you think they would have any problem stealing IP from inventors or NPE’s? Lawmakers who buy the patent ‘troll’ fairy tale are either naive or are afraid to lose campaign support.”

Image source: http://www.nyt.com

Bold Patent Moves Bolster Facebook, MSFT

Cash Rich, IP-Savvy MSFT Embraces Role of Patent Dealmaker

After acquiring 800 patents and scores of applications and licenses from AOL for $1.1B just two weeks ago, Microsoft has said that it has flipped the bulk of the portfolio, 650 patents, to Facebook for $550M, securing the IP assets and licensing MSFT needs while recouping almost half of its original potentially bargain cost.

It was reported today in Venture Beat that MSFT wanted to partner with FB all along, but that AOL put the cabash on it. IP CloseUp is not buying that.

In a pre-IPO buying frenzy that has to concern some shareholders, FB has a costly portfolio of quality patents to its $1B acquisition of Instagram two weeks ago. You have to wonder if investors believe that despite FB’s lofty market valuation whether it has the firepower to succeed as a major growth company. These recent moves are sure to help. In March, Yahoo sued Facebook, alleging Facebook violated ten Yahoo patents related to online advertising and web communications.

“Stinking Mad”

Sources have told IP CloseUp that Facebook was “stinking mad” that it did not land the AOL patents when they went up for bid several weeks ago, confiding that the failure had more to do with process than cost. MSFT emerges a huge winner, with patents its needs for far less than their true market value (see “Could AOL Patent Sale Have Netted More Than $1B?”) and cash in hand.

You have to wonder how the AOL deal got done. With investor pressure from Starboard Value the company may have been spooked into taking what appeared to a best offer before others were on the table.

“The market was talking about $300M,” speculated one observer. “MSFT may have offered a billion plus if the deal got done immediately.” It did, much to Facebook’s chagrin (and Google’s and Apple’s) and others who may have wanted a shot at controlling AOL’s excellent portfolio, which included original Netscape Internet patents.

A post on the IAM Blog today raised good a question. Will a Department of Justice anti-trust team soon be mobilized to see how recent patent sales are being orchestrated given that some appear to be barely marketed?

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For the patent wars this marks new territory. Smart combatants with cash and guts are well-equipped to play. 

Illustration sources: hubspot.com; heavy-downloads.blogspot.com


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