Study of the Antimonopoly Act on Bundling involving Standard-Essential Patents ～Based on the discussion in FTC v. Qualcomm～ (2022.3)

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SHIRAISHI, Kosuke(Planning Office, Investigation Bureau, General Secretariat, Japan Fair Trade Commission and Researcher of the Competition Policy Research Center)　

Abstract
In FTC v. Qualcomm, the licensing practice called “No License, No Chips” (“NLNC”) policy, which requires signing a SEP license agreement as a condition for modem chip supply, was alleged to be an anticompetitive practice. In Japan, there are a small number of studies focused on NLNC’s anticompetitive effect. A few studies argue that anticompetitive effect of NLNC is so called “add-on effect”. This discussion paper analyzes the District Court decision, arguments by the both parties, Amicus Curiae at the Appeal Court and the Appeal Court decision. It then clarifies the anticompetitive effect of NLNC. Finally, it studies how to assess the similar conduct under the Anti-Monopoly Act also known as the Japanese antitrust law. This paper concludes that NLNC can raise the cost for competitors by allocating the price of chips to the royalties of SEPs although NLNC does not have “add-on effect”.“As efficient competitor test” is not right tool for evaluating the conduct. NLNC is not competition on the merits. The conduct is not justified for preventing infringement of patent rights. It may violate the Japanese antitrust law as exclusionary conduct.

Abstract

　
In FTC v. Qualcomm, the licensing practice called “No License, No Chips” (“NLNC”) policy, which requires signing a SEP license agreement as a condition for modem chip supply, was alleged to be an anticompetitive practice. In Japan, there are a small number of studies focused on NLNC’s anticompetitive effect. A few studies argue that anticompetitive effect of NLNC is so called “add-on effect”.

This discussion paper analyzes the District Court decision, arguments by the both parties, Amicus Curiae at the Appeal Court and the Appeal Court decision. It then clarifies the anticompetitive effect of NLNC. Finally, it studies how to assess the similar conduct under the Anti-Monopoly Act also known as the Japanese antitrust law.

This paper concludes that NLNC can raise the cost for competitors by allocating the price of chips to the royalties of SEPs although NLNC does not have “add-on effect”.“As efficient competitor test” is not right tool for evaluating the conduct. NLNC is not competition on the merits. The conduct is not justified for preventing infringement of patent rights. It may violate the Japanese antitrust law as exclusionary conduct.