The DOJ Should Review Avanci’s Patent Pool and Revoke its License to Troll
Alex Moss | October 18, 2022
The Department of Justice’s Antitrust Division is supposed to protect Americans from schemes that drive prices up and competition down. Unfortunately, the Division’s former head, Makan Delrahim, did the opposite, protecting anticompetitive conduct from meaningful scrutiny and disregarding concerns about consumer harm. One glaring example is the (absurdly favorable) business review letter he issued regarding a patent licensing pool administered by Avanci.
That pool includes a huge (but secret) number of patents declared essential to the 5G standard. Avanci was, however, open about its plan to offer licenses exclusively to car makers and refuse licenses to all other industry participants—including manufacturers of the components that enable 5G communication. The DOJ’s letter acknowledged the pool’s potential anticompetitive effects, but ignored or downplayed them while overstating its potential benefits. This favorable treatment was no surprise given Maken Delrahim’s long tenure as a lobbyist for Qualcomm, one of Avanci’s founding members.
Two years later, those anticompetitive effects can no longer be ignored—we are seeing them play out in the real world, and they will only get worse as 5G becomes more entrenched. Subsequent developments—especially the global supply chain crisis—have made the industries affected by Avanci’s pool even more vulnerable. Sparked by the COVID-19 pandemic and exacerbated by Russia’s invasion of Ukraine, that crisis continues to depress supply and inflate costs as well as uncertainty in the supply chain for cars and the chips on which they (and all connected devices) depend—the same industries affected by Avanci’s pool. The last thing American manufacturers and consumers of cars and semiconductor chips need are additional costs, risks, and uncertainty.
For that reason, PIPLI has joined 27 former government officials, professors, and public interest advocates in urging the Antitrust Division’s current head, Assistant Attorney General Jonathan Kanter, to reconsider the business review letter approving the Avanci patent pool. Withdrawing, revising, or downgrading that letter will send a strong signal to Avanci that it no longer has a green light to engage in abusive patent licensing practices. If the letter stands, it will embolden Avanci to expand its range of targets to encompass connected devices of all kinds, encourage others to follow Avanci’s example, and deter private attempts to challenge this type of conduct through litigation. Avanci is sure to benefit, but the American people will bear the cost through higher product prices and lost opportunities for innovation and employment.