Last week, the Third Circuit held that in a consensus-oriented private standard setting environment, a patent holder’s intentionally false promise to license essential proprietary technology on fair, reasonable and non-discriminatory terms, coupled with the standard setting organization’s reliance on that promise when including the technology in the standard, and the patent holder’s subsequent breach of that promise, is anticompetitive conduct actionable under the Sherman Act.[1]

The Court of Appeals opinion reversed an earlier decision of the District Court for the District of New Jersey dismissing Broadcom’s antitrust suit against Qualcomm. In its complaint, Broadcom alleged that Qualcomm monopolized certain markets for cellular telephone technology through intentionally deceiving ETSI, a private standard-setting organization (SSO), and its members by making false

promises to license its patented technology on fair, reasonable, and non-discriminatory (FRAND)terms, and then reneging on those promises by licensing its technology on non-FRAND terms after the technology was incorporated into the standard.