Marvin Ammori

I should learn, at some point, the basics of how to program.  I did once argue that we should teach it in schools: programming is both the new liberal art and the new shop class.

I should also write another somewhat substantial piece on First Amendment doctrine. 

As noted in our last post, several news reports suggest that the FTC’s wide-ranging 19-month investigation of Google’s business practices is coming to an end.

The FTC and Google are also settling a (somewhat different) matter regarding whether Google can seek injunctions when it asserts “standard essential” patents, also known as SEPs.

This post is more for explanation than advocacy. The competitive issues regarding these patents are complex, and it remains unclear what the ultimate settlement will say.

CNET has a nice description of the reported agreement:

Google is prepared to agree not to use its patent war chest to block the sale of products it believes infringe on its intellectual property. The agreement would cover what are known as standard essential patents, which cover technology used in technical standards. (Reuters uses the example of a patent that ensures one brand of wireless phone can call another brand.)

Google has used those patents in litigation around the world as part of the ongoing patent wars among device manufacturers. But at least one federal judge has ruled that standard essential patents can’t be used to win injunctions, and a majority of FTC commissioners have ruled in recent cases that such a use of essential patents can be considered anticompetitive.

According to Reuters, the settlement would leave room for Google to request an injunction if an infringing company refused to negotiate a license.

According to news reports, Apple and Microsoft lobbied antitrust authorities in the United States and Europe to investigate Google for seeking injunctions based on SEPs.

In this (somewhat long) post, after the flip, I’ll explain what SEPs are, where they fit within the broader mobile patent wars, and the effect of the conditions that appear to be part of the FTC-Google agreement.

(If I am confused or wrong about something, I’d be happy to correct it. Just comment below. )

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Several news reports suggest that, after a wide-ranging 19-month investigation of Google’s business practices, the Federal Trade Commission is near to closing its investigation of Google. Early reports also suggest that the FTC found that Google’s business practices did not harm consumers or violate applicable antitrust laws. Specifically, the FTC seems to have rejected the Google competitors’ core antitrust arguments: that Google uses its search algorithm to preference its own products over that of its rivals. Politico this weekend reported that Google will be making some voluntary commitments regarding use of snippets, and AdWords-exclusivity arrangements. At the same time, the FTC and Google are also settling a (somewhat different) matter regarding whether Google can seek injunctions when it asserts “standard-essential” patents.

The coalition of competitors lobbying for an FTC investigation and seeking a federal antitrust case, called FairSearch, is already expressing disappointment. Last week, the coalition, which includes Microsoft, Foundem, and Hotwire, started asking the Department of Justice to repeat all the FTC’s work and start a new investigation of Google. Today, FairSearch issued a statement to the effect that the FTC was failing on the job unless it takes action “to permanently end Google’s biased display of search results.” It has also argued that “voluntary commitments” aren’t enforceable.

FairSearch’s words and actions reflect a little desperation. There is almost no way the DOJ would repeat the FTC’s lengthy investigation: our nation has two antitrust agencies who split rather than repeat the immense work of antitrust enforcement. It’s not a legal gauntlet, where companies must survive one antitrust agency after another, applying the same law. The FTC heard the complaints of Google’s competitors and it investigated them. Just because FairSearch failed to persuade the FTC does not mean that it should have another opportunity, with the same law and facts, at a different antitrust agency. Plus, to the extent that Google might be adopting some voluntary commitments, the FTC could enforce them under their strongest source of jurisdictional power: the FTC can act against deceptive practices. If Google even “voluntarily” commits to certain actions in the market and doesn’t abide, the FTC would have a stronger case than it would have under “unfairness” or even traditional antitrust principles. If we were talking about a different agency, I’d be more skeptical, but the FTC is not shy about going after such deception.

It is not surprising that the FTC rejected the search-bias arguments. As we, and others, have explained (see here and here), those arguments were evidently flimsy as a matter of fact and as a matter of law. For example, there is no way to define a “neutral, unbiased” search algorithm. The point of a search engine is to discriminate in favor of particular results for particular users, even if every website wishes to be listed first. A technical committee or government agency could not easily enforce search “neutrality.” Google’s competitors, like Bing, engage in the same practices. And consumers appear to benefit from many of the activities about which the competitors complain. FairSearch made its best case on search-bias, in public and private, and it was not a strong one.

I am looking forward to seeing the full details when the settlement is announced. I have written quite a bit about the antitrust investigation; I’ve focused on the issues of search “bias,” snippet-use and fair use, and transparency, each of which will be the topic of much discussion in tech and antitrust circles.

I haven’t written very much about the patent issues yet, but hope to do so soon.

Also–as readers of this blog are aware–Google is a client of my law firm on a range of issues, and  I have advised them during the FTC investigation. These thoughts are mine, and shouldn’t be attributed to anyone else, including Google.

Today, Politico ran an op-ed I wrote about the importance of ensuring fair use while enforcing competition policy. At the moment, the FTC is investigating Google for antitrust issues. The allegations against Google are many, and often changing, but I focus on one particularly problematic allegation: that Google is acting anticompetitively through quoting competitors’ content, even though Google relies on the fair use exemption in copyright law.

Of all the allegations leveled by Google’s competitors, I think this one might be the most dangerous argument for the broader Internet. It could provide copyright-like protections (a new “ancillary” copyright) that would expand the already-inflated copyright protections that can restrain users’ ability to access, find, and share information.

Here is a part of the Politico op-ed. It’s run in “Politico Pro,” meaning it’s available only to some readers (premium users). I believe in a few days, it will be removed from the paywall and available to all readers. Here is an excerpt (thanks to the fair use doctrine).

Opinion: The FTC and Google’s supposedly anti-competitive quoting

By Marvin Ammori

11/29/12 5:24 AM EST

Last month, a lawsuit over 10 words made headlines. The estate of author William Faulkner filed a copyright infringement suit against Sony Pictures because Sony’s 2011 Woody Allen film, “Midnight in Paris,” used a well-known, 10-word quote from a 1950 Faulkner novel. Coming less than a year after Wikipedia and Reddit blacked out their sites to protest controversial copyright legislation known as SOPA, Time magazine called this suit another example of copyright “getting out of control.”

Granting Faulkner’s estate these rights would harm creativity in film, but an antitrust agency in Washington may inflict even more damage to the Internet through another theory providing legal protection for short quotes.

Since June of last year, the Federal Trade Commission has been investigating Google based on allegations that the company’s actions are anticompetitive. The Financial Times reported last week that the FTC is considering one theory that could run straight into the buzzsaw of copyright law, as well as the First Amendment doctrine enabling us to quote authors. At the same time, it would likely ensure that the FTC and Google lock into years of litigation.

The agency is reportedly reviewing how Google crawls and displays short snippets of content from review websites. The crux of the theory is that Google displayed review snippets from Yelp and TripAdvisor and in Google Places, its local search tool.

Politico also ran an opposing op-ed from FairSearch, the coalition of companies, led by Microsoft, seeking the antitrust investigation against Google.

As most readers of this blog know already, my law firm and I do some work for Google, but I don’t speak for Google, only for myself.

Update – 2:55 PM

If you want to learn more about fair use, see this great explanation by Mike Masnick at Techdirt.

In his Judge, Jury & Executioner segment on yesterday’s show, Colbert discussed Supap Kirtsaeng v. Wiley & Sons, a case recently argued before the U.S. Supreme Court addressing whether the first sale doctrine applies to copyrighted goods made and purchased abroad but later imported into the United States. The segment referenced a piece in The Atlantic written by Marvin, discussing the broader implications of the case. The Court will issue its decision sometime before June 2013.

Bloomberg reports today that the FTC is reconsidering some aspects of its ongoing antitrust investigation of Google. According to the story, agency officials are not certain of the legal strength of a claim that Google preferences its own products and services over those of its competitors. In addition to the legal hurdle, the officials are trying to figure out if such preferencing actually provides “benefits to consumers” that “outweigh any harm suffered by rivals.”

If this story is accurate, it’s a good sign. Companies like Microsoft, Yelp, Nextag, Foundem, and others have aggressively made their case, flawed as I think it is, not only to the FTC, but also to Congress and in academic and legal circles. The FTC has taken their claims seriously and investigated them. But these competitors have leveled many allegations that are either factually disputed or likely to benefit consumers and could not even amount to a claim under antitrust law.

If the FTC ultimately decides not to advance some claims, it is not for lack of taking allegations seriously. Google’s competitors have had a lot of time to make their case. Having now put it forward, they have revealed just how weak it really is.

Disclosure: As we always note, Google is a client of the firm. We have been retained by the company to advise on these issues. But here I do not speak for the company, only for myself.