Memorandum: Will the International Trade Commission or the Antitrust Division Set Policy on Monopoly and Innovation?

Will the U.S. International Trade Commission (ITC) or the Antitrust Division set policy on monopoly and innovation? I submit this memorandum to the Antitrust Division to pose this question, which arises from the ITC’s serious misapplication of antitrust law and economics in Investigation No. 337-TA-1065, Certain Mobile Electronic Devices and Radio Frequency and Processing Components Thereof (the 1065 Investigation). I was an expert economic witness for Qualcomm in this patent-infringement dispute with Apple. I explain in this memorandum why it is my opinion that the administrative law judge (ALJ) in the 1065 Investigation reached findings that conflict with controlling American antitrust jurisprudence. Those errors concern (1) the incorrect inference of monopoly power from market share alone and (2) the incorrect view that Schumpeterian competition across successive generations of monopoly cannot deliver innovation and lower quality-adjusted prices. The ALJ’s findings drive a wedge between the Antitrust Division and the ITC on how properly to use economic principles to diagnose monopoly power. As the quality of administrative adjudication deteriorates at the ITC, patent holders engaged in global disputes over licensing or infringement can choose to litigate their multijurisdictional disputes before highly sophisticated tribunals in other countries. Given what the 1065 Investigation reveals about how far the ITC’s economic sophistication on monopoly and innovation lags behind that of the Antitrust Division, why would any patent holder having the choice litigate before the ITC rather than a court in London or Germany or China?

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