Sullivan & Cromwell’s Garrard Beeney wasn’t at all surprised about the antitrust suit filed Friday against his client, the patent licensing company MPEG LA, by a German technology firm called Nero AG. [Hat tip: Courthouse News, which links to the complaint.] Beeney told us that antitrust allegations are a pretty common tactic in the sort of licensing fee dispute MPEG LA and Nero are involved in. Earlier this year, MPEG sued Nero for breach of contract alleging that it had not fully paid what MPEG believes that Nero owes under the terms of the licensing agreement. Beeney said the antitrust suit was a standard countermeasure.
“I think we’re looking it as a typical response by a company that has not abided by the terms of the license they’ve taken,” said Beeney, a former Litigator of the Week for his work on behalf of MPEG LA in litigation against Alcatel-Lucent.
MPEG LA, as we’ve told you here and here, is in the business of issuing licenses for pools of patents related to digital video technology. Companies that want to make consumer technology products can take a license from MPEG LA and not worry about being sued. They also save the time of negotiating with individual patent holders.
But Nero, represented by Winston & Strawn, alleges that MPEG LA has abused its monopoly power. Nero claims that MPEG LA has not lived up to the commitments it made to the Department of Justice when it was previously investigated by antitrust enforcers. (The DOJ issued a letter to MPEG LA on June 26, 1997, stating that it was “not presently inclined to initiate antitrust enforcement action” over the licensing arrangement.)
According to the suit, MPEG LA has not engaged a truly independent expert who can determine what patents are essential to MPEG LA licenses. Nero claims that MPEG LA has added patents to its pools in an effort to extend its monopoly position. It also asserts that the pool has imposed licensing terms that are unfair, unreasonable, and discriminatory.
Beeney, who will be defending the case with his colleague Michael Steinberg, told us that similar allegations against patent licensors have been rejected by various jurisdictions, including the U.S. Court of Appeals for the Federal Circuit in Princo v. U.S. Philips.
John Gibson of Winston & Strawn, who filed the case for Nero, did not return a call for comment.
This story originally appeared in The Am Law Litigation Daily, a Corporate Counsel sibling publication.