Judge Ken Starr Responds to Derogatory Remarks About Economic Expert J. Gregory Sidak Made by an Administrative Law Judge in an International Trade Commission Patent Dispute Over Apple iPhones; Decision “Drives Wedge” Between ITC and Antitrust Division

Dec 16, 2018


WASHINGTON, D.C. – DECEMBER 16, 2018 – Judge Ken Starr, former Solicitor General and Circuit Judge on the U.S. Court of Appeals for the District of Columbia Circuit, has responded on behalf of J. Gregory Sidak, chairman of Criterion Economics LLC, whom Judge Starr represents “[a]s a matter of principle and without acceptance of any fee,” to derogatory comments about Mr. Sidak’s expert economic testimony that were made by an administrative law judge (ALJ) of the International Trade Commission (ITC) in the recommended determination in Investigation No. 337-TA-1065, Certain Mobile Electronic Devices and Radio Frequency and Processing Components Thereof. The 1065 Investigation concerns Apple’s alleged infringement of certain non-standard-essential Qualcomm patents practiced in five models of iPhones. Judge Starr concludes that an appellate court would find multiple rulings by the ALJ that disparage Mr. Sidak to be arbitrary and capricious, unsupported by substantial evidence, and contrary to established antitrust law. In addition, Judge Starr explains why in his opinion the ALJ’s recommended determination “reached findings that conflict with controlling American antitrust jurisprudence and consequently drive a wedge between the Antitrust Division and the ITC on how properly to use economic principles to diagnose monopoly power.”

Judge Starr delivered a letter to Assistant Attorney General Makan Delrahim of the Antitrust Division of the U.S. Department of Justice on Tuesday, December 11, 2018, alerting him to the rift that the 1065 Investigation creates between the ITC and the Antitrust Division. Writing from the perspective of an appellate judge reviewing an agency’s action, Judge Starr identifies what he considers to be three reversible errors in the ALJ’s findings concerning Mr. Sidak’s testimony: (1) the ALJ’s inference of monopoly power from market share alone, (2) the ALJ’s finding that Schumpeterian competition across successive generations of monopoly cannot deliver innovation and lower quality-adjusted prices, and (3) the ALJ’s finding that Mr. Sidak was biased and that his expert economic testimony lacked credibility and deserved no evidentiary weight. Judge Starr enclosed with his letter to Mr. Delrahim a copy of Mr. Sidak’s own memorandum to the Antitrust Division, Will the International Trade Commission or the Antitrust Division Set Policy on Monopoly and Innovation?. Written in consultation with Judge Starr, the memorandum explains in greater economic detail why the ALJ’s findings in the 1065 Investigation conflict with controlling American antitrust jurisprudence and diminish public confidence in the quality and sophistication of the ITC’s administrative adjudication of patent-infringement disputes.

Judge Starr concludes that “the misapplication of antitrust concepts that is apparent in the ALJ’s initial determination in the 1065 Investigation usurps the Antitrust Division’s role in the setting of national policy on questions of monopoly and innovation. In addition, that an ALJ could so misapply familiar antitrust concepts diminishes public confidence that the ITC has the competence to resolve the weighty economic issues necessarily presented in complex disputes over valuable intellectual property rights. Patent holders engaged in global disputes over licensing or infringement can choose to litigate their multijurisdictional disputes before highly sophisticated tribunals in other countries, particularly the specialized patent courts in London and Germany. The deficit of economic rigor evident in the ALJ’s initial determination in the 1065 Investigation diminishes the ITC’s reputation as an expert adjudicator of these global patent disputes and encourages patent holders to litigate overseas.”

Regarding the ALJ’s presumption that Mr. Sidak’s testimony was biased owing to the amount of his professional fees to Qualcomm, Judge Starr concludes that “an appellate court would likely find (1) that the ALJ in the 1065 Investigation based his conclusions of bias on an inaccurate assumption of the actual depth and breadth of Mr. Sidak’s engagement on behalf of Qualcomm, and (2) that the finding that Mr. Sidak was biased was not only unsupported by substantial evidence, but also arbitrary and capricious.” As Judge Starr explains, “The ALJ never considered that Mr. Sidak and his staff at Criterion Economics devoted more than 9,000 hours” to the case and “never compared Criterion’s fees with those charged by economic consulting firms employing or supporting other expert economic witnesses of comparable reputation on matters of similar size, scope, complexity, urgency, and consequence.” Judge Starr further explains that “Qualcomm disclosed in federal district court in October 2018 that it believes that Apple owes Qualcomm $7 billion in past-due royalty payments,” such that “Qualcomm’s litigation costs for fiscal year 2018 . . . exceed[ed] half a billion dollars. The Criterion professional fees upon which the ALJ remarked were less than 1 percent of that amount.”

Regarding Mr. Sidak’s professional reputation and credibility as an expert economic witness, Judge Starr observes that the ALJ in the 1065 Investigation “seemed not to recognize the depth of Mr. Sidak’s professional experience, the breadth of his scholarly contributions to the economic analysis of complex legal disputes on competition and intellectual property questions, or the credibility given his scholarship by respected jurists and scholars over many years.” Judge Starr notes that Mr. Sidak twice served as Judge Richard Posner’s court-appointed neutral economic expert in patent litigation, and that “American jurists across the political spectrum—Stephen Breyer, Frank Easterbrook, Douglas Ginsburg, Neil Gorsuch, Raymond Randolph, Stephen Reinhardt, Laurence Silberman, David Souter, and Stephen Williams—have cited Mr. Sidak’s writings,” which include six books and approximately 150 scholarly articles. Judge Starr calls Mr. Sidak’s scholarly writings “prolific, original, and influential.” 

Judge Starr concludes: “As a former federal judge, I find it impossible to fathom how the ALJ in the 1065 Investigation could have found Mr. Sidak biased and lacking in credibility when for decades so many eminent jurists, policy makers, scholars, and clients have sought his counsel and have consistently recognized his objectivity, insight, intellectual rigor, and integrity. Mr. Sidak’s professional career has personified a character for truthfulness. Not only is that a virtue for any person to possess, it is precisely how the law defines credibility.”

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Founded in 1999 by J. Gregory Sidak, Criterion Economics LLC provides expert economic testimony in legal proceedings throughout the world. Additional information appears at https://www.criterioneconomics.com/.

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