Golden Bridge Technology, Inc. v. Motorola, Inc.

• Citation: 547 F.3d 266
• Decision Date: 23 October 2008
• Docket Number: No. 07-40954.,07-40954.
• Parties: GOLDEN BRIDGE TECHNOLOGY, INC., Plaintiff-Appellant, v. MOTOROLA, INC.; Ericsson, Inc.; Panasonic Mobile Communications Development Corp. of USA; Qualcomm Incorporated; Lucent Technologies, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

547 F.3d 266

GOLDEN BRIDGE TECHNOLOGY, INC., Plaintiff-Appellant, v. MOTOROLA, INC.; Ericsson, Inc.; Panasonic Mobile Communications Development Corp. of USA; Qualcomm Incorporated; Lucent Technologies, Inc., Defendants-Appellees.

No. 07-40954.

United States Court of Appeals, Fifth Circuit.

October 23, 2008.

Donald H. Mullins (argued), Badgley-Mullins Law Group, George E. Kargianis, Law Offices of George Kargianis, Seattle, WA, for Golden Bridge Technology, Inc.

Peter C. McCabe, III, Michael Paul Mayer, Winston & Strawn, Chicago, IL, for Motorola, Inc.

Theodore E. Stevenson, III, Rosemary T. Snider, McKool Smith, Patrick J. Conroy, Shore, Chan, Bragalone, LLP, Dallas, TX, Joel Lance Thollander, McKool Smith, Austin, TX, for Ericsson, Inc.

Marc G. Schildkraut, Howrey, LLP, Washington, DC, Glenn A. Perry, Sloan, Bagley, Hatcher & Perry, Longview, TX, for Qualcomm, Inc.

Christopher S. Yates, Daniel M. Wall (argued), Latham & Watkins, San Francisco, CA, for Lucent Technologies, Inc.

Appeal from the United States District Court for the Eastern District of Texas.

Before GARZA and ELROD, Circuit Judges, and HICKS,^* District Judge.

EMILIO M. GARZA, Circuit Judge:

Plaintiff Golden Bridge Technology, Inc. ("GBT") appeals the district court's grant of summary judgment in favor of the defendants.¹ The district court granted summary judgment against GBT's claim that the defendants unlawfully conspired not to deal with GBT in violation of the Sherman Antitrust Act. For the following reasons, we affirm.

I

Golden Bridge Technology ("GBT") develops wireless communications technology for cellular networks. Along with the Appellees, GBT is a member of a non-profit standard setting organization called Third Generation Partnership Project ("3GPP"). 3GPP institutes uniform technology standards for the telecommunications industry to ensure worldwide compatibility of cellular devices and systems. More than 260 companies belong to 3GPP, representing all levels of the cell phone industry. The 3GPP members are responsible for creating and developing the 3GPP standard, which means determining what technologies will be included in the standard as either mandatory or optional features.

GBT owns patents to Common Packet Channel technology ("CPCH"), which allows the transmittal of electronic information packets between cellular phones and base stations. In 1999, 3GPP adopted CPCH as an optional feature. Optional status meant that manufacturers did not have to use CPCH, but if they chose to they had to follow the 3GPP standard to ensure compatibility with other equipment and networks. Since that time, two companies have obtained licenses to use CPCH, but neither company has field tested or implemented the technology.

Changes to the 3GPP standard occur through consensus of the individual members. Individual members are divided into Working Groups, which have different responsibilities related to developing the standard. Each Working Group belongs to one of six Technical Specification Groups, and the Technical Specification Groups are presided over at the top level by the Project Coordination Group. The Working Groups propose changes to the 3GPP standard by submitting change requests to the other Working Groups, which if approved are submitted to the relevant Technical Specification Group for decision. The opposition of a single individual member prevents approval of a change request, unless 71% of individual members attending a subsequent plenary meeting vote to adopt the change. Technical decisions are appealable to the Project Coordination Group.

At the 2004 plenary meeting for the Technical Specification Group to which GBT and the Appellees belonged, individual members wanted to simplify the 3GPP standard by removing old and unused technologies. At a subsequent Working Group meeting in Scottsdale, Arizona, two individual members presented a proposed feature clean-up list that did not include CPCH. No decision was reached, and the clean-up discussions continued via emails between several companies in attendance at the Scottsdale meeting. These companies (including Motorola, Ericsson, and Qualcomm, but not Lucent) discussed adding CPCH to the clean-up list. No agreement was reached and they ultimately declined to include it, apparently due to concerns that its inclusion would prevent consensus. GBT did not attend this meeting and was not included on the emails.

The next plenary meeting occurred in Tokyo, Japan. Appellees all attended this meeting, but GBT did not. The proposed feature clean-up list was presented, still not including CPCH. However, an Ericsson representative spoke out in front of the entire group, suggesting adding CPCH to the clean-up list. Cingular, a previous friend of CPCH, announced support for removal. No objections arose. Discussion turned to other issues, and the chairperson of the plenary meeting requested that the members hold an offline session to obtain consensus on unresolved items. On the final day of the plenary meeting, the members presented the revised clean-up list with CPCH included. No one objected, so the Working Groups created change requests for each feature on the list. These change requests were approved at a subsequent Working Group meeting, which GBT failed to attend. At the following plenary meeting in Quebec, the change requests obtained final unanimous approval and all of the features on the revised clean-up list were removed from the 3GPP standard. GBT also failed to attend this meeting and did not appeal CPCH's removal to the Project Coordination Group.

GBT filed this lawsuit prior to the Quebec meeting, alleging a violation of the Sherman Antitrust Act, 15 U.S.C. § 1. GBT claimed that the defendants conspired with each other to remove CPCH from the 3GPP standard, resulting in the unlawful exclusion of GBT from the market. The district court granted the defendants' motion for summary judgment, finding that GBT had failed to present any evidence of a conspiracy. GBT now appeals.

II

We review the district court's grant of summary judgment de novo, applying the same standard as the district court. Fabela v. Socorro Indep. Sch. Dist., 329 F.3d 409, 414 (5th Cir.2003). We view all facts in the light most favorable to the non-movant, and affirm only when the evidence "show[s] that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED R. CIV. P. 56(c); see also Coury v. Moss, 529 F.3d 579, 584 (5th Cir.2008).

The Supreme Court has specified what a plaintiff must show to avoid summary judgment on a Sherman Act § 1 claim:

To survive a motion for summary judgment ... a plaintiff seeking damages for a violation of § 1 must present evidence "that tends to exclude the possibility" that the alleged conspirators acted independently. Respondents ... must show that the inference of conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed respondents.

See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Accordingly, we reverse the district court's grant of summary judgment only where the evidence is strong enough to reasonably exclude the possibilities of independent action and conduct consistent with permissible competition. See Tunica Web Adver. v. Tunica Casino Operators Ass'n, 496 F.3d 403, 409 (5th Cir.2007).

III

Section 1 of the Sherman Act states: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." 15 U.S.C. § 1. Although § 1 could be read to outlaw all contracts, it has long been interpreted to only proscribe unreasonable restraints. See Leegin Creative Leather Prods. v. PSKS, Inc., ___ U.S. ___, 127 S.Ct. 2705, 2712, 168 L.Ed.2d 623 (2007). To establish a § 1 violation, a plaintiff must prove that: (1) the defendants engaged in a conspiracy; (2) that restrained trade; (3) in the relevant market. See Apani Sw., Inc. v. Coca-Cola Enter., Inc., 300 F.3d 620, 627 (5th Cir.2002). Once a plaintiff establishes that a conspiracy occurred, whether it violates § 1 is determined by the application of either the per se rule or the rule of reason. See Spectators' Commc'n Network, Inc. v. Colonial Country Club, 253 F.3d 215, 222-23 (5th Cir.2001). If the court determines that the defendant's conduct "would always or almost always tend to restrict competition and decrease output," the restraint is per se illegal and no further inquiry occurs. See Leegin, 127 S.Ct. at 2713. However, if the conduct is not deemed per se unreasonable, the plaintiff will also have to prove that the conduct unreasonably restrains trade in light of actual market forces under the rule of reason. Id.

Regarding the conspiracy element, the Supreme Court recently observed that "the crucial question [in a § 1 claim] is whether the challenged anticompetitive conduct stems from independent decision or from an agreement." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (internal quotations omitted). The plaintiff must present evidence that the defendants engaged in concerted action, defined as having "a conscious commitment to a common scheme designed to achieve an unlawful objective." Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984). Concerted action may be shown by either direct or circumstantial evidence. Direct evidence explicitly refers to an understanding between the alleged conspirators, while circumstantial evidence requires additional inferences in order to support a conspiracy claim. See Tunica, 496 F.3d at 409. Independent parallel conduct, or even conduct among competitors that is consciously parallel, does not alone establish the contract, combination, or conspiracy required by § 1. S...