Golden Bridge Technology, Inc. v. Nokia, Inc.
| Decision Date | 17 February 2006 |
| Docket Number | No. 2:05-CV-170.,2:05-CV-170. |
| Citation | 416 F.Supp.2d 525 |
| Parties | GOLDEN BRIDGE TECHNOLOGY, INC., Plaintiff, v. NOKIA, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
Thomas John Ward, Jr., Law Office of T. John Ward Jr. PC, Longview, TX, Alisa Anne Lipski, Corby R. Vowell, Michael J. Collins, Edward W. Goldstein, Goldstein & Faucett LLP, Houston, TX, Deborah J. Race, Otis W. Carroll, Jr., Ireland Carroll & Kelley, PC, Tyler, TX, Franklin Jones, Jr., Jones & Jones-Marshall, Marshall, TX, for Plaintiff.
Thomas Ray Jackson, Michael J. Newton, Jones Day, Mara Jill Bindler, Mike McKool, Jr., Patrick Joseph Conroy, Theodore Stevenson, III, McKool Smith, Dallas, TX, Allen Franklin Gardner, Michael Edwin Jones, Potter Minton PC, Deron R. Dacus, Ramey & Flock, Andy Wade Tindel, Provost Umphrey Law Firm, Tyler, TX, Carl R. Roth, Michael Charles Smith, The Roth Law Firm, Harry Lee Gillam, Jr., Melissa Richards Smith, Gillam & Smith, LLP, Samuel Franklin Baxter, Attorney at Law, Marshall, TX, James Mrowicki, Kathleen J. Mackie, Peter C. McCabe, III, Winston & Strawn, David C. McKone, David A. Nelson, Latham & Watkins LLP, Chicago, IL, Daniel B. Rapport, Robert D. Kaplan, Friedman Kaplan Swiler & Adelman LLP, Steven Cherny, Latham & Watkins LLP, New York, NY, David E. Jones, Heller Ehrman LLP, Madison, WI, David E. Kleinfeld, Heller Ehrman LLP, San Diego, CA, Marc Schildkraut, Heller Ehrman LLP, Washington, DC, Glenn Allen Perry, Sloan Monsour, Eric Miller Albritton, Attorney at Law, Longview, TX, Kyle D, Andeer, Latham & Watkins, San Francisco, CA, for Defendants.
Before the Court is Nokia, Inc.; Motorola, Inc.; T-Mobile USA, Inc.; Ericsson, Inc.; Panasonic Mobile Communications Co. LTD; NTT Docomo, Inc.; Qualcomm Incorporated; and Lucent Technologies, Inc.'s (collectively "Defendants") Joint Motion to Dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and under 12(b)(1) for lack of subject matter jurisdiction (Docket No. 49). For the reasons discussed below, the Court DENIES Defendants' Motion.
Defendants and Golden Bridge Technology Inc. ("GBT") are members of a nonprofit standard setting organization called Third Generation Partnership Project ("3GPP"). 3GPP is composed of representatives from wireless telecommunications companies from all over the world. 3GPP was created to institute uniform technology standards for telecommunications systems and equipment to ensure worldwide compatibility of Wideband Code Division Multiple Access ("WCDMA") devices and systems.
GBT develops technology utilized in the wireless communications industry, specifically for WCDMA systems. GBT owns the patent to a technology called Common Packet Channel ("CPCH"), which allows medium-sized packets of electronic information to be sent between a cellular phone and a base station. In 1999, CPCH was adopted by 3GPP as an optional part of the 3GPP standard. This meant that manufacturers of cellular equipment were not required to use CPCH, but if they chose to include the technology they had to comply with the CPCH standard set out by 3GPP.1
GBT alleges that after the issuance of its patents covering CPCH technology it began discussions with several Defendants to secure licenses of the technology. In March 2005, the 3GPP Technical Standards Group met at a meeting in Tokyo, Japan. Defendants were all represented at this meeting. However, GBT was not in attendance. At the meeting, most of the Defendants were participants in the "Feature Clean Up Committee" that decided which technologies would be proposed for removal, from the standard. Allegedly, CPCH was added to the list of features for removal as a result of an "offline session" involving Defendants. The contents of this "offline session" were not recorded in the minutes of the official session. GBT claims that Defendants conspired among themselves not to deal with GBT and to have CPCH removed from the 3GPP standard. GBT contends that Defendants sought to remove CPCH from the 3GPP standard to prevent having to pay royalties to GBT for its technology and to ensure that network operators would be unable to demand the equipment from Defendants. GBT claims it was not given any prior notice that CPCH would be considered for deletion at the March meeting.
GBT filed this complaint on May 6, 2005 alleging a violation of the Sherman Antitrust Act, 15 U.S.C. § 1 and state law claims for tortious interference with prospective economic advantage and unfair competition. 3GPP approved the recommendation for deletion of CPCH from the standard at a plenary session in Quebec, Canada on June 1-3, 2005. GBT claims the removal of CPCH from the 3GPP standards eliminated GBT's ability to market CPCH and excluded GBT and CPCH from the market by foreclosing the ability of telecommunications equipment manufacturers and network operators to implement CPCH. GBT claims that Defendants' actions exemplify a classic group boycott or concerted refusal to deal constituting a per se violation of § 1 of the Sherman Antitrust Act ("Sherman Act"). Defendants contend that GBT has not asserted a claim under the Sherman Act because GBT has not alleged that Defendants engaged in a conspiracy, the per se rule does not apply to standard setting activities such as those at issue in this case, GBT has not defined a relevant market, and GBT lacks antitrust standing because it has not pled an antitrust injury.
Dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) is appropriate where a party fails to state a claim upon which relief can be granted. See FED. R. CIV. P. 12(b)(6). In ruling on a Rule 12(b)(6) motion to dismiss, a court construes the complaint in favor of the plaintiff and all facts pleaded are taken to be true, no matter how improbable those facts. See Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989); Lowrey v. Texas A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir.1997). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). However, "in order to avoid dismissal for failure to state a claim . . . a plaintiff must plead specific facts, not mere conclusory allegations." Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000). A court "will thus not accept as true conclusory allegations or unwarranted deductions of fact." Id.
Section 1 of the Sherman Act states that "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." To establish a § 1 violation, a plaintiff must prove that: (1) the defendants engaged in a conspiracy, (2) the conspiracy had the effect of restraining trade, and (3) trade was restrained in the relevant market. Apani SW, Inc. v. Coca-Cola Enter., Inc., 300 F.3d 620, 627 (5th Cir.2002); Spectators' Comm. Network Inc. v. Colonial Country Club, 253 F.3d 215, 220 (5th Cir. 2001); Johnson v. Hosp. Corp. of Am., 95 F.3d 383, 392 (5th Cir.1996).
Defendants argue GBT has not alleged that Defendants engaged in a conspiracy. Defendants contend they did not conspire against GBT but only made recommendations as participants of the Feature Clean Up Committee at the March 2005 meeting in Tokyo. GBT alleged Defendants engaged in a conspiracy at the March 2005 meeting:
42. Defendants acted in concert with each other by voting and/or agreeing to remove CPCH from the next release of the 3GPP technical standards, without notice, without technical justification, and without a replacement, for the purpose of injuring and interfering with GBT's business, in part because of GBT's efforts to obtain favorable licenses for its technology.
....
46. At the March 9-11 3GPP meeting, Defendants combined and conspired to refuse to deal with GBT with respect to CPCH, and encouraged others to refuse to deal with GBT by eliminating CPCH as an optional standard for 3GPP technology, contrary to Section 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1.
GBT sufficiently alleges that Defendants engaged in a conspiracy to overcome a 12(b)(6) motion to dismiss. This is especially true since GBT has not been able to conduct extensive discovery at this point in the proceedings to determine exactly what occurred among the Defendants prior to and during the March 3GPP meeting in Tokyo.
An action must be deemed an unreasonable restraint of trade to violate § 1 of the Sherman Act. NW Wholesale Stationers, Inc. v. Pac. Stationary & Printing Co., 472 U.S. 284, 289, 105 S.Ct. 2613, 86 L.Ed.2d 202 (1985). An unreasonable restraint of trade can be proven using either "the per se rule" or "the rule of reason." See Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d 284, 289 (5th Cir.1988). Under the rule of reason analysis a plaintiff must "show that the defendants' actions amounted to a conspiracy against the market—a concerted attempt to reduce output and drive up prices or otherwise reduce consumer welfare." Id. at 293-92. A plaintiff must establish two elements related to an anticompetitive conspiracy under the rule of reason: "(1) that the defendant engaged in some form of joint action, and (2) that this joint action amounted to an unreasonable restraint of trade." Id. at 293. An unreasonable restraint of trade can be established by proving either an unlawful purpose or an anticompetitive effect. Id. at 294. In Northwest Wholesale Stationers, the Supreme Court stated that claims under § 1 of the Sherman Act are subject to the rule of reason analysis
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