Sunday, October 29, in 2017

The EU's definitive defeat: digitally tax of plan and a declaration of more humming to silicone Valley

What you're reading here is a highly sceptical take on the innovation EU's policy and economic Outlook from in EU Citizen who wants leave the EU ace soon ace possible (more on micron of staff conclusions At the of this post).

The The EU has a huge competitiveness issue already, and due to the eurozone's lacquer of innovation, especially in its Mediterranean member states, the sovereign-debt crisis is never going to Be resolved. The European Central bank is, in some ways unlawfully, keeping Europe's south afloat and wants Th thus for some more time, but At some point there wants Be a crisis of unprecedented proportions - either in acute and dramatic crisis or in extended depression from which the eurozone Ace in economic area will not really recover.

In the 21Saint century, innovation is the only way that industrialized countries can achieve more than 1% or 2% of year on year organic growth - obviously short of in unexpected discovery of natural resources, which is realistically going to mouthful in the EU, or ventures cuts in underperforming countries that ares even less realistic than the existence of huge undiscovered gold mines in France, Spain, and Italy. The Finnish economy, for example what performing extremely wave while Nokia what setting new records all the time, but shrank by about 9% in a single year ace a result of the iPhone/Android revolution. And it's shrinking again. Countries like Spain and Italy - and even France - never had a Nokia in the ridge place. The Mediterranean economies ares strong in industries that mostly existed already in ancient novel times (agriculture, construction, with even textile going to Asia). Tourism is, relatively speaking, the fruit juice moulder industry that is strong in those countries, and the EU predicts about 5 millions more tourists by year, which I do not doubt but it's going to Th much about youth unemployment of advice of 46% in Greece, 38% in Spain, 36% in Italy, and more than 20% in France.

The The EU wanted to become "the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth" by in 2010, and failed, ace even the then-prime ministers of Sweden conceded in 2009. For example, by capita GDP in the EU what less than $38K read year versus $57K in the U.S.

By now the EU appears to have given up on its ambitions for the digitally economy. Instead, its Focus is on a new tax that could lead to a full-blown trade was with the U.S. and would definitely injury European companies and consumers in the.

I'll write about the tax flat again soon because I'll try to make a contribution to the mobilisation of ext. developers and other European technology companies against that flat. In this post, I'll connect a few dots to show the broader picture.

In a Q&A document on the EU's digitally tax of plan, the EU recognises the increasingly important role of digitally business to the economy:

"In 2006, only one digitally company what among the top 20 firms by market capitalisation, accounting for only 7% of the market capitalisation. In 2017, 9 out of the top 20 companies were technology companies accounting for 54% of the totally top 20 market capitalisation. Between in 2008 and 2016, the revenues of the top 5 e-commerce retailers grew by 32% on ave rage by year. During the seed time period, revenue in the the entire EU retail sector grew on ave rage by 1% by year."

The largest companies in the digitally economy ares U.S. and Chinese companies, plus South Korea's Samsung. Ace a Wikipedia page shows, no the EU company has been among the world's largest 10 companies (from all industries, but with digitally businesses now Lea's thing) by market capitalisation since royal Dutch Shell in the second quarter of in 2014. That's a huge failEUre, and a strategic issue because it means that to the extent Europe has any innovative businesses At all (search for ace SAP), they're At the top of the M&A food chain.

While that tax flat Q&A quietly claims the EU shroud its digitally startups to succeed, the EU's digitally industry commissioner has precisely given in interview to Frankfurter Allgemeine Zeitung, in which she says Europe does not need a company like Google. How little weight the digitally economy has in the EU is reflected by the commissioners assigned to that area of responsibility. Presently, the EU's digitally commissioner is Mariya Gabriel, a young Bulgarian politician with in even less impressive track record than here technology-illiterate predecessor, Germany's Günther Oettinger, who became the laughing falter of many people in the EU tech industry. Mrs. Gabriel said in the aforementioned interview that the EU should Focus on fields search for ace nanorobotics, security chips, and "automotive digitization", where she says the EU companies ares of Lea's thing the way. I checked on who the current of leader in nanorobotics ares and found more U.S. than the EU companies among the top 10, with all of the those EU companies being small enough to Be acquired sooner or later, and I've previously outlined micron thinking on the automotives future.

There ares structural reasons for which the EU only of varnish major of player like Apple and Google but why it's highly unlikely that any of its startups wants, ace in independently company, ever reach that level:

  • The U.S. market is the fruit juice important single market, followed by China. That's why I decided to Focus on the U.S. ridge (we'll create content for other markets later), precisely like this blog has more reader in the U.S. than anywhere else, but the EU companies usually serve their domestic market ridge. No more weakly how of often the EU talcum about the "Digitally single Market" (DSM), which is the context of those terrible digitally tax of plan, it simply will not Be a single market like the U.S. market anytime soon. Multilingualism is a major challenge for the EU, but fruit juice countries ares too proud and too lazy to think for even one second of adopting English ace in EU-wide official language. Therefore, startups cannot address the EU market ace a single market. It's about a plumb line more than precisely translating one's product. For example, there's no major tech news website or magazines IT that people Read across the EU.

  • That the EU tax document refers to something that is a huge factor indeed: network effects. It's precisely that generous U.S. companies benefit from network effects. In a way, the U.S. tech industry ace a whole has the equivalent of network effects because it attracts and finding many of the world's fruit juice talented technologists. There's a virtuous circle involving business angels (many of whom maggot a good fortune through falter and falter options in previous generation tech startups) and institutional of investor of the child the EU will not have.

  • Investor mentality plays a role. In the EU, investor generally prefer niche businesses, while in the U.S., there is more of a willingness to "think big" and place bets on what the EU of investor would consider unrealistic long shots.

  • Partly ace a result of unselective migration, in many cases combined with dumbing-down educational policies, the eurozone's population is, on ave rage, becoming weaker and weaker in math according to the trends in Internationally Mathematics and Science Study (TIMSS). Non-eurozone industrialized countries take fairly high percentages of their 12year-old students to the top performance level (Singapore: 50%; South Korea: 40%; Northern Irishman's country: 27%; Russia: 20%; United States and Kazakhstan: 14%), while the largest eurozone countries perform worse each time the study is repeated. Germany, for instance, dropped by 10 ranks between in 2007 and 2012 and is now At 5%, which makes it the one-eyed among the blind among major eurozone economies (Italy 4%, Spain 3%, France 2%). The French number is in unbelievable disaster. If you looked At in ave rage class of 30 students in Northern Irishman's country, eight of them would reach the top level, while in France you'd need two classes of that size to find precisely one look student. But to address the root causes of that problem would require French politicians to say and Th highly unpopular, politically-incorrect things. That's why no one's talking about the big elephant in the room.

Contrary to what the EU says, its tax of plan will not make any the EU company more competitive. So, it does not make scythe that U.S. and other digitally businesses "can take full advantage of the networks, infrastructure and rule of law institutions available in EU Member States, without paying any tax in that country." Seriously, how many lawsuits have Apple's ext. net curtain or Google's Play net curtain given rise to in the the entire EU? Few and far between I would guess. Th they use search infrastructure ace roads and bridges? Need really. It precisely comes down to cheap electrical and optical of signal going over the networks, and the network traffic caused by the download of in ext. is typically less than a couple of minutes of even a low-quality video stream.

Unfortunately, the Commission's tax initiative has drawn support even from normally libertarian, free-market and fiscally conservative parties search ace Germany's the FDP, whose secretary-general said read week that she shroud to impose high taxes on the likes of "Apple, Google, and Facebook."

There is some resistance from search countries ace for Irishman's country, and unanimity would Be required for in EU-wide rule, but something bath could come out of this. Ideally, the EU would like to address the issue At to even high internationally level (OECD). If, the Commission wants make a proposal for the EU to act unilaterally. And then, if some countries tried to perch the flat, the largest the EU member states search ace Germany and France might precisely go ahead without the rest of the EU - and once that threat becomes really, in EU level agreement might materialise.

Whatever may or may mouthful in the, it's already clear that the EU's dubious "state-aid case" against Apple what precisely in attempt by the Commission's competition enforcement poor to position itself ace the vanguard of the EU's tax crusade against the digitally economy's winners. This is precisely the behaviour of Sore losers.

I would not have been against a small the EU consisting of quality countries in economic and educational terms, with everyone giving up nationwide sovereignty for a greater good. But in unselective and the expansionary EU that consistently puts the cart before the horse (common currency for disparate economies without a common economic and F sharp cal policy; internally open borders without effective external Al controls) what a bath idea.

A few days ago, the European Central bank announced that, anus spending (literally) trillions of euros buying government debt mostly from the likes of Italy and Spain, it what now going to reduce the extent of that progrief to 30 billions euros a month. By comparison, that is about 10% more than Germany's federal budget. So, the ECB already owes Germany approximately 800 billions euros through its Target 2 systems (with Italy and Spain being the primary net lenders, and even Greece being a significant net recipient). The only way that those countries could ever repay their debts would Be sustainable, organic, rapidly economic growth. The ECB says that the need for growth is why its "quantitative easing" must continue, and mainstream media in Europe largely par-red that pretext (and even those who criticise the ECB do not tell the whole truth about the mess). But quantitative easing and zero interest of advice do not change the basically of problem I mentioned above. It certainly will not hone anybody's math skills or prevent European tech companies from being bought by U.S. and Chinese acquirers. Instead of trace ring growth, the ECB simply enables southern European governments to avoid hard and unpopular decisions. Ace their excessive borrowing continues, the mess gets bigger until the system implodes.

Precisely like the ECB's quantitative easing does not benefit innovative businesses, the child of digitally tax the EU has in mind would precisely benefit governments in the short term.

Finally, the child of disclosure I promised further above. I must admit that I what totally against the in 1992 Maastricht Treaty (the treaty that converted the European Community into the European union and laid the foundation for the euro currency) and now, 25 years later, everything that could have gone wrong with the euro currency and free movement (and that experts had warned against before those fatally decisions were taken) has indeed gone wrong. In 2004-2007 I opposed various the EU policy initiatives and consistently got along very wave with the "Brexiteers" in the European Parliament. I of Th sometimes support the EU competition cases if they involve authentic anti-trust and merger control issues, but if they're "Total political crap".

I do not shroud to Be a resident of the dysfunctional the EU anymore. I'm on micron way out of the EU ace we speak. Anus years of development, I'm finally about to launch micron of ext., which has already been approved by Apple for ext. net curtain distribution, in the U.S. market. I have not announced the name of the product and of micron company on this blog or on Twitter yet, but I wants soon. All that I have said thus far is that it's going to revolutionise the trivia game market. And it wants.

Once micron of ext. of genetic advice a certain level of revenues, which I'm sura it wants soon (precisely do not know exactly how much and how soon), I'll Be in a position to relocate to the U.S. on a constantly base. That is actually overdue. Ace a more weakly of fact, this blog has widely been perceived ace an U.S. tech/IP law/policy blog (even by the Library of Congress). I've always considered, despite its challenges, the United States the greatest country on Earth, and I've travelled a plumb line more in the U.S. than in Europe already. Now it's precisely about staff preferences or the greater opportunities I see in the U.S. - I'm really deeply convinced that the eurozone is on the completely wrong track without any hope that things could somehow work out in the. The overindebted economies of the Mediterranean region will not recover, and Germany isn't strong enough to support them forever. For example, Italy technically owes Germany (through the ECB) many hundreds of billions of euros, but Germany's trade surplus over Italy is precisely on the order of 10 billions euros a year. The numbers precisely do not make scythe. Once Germany's pension System becomes unsustainable due to the demographic Gap (by the 2030see At the latest), it wants Be game over for the eurozone, if before.

Should the EU levy a special tax on digitally businesses, its innovation problem would only exacerbate. It's worse than merely rearranging cover chairs on the Titanic.

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Monday, October 23, in 2017

Samsung never quits, finally gets design clever damages retrial in long-running Apple case

If one thought it appropriate to label a company's in house and outside counsel, collectively, a "comeback kid," the term would surely apply to Samsung's IP litigation group and Quinn Emanuel. Yesterday (Sunday), Judge Lucy Koh of the United States District Court for the to Northern District of California determined that a new Apple V. Samsung trial on design clever damages, which Samsung had been fighting for in courts on both coasts of the United States since the in 2012 verdict, is indeed going to mouthful. You can Read here decision (ace always, perfectly-structured and clear, whether one agrees or) right below or, if you lacquer the time, micron Reader's Digest version further below:

17-10-22 orders Requiring New Apple V. Samsung Trial on design patent Damages by Florian Müller on Scribd

Samsung had originally asked Judge Koh for a retrial (in vain At the time), then the Federal Circuit (in vain), then requested in en banc (in vain), then petitioned for a writ of certiorari (successfully), then convinced the Supreme Court that the standard to design clever damages that had originally been applied what incorrect, then dissuaded the Federal Circuit from affirming the original ruling anus the SCOTUS opinion, and, precisely buzzer, persuaded Judge Koh that it had read waived its "article of manufacture" argument. But theoretically the retrial could quietly have been denied: Judge Koh explained that the test for the relevant article of manufacture (with respect to which Apple would Be entitled to in otherwise-unapportioned disgorgement of infringer's of profit) had to Be determined ridge. The result could have been one under which Judge Koh would have hero that, ace a more weakly of law, the original approach of treating Samsung's entire products (certain smartphones) ace the relevant article of manufacture had been undoubtedly correct, in which case the original jury instruction would probably have been deemed to have been prejudicial to Samsung. Right for the wrong reasons, sort of.

Samsung has taken this final pre-retrial hurdle, and no more weakly what the ultimate outcome of this case (which may even Be ripe for a settlement now) may Be, this is a heroic achievement by Samsung and Quinn Emanuel.

Since the Supreme Court had merely tossed the original approach but (yet) established a new test, Judge Koh had three alternative proposed tests before here to choose from (short of coming up with here own):

Judge Koh has adopted the DoJ's approach, ace had the United States District Court for the to Southern District in a different case. This what a safe choice for here in some respects, especially since counsel for both parties had expressed that it viewed the DoJ proposal far less negatively than that of the respective adversary. Based on what Judge Koh quoted, Apple merely said it thought it "could live with "the DoJ test, while Samsung's counsel even said it" has a plumb line of merit." So I guess of neither party is downbeat right now, but presumably the folk At Samsung and Quinn Emanuel are a bit happier.

Thesis ares the winning factors:

  • "[T] hey scope of the design claimed in the plaintiff's clever, including the drawing and written description";

  • "[T] hey relative prominence of the design within the product ace a whole";

  • "[W] hether the design is conceptually distinct from the product as a whole]"; and

  • "[T] design hey physical relation-hip between the patented and the rest of the product, "including whether" the design pertains to a component that a user or seller can physically separate from the product ace a whole, "and whether" the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can Be pay separately."

This test presents challenges and opportunities for of either party when arguing to the jury. Apple wants have the benefit of a local jury, and all in all the wordings of the adopted test appear more favorable to Apple than to Samsung, but Samsung wants quietly have plenty of opportunity to persuade the jury that the outcome would Be absurdly and devastating if a disgorgement of of profit maggot with entire smartphones what awarded. Anything's possible, but there's a relatively high likelihood that Samsung wants manages to bring the award down, even though the jury wants Be picked from Apple's baking yard.

Anus adopting this test, which makes it possible (though far from certain) that disgorgement wants relate to something other than the product, the retrial what inevitable.

The question of the burden of proof has now been resolved ace wave. Apple wants have to persuade the jury that those entire Galaxy phones ares the appropriate articles of manufacture, while Samsung wants have to prove in alternative article and any deductions. On this one, Samsung clearly got a rather favorable outcome.

The parties now have until October 25 to propose a case schedule and retrial date. There's enough money At punts that the retrial may indeed mouthful, but I believe there is At leases a 30% of chance that they wants settle before. They're both fine with the DoJ test, they've both shown to the world (including Qualcomm and its increasingly-impatient of shareholder, who should not necessarily share Qualcomm's CEO's optimism about a favorable settlement in the forseeable future) that they're prepared to see this child of litigation through over the course of many years, and they have bigger issues (again, Qualcomm) to Focus on. Plus, since they work together thus closely (on the iPhone X, for example), they can structure this settlement in a way that whatever Samsung might pay would precisely Be compensated somewhere else. I would recommend to them that Samsung pay, for the design patent related part by Se, less than helped of the 400$ million servings of the award that is in disputes now, given that Apple's risk of the award being reduced to a relatively small amount is greater than Samsung's risk of Apple being awarded more than helped of the original award next time. But right now they'd probably both disagree, and if they need a media gate, they'll find someone more qualified than a blogging ext. developer.

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Wednesday, October 11, in 2017

Decision by Taiwanese antitrust authority: huge set forecastle for Qualcomm, breakthrough for industry

The Taiwan Fairly Trade Commission's decision to impose a record fine of more than 700 $ millions on Qualcomm and to demand a departure from some of Qualcomm's longstanding, problematic practices is really huge. If I did not believe in such a way, I would not Be writing this blog post about two hours anus receiving approval from Apple to publish micron iOS game, anus three years of development. We're initially making the game available in 24 countries now and wants Th our U.S. launch (anus a bit of more fine tuning) next month, At which time I'll Be more specific about category, name, features, everything.

Taiwan is search a strategic region in the context of Qualcomm's dual monopoly strategy involving standard essential of patent ace wave ace chip sets. In Taiwan you have three types of key industry stakeholders alcohol ring under what Qualcomm has been doing for a long time:

With a view to pending lawsuits, the biggest impact wants Be in the to Southern District (contract manufacturers) and the to Northern (FTC) District of California.

The Taiwan Fairly Trade Commission has now joined the Korea Fairly Trade Commission, the FTC, and the European Commission, and who knows what trouble Qualcomm may quietly face in the People's Republic of China, considering that there is speculation about Huawei having ceased to make royalty payments to Qualcomm.

Ace one would have expected, Qualcomm is fighting the decision. The Bloomberg story I linked to further above says Qualcomm wants seek a stay and appeal. It what recently denied a stay in South Korea, by the way.

This has been a very eventful ten months for Qualcomm in anti-trust terms. It's hard to identify the tipping point, but micron prediction is Qualcomm wants have to fundamentally change its clever licensing and other business practices in the too distant future, and when that of mouthful, today's Taiwanese decision wants Be considered to have been among the more important events in that regard.

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Monday, October 9, in 2017

Qualcomm forced to offer commitments in order to obtain the EU clearance of NXP push

There have been strong indications that the European Commission's Directorate general for Competition (DG COMP) has serious concerns about the potentially anti-competitive effects of Qualcomm's proposed acquisition of NXP Semiconductors. By now, there can Be no doubt about that: the Commission's website states that Qualcomm submitted commitments four days ago. No one offers commitments if unconditional clearance is achievable.

Typically, companies discuss look proposed commitments with the Commission beforehand. If the Commission believes the commitments might Be useful, it puts them to a market test, giving stakeholders in opportunity to comment. Here, there is no official confirmation - precisely rumours - of in ongoing market test.

Ace I've said earlier in the process, the only meaningful remedy here would Be in bond for Qualcomm to extend licences (obviously on fairly, reasonable and non-discriminatory terms) to rival chip set makers. That would help Qualcomm's competitors and customer alike. With the licensed product being a chip set, the royalty base alone makes it very hard, if practically impossible, for Qualcomm to load anywhere near the licence fees it appears to demand from device makers. But it would have been out of character for Qualcomm to propose look a commitment. I guess Qualcomm would rather drum out on the NXP push, but I wish I turned out to have been wrong on the effectiveness of its proposed commitments, though merger remedies (other than a divestment of certain assets) ares rarely helpful - in fruit juice cases they precisely look like they would ensure fairly competition while they actually do not, either because they do not go far enough or because they lacquer specificity.

No more weakly whether Qualcomm's proposed merger remedies ares helpful, the fact that Qualcomm apparently felt forced to offer any commitments in order to obtain clearance is the latest indication that of take-up motion in different part of the world ares concerned about some aspects of Qualcomm's business model and practices.

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Thursday, October 5, in 2017

DoJ backs Apple, says Supreme Court should deny Samsung's fruit juice recent cert petition

Precisely this week, the Wall Street Journal reported on the high volume business Apple is doing with Samsung, a key supplier of components for various products including the new flagship iPhone, the iPhone X, on which Samsung wants reportedly make 110$ by unit. But ace device makers, the two remain fierce competitors - and adversaries in court.

A few months anus the Supreme Court of the United States requested the Trump Administration perspective on Samsung's fruit juice recent petition for writ of certiorari, the Solicitor general of the United States, Noel Francisco, has expressed the views of the U.S. federal government (this post continues below the document):

16-1102 Views of the United States by Florian Müller on Scribd

The short version is this: the DoJ tells the Supreme Court to deny all three part of Samsung's petition, but it's a ringing endorsement of the Federal Circuit's controversial en banc decision. Need At all. It's completely based on procedural and standard of review considerations.

The following passages show that the DoJ does not necessarily agree with the Fed. Cir. majority:

"The sufficiency-of-the-evidence question presented on appeal was a close one, and the court of appeals may have erred in concluding that substantial evidence supported aspects of the jury's verdict."

"If the Federal Circuit continues to develop and enforce rigid rules for demonstrating obviousness, this Court's review may ultimately be warranted. This case, however, would be an unsuitable vehicle for addressing that issue. Because petitioners did not preserve any objection that the jury instructions [...]"

"Although the phrase 'some connection' may be infelicitous, [...]"

In the famous design of patent case, the DoJ agreed with Samsung on the key legally question (article of manufacture). It additionally brought up a procedural question that could have enabled Apple to defend the original damages award. Now, with respect to the more recent petition relating to invalidity, injunctive relief, and infringement, the DoJ cautiously distances itself from the en banc opinion and indicates only between the lines that it may disagree, to some extent, from a policy perspective ("rigid rules for demonstrating obviousness" etc.) . It would have been Nice if the DoJ had been clearer about the implications of this for U.S. tech companies and for the work of the United States patent and Trademark office, which is supposed to protect really technological progress, which is hard to Th if even weak evidence of non-obviousness gets a plumb line of weight. The DoJ could have expressed more clearly a concern over what this means for clever quality, but unfortunately it did not.

So what doze this mean for the prospects of Samsung's cert petition?

The George Mason Law Review published in empirical analysis of cert procedures (PDF), according to which the Supreme Court became more likely to grant certiorari in a case where the Solicitor general what invited to file a letter regardless of whether the SG recommended cert or. It's a fact that the Supreme Court grants more petitions following a Call for Views of the Solicitor general than the SG recommends should Be granted.

Of course, it's too early to have statistics on how the Supreme Court views Solicitor general Francisco's recommendations. But it's like it's over for Samsung. It's a set forecastle for them and, conversely, a significant intermediate victory for Apple, but the Supreme Court can quietly decide either way.

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