Alison Frankel

It’s not easy for antitrust plaintiffs to get past a defense motion to dismiss. Before the U.S. Supreme Court raised the pleading standard for everyone in Ashcroft v. Iqbal in 2009, it imposed that tough burden on antitrust claimants in Bell Atlantic v. Twombly, a 2007 opinion that held it’s not enough just to argue that alleged conspirators engaged in parallel price-fixing. Under Twombly, antitrust complaints have to offer detailed and specific facts to support a plausible argument that defendants colluded to restrict competition.

On Wednesday evening, U.S. District Judge Lucy Koh of San Francisco federal court ruled that software engineers in a putative class action against Apple, Google, Intel, Intuit, Lucasfilm, Adobe, and Pixar met that high standard. As the judge explained in her 29-page opinion, it certainly helped the plaintiffs that the defendants all entered consent decrees with the Justice Department in 2010, agreeing to end their practice of restricting cold calls to recruit one another’s engineers. But what really convinced the judge not to dismiss the engineers’ case was the “significant influence” of former Apple CEO Steve Jobs; Google chairman and Apple board member Eric Schmidt; and Apple and Google director Arthur Levinson.

At least one of those three men, Koh said, had a hand in each of the six bilateral anti-poaching agreements among the defendants. “Their overlapping board membership lends plausibility to plaintiffs’ allegations that each defendant entered into this conspiracy ‘with knowledge of the other defendants’ participation in the conspiracy, and with the intent of . . . reduc(ing) employee compensation and mobility through eliminating competition for skilled labor,’” the judge wrote.

The Apple board members’ influence on all of the defendants tied the six company-to-company anti-poaching agreements into a broader price-fixing conspiracy, said class counsel Joseph Saveri of Lieff Cabraser Heimann & Bernstein. Saveri told me he was pleased that Koh also picked up on arguments that the identical agreements lent weight to the plaintiffs’ conspiracy allegations. As the judge wrote, “The fact that all six identical bilateral agreements were reached in secrecy among seven defendants in a span of two years suggests that these agreements resulted from collusion, and not from coincidence.”

The plausible inference from the plaintiffs’ evidence, Koh said, is that “the agreements were negotiated, reached, and policed at the highest levels of the defendant companies.” According to the judge, Jobs pushed particularly hard for anti-poaching agreements and had a hand in four of the six company-to-company deals. When, for instance, former Palm CEO Ed Colligan balked at an agreement, Jobs allegedly told him, “‘We must do whatever we can’ to stop cold calling each other’s employees and other competitive recruiting efforts between the companies,” Koh wrote.

My colleague Jon Stempel pointed out in his story on Koh’s ruling that Jobs also personally reached out to Apple board member Schmidt when Google was attempting to recruit an Apple engineer. “I would be very pleased if your recruiting department would stop doing this,” Jobs wrote Schmidt. (The Google recruiter in the incident was subsequently fired, Stempel wrote.)

“Jobs was kind of thuggish,” Saveri told me. “He was a tough guy and a force of nature, and he ran over almost everyone, including CEOs of big companies.”

Saveri also said that thanks to Koh’s October 2011 order requiring defendants to turn over materials from the Justice Department investigation, the plaintiffs already have stronger evidence than what’s in the complaint Koh declined to dismiss. (She did dismiss California state-law business claims, but kept alive all state and federal antitrust allegations.) The class can now proceed with additional discovery.

I emailed Apple counsel George Riley and Michael Tubach of O’Melveny & Myers, who submitted the joint defense motion to dismiss, but didn’t hear back.

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Has there ever been a price-fixing case in which the alleged conspirators agreed to take less money for their product and simultaneously up their production and boost competition? The answer to that question may determine the success of the Justice Department‘s e-books antitrust suit against Apple and the two publishers that have not agreed to settle DOJ’s civil charges.

On Friday, Apple and three publishers filed reply briefs in their effort to win dismissal of the private antitrust class action that parallels the Antitrust Division’s case. Those filings, coming two days after the government brought suit, offer good hints at how defense lawyers for Apple and the publishers will counter the Justice Department’s allegations. (Interestingly, Hachette and Harper Collins — the two publishers that have reached a tentative $52 million settlement with 16 state Attorneys General — did not sign the joint publishers’ motion, which suggests that they may argue their AG deal resolves the class action plaintiffs’ damages claims.)

The essence of the government’s case (as well as the private class action) is that the publishers regarded Apple’s entry into the e-books market as a chance to break Amazon’s 90-percent monopoly. As part of that effort, the publishers allegedly conspired with Apple to change the e-books model from the wholesale pricing Amazon insisted upon to so-called “agency pricing,” in which publishers set prices and Apple received a commission for every e-book it sold. Both the class action and the government suit assert that Apple and the publishers engaged in what’s known as “per se” price-fixing, which means that plaintiffs must only prove there was a conspiracy to restrain competition and raise prices. The Justice Department and private plaintiffs claim the proof of the conspiracy is the rise in e-book prices after the publishers all signed agency-pricing deals with Apple, from $9.99 to $12.99 or $14.99 for new titles.

But the publishers have long argued that the price-fixing evidence doesn’t add up, since they actually make less money per book through Apple’s agency model than through wholesale pricing, in which they sold books directly to Amazon and received a percentage of that sale price. Before Amazon’s e-book reader, the Kindle, faced competition from the iPad and Barnes & Noble’s Nook, the publishers assert, Amazon regarded e-books as a loss leader to drive Kindle sales, so it was willing to pay relatively high prices to publishers. Nevertheless, according to the 24-page brief filed Friday by Penguin, Macmillan, and Simon & Schuster, the publishers were all so concerned about Amazon’s stranglehold on the e-books industry — and the risks that monopoly posed for sales of both e-books and traditional books — that they independently signed on with Apple. Independent decisions, even in parallel, don’t constitute price-fixing, the publishers contend.

The publishers’ motion to dismiss the class action relied heavily on the U.S. Supreme Court’s 2007 ruling, Bell Atlantic v. Twombly, which held that antitrust plaintiffs must show specific, detailed evidence of a conspiracy. That may be a less appealing defense against the Justice Department’s complaint, which includes the sort of specific allegations of meetings and e-mails that Twombly demands. Instead, when Apple and the publishers move to dismiss the government’s suit, I’ll expect to see an argument Apple raised in the 20-page brief its lawyers at Gibson, Dunn & Crutcher filed Friday in the class action. Apple asserted that the e-book case should be considered under the “rule of reason” standard articulated in the U.S. Supreme Court’s 2007 ruling Leegin Creative Leather v. PSKS. Under the rule of reason, as opposed to a per se price-fixing case, the plaintiffs have to prove the alleged conspiracy impacted the market.

In Leegin, the Supreme Court held that only price restraints that restrict competition and decrease output are per se illegal under the Sherman Act, and courts may only find per se illegality when they “have had considerable experience with the type of restraint at issue.” Apple contended that the e-book class action plaintiffs can’t meet the rule of reason standard because Apple didn’t have the market power to insist on higher prices and e-book sales soared after Apple entered the market. “Apple simply entered a market it never competed in, using bargained-for agreements that did not set prices or limit output at all,” the brief said. “Prices cannot be divorced from output, legally or economically, and it is beyond dispute that Apple’s entry with the iPad and iBookstore was expected to, and did, ‘prompt a surge in eBook purchasing.’”

Though Apple emphasized that it can’t be the hub of a price-fixing conspiracy through individual agreements with publishers — and thus the per se rule can’t apply to its conduct — the publishers also have a strong argument that no court has the requisite “considerable experience” with the kind of price-fixing conspiracy alleged in the e-books case to apply the per se standard. The publishers could argue that aside from the higher prices consumers now pay for e-books, the e-books scenario lacks classic indicators of price-fixing, such as more money for members of the conspiracy, less competition, and reduced output for purchasers. If the defendants persuade U.S. District Judge Denise Cote of Manhattan federal court, who is overseeing all of the e-books litigation, to adopt the rule of reason standard and consider the marketplace impact of the alleged conspiracy, they are sure to point out that increased competition in the e-books market has led to drastically lower prices for e-readers like the Kindle and the Nook, as well as many more titles becoming available.

Apple is represented in the Justice Department case by O’Melveny & Myers. On Friday’s brief for the publishers are Sidley Austin for Macmillan; Akin Gump Strauss Hauer & Feld for Penguin; and Weil, Gotshal & Manges, Proskauer Rose, and the Law Office of Martha E. Gifford for Simon & Shuster. Harper Collins, which did not join the publishers’ reply brief and has settled both the Justice Department and state AG cases, is represented by Skadden, Arps, Slate, Meagher & Flom in all of the e-books litigation. Hachette, which has also settled with DOJ and the AGs, has Freshfields Bruckhaus Deringer.

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With a single ruling this week, U.S. District Judge James Robart of Seattle federal court may have fundamentally altered the balance of power between Motorola Mobility and the leading opponents of Motorola’s soon-to-be-parent Google, Microsoft and Apple.

In another indication that the smartphone war is shifting away from individual infringement suits, Robart granted Microsoft’s motion for a temporary restraining order, which effectively bars Motorola from acting to enforce whatever relief it’s granted in an ongoing German patent case. In that case, before a court in Mannheim, Motorola has claimed Microsoft Windows and Xbox products infringe German patents that are part of Motorola’s standard-essential portfolio. The Seattle judge, according to this transcript of the order he issued in open court, agreed with Microsoft that the German patents are already at issue in Microsoft’s case before him, which accuses Motorola of breaching its obligation to offer standard-essential patents on fair and reasonable licensing terms.

Robart granted the TRO under the Anti-Suit Act, which is intended to restrict forum-shopping and harassing litigation. That’s how Microsoft and its counsel at Sidley Austin described Motorola’s German suit. According to Microsoft, Motorola first tried to extract exorbitant licensing fees for a portfolio of about 100 worldwide standard-essential patents. Then, after Microsoft filed a Seattle federal-court suit asserting that Motorola’s licensing demand was a breach of its contract with a European standard-setting body, Motorola sued Microsoft in Germany for infringing German patents that were part of the portfolio at issue in Seattle.

The judge agreed that Motorola appeared to have run to Germany to obtain an injunction there before he could decide the merits of Microsoft’s contract case. Microsoft’s U.S. suit, he said, included the same patents Motorola was asserting in Germany, because those German patents were part of the portfolio for which Motorola demanded allegedly improper licensing fees. Robart concluded that under the Anti-Suit Act, he has the power to block Motorola from enforcing whatever relief it wins in Germany until he rules on the larger question of reasonable licensing fees for standard-essential patents. Here’s what the judge said at Wednesday’s hearing:

The battleground in this… is whether the United States action, or resolution of it, would be dispositive of the foreign action to be enjoined… And I will add, for the edification of the Court of Appeals, so it knows where I’m coming from, that I consider the preservation of my ability to resolve this dispute to be something that needs to be carefully guarded, otherwise we run into the possibilities of conflicting resolutions, duplicative litigation, and unfortunate results that don’t follow appropriate law.

Why is the ruling so significant? Injunctions are hard to obtain in U.S. patent litigation, so, as you know, patent holders in the last five or so years have taken advantage of easier injunction standards in Germany and elsewhere to gain leverage in global patent disputes. The Robart ruling holds that, at least in cases involving worldwide standard-setting portfolios, U.S. litigation trumps cases elsewhere. That’s a potentially significant shift in the balance of power between patent holders and licensees.

Expect to see Apple, for instance, point to the ruling in its own standard-essential litigation with Motorola. Apple sued Motorola in San Diego federal court in February, making essentially the same argument as Microsoft: It claimed Motorola’s German assertion of standard-setting patents against Apple violates Motorola’s contract with the standard-setting body. The parallels with Microsoft’s case suggest that Apple will also be able to use the Robart ruling to block Motorola from enforcing any German injunction it obtains.

The leading authority on standard-setting patents, Jorge Contreras of American University’s Washington College of Law, told me Robart’s ruling is “pretty astounding.” He said he’s never before seen a contract case involving standard-essential patents serve as the basis of an Anti-Suit injunction — and said that the U.S. judge’s assertion of his authority to block foreign patent actions is “very surprising.” Motorola, he said, has to offer a worldwide portfolio of patents to licensees of standard-essential technology. So to say that such an offer precludes litigation over patents in the portfolio outside of the U.S. “seems like a significant reach…I can see this being a really important decision.”

Microsoft deputy general counsel David Howard told Reuters that the ruling means “Motorola can’t prevent Microsoft from selling products until the court decides whether Motorola has lived up to its promise.” Motorola, pointing to the $100 million bond Robart ordered Microsoft to post, said the ruling means Microsoft is committed to license its standard-essential patents. I left a message for Motorola patent counsel K. McNeill Taylor and outside counsel Steven Pepe of Ropes & Gray but didn’t hear back.

Motorola has not said whether it intends to appeal the TRO, which is set to last only until a May 7 hearing on Microsoft’s motion for summary judgment. The Mannheim court, meanwhile, is expected to issue its ruling in Motorola’s German injunction bid on May 2.

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The newly-filed Justice Department complaint against Apple and five major publishers is an incalculable boon to Hagens Berman Sobol Shapiro and Cohen Milstein Sellers & Toll, the firms that won the intense competition to lead the multidistrict e-books antitrust class action. There hasn’t yet been discovery in the class action, which the defendants have moved to dismiss or send to arbitration, so the specific details in the Antitrust Division’s complaint, including emails and meetings between Apple and publishing executives, are powerful evidence of the conspiracy the class action alleges. The Justice Deparment’s same-day settlement with Hachette Books, Simon & Shuster, and Harper Collins also increases the likelihood that those publishers will also move to resolve the class action and improves the class’s case against Apple and the remaining publishers, Macmillan and Penguin.

There’s another gift to the private lawyers in the DOJ case as well: The Justice Department is not asking for any money damages of its own. Its complaint seeks only a decree that the defendants engaged in an unlawful price-fixing conspiracy, an injunction against such collusive conduct, and costs. The Antitrust Division — which filed its case in Manhattan federal court as a related proceeding to the multidistrict litigation — seems to be leaving money damages entirely in the hands of Hagens Berman and Cohen Milstein.

Steve Berman of Hagens Berman told me in an email that it’s not unusual for the Justice Department “to leave damages to private lawyers.” He also said there had been no discussions between class counsel and the DOJ on what sort of damages the Justice Department would seek. But his firm’s official statement makes clear that the private lawyers also noticed the distinction between what they want and what the Antitrust Division is after:

While Attorney General Holder’s actions, if successful, will put an end to the anticompetitive actions, our class action is designed to pry the ill-gotten profits from Apple and the publishers and return them to consumers…

Big money is at stake in the e-books litigation, which contends that Apple and the publishers used Apple’s entrance into the e-reader market to fix the prices of books at $12.99 or $14.99, rather than the $9.99 Amazon charged. The Consumer Federation of America said Tuesday in a letter to the chairman of a Senate Judiciary subcommittee that the difference will likely cost consumers more than $200 million in 2012. Sixteen state Attorneys General who announced suits paralleling the DOJ case reportedly reached a $52 million settlement with Hachette and Harper Collins on Wednesday.

So how often does the Antitrust Division leave money damages out of its cases? Obviously, when the Antitrust Division files a complaint to block a proposed merger, it seeks an injunction, not money damages. In criminal price-fixing cases, it demands big-money pleas (as in the largest-ever criminal antitrust fine, $548 million, that auto parts manufacturers agreed to pay in January). But Justice asks for money damages even in civil cases. The proposed antitrust settlement with Morgan Stanley that DOJ announced in March, for instance, includes $4.8 million in damages.

I’ve previously noted that the e-books class action is a rare instance of the private antitrust bar bringing claims in advance of regulators, rather than filing follow-on private claims. I’ve been told that the Justice Department was very interested in the allegations in the private litigation. Maybe the feds’ decision not to seek money damages was a bit of gratitude for the pioneering work of plaintiffs lawyers.

I emailed the Antitrust Division to ask, but didn’t get a response.

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In a really smart piece last month, my Reuters pal Dan Levine wrote that Steve Jobs’ promise to kill Google’s Android operating system has not been fulfilled. Instead, wrote Levine and co-author Poornima Gupta, Apple’s patent war against Android users Motorola, Samsung, and HTC had become “a costly global war of attrition.” Both sides have won skirmishes, but no battle has been decisive. The Reuters story quoted Judge Richard Posner of the 7th Circuit Court of Appeals, who is overseeing a Motorola case in U.S. District Court in Chicago. “You’re not going to shut down the smartphone,” Posner told Apple’s lawyer. “[And] they’re not going to shut down the iPhone.”

The exact same thing could be said of Microsoft’s patent war with Google and its Android acolytes. When the smartphone patent infringement cases launched in 2009 and 2010, maybe it was feasible that one or two of the big three could kill off another of them. But since then, with Apple and Microsoft teaming up to buy Nortel patents and Google countering with its purchase of Motorola Mobility, this war has become a standoff that can only be resolved with cross-licensing deals.

That’s why antitrust arguments — as opposed to patent infringement claims — have been creeping into the spotlight over the last few months. On Tuesday, the European Union announced that it has opened antitrust investigations of Motorola’s demands for licensing fees on standard-setting patents, following complaints by both Microsoft and Apple. (Google’s Android partners, of course, have lobbed similar allegations of patent extortion at Microsoft.) The goal of such claims is to drive down the cost of licensing one another’s patents. In other words, if you can’t beat ‘em, pay as little as possible to join ‘em.

We should have a much better idea of the strength of Microsoft’s assertions against Motorola by next week, when Microsoft’s lawyers at Sidley Austin will get to air their arguments about Motorola’s alleged abuse of its industry-standard patents at a preliminary injunction hearing before U.S. District Judge James Robart in federal court in Seattle. Microsoft moved for the injunction on March 28, asking the judge to stop Motorola from taking any action to block certain Microsoft products from the German market. Microsoft said it had brought the Seattle suit in 2010 “to force Motorola to honor its commitment to license its standard-essential patents.” Instead, according to Microsoft, Motorola went to German courts, seeking its own injunction against Microsoft. Microsoft argued in its Seattle motion that it needs a restraining order to preserve the U.S. judge’s ability to decide the merits of its case.

It outlined those purported merits in a summary judgment motion filed last Friday. According to Microsoft, Motorola made a “blatantly unreasonable” demand that it pay $4 billion (yes, billion) in annual royalties for the use of 50 Motorola patents in Microsoft Windows. The demand “was so overreaching that no rational company could ever have accepted it or even viewed it as a legitimate offer,” Microsoft asserted. “Motorola’s obvious strategy was … to make an offer that Microsoft was sure to refuse so that Motorola then would be free (in its view) to sue on its standard-essential patents to gain leverage in other disputes with Microsoft.” Microsoft asked for a ruling that Motorola had breached its agreement to license standard-setting patents on fair and reasonable terms.

Motorola is represented in the Seattle case by Ropes & Gray. Ropes partners Jesse Jenner and Steven Pepe didn’t return my calls. I also left messages with Microsoft inside counsel Andrew Culbert and outside counsel David Pritikin of Sidley but didn’t hear back.

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The standard for U.S. judges to grant a preliminary injunction is notoriously high. Plaintiffs have to show that they’re likely to succeed on the merits; that they’ll suffer irreparable harm if the injunction isn’t granted; that the injunction is in the public interest; and that the balance of fairness supports awarding the bar. In patent cases, the analysis of likely success on the merits offers two outs for defendants: they can show that the plaintiffs’ patent probably isn’t valid or that they didn’t infringe it. In other words, there’s a long list of reasons for a judge to refuse to grant a preliminary injunction (which is one reason why so many patent holders also seek injunctions overseas).

In the most consequential injunction case of the moment — Apple’s attempt to bar sales of three Samsung smartphones and Samsung’s new Galaxy tablet — U.S. District Judge Lucy Koh of San Jose federal court picked reasons from all over the no-injunction menu as she refused late Friday to grant the injunction. (Here’s the Reuters story from Dan Levine.) There’s no real theme running through Koh’s decision, which analyzes each asserted patent and each allegedly infringing product. That’s frustrating for anyone hoping to find a broader meaning for smartphone litigation in her ruling, but it gives Apple and Samsung a pretty clear indication of how they’re likely to fare as the merits case moves forward.

Apple asserted that two Samsung phones — the Galaxy 4G and Infuse 4G — infringe two Apple design patents. Based on the precedent established by the U.S. Court of Appeals for the Federal Circuit in a case called Egyptian Goddess v. Swisa, Koh applied an “ordinary observer” test to evaluate infringement. She concluded that although it is “a close question,” an ordinary observer would likely find Samsung’s Galaxy and Infuse phones infringe Apple’s patent on a flat, black, rectangular smartphone with a translucent face. She found that under the Durling v. Spectrum Furniture test for obviousness, Samsung was likely to succeed in challenging one of Apple’s smartphone design patents as invalid — but she found Samsung had not raised substantial questions about the validity of the other patent.

That was a significant finding for Apple, but Apple’s case for an injunction foundered when Koh considered the question of whether it would suffer irreparable harm if Samsung continued selling the allegedly infringing phones. Apple said it would suffer a loss of goodwill and brand erosion from Samsung’s sale of phones that, in Apple’s view, are knockoff iPhones. Koh said Apple hadn’t offered evidence to back its somewhat novel theories. “Given the ambiguity of the evidence regarding the importance of design to smartphone purchasers, and the lack of evidence establishing actual consumer confusion, or some other direct or circumstantial evidence that Samsung’s design choices have impacted Apple’s market share or led Apple to lose customers, it is difficult to say that Apple is likely to suffer irreparable harm as a result of Samsung’s infringing conduct,” she wrote.

Apple made a stronger showing of irreparable harm from Samsung’s continued sale of Galaxy tablets, according to Koh. She also found that “in light of the substantial similarities” between the Samsung and Apple tablets, Apple would likely be able to show that Samsung infringed its iPad design patent. (You may recall the Reuters report from the injunction hearing where, when Koh held up the two rival tablets, Samsung counsel Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan, standing 10 feet away, couldn’t pick out her client’s product.)

But Koh said that Apple’s design patent appeared to have been anticipated by previous tablets, such as a 1994 Fidler/Knight Ridder device and an HP device. “The court therefore finds that Samsung has raised a substantial question regarding the validity of the [Apple tablet design] patent on obviousness grounds,” Koh wrote. “Accordingly, given the strength of the prior art presented by Samsung, the court does not find that Apple’s secondary considerations of evidence of non-obviousness overcomes the substantial questions of invalidity.” (Koh did not cite Samsung’s much-discussed assertion that the iPad was anticipated by a handheld device in Stanley Kubrick’s movie “2001: A Space Odyssey”.)

Apple claimed four Samsung devices — the Galaxy phone and tablet, the Infuse phone, and the Droid Charge phone — infringed an Apple patent on touch-screen scrolling. Koh agreed that Apple is likely to be able to show that the Samsung products infringe the patent and that Samsung hasn’t raised a substantial question of the patent’s validity, despite Samsung’s claim that Apple engaged in inequitable conduct to obtain the patent. But the judge said Apple hadn’t shown it would be irreparably harmed by Samsung’s continued sale of devices that infringe a patent for a function that’s only one of many the devices perform. “That [the patent] does not appear to be either necessary for the product to function, or a core technology of the product, weighs against a finding of irreparable harm,” she wrote. “Ultimately, the court finds that Apple has failed to meet its burden to establish that money damages will not be sufficient to compensate Apple for the Samsung products that likely infringe the patent.”

Interestingly, Koh gave no weight to amicus briefs by AT&T and T-Mobile arguing that Apple’s proposed injunction is not in the public’s interest. Although the judge permitted the briefs to be submitted, she concluded they were essentially self-serving.

A preliminary injunction ruling isn’t, of course, a ruling on the merits. But given the furious, albeit mostly sealed briefing in this case, the record before Koh is well-developed. If I were Samsung’s lawyers at Quinn, I’d be worrying about the cellphone design and touch-screen scrolling patents the judge found likely to be valid and infringed; they squeaked by an injunction because Apple couldn’t show irreparable harm, but money damages are another matter. Apple’s lawyers at Morrison & Foerster, meanwhile, appear to have their work cut out for them if they want to uphold the validity of the tablet design patent; Samsung’s tablet may look the same, but that’s not enough to make a case unless Apple was the first to devise the look.

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As all the world knows, Samsung is engaged in a do-or-die international patent battle with Apple. On Wednesday alone, Samsung saw a court in the Netherlands enjoin it from infringing an Apple smartphone patent; planned for an injunction hearing in Germany, where a court enjoined the Samsung Galaxy Tab, then lifted the preliminary injunction; and went before Judge Lucy Koh in San Jose federal court, where Apple is demanding yet another injunction barring Samsung devices.

But all that bet-the-company stuff doesn’t mean there’s no place for fun. In an August 23 declaration that set the tech world snickering, Samsung’s lawyers at Quinn Emanuel Urquhart & Sullivan asserted that Apple’s extremely broad design patents on the iPad were anticipated by (among other pop culture reference points) Stanley Kubrick’s 1969 movie 2001: A Space Odyssey. Quinn even helpfully provided a link to a YouTube clip of the crew of the Kubrick spaceship Discovery using thin rectangular devices that look curiously like iPads. (A similar Star Trek clip suggests Captain Picard also used an iPad before Apple invented it.)

The argument isn’t quite as wacky as you might think. Just recently, lawyers for Yves Saint Laurent told Manhattan federal judge Victor Marrero that Christian Louboutin can’t trademark red soles because Dorothy had red shoes in The Wizard of Oz; Judge Marrero cited Dorothy’s “famous ruby slippers” on the first page of his opinion knocking out Louboutin’s trademark. Trademarks have squishier standards than patents, but if it worked for Yves, maybe it’ll work for Samsung as well.

While Judge Koh ponders the question of invalidity-by-science-fiction, I thought about how other patent defendants, present and future, might make use of pop culture. Those flying cars now on the market for a cool $230,000? Sorry Terrafugia Transition. Chitty Chitty Bang Bang got there first. You can find all kinds of wristwatch televisions for sale (including models by Samsung). Wonder if they all disclosed Dick Tracy in applications to the Patent & Trademark Office. Inequitable conduct, anyone?

Creepy human-looking robots have experienced a recent population explosion, but C-3PO of Star Wars beat them by 30 years. Then again, C-3PO was himself anticipated by the (alas, unnamed) humanoid robot on the TV series Lost in Space. Laugh all you want, but Lost in Space is a trove of prior art. Look out Martin Jetpack – Lost in Space saw you coming forty years ago. (And not only Lost in Space: a jetpack scene appeared both in the 1965 James Bond film Thunderball, and in 1949′s King of the Rockiet Men.) Animal cloning? Jurassic Park. Human gene patents? Planet of the Apes. Even IBM’s landmark chess-playing computer was dreamed up back in 1910, in a sci-fi short story by Ambrose Bierce.

I’ve managed to avoid the obvious, but every Star Trek buff knows where we’re headed. That’s right: the Star Trek communicator. It’s a handheld device that flips open to permit Captain Kirk to talk with his ship and crew. Nokia liked the parallels between the Star Trek device and modern cellphones so much that it actually produced working prototypes based on Captain Kirk’s communicator. But by Samsung’s 2001: Space Odyssey standard, the entire cellphone industry was anticipated by Gene Roddenberry. Who knows how many of Nortel and Motorola patents for which Google, Microsoft, and Apple have recently decided to shell out billions are design patents that under Quinn Emanuel’s Space Odyssey standard are invalid because of Star Trek prior art?

The mind boggles.

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Remember the Cold War military doctrine of Mutually Assured Destruction? The idea was that if the United States and the Soviet Union both knew the enemy had enough weapons to wipe the entire country off the map, neither would actually use those weapons. Mutually Assured Destruction got the entire world through the age of fallout shelters and Barry Goldwater. So the doctrine should be powerful enough to get Google, Apple and Microsoft past Justice Department antitrust regulators.

It’s a given that Google’s $12.5 billion Motorola bid is going to be scrutinized for its antitrust implications. Google’s law firm on the deal, Cleary Gottlieb Steen & Hamilton, has conceded that point; the firm announced that David Gelfand – who previously escorted Google unscathed through antitrust reviews of its DoubleClick and AdMob acquisitions — will be antitrust counsel on the Motorola bid. The $4.5 billion acquisition of Nortel’s intellectual property by a consortium led by Microsoft and Apple is already under review by the DOJ’s antitrust division. I’m betting that each patent plays will have an easier time passing regulatory muster because of the other.

Before I get to why, there’s the issue of which agency will be investigating the Google deal. Both the Federal Trade Commission and the Justice Department have the power to conduct premerger antitrust reviews. They’ve both looked at Google acquisitions in the past: the FTC green-lighted the 2007 DoubleClick and 2010 AdMob deals; the DOJ rejected Google’s proposed advertising partnership with Yahoo in 2008 and approved, with some modifications, its deal with ITA Software in 2011. The FTC is also reportedly conducting a widespread antitrust investigation of Google’s search engine business. But I have it on good authority that the Justice Department will be handling the Motorola review, partly because DOJ has historically overseen competition in the telephone industry and is already reviewing the AT&T merger with T-Mobile and the Nortel IP sale.

Traditionally, antitrust regulators look at deals as either horizontal or vertical acquisitions. The classic horizontal deal is a merger of two rivals in the same market. A vertical acquisition is one that helps a company with its own upstream or downstream products. Vertical deals are considered less of a threat to competition within a market, so they get less antitrust scrutiny. In one regard, Google’s Motorola acquisition is a simple vertical merger, since it puts Google into two businesses it wasn’t in before: manufacturing smartphone handsets (and set-top devices) and licensing patents.

But IP complicates the traditional horizontal-or-vertical analysis, because patents, by their very nature, are intended to squelch competition: patent holders have a short-term monopoly on their invention. If you’ve paid even the slightest attention to the patent-bound technology industries, you know how viciously patents can be wielded for anticompetitive purposes, particularly when end products like computers and smart phones are covered by hundreds of patents. The FTC conducted hearings in June (here’s the transcript) on what it calls “patent hold-up” — the ability of a patent owner to extract big licensing fees for IP that’s just part of a sophisticated tech product.

So when antitrust regulators look at patent-heavy deals, they have to analyze the patent licenses that will transfer in the merger from both horizontal and vertical perspectives. The relevant market in patent deals, to use another bit of antitrust lingo, is the technology market, not necessarily the market for a particular downstream product or service. When the DOJ looks at the Motorola deal, its antitrust lawyers will want to know which companies license Motorola technology, how those licenses affect the relevant markets, and how much leverage the licensing agreements and Motorola patents give Google in those markets.

That’s where the Nortel IP consortium comes in. DOJ has to ask the same questions about how Microsoft, Apple, Research in Motion, Ericcson, Sony, and EMC can leverage the 6,000 or so Nortel patents they acquired for $4.5 billion in June. The last (and only) time the Justice Department previously reviewed a similar IP transfer was in 2010, when DOJ examined the $442 million purchase of Novell software patents by a different Microsoft and Apple consortium. In that review, regulators barred Microsoft from acquiring any patents outright and said EMC couldn’t acquire 33 of the patents it wanted.

This time around, though, Microsoft and Apple can point to Google’s purchase of the Motorola patents to argue that the Android smartphone platform is now as heavily armed as the iPhone and Microsoft’s Windows Mobile smart phone. Google, in turn, can credibly claim that it needs the Motorola smartphone patents to protect Android from the power its rivals acquired via the Nortel patents.

It would be easy for regulators to look at the two potent patent portfolios (say that three times fast!) — wielded by warring competitors in one of the most cutthroat industries in the world — and see a balance of power. If Google monkeys with Motorola patent licenses, Microsoft and Apple will retaliate with Nortel IP licenses. You can call it mutually assured destruction, but it could turn out to be a constructive end to the expensive smartphone patent wars.

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Back in March 2010, Apple filed separate suits at the U.S. International Trade Commission against Nokia and HTC, accusing both cellphone makers of infringing Apple’s smartphone patents. In April, the ITC staff recommended that the patents Apple had asserted against both Nokia and HTC should be tested in a consolidated case. Nokia and HTC supported the proposal. Apple’s lawyers at Kirkland & Ellis complained that the partial consolidation would aid Nokia and HTC by creating “complexity and delay,” but the lawyers didn’t fight hard against it because they didn’t want the case — which had the potential to knock iPhone competitors out of the U.S. market — to get bogged down.

The consolidation had clear advantages for the defendants and disadvantages for Apple. Nokia and HTC could mount a joint challenge to the validity of the Apple patents, pooling ideas and resources. Meanwhile, on the infringement side of the case, Apple’s Kirkland lawyers had a doubled workload to master the technology in phones made by both Nokia and HTC.

When the case was tried before ITC administrative law judge Carl Charneski in April and May, Nokia and HTC both had A-list defense counsel: Alston & Bird for Nokia; Keker & Van Nest and Quinn Emanuel Urquhart & Sullivan for HTC. (Quinn, remember, regularly represents Google; HTC phones run on Google’s Android platform.) The three defense firms worked together, incorporating one another’s briefs and presenting joint expert witnesses to opine on the validity of the Apple patents.

And then the fates of Nokia and HTC diverged dramatically. In June, Nokia announced that it had reached a global megadeal with Apple, with Apple agreeing to pay hundreds of millions of dollars for Nokia IP. HTC waited for Judge Charneski. His initial determination, issued Friday afternoon, found HTC to infringe two valid Apple patents. (HTC is off the hook with respect to two others.) Though the administrative law judge’s determination can be appealed to the full ITC, the preliminary ruling sent HTC’s share price off a precipice.

How did two defendants end up with such different results?

The answer to that question lies in litigation’s increasingly strategic significance for big businesses. Apple’s consolidated ITC case against HTC and Nokia was just one piece in the litigation chess game Apple is playing with every cell phone maker. Consider Apple’s smartphone litigation history with Nokia, a company which is allied with Microsoft in the great smartphone showdown. Nokia has a vast patent portfolio, including crucial 3G intellectual property. It initiated a patent war with Apple; Apple’s ITC complaint against Nokia was in retaliation for Nokia’s infringement claims against Apple. The litigation between the companies was more important in determining how big a licensing deal Apple would sign than in determining whether Apple would sign any deal at all.

HTC has far less leverage with Apple, which is why its loss in the ITC consolidated case looms so large. HTC is a young company without much IP Apple needs. It’s also closely allied with Google — Apple’s sworn smartphone enemy, thanks to Android. If Apple was unlikely to work out a licensing deal with HTC before Judge Charneski’s ruling, it’s even less likely to do so now. (Things can change, of course. HTC has said it will ask the full ITC to review Friday’s initial determination, and its own ITC infringement suit against Apple, tried right after the completion of the consolidated case, has not yet been decided.)

Apple still has major pending smartphone cases in the works with Motorola and Samsung. Both are veteran cellphone pioneers with valuable technology, a la Nokia; both also use Google’s android operating system, like HTC. Should be very interesting to see whether they end up like Nokia or HTC.

(Reporting by Alison Frankel)