Sherman Act Claims Face Scrutiny in Disney’s Fight Over Video Streaming Patents
Sherman Act Claims Face Scrutiny in Disney’s Fight Over Video Streaming Patents
Legal Experts Analyse DOJ Position in Disney v. InterDigital SEP Dispute
In a significant development within the realm of antitrust and intellectual property law, the United States Department of Justice (DOJ) filed a Statement of Interest in the high-profile case of Disney Enterprises, Inc. v. InterDigital, Inc., currently pending in the District of Delaware. The case revolves around alleged abusive licensing practices, monopolization claims, and violations of Sections 1 and 2 of the Sherman Act concerning video compression technologies essential to streaming services like Disney+, Hulu, and ESPN+.
The Heart of the Dispute: SEPs and RAND Commitments
At the core of the lawsuit is InterDigital’s assertion of patents that it deems Standard Essential Patents, technologies considered indispensable to modern video streaming standards. Disney contends that InterDigital’s enforcement of these patents constitutes anticompetitive conduct, particularly through supra-RAND licensing demands, which allegedly go beyond the scope of reasonable and non-discriminatory obligations.
Disney’s filing accused InterDigital of:
- Violating RAND commitments made to Standards Setting Organizations (SSOs), particularly the International Telecommunication Union (ITU),
- Seeking royalties based on market power derived from SEPs,
- Engaging in litigation tactics that imposed unwarranted costs and global business risks.
DOJ Perspective: Patent Power Does Not Equal Market Power
In its Statement of Interest, the DOJ clarified that holding a patent—even a SEP—does not automatically confer market power, referencing the Supreme Court’s decision in Illinois Tool Works Inc. v. Independent Ink, Inc. This is a critical distinction, as antitrust liability cannot be triggered solely by patent ownership or high licensing fees.
Key DOJ arguments include:
- “Charging high prices does not by itself constitute exclusionary conduct.”
- Fair pricing disputes should be resolved through contract law, not antitrust litigation.
- No evidence of exclusionary behaviour or harm to the competitive process was presented.
Antitrust vs. Contract Law
The DOJ made it clear that antitrust law is not a catch-all remedy for disputes rooted in licensing negotiations or failed commercial agreements. Disney’s complaint, while detailing contractual breaches, did not substantiate claims of market exclusion, reduced output, or suppressed innovation—all critical to sustaining an antitrust claim.
The DOJ emphasized the risk of misapplying antitrust principles to licensing disputes, warning it could:
- Undermine standards development efforts,
- Disincentivize SEP disclosures and participation in SSOs,
- Chill procompetitive innovation.
Noerr-Pennington Immunity: Protecting the Right to Litigate
InterDigital’s defense invoked the Noerr-Pennington doctrine, which shields entities from antitrust liability when engaging in legitimate litigation or petitioning activities. Disney alleged the company’s domestic and international lawsuits amounted to a strategy of intimidation, but the DOJ found no facts indicating “sham litigation”—a critical requirement to invalidate immunity.
To qualify as sham, litigation must be:
- Objectively baseless, and
- Brought in bad faith, such as with a patent obtained via fraud.
The DOJ concluded that InterDigital’s suits had a legitimate basis, as the company was seeking judicial redress for alleged infringement of valid patents.
A Pivotal Case for the Future of SEP Enforcement and Antitrust Law
The DOJ’s intervention signals a deliberate effort to clarify the boundaries between patent rights, contract enforcement, and antitrust violations. By reiterating that high licensing fees, even for SEPs, do not inherently imply exclusionary conduct or anticompetitive behaviour, the statement aligns with prior precedent aimed at preserving the balance between innovation incentives and market competition. As the Disney v. InterDigital case unfolds, it will likely set an influential precedent on how RAND commitments, SEP enforcement, and antitrust principles intersect in the streaming era.
