U.S. District Court dismisses monopolization claims against MPEG LA

On 24 November 2010 the U.S. District Court for the Central District of California dismissed monopolization claims brought by NERO AG (“Nero”) against MPEG LA, LLC (“MPEG LA”), an administrator of various patent pools in the consumer electronics sector (NERO AG v. MPEG LA, November 24, 2010, C.D. Cal., No. 10-cv-3672-MRP-RZ).

This follows the court’s September 2010 dismissal of Nero’s initial complaint. Nero has now finally dismissed allegations included the following:

  • First, Nero alleged that Nero had no practical alternative to licensing from a pool for MPEG-2 technologies (“MPEG-2 pool”) administered by MPEG LA. However, since Nero did not try to license the patents it needs individually, but based its allegation solely on the economic infeasibility of such licensing, the court found that Nero failed to plausibly allege that direct licensing from patent holders is infeasible.
  • Second, Nero alleged that MPEG LA expanded the temporal scope of its monopoly by adding non-essential patents to the MPEG-2 pool. However, the court considered that the non-essential patents that Nero claimed had been added to the pool could not plausibly extend its temporal scope. This is because some patents indentified by Nero were not added to the pool; they were already included in the pool at an earlier date, whereas the other patents identified by Nero will expire before some of the original patents in the pool. The court also dismissed Nero’s related allegation that the inclusion of non-essential patents into the pool sought to raise the costs of determining which patents Nero needs to license.
  • Third, Nero alleged that MPEG LA coerced licensees into an extended MPEG-2 license that prevents Nero from licensing the essential patents independently for a five-year period. The Court found, however, that Nero did not explain how it was coerced into such an extended license either by facing the threat of patent infringement litigation or by being disadvantaged due to Nero’s competitors otherwise benefitting from lower royalty rates. [Juha Vesala]