FOSS Patents

Patent pool administrator Sisvel just announced that Huawei, one of the largest patent holders in this space, has joined the narrowband Internet of Things (IoT) patent pool that was launched last November. The largest founding licensor was Ericsson.

This is the second Sisvel pool for Huawei to join. More than a year ago, Huawei started its working relationship with Sisvel as an initial licensor of its WiFi 6 pool (as Sisvel president Mattia Fogliacco recalls in today's press release) and is also an Avanci 5G licensor, which shows that the Chinese innovator is increasingly receptive to pool-based licensing solutions. Other major SEP holders may now be more interested in joining this pool, given that Huawei and Ericsson (as well as various other patent holders) already give the licensing program a lot of substance.

Sisvel's updated list of NB-IoT licensors contains several other names I haven't previously noticed, such as KPN, Deutsche Telekom, and BlackBerry. What licensees get is a "one-stop shop" (as Sisvel's cellular IoT program manager Sven Torringer calls it in today's press release) that gives them access to more than two dozen patent portfolios, with Huawei, Ericsson, and NTT Docomo being considered particularly strong in narrowband IoT. It's fair to say that Huawei had a leadership role in the development of the IoT-related parts of the 4G/LTE standard.

Sisvel's press release mentions "new royalty rates for the Cellular IoT patent pool, including for devices with a lower selling price," and that it has "expanded its offering to new product verticals." Previously, as I reported at the time, the rate was "0ドル.66 per unit for LTE-M" and "a distinction [was] made between asset trackers (1ドル.33 per unit) and smart meters (2ドル per unit)." The 2ドル (smart meters) and 1ドル.33 (smart sensors with a selling price above 20ドル and up to 130ドル) price points are still found. But now there is also a 0ドル.35 per-unit royalty rate for smart sensors with a selling price above 6ドル (up to 20ドル) and a 0ドル.08 per-unit rate for devices with a selling price of 6ドル or less.

For makers of low-priced IoT products, this means the value proposition has changed enormously in their favor: far more patents, and far lower rates for certain applications. It looks like two factors have resulted in this more flexible and attractive royalty structure:

• In my commentary on the creation of the pool I already noted that the challenge for an IoT patent pool is market development: it's not enough to offer licenses or to dissuade implementer from infringement, but about adoption of the standard. Patent pool administrators operate in a two-sided market. They have to bring licensors and licensees together, and in order to do so, they have to listen to both sides.

• Sisvel's new NB-IoT royalty rates are definitely reconcilable with Huawei's bilateral licensing terms for such products, which are highly differentiated as I explained last month. The pool is a one-stop option, but it's not the only way to get access to Huawei's intellectual property.

  Huawei is both a major patent holder and a large-scale implementer. If a pool worked for only one side, Huawei would find it hard or even impossible to join.

The rock-bottom rates that the pool now offers for devices with a selling price of 6ドル or less should enable new applications. What comes to mind as potentially the highest-volume and lowest-price NB-IoT application is called printable NB-IoT tracking labels. They are asset trackers in the form of stickers that could, for instance, track an Amazon package.

At a time when policy makers are working on an EU SEP Regulation, it's warranted to put major SEP news such as this one into the current political context. The European Commission's Directorate-General for the Internal Market (DG GROW) clearly underestimated the extent to which patent pools could be part of the solution as opposed to being part of the problem. The favorite pretext (not only of DG GROW but also Apple and its allies and astroturfers) to push for legislative intervention is that IoT SMEs allegedly need a different legal environment. But patent holders are smart enough to realize that IoT patent licensing won't work unless the royalty rates enable IoT product makers to thrive. While I still haven't seen a single SEP enforcement action against an SME as defined by the EU, and the IoT sector is generally not a legal battlefield at the moment, the market continues to find and improve solutions.

Patent pools not only bring licensors together with licensees, but also have to broker a compromise between licensors of very different kinds. Huawei with its high product volume (which is not fully visible to people in the Western hemisphere for purely geopolitical reasons, but is a reality in the rest of the world) obviously has a more balanced take than a non-practicing entity, which is not meant to disparage NPEs but plainly a fact. In order for a pool to unite product makers like Huawei and Ericsson with infrastructure companies like NTT Docomo and Deutsche Telekom as well as with research institutes and patent licensing firms, it has to identify royalty rates that work for all of them.

An EUIPO-led process for aggregate (entire standard) and bilateral (licensor A and licensee B) royalty determinations will cause delay and complicate matters. In the meantime, patent pool administrators and other market actors work out and fine-tune the solutions they offer.

With so much in flux especially concerning IoT, the prudent thing for the EU to do would be to wait and better understand what's going on. Instead of trying to adopt something before the end of the legislative term just for the sake of having some kind of outcome to show (no matter how flawed), they should go back to the drawing board and take note of new developments, such as IoT licensing terms becoming more attractive at a breathtaking pace.

Today a reader made me aware of new standard-essential patent (SEP) litigation activity in China: Datang Mobile is suing Samsung in the Fuzhou Intermediate People's Court over six 4G/LTE SEPs, seeking a total of approximately 120 million RMB (US17ドル million) in damages. I did a short LinkedIn post to ask around whether other readers could contribute additional information.

In a November 2022 post on Sisvel's narrowband-IoT pool, Datang was mentioned as a licensor that builds mobile networks. Datang's DTmobile unit is also an Avanci 4G licensor.

I've been provided with a shareholder report that has the following headline:

中信科移动通信技术股份有限公司

关于子公司提起诉讼的公告

Here's a Google translation of the headline:

CITIC Mobile Communication Technology Co., Ltd.

Announcement of Subsidiary's Litigation

That document is dated February 6, 2023. The patent numbers are redacted (2009XX.1, 2012XX.1, 2011XX.3, 2011XX.X, 2010XX.0, and 2009XX.3). The defendants are described as "Samsung (China) Investment Co., Ltd. and other companies".

While Datang's cellular SEPs are not often mentioned in the Western world (basically just in connection with pools), it is a significant 4G and 5G SEP holder. As a network infrastructure maker, Datang understands the implementer's perspective.

About a month ago, Samsung renewed a patent cross-license agreement with Nokia. Two years ago, Samsung had a short-lived dispute with Ericsson. Samsung's licensing team often manages to avoid litigation.

The damages amount Datang is seeking in the aggregate of those six Chinese cases is almost certainly not what the dispute is really about. Datang holds many more patents, and particularly also plenty of patents outside of China. Furthermore, it has apparently requested an injunction.

This is a follow-up to yesterday's post on why actual numbers of narrowband IoT-related standard-essential patents are hard to come up with, and keyword searches are inherently unreliable in this context. Tim Pohlmann, the founder and CEO of IPlytics, reacted on LinkedIn, first under his personal and then posting the same statement under IPlytics' corporate account. He "doth protest too much"--and he contradicts himself:

The actual report purports to "paint a robust picture of the NB-IoT landscape" (emphasis added) and to "provide meaningful, actionable insights." The headline is "Who is winning the IoT SEP race?" (on the website: "Who is leading the IoT SEP race?") On LinkedIn, however, Mr. Pohlmann wrote the following, which contrasts nicely with his marketing claims:

"Our reports are not published to provide the truth about the winner[s]. We publish reports to show[]case what can be done with the data we provide. We do not care who ranks first[,] second or third."

IPlytics wants to have it both ways. They make bold claims and promises in public, and their reports have been used not only in licensing negotiations but also by litigants. Once you challenge the methodology and question the results of a particular report, they distance themselves even from its very headline ("Who is winning..."), downgrade the piece to a "showcase," suddenly discover humility, and place the emphasis on a disclaimer ("our data analysis and report results are limited to the approach of a patent declaration-based keywords search").

I would recommend to litigants whose adversaries proffer IPlytics reports to show to the court what Mr. Pohlmann publicly stated on LinkedIn in response to my criticism. Toying around with a database isn't necessarily admissible evidence.

Sadly, the inconsistencies don't end there. Just two examples in the NB-IoT context, comparing last week's report to its 2020 predecessor (Who owns patents, SEPs and develops standards for smart home technologies?) in the specific context of NB-IoT portfolio size:

1. Huawei--of which I said yesterday that it and Qualcomm indisputably deserve the two top spots--was not even listed among the top NB-IoT SEP holders in the 2020 report, and now it is (credibly) the number one.

   What was IPlytics doing and thinking two years ago? The complete absence of Huawei from the list of leading patent owners should have been more than enough for the report to fail any plausibility check before it was published. IPlytics should have asked themselves whether their methodology was sound given that such an outcome was inexplicable. Instead, they went ahead and published their report anyway. How "robust" and "actionable" is that?

2. For Nokia, Figure 4 of the 2020 report indicated approximately 2,300 patents from 500 patent families. In the 2022 report, however, those numbers are down to approximately 400 patents from 150 patent families (Figure 1). How can Nokia possibly have lost 5 out of 6 assets--and more than 2 out of 3 patent families--during a two-year timespan? Again, how is that "robust" and "actionable" short of a patent cliff of unprecedented proportions in the field of wireless communications technology? And how is it responsible to create such confusion around a key long-term growth area for a publicly traded company like Nokia?

I emailed Mr. Pohlmann before German office hours on Thursday, and received a reply a few hours later: a detailed email that for the most part sidesteps the issue I raised (the above discrepancies between the 2020 and 2022 reports). Only one paragraph really addresses my question, and Mr. Pohlmann (with whose company I signed an NDA a long time ago) authorized publication of his email, so let me quote:

"The smart home report from 2020 used a much simpler approach. Here only TS [technical specifications] that mention NB-IoT and LTE-M were identified to then connect this given list [of] TS to declared patents. So this report uses a keyword search in TS documents that have declared patents associated. The data approach of both reports are quite different. Also I must say that the number of declared patents has very much increased since July 2020."

The "much simpler approach" in 2020 did not dissuade IPlytics from publishing it (and declaring "winners") at any rate. If they say in 2022 that they've improved since the 2020 report, what will they tell us in 2024?

The last sentence about a massive increase in the number of declared patents (by the way, we're talking about subsets of the 4G standard, which is already quite mature by now) still doesn't explain why they published a list in 2020 (instead of immediately identifying an issue) without Huawei--the actual number one--among the top 10 patent owners. Mr. Pohlmann is a frequent speaker at SEP conferences, which in addition to his own company's patent database provides him with plenty of opportunity to get a feel for the market.

It is unfortunate that it is so hard to determine portfolio sizes in the narrowband IoT context. There are some companies who may only have a 1% or 2% share of all 4G/LTE SEPs, but their research may be disproportionately focused on parts of the standard that are relevant to its narrowband subsets (LTE-M and NB-IoT). Someone who is an average-sized fish in the larger pond may be a bigger fish in the smaller pond. Someone who filed for patents before those narrowband subsets were defined will not have used certain keywords in the claims or specification of a given patent application, but it may later read on NB-IoT and/or LTE-M anyway (false negatives under a keyword-based approach), while someone else may just have thrown in some keywords at a later stage, which doesn't guarantee that a given patent actually maps to the relevant specification of the standard.

IPlytics should be lower-key in its PR and marketing communications. That will lead to greater consistency. It's always better to underpromise and overdeliver, especially when there is the possibility of those reports being used in litigation or relied upon by policy makers and regulators.

There are more and more firsts in the Ericsson v. Apple 5G patent dispute:

• the first-ever Colombian standard-essential patent (SEP) judgment (Ericsson is now enforcing a 5G injunction, which Apple desperately sought to prevent),

• the first-ever "emergency motion" for an antisuit damages order (Apple's reaction to the Colombian decision), and now...

  ...TA-DA...

• the first-ever SEP lawsuit brought by Apple, which has been on the receiving end of SEP assertions for well over a decade but is only now striking back with a SEP for the first time in its history.

The venue is--of course--Munich, the world's #1 SEP injunction hotspot (while I haven't found out yet whether Apple is seeking an injunction, I'm sure it's either doing so now or would do so a little later).

The patent-in-suit is EP3178199 on "virtualized network function management." The company that filed for it, and obtained it, is Intel. A few months after the application was granted, Apple bought Intel's baseband chipset division, and in a subsequent transaction acquired many of Intel's cellular SEPs, such as this one. The database of the European Telecommunications Standards Institute (ETSI) shows that Intel declared the underlying patent application essential to the LTE (Long-Term Evolution, commonly known as 4G) standard, more specifically to its Evolved Packet System RAN part. RAN stands for Radio Access Network. The relevant 3GPP specification, no. 32.842, is titled "Telecommunication management; Study on network management of virtualized networks." That technical report was approved in 2015. All five IPR (intellectual property right) declarations related to that one were made by Intel, and Intel didn't subsequently declare any of those rights non-essential. So there is a FRAND commitment in place.

The Munich I Regional Court has assigned this case to its 21st Civil Chamber (Presiding Judge: Dr. Georg Werner). The case no. is 21 O 1970/22, and the first hearing (with the second one being a full trial) slated for February 15, 2023.

The same division will hear another Apple v. Ericsson countersuit on March 1, 2023: case no. 21 O 3471/22 over EP2946486 on an "apparatus, system and method of wireless backhaul and access communication via a common antenna array." This is a homegrown Apple patent, and appears to be a non-SEP.

At least one of Ericsson's cases has also been assigned to the Munich court's 21st Civil Chamber and will be heard in September 2022.

The two Munich complaints by Apple against Ericsson are not the only countersuits--just the most recently discovered ones. There is also a Mannheim case over another homegrown non-SEP, which will go to trial in October 2022, and a complaint with the United States International Trade Commission (USITC, or just ITC) seeking an import ban on mobile base stations implementing mmWave, but those patents haven't been declared essential to a standard.

Apple and Ericsson are not the only companies contributing to the continued growth of the Munich patent (and especially SEP) docket. In my next post I'll report on several new automotive SEP assertions that have very recently been brought there.

Yesterday, IAM reported that Via Licensing was going to discontinue its wireless patent pool business in order to focus on its wildly successful codec pools--and said Sisvel, the sole remaining pool of wireless standard-essential patents (SEPs) for mobile devices, as "throwing open its doors to former Via licensors." Sisvel itself issued the following statement, which sounds like "yes, but not so fast":

"On April 26, 2022, Via Licensing announced that they were dissolving certain wireless pools and will likely contribute the wireless patents owned by Via to a 5G pool under formation by Sisvel [pointing to IAM]. Sisvel is in the process of initiating discussions with Via pool members regarding joining the Sisvel 5G pool.

"Sisvel feels that a single pool incorporating key patents from the Via and Sisvel pools will create more value for licensees and accelerate adoption by 5G implementers. This, in turn, will accelerate royalty revenue back to the patent owners and enable further innovation for future cellular generations."

It is indeed interesting that Via made this decision as the industry is transitioning to 5G. This is now the time either to go all in on 5G, the To Be Or Not To Be standard of the 2020s, or to get out of the market. It's easy to see why Via's management looked at how one category of pools was performing for them versus another. The ROI of dedicating precious management bandwidth to a sluggish cellular pool just can't compete with the alternative of focusing on where they have momentum. That's how a market economy picks winners and losers within a portfolio.

By contributing the cellular patents it actually owns (as opposed to third-party patents it administered as part of the pool) to Sisvel's pool, Via endorses through meaningful action the alternative to its licensors that Sisvel's pool represents. If they issued a mere recommendation, people would wonder why they don't put their patents where their mouth is. Via's decision regarding its own patents represents meaningful peer recognition for Sisvel.

Still, it is now up to each and every one of those roughly 30 Via licensors to decide. Maybe some believe the time has come for them to focus exclusively on bilateral licensing (like the Ericssons and Nokias of the world, which transact directly with consumer electronics makers), while others will determine that they can actually have it both ways by joining Sisvel's pool and still doing direct license deals (which is also the way it works with Avanci).

In addition to the statement I quoted from, Sisvel published a two-page Q&A (PDF) on the implications of Via Licensing's decision to exit from cellular SEP licensing. In that PDF, Sisvel emphasizes that "there is the unique opportunity to create a single, more effective and powerful license proposition that will be better for both the patent owners and implementors [...] unlocking to the maximum extent the transactional efficiencies that patent aggregation allows for."

In my observation, there is empirical evidence besides Via's codec pools that the industry benefits when it can converge on a single pool in a given field. It took Avanci some time to build serious momentum, but it's now on a roll (though some automotive naysayers like Continental refuse to acknowledge it). Sisvel interestingly contributed its own (assigned, not administered) patents to the Avanci pool, which was probably a first in the world of patent pools as Sisvel technically competes--as a pool administrator--with Avanci's parent company, Marconi. Historically, the MPEG LA codec pools that were one-stop solutions also delivered outstanding results, while the HEVC and VVC situation is an unmitigated disaster for the industry at large.

Why would or wouldn't Via's cellular SEP licensors join Sisvel's pool?

As someone who closely monitors cellular SEP litigation and licensing, I would be surprised if "migration" from Via's defunct pool to Sisvel's more successful one didn't happen on a substantial scale. If the current situation had hypothetically arisen about a decade ago, I'd probably have had compatibility concerns. Not so anymore.

In 2015, I commented on Google joining Via Licensing's LTE pool and interpreted that decision as Google distancing itself from its prior FRAND abuse (for which it was even ordered to pay Microsoft damages). A number of Via's major contributors clearly prioritize implementers' interests, though just like any pool, Via, too, depended on its licensors' willingness to enforce if need be (such as against TCL, a dispute I discussed last summer).

The Sisvel of now has painstakingly built a reputation of being an organization that willing and even not-so-willing licensees can get along with. A couple of weeks ago, Sisvel announced an agreement with Vivo that was struck without having to resort to litigation, which also applies to last year's deal with Samsung. Last summer, Sisvel successfully settled patent infringement disputes with Xiaomi, OPPO, and ZTE. Those are no small achievements, not only but also in light of the unit volumes involved--and Sisvel points to them in that Q&A document on the fallout from Via's decision.

In that document, Sisvel stresses that the terms for former Via licensors joining the pool now will be just as advantageous as for Sisvel's longstanding partners--and "Sisvel will also accept existing third-party essentiality evaluations as relevant evaluations under its 5G multimode and cellular IoT pool, which should eliminate any concerns for double costs." So IAM had a point when describing the situation as Sisvel "throwing open its doors to former Via licensors." It does look like they're committed to a smooth transition for all parties with an interest in making it work.

Of course, if Sisvel's pool grows, its royalty rates will increase, and then it wil have to be worked out with existing and future licensors to what extent they may already be licensed, be it through Via's pool or bilateral agreements. That's the bread-and-butter business of patent pools. Avanci worked it out with Daimler despite Daimler previously having taken a direct license from Nokia, Sharp, and Conversant. I venture to guess Sisvel has addressed such situations, too.

I'll keep an eye on announcements of Via licensors joining Sisvel's cellular SEP pool for consumer electronics products. The question is an important one for this industry, and the time may be just right for consolidation.

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The dispute with Daimler is the gift that keeps on giving to Nokia. The case settled seven months ago, but yesterday Nokia's EP2550762 on "signalling of channel information" got upheld by an opposition panel of the European Patent Office with only a minor amendment, which still allows Nokia to claim that it is essential to the 4G/LTE standard. The patent relates to carrier aggregation (aggregating bandwidth from different parts of the spectrum).

Nokia didn't assert that standard-essential patent (SEP) against Daimler, but it was on a list accompanying Nokia's infringement notice, so Daimler and its supplier TomTom challenged it, possibly also hoping to drive up Nokia's litigation costs. Daimler wasn't actually listed as a party, but their lawyers (Quinn Emanuel) obviously weren't opposing the patent pro bono.

Let me quote from the EPO's summary and a pagraph that will now be inserted into the patent specification:

"In independent claims 1, 4, 7, 11 and 14 of the present patent, a disclaimer has been included for differentiation from this prior art document"

This makes the patent more valuable for Nokia's future 4G enforcement campaign. It is a significant accomplishment for Nokia's patent attorneys, Cohausz & Florack partners Bjoern Brouwers and Dr. Christoph Walke. It wasn't easy because the opposition board raised some issues in a preliminary opinion. The opposing parties, however, withdrew well in advance of yesterday's oral hearing.

Some automotive companies have yet to learn how to get their money's worth in patent litigation. Sometimes the economically smarted choice is to take a license. Before Daimler reached that conclusion and took an Avanci pool license, it had already paid substantial "tuition fees" in the form of ultimately unsuccessfully defending itself against Nokia, Sharp, and Conversant--and an IP Bridge case against Daimler would have gone to trial in Munich later this month.

Earlier today I also questioned the wisdom of Ford defending itself against Avanci licensors Sisvel, IP Bridge, and Longhorn IP.

When Daimler settled with Nokia, the Finnish wireless company had won "only" one injunction each in Mannheim and Munich. But shortly after that settlement I looked more closely at the state of affairs in various proceedings, only to find that Nokia would probably have been able to enforce the Mannheim injunction without a need to provide security in possibly just a matter of months, and that Nokia would very likely have won several more injunctions. That is not to say that no one can defend against Nokia: sophisticated smartphone companies would do a better job than Daimler. An interesting benchmark: OPPO outperformed Daimler against Sharp.

Daimler's litigation department managed that litigation a bit like people who order whatever item on the restaurant menu is priciest. You could take a burger straight out of McDonald's, put it on the menu, charge 350,ドル and those types of people would order it even if they could get a filet mignon from wagyu beef at half the price at what would still be an upscale restaurant on the other side of the street. There came a point when others in the organization were no longer prepared to support that wasteful spending. Now they just have to realize at Daimler that it's a mistake in German patent litigation not to hire interdisciplinary teams consisting of attorneys at law and patent attorneys. Patent attorneys won this one for Nokia.

Nokia definitely got a lot of value out of the Daimler dispute. But again, sophisticated tech companies, above all smartphone makers, are the real challenge, provided that can come up with a new challenge to EP'762 as merely rehashing Daimler's unavailing arguments won't help.

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I've just been able to obtain the complaint Ericsson filed against Apple yesterday with the United States International Trade Commission, seeking a U.S. import ban of 4G and 5G Apple products (iPhones, iPads, and Apple Watches; I'll provide the full list further below). As I speculated in my previous post on Ericsson v. Apple, one of the two patent infringement lawsuits Ericsson filed yesterday with the United States District Court for the Western District of Texas is a companion complaint to an ITC complaint--and as I figured, it's the one in which Ericsson is asserting four patents:

1. U.S. Patent No. 8,102,805 on "HARQ [Hybrid Automatic Repeat reQuest] in spatial mutiplexing MIMO [multiple-input multiple-output] system"

2. U.S. Patent No. 9,532,355 on "transmission of system information on a downlink shared channel"

3. U.S. Patent No. 10,425,817 on a "subscription concealed identifier"

4. U.S. Patent No. 11,139,872 on "codebook subset restriction signaling"

Those four patents have all been declared essential to the 4G or 5G cellular connectivity standards. The Texas case will be stayed pending the resolution of the ITC complaint, but Ericsson could go back later (should the parties still not have agreed on a deal by then) and seek damages in Texas. The ITC can order import bans, but does not have the statutory authority to award damages.

Formally, the ITC now has to decide whether to institute an investigation. That preliminary phase takes about a month, and it's a given that an investigation will be launched.

The complaint reveals that the previous license agreement ran through Friday (January 14, 2022). The most interesting passage is how Ericsson experienced its talks with Apple to agree on a new license agreement:

"[...] Starting in late 2020, Ericsson extended offers to Apple to sign a new license on FRAND terms. In sum, consistent with its obligations under the ETSI IPR Policy and to the technology community, Ericsson has sought in good faith to conclude a license agreement with Apple on FRAND terms.

"Ericsson’s efforts have failed because Apple refuses to pay a FRAND royalty for a portfolio license commensurate with licenses taken by existing licensees. Apple’s gambit is indistinguishable from a “reverse hold-up,” in which Apple abuses the protections afforded by FRAND while freely using Ericsson’s patented technology. Such tactics give Apple a ubstantial, unfair edge over its telecommunications competitors who have agreed to—and who maintain—licenses under Ericsson’s global portfolio of patents on FRAND terms. Apple has therefore not fulfilled its obligations to remain a third party beneficiary of the contract between Ericsson and ETSI." (emphases added)

Ericsson also says it has "provided Apple with a set of 300 claim charts demonstrating essentiality of certain of Ericsson’s Essential Patents," but "[t]he negotiations made clear there is a dispute between Apple and Ericsson as to the essentiality, and value, of Ericsson’s Essential Patent portfolio." And then Ericsson says this:

"After more than a year of negotiations, Apple continues to insist on an unreasonably low, non-FRAND rate for a cross-license." (emphasis added)

Various media reports today quoted an Ericsson statement according to which the Swedish company is now suing Apple "in multiple jurisdictions." I would expect at least Germany, the United Kingdom, and the Netherlands to be among them, and possibly some Asian jurisdictions. I'll try to find out more.

The official title is "In the Matter of Certain Mobile Telephones, Tablet Computers with Cellular Connectivity, and Smart Watches with Cellular Connectivity, Components Thereof, and Products Containing Same." Here's the complete list of accused Apple products:

• 5G iPhones: iPhone 13 Pro, iPhone 13 Pro Max, iPhone 13 (5G), iPhone 13 mini, iPhone 12, iPhone 12 Pro, iPhone 12 Pro Max, iPhone 12 mini

• 4G iPhones: iPhone 11 Pro, iPhone 11 Pro Max, iPhone 11, iPhone SE, iPhone XS, iPhone XS Max, iPhone XR, iPhone X, iPhone 8 Plus, iPhone 8

• 5G iPads: iPad Pro 11-inch (3rd gen), iPad Pro 12.9-inch (5th gen), iiPad mini (6th gen)

• 4G iPads: iPad Air (4th gen), iPad (9th gen), iPad Pro 12.9-inch (4th gen), iPad Pro 12.9-inch (3rd gen), iPad Pro 12.9-inch (2nd gen), iPad Pro 12.9-inch (1st gen), iPad Pro 11-inch (2nd gen), iPad Pro 11-inch (1st gen), iPad Pro 10.5-inch, iPad Pro 97-inch, iPad Air (3rd gen), iPad Air 2, iPad Air (1st gen), iPad (8th gen), iPad (7th gen), iPad (6th gen), iPad (5th gen), iPad mini (5th gen), iPad mini 4, iPad mini 3, iPad mini 2

• 4G Apple Watches: Apple Watch Series 7, Apple Watch Series 6 Apple Watch SE, Apple Watch Series 5, Apple Watch Series 4

In principle, Ericsson can try to add to that list any Apple products released in the coming months.

Here's Ericsson's ITC complaint (without the exhibits):

22-01-17 Ericsson v. Apple ... by Florian Mueller

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Hurricane Ida's landfall prevented the Fifth Circuit from holding the Continental v. Avanci et al. appellate hearing scheduled for yesterday (Monday, August 30). But the appeals court is still weathering the storm in other ways, and today put out its HTC v. Ericsson opinion (PDF).

The judgment is unanimous, though Circuit Judge Higginson filed a concurrence to make a point that is, ultimately, not outcome-determinative here.

The case originated from the Eastern District of Texas, where HTC alleged a FRAND breach by Ericsson, lost a jury trial, and the district court additionally entered declaratory judgment holding Ericsson in compliance with its obligations under the ETSI FRAND pledge, which is governed by French law. While the appeals court's affirmance of the district court ruling is based on purely legal questions (partly relating to jury instructions), it's worth noting what royalty demands have been blessed on the bottom line:

• Ericsson initially (in 2016) wanted 2ドル.50 per 4G device.

• After HTC brought the complaint in question, "Ericsson proposed a new licensing agreement whereby HTC would pay 1% of each 4G device sold, subject to a 1ドル floor and a 4ドル cap."

HTC's response to the original 2ドル.50 rate was a measly 0ドル.10 counterproposal. The reaction to the 1%/1ドル-4 deal was an amended complaint.

Why such a discrepancy? Primarily it's due to the fact that HTC made a smallest salable patent-practicing unit (SSPPU) argument, claiming that the baseband processor should serve as the royalty base.

Outside of the Northern District of California, SSPPU arguments don't seem to get traction. While I believe no court would ever be inclined to let a WiFi SEP holder collect 1% of the price of an entire airplane with WiFi on board, baseband processors that aren't fully licensed aren't the measure--and if they are fully licensed, than the value of all IP licenses far exceeds that of the raw material.

The district court declined to overinstruct the jury, and its approach has now been affirmed. This is also a post-term achievement for the Antitrust Division of the United States Department of Justice under then-AAG Makan Delrahim. In late 2019, the Trump DOJ had filed an amicus brief formally in support of neither party but practically in Ericsson's favor. Interestingly, Apple's amicus brief in support of automotive supplier Continental's ill-conceived U.S. case against Avanci, Nokia and others--which is pending with the same appeals court--is all about bashing the Trump DOJ.

Let's face it: this victory for Ericsson is of transcendental importance. Whatever HTC will end up paying Ericsson is just a small piece of the puzzle. In the greater scheme of things, this is yet another milestone for cellular SEP holders, some of whom are going to look at Ericsson's win and feel that their rates are too low. And it's going to be harder and harder for car makers to refuse to pay royalties on their products that the U.S. judiciary apparently considers appropriate for phones. Apportionment arguments don't seem to do the trick for implementers--and there are so many license agreements that will have to be renewed in the near future, with SEP holders often demanding substantially higher royalty rates for licenses covering 5G.

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The automotive patent wars are heating up. On Wednesday, a key Nokia v. Daimler decision is going to be handed down in Munich. Meanwhile, Nokia's partners in crime are pretty active, too. Three weeks ago I reported on patent infringement complaints brought by a Nokia-fed troll, Conversant, against Tesla in the Western District of Texas and in Mannheim, Germany. In that post I also mentioned other pending litigation by contributors to the infamous Avanci patent pool against Tesla:

• a lawsuit by Foxconn-owned Sharp in Japan, and

• a case brought by patent troll Sisvel in the District of Delaware over former Nokia patents.

The latest news is that Sisvel stepped up its campaign on Friday (May 15, 2020) by filing a second Delaware complaint against Tesla (this post continues below the document):

20-05-15 DED20cv655 Sisvel ... by Florian Mueller on Scribd

The co-complainants are Sisvel and one of its subsidiaries, named 3G Licensing.

The prayers for relief do not include injunctive relief for the time being. It's just about money.

These are the nine patents-in-suit, all of which were declared essential to certain cellular standards (3G and 4G):

• U.S. Patent No. 7,979,070 on "mobile equipment for sending an attach request to a network" (a former Nokia patent that was declared essential to the 4G/LTE standard)

• U.S. Patent No. 8,600,383 on an "apparatus and method for making measurements in mobile telecommunications system user equipment" (a former BlackBerry patent declared essential to the 4G/LTE standard)

• U.S. Patent No. 8,189,611 on a "system and method for resolving contention among applications requiring data connections between a mobile communications device and a wireless network" (another former BlackBerry patent declared essential to the 4G/LTE standard)

• U.S. Patent No. 7,215,653 on "controlling data transmission rate on the reverse link for each mobile station in a dedicated manner" (a former LG patent declared essential to the 3G standard)

• U.S. Patent No. 7,319,718 on a "CQI coding method for HS-DPCCH" (another former LG patent declared essential to the 3G standard)

• U.S. Patent No. 7,661,625 on a "method of scheduling an uplink packet transmission channel in a mobile communication system" (a third former LG patent declared essential to 3G)

• U.S. Patent No. 7,580,388 on a "method and apparatus for providing enhanced messages on common control channel in wireless communication system" (a fourth former LG patent declared essential to 3G)

• U.S. Patent No. 7,869,396 on a "data transmission method and data re-transmission method" (a former LG patent declared essential to 4G/LTE and temporarily assigned to Thomson)

• U.S. Patent No. 8,971,279 on a "method and apparatus for indicating deactivation of semi-persistent scheduling" (a patent filed by Thomson Licensing claiming priority to a patent originally filed by LG; declared essential to 4G/LTE)

So this is a typical "privateering" case, with operating companies--especially a couple whose core business (handsets) failed miserably--having transferred patents to a patent troll for the purpose of extracting royalties from makers of innovative products.

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The devaluation of a dying company's overrated patent portfolio has begun today. At 9 AM local time, the Mannheim Regional Court announced its final judgment in the first of ten German Nokia v. Daimler patent infringement cases to have been adjudicated. As expected, the court with by far the best technical understanding of cellular standards in the world tosses Nokia's complaint over EP2286629 on a "method and apparatus to link modulating and coding scheme to amount of resources." Contrary to Nokia's assertion, the patent is a far cry from being essential to the 4G/LTE standard.

Industry insiders know that Nokia, which failed in the mobile handset market because it was more focused on saving costs than delivering a great user experience, had already lost many of its best engineers when most 4G/LTE-related patents were filed. In its official communications, Nokia talks about the tens of billions of euros it invested in research and development in years and, especially, decades past. But the 2010s were the decade when Nokia took a definitive downturn from which it's not going to recover, short of a Finnish Steve Jobs emerging somewhere.

As I mentioned in my previous post (on a Munich case that Nokia can only "win" if the court is happy to be overruled within a couple of months at the most), Nokia's SEP portfolio is largely untested. The only judgment I remember was one that Nokia lost in Mannheim to a tiny rival (ViewSonic). In a recent conversation, a German patent litigator who has asserted SEPs for different plaintiffs on numerous occasions told me that Nokia itself presumably doesn't even have a clue as to the strength of its cellular SEPs, just because they've typically always settled before decisions came down.

So far, the SEP litigation score is "Defendants 2, Nokia 0."

It's fairly possible that Nokia, if it can't settle with Daimler (which Daimler shouldn't do because Nokia owes its suppliers an exhaustive FRAND license), will lose all of its ten pending SEP cases against Daimler when all appeals (including the nullity cases before the Federal Patent Court) have been exhausted. In the meantime, Nokia will have to negotiate renewals with various major licensees in the smartphone segment, and those licensees are probably watching what happens in those automotive cases--and wondering what they're actually paying Nokia for (though they all pay a fraction on a per-unit basis of what Nokia wants from Daimler in contravention of EU antitrust law).

The next round of mediation talks (unreasonably requested by a European Commission shirking its competitoin enforcement duty so far) will take place now, and most likely, nothing will come out of it. The fact that Nokia's ten SEPs-in-suit may not inclde a single valid patent that is actually essential to a cellular standard won't help.

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Next Tuesday (January 21, 2020), the Mannheim Regional Court is scheduled to hold a trial in a Nokia v. Daimler case over EP2286629 on a "method and apparatus to link modulating and coding scheme to amount of resources." With mediation having practically failed (though the mediators might invite everyone to another meeting, it wouldn't be likely to yield a result), the assumption is still that the trial will go forward.

Nokia is going to lose that one in all likelihood. Presiding Judge Dr. Holger Kircher notified the parties and the numerous intervenors (various Daimler suppliers) that, on a preliminary basis, his panel has concluded the patent-in-suit is not essential to the 4G/LTE standard--neither on the basis of a literal infringement theory nor the German equivalent of the Doctrine of Equivalents (DoE).

Therefore, the court doesn't anticipate that FRAND/antitrust matters, the most important one of which is whether Daimler's suppliers are entitled to an exhaustive component-level SEP license from Nokia, would be reached in this case.

Another Nokia v. Daimler case in Mannheim was supposed to go to trial last month, and was postponed (because the parties had agreed on mediation) to March 27.

The next Nokia v. Daimler court clash after next week's trial (which in all likelihood will just result in the rejection of Nokia's complaint on the grounds of non-infringement) will take place in Munich on February 6 (see this list of trial dates). Rumor has it that Presiding Judge Dr. Matthias Zigann of the Munich I Regional Court's 7th Civil Chamber recently indicated that Nokia's royalty demands from Daimler are not FRAND-compliant, in which case Nokia would be denied injunctive relief even if the patent was deemed valid and infringed (as the court thought at an early first hearing last June). I don't know whether the court's preliminary assessment of non-compliance with the FRAND licensing obligation is purely numerical (the royalty Nokia is seeking on a per-car basis is way out of line, but I don't know whether that's where the court has a concern) or related to non-monetary terms.

Things are not going well for Nokia at the moment, but a reversal of fortunes is always a possibility in these types of disputes.

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If you are already familiar with SEP portfolio valuation methods and their inherent shortcomings, you may wish to skip the introductory part (Basics) and jump straight to the part where I discuss specific issues with Qualcomm's conduct in connection with what is arguably the most central standardization process in the field of cellular telecommunications.

The valuation of standard-essential patent (SEP) portfolios is often performed in two steps: first, the value of all SEPs reading on the relevant standard is determined; second, the relative value of a given company's contributions to the standard is measured. In antitrust or contract cases raising FRAND questions, the inquiry may be limited to the second part, as a disproportionately high share of industry-wide royalties collected by one SEP holder can in and of itself serve to establish overcharging and unreasonableness. The latter is a huge problem for Qualcomm in the FTC antitrust case, given that Qualcomm collects approximately 25% of all wireless SEP royalties while being far below that percentage when it comes to its ownership position in wireless SEPs relative to the rest of the industry. Even Ericsson, a company that just suported Qualcomm's now-fully-briefed Ninth Circuit motion to stay the FTC's antitrust remedies, gave testimony in the FTC case that undermines Qualcomm's royalty demands. Ericsson believes to be the leader, and expressed the view that even Nokia's SEP portfolio appears more valuable than Qualcomm's.

For the purpose of determining the relative value of a given company's contributions to a standard, two inherently imperfect indicators are commonly looked at:

1. the number of declared-essential patent families; and

2. the number of contributions to the standardization discussion (so-called change requests).

Either approach is purely quantitative, not qualitative. But a qualitative analysis is rather costly and time-consuming even with respect to a single patent, making it practically impossible for a large portfolio. And the valuation of change requests can also be difficult, except for requests that are obviously devoid of any technical value, such as reports of mere typos or punctuation mistakes.

The specific problems of the first approach (counting declared-essential patent families) include the well-known problem of massive overdeclaration (driven by both the desire to capture as much of the value of a standard and the potential liability for undeclaring) and that of "opportunistic patenting". To explain the latter, I'll quote an instructive passage from Just-in-time inventions and the development of standards: How firms use opportunistic strategies to obtain standard-essential patents (SEPs), a paper authored by Byeongwoo Kang and Rudi Bekkers on behalf of the Eindhoven Center for Innovation Studies (ECIS) that examined the patenting behavior of participants in standard-setting and identified unusual filing activity around key standard-setting meetings:

"Our data reveals a strong relationship between patent timing and the occurrence of meetings. We observed a remarkable phenomenon that we call 'just-in-time-inventions': the patent intensity of about-to-become claimed essential patents is much higher during or just before these meetings than in other periods. At the same time, they are of considerably lower technical value ('merit'). This suggests that the just-in-time inventions are only beneficial to their owners, whereas for the public they merely invoke unnecessary costs. Finally, we observed that the phenomenon of just-in-time inventions is highly concentrated among specific types of firms, above all vertically integrated ones, and the incumbent champions of the previous technology standard." (emphasis added)

The market-driven and reality-centric solution to the problems I just outlined would be exactly what the FTC proposed in its opening statement in the FTC v. Qualcomm antitrust trial in January: SEP holders like Qualcomm should have to negotiate without undue leverage and, if necessary, prove the value of exemplary patents in court, where the validity and infringement of those patents can be challenged. The FTC didn't say so, but in the industry's opinion Qualcomm's SEPs tend to be very broad, making many of them more susceptible to invalidity than non-infringement contentions. Qualcomm's "No License-No Chips" policy has enabled the San Diego chipmaker to pretty much avoid "the moment of truth," and until earlier this decade, SEP holders drew enormous leverage from the threat of injunctive relief.

But most of the time, portfolio valuation--be it in negotiation or in portfolio-related litigation--is based on those two imperfect methods: DEP (declared-essential patent) counts and CR (change request) counts.

Qualcomm employee Wanshi Chen (the latter being the family name) is the chairman of the 3GPP RAN1 ("R1") working group ("WG"). That WG is "responsible for the specification of the physical layer of the radio [i]nterface" for all the major cellular standards from 3G to 4G (LTE) to 5G. 3GPP means "Third Generation Partnership Project." According to its website,

"The 3rd Generation Partnership Project (3GPP) unites [Seven] telecommunications standard development organizations (ARIB, ATIS, CCSA, ETSI, TSDSI, TTA, TTC), known as 'Organizational Partners' and provides their members with a stable environment to produce the Reports and Specifications that define 3GPP technologies.

"The project covers cellular telecommunications network technologies, including radio access, the core transport network, and service capabilities - including work on codecs, security, quality of service - and thus provides complete system specifications. The specifications also provide hooks for non-radio access to the core network, and for interworking with Wi-Fi networks.

"3GPP specifications and studies are contribution-driven, by member companies, in Working Groups and at the Technical Specification Group level."

For a company seeking to exercise a maximum of control over cellular standards development, it's hard, if not impossible, to think of a more influential position than the chairmanship of the RAN1 WG. For an overview of 3GPP WGs I recommend table 1 on page 6 of a document (PDF) available on Ericsson's website. 3GPP members have full access to certain stats on the "3GPP meetings for group R1" webpage. RAN1 WG meetings attract substantially more participants (typically around 450) than meetings held by other WGs.

Unfortunately, Mr. Chen's conduct raises very serious questions. There are extremely strong indications that he has been leveraging this position for the purpose of distorting DEP and CR counts to an extent that other industry players may view as a downright betrayal of the trust that was once placed in him. As in some other patent-related contexts, the proverbial fox appears to have been put in charge of the hen house.

First, there's a conspicuously high number of SEP declarations by Mr. Chen compared to other current and recent 3GPP WG chairmen, as shown by the high-rising bluish line on the following chart based on IPlytics data (click on the image to enlarge; this post continues below the chart):

Mr. Chen was a very active patentee even before, but his current position gives him privileged access to information and generally a lot of influence over the standardization process.

The raw data underlying the chart comes from all SEP records where the chairmen or vice chairmen are listed as inventors or co-inventors. IPlytics is a particularly popular tool for researching patent databases. I have recently seen IPlytics-based charts in various articles and tweets by top-notch analysts. So far I have heard only good things about their service.

The number of SEP declarations per month was calculated by counting each patent family at most once per generation (taken from the "technology generation" field); if a declaration involves multiple generations, then the highest generation was used. For each patent family, the earliest declaration date of all patents with the same generation was used. The chart then shows the cumulative number of declarations on a monthly basis.

Mr. Chen was elected RAN1 chair in August of 2017. The chart shows filings by other chairmen and vice chairmen (of RAN1 as well as RAN2 and SA2) who held those positions for a comparable period of time. The chart furthermore shows the numbers for some ex-RAN1 chairmen. Note that Mr. Chen, prior to becoming cahirman, served as vice chairmen form August 2013 to August 2017. The following table shows the periods of chairmanship or vice-chairmanship for the relevant persons (format: MM/YY):

The disproportionately high number of SEP declarations by Mr. Chen strongly suggests that he's taking advantage of his current chairmanship and already did so with respect to his prior vice-chairmanship.

Correction requests are one type of contribution to a standard-setting process. Their primary purpose is to fix issues as early as possible, ideally before any user of standards-compliant devices will be affected. Under 3GPP rules, any formal changes to a specification of an already-adopted standard require the submission of CRs in the sense of correction requests.

It's a well-known fact that some participants in standard-setting like to inflate the number of CRs such as by filing separate CRs even when they could--and conveniently would be--combined. And there can be duplicative or conflicting CRs, which is why it's undoubtedly necessary to consolidate overlapping CRs at the editorial stage. But Mr. Chen imposed new rules that were simply designed to deprive participants of the credit they deserve for valuable contributions, while crediting mostly just the section editors, not the original contributors.

Here's an example of a CR that an editor employed by Motorola Mobility submitted, but a proposal of the verry same substance had previously been rejected only because of the new rules imposed on the RAN1 WG by the Qualcomm-employed chairman (this post continues below the document):

36213_CR1162_(Rel-15)_R1-18... by Florian Mueller on Scribd

Instead of allowing submitters to use the standard form all the time, Mr. Chen insisted on a limit of one submission per company during a given period, and even required submissions to be made in standard text files (as opposed to using the submission form, as Motorola Mobility did in the above example, which resulted in rejection only because they used the standard form)--and the net effect is basically that the editor will then submit the CR in the name of the editor's company, without any credit to the original submitter.

I've obtained an email sent by Mr. Chen to the entire WG on June 26, 2018 ("Draft agenda for RAN1#94"), in which he reminded everyone of the rule that they should not use the standard CR template and of the one-CR-per-company limit:

---START QUOTE---

• For those agenda items marked with “no individual CRs” – PLEASE, no individual CRs, only text proposals. Please also do NOT use CR template for your contribution. Rather, just use regular word document with proposals & TPs embedded instead.

• For those agenda items marked with “single contribution restriction” – PLEASE, follow it STRICTLY. For example:

  • If any companies have with more than one contribution in the respective agenda items, the 2nd contribution and onward will be marked in red color and will NOT be treated.

  • The contribution itself CAN NOT be a “shell” contribution, which only contains references to other multiple contributions located e.g., in “others’ section. Each contribution has to be self-contained. The “shell” contributions will be marked in red color and will NOT be treated.

---END QUOTE---

Mr. Chen's overly strict rules were criticized by ETSI's Kai-Erik Sunell in an email on August 30, 2018 for being inconsistent with standard 3GPP rules:

"P.S. Frankly speaking, it is difficult for me to understand why you are asked to prepare these corrections on behalf of other companies. 3GPP working methods do not define any 'CR editors' and all 36.xxx specifications are already under change control which means that the rapporteurs of these specifications cannot serve as specification editors anymore. You (and everyone else) are, of course, welcome to serve as informal 'CR editor' if you like to volunteer for something like that but then, please, fill in all the coversheet fields as if the CR captured your own corrections. Please see below an extract from TR 21.900 Technical Specification Group working methods, subclause 4.1.2, https://portal.3gpp.org/desktopmodules/Specifications/SpecificationDetails.aspx?specificationId=555"

Mr. Sunell's title at ETSI is Mobile Competence Center Technical Officer. But ultimately the chairman decides the rules, and apparently the rules haven't really improved since.

"Credit where credit is due" is a good principle. It doesn't make sense that the RAN1 WG would credit only section editors of the specification but not the original submitters.

Of course, it does make sense for Qualcomm's purposes. But will the rest of the industry let one company set the rules for the most important 3GPP WG just because it decreases some other major patent holders' CR percentages? And how about Mr. Chen's disproportionately high number of SEP declarations?

I would encourage the membership of the RAN1 WG to raise the issues internally, and to think about the extent to which Qualcomm's corporate interests as a major patent holder and monetizer are aligned with the interests of the industry at large in encouraging and fairly crediting (with a view to future patent valuation discussions) all contributors.

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More than three years after naming and shaming Ericsson's privateering deal with Optis Wireless (among a long list of similar partnerships), I became aware of the recent verdict against Huawei in the Eastern District of Texas, which serves to show how Huawei is torn between its strategic interests as a leading Android device maker on the one hand and an aggressive patent licensor on the other hand.

A corporation of that size is party to many disputes at any given point in time, and obviously the shoe will regularly be on the other foot. Parties don't make or change laws, so litigants can merely try to undermine (to a limited and often negligible extent) their adversaries' credibility by pointing to contradictions. However, in two respects such contradictions can be very significant:

• FRAND licensing negotiations and disputes involve bona fide questions, making inconsistencies more problematic than in such a context as patent infringement.

• We're all among the potentially billions of judges sitting on the court of public opinion, and some companies spend huge amounts of money on PR agencies and departments--or even on advertising campaigns like Qualcomm's big-time self-promotion in San Diego--to make us believe that they're the good guys. In that respect, it's a serious issue if they blatantly and brazenly apply double standards.

For an example, while Apple's positions on standard-essential patent (SEP) licensing have been perfectly consistent over the years, I really took issue and even got emotional when Apple's lawyers in the second California case against Samsung argued that a few narrow software patents entitled the iPhone maker to a "reasonable royalty"-type of damage award of 40ドル per device. Those weren't standard-essential, and if that claim had simply been based on lost profits, it would have been a different story. But they said "reasonable", and that's the R--the single most important letter--in "FRAND."

Samsung used to seek remedies over SEPs that I consistently disagreed with. I viewed their litigation tactics far more favorably when they dropped the related claims against Apple and even joined pro-FRAND organizations. Same with Google, by the way, but since it divested Motorola Mobility and contributed to an LTE patent pool, it's probably not going to be active again as a SEP enforcer in the foreseeable future.

If Huawei were a person, the diagnosis would be schizophrenia. Sorry to say so about one of my two favorite Android brands. According to Wall Street rumors, Huawei is (thankfully) part of the rebellion against Qualcomm. Just a couple of days ago, the FTC pointed to a 20-year-old Qualcomm filing that took the very opposite position on the FRAND licensing of rival chipset makers as Qualcomm is taking now. In Huawei's case, we're not talking about two decades in between. What we're seeing unfold here are parallel cases (Huawei's litigation with Samsung in the U.S. and China, and in parallel, PanOptis' litigation against Huawei in the U.S. and Germany, which provoked a Huawei countersuit in China for the purpose of a FRAND determination). It's like Huawei has to wear a different hat every 20 days, and at times every 20 hours, than change positions over the course of 20 years.

In the (Pan)Optis v. Huawei case in the Eastern District of Texas, the parties filed their proposed findings of fact and conclusions of law (after the recent jury trial and with a view to an upcoming bench trial) late last month--(Pan)Optis on the left side, Huawei on the right side. And some of what Huawei says is really interesting (this post continues below the document):

18-09-28 PanOptis v. Huawei Proposed Findings of Fact by Florian Mueller on Scribd

(Pan)Optis claims to have "acquired" (though it may actually be more of a service provider to Ericsson in economic terms) 63 SEP families. I haven't seen a comparable public claim by Huawei, but this Chinese study (in English, though) concluded that Huawei had declared slightly more than 600 patent families to be essential to 4G/LTE.

According to Huawei's own proposed finding of fact #58, "Huawei sent a letter to PanOptis indicating that it was willing to enter into a license to PanOptis’ U.S. declared essential patents for a rate of 0.09%, its EU declared essential patents for 0.056%, and its China and Rest of the World declared essential patents for 0.04%."

When I see a Huawei FRAND position that has a zero to the right of the decimal point, it immediately brings back to memory the FRAND rate that a Chinese court set, at Huawei's request, for InterDigital's SEPs: 0.019%.

Samsung claims that Huawei never substantially lowered its 1.5% royalty demand. Huawei denies that allegation, but without specificity (at least in the public redacted version of the relevant filing).

The recent Texas verdict related to five patents, four of which were standard-essential (and the jury awarded a far lower per-patent rate on each of those SEPs than on the non-SEP). While Huawei can--and according to a couple of more recent filings will--seek a judgment as a matter of law on the merits and on the damages award, for the time being (Pan)Optis has established the actual infringement of four presumed-valid SEPs, while Huawei has yet to prove anything in the United States. It has prevailed on a couple of patents in China, though.

The proposed findings of fact and conclusions of law in the Texas case also deviate from Huawei's positions in the Samsung despite with respect to whether one court should set a worldwide royalty rate:

"[DCL24] As discussed above, PanOptis has never given Huawei a U.S.-only offer. But, in view of PanOptis' decision to sue Huawei on its U.S. patents in a U.S. court, and in view of the very minor share of Huawei's sales in the U.S., and that Huawei has clearly stated its willingness to agree to and desire for a FRAND license covering its US sales, FRAND requires that PanOptis offer Huawei a U.S.-only license, rather than requiring that, in order to get a U.S. license to cover its minimal U.S. sales, Huawei also take a license in other countries where its sales are much greater (e.g., more than 60% in China) under foreign patents not at issue in this litigation. Despite Huawei repeatedly seeking a U.S.-only license and offering to settle the U.S. case, PanOptis has refused to discuss such options with Huawei."

"[DCL26] Like Motorola, PanOptis violates its FRAND obligations by suing Huawei on U.S. patents and insisting on a global license, despite Huawei's comparatively low sales in the U.S. and Huawei’s offer to enter into a U.S.-only license. Admittedly, Motorola sought an injunction against Apple in Germany, and PanOptis is seeking only damages against Huawei in U.S."

In the aforementioned bench trial opening brief, Huawei discourages the Texas court from setting a global FRAND rate:

"Further, as the Court recognized in limiting PanOptis' Count IX to U.S. patents [...], the Court should refrain from exercising its discretion to adjudicate FRAND issues as to foreign patents since doing so would necessitate determinations concerning the scope, infringement, and validity of non-U.S. patents governed by non-U.S. laws."

I agree--but why did Huawei ask the United States District Court for the Northern District of California to make a global FRAND determination in its dispute with Samsung? And why shouldn't Samsung firstly get the chance that Huawei actually had--even if only with respect to a handful of patents--in the Eastern of District (though it now has to get the verdict overturned, either by the district court or on appeal) to litigate its non-infringement and invalidity defenses?

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Yesterday's announcement that Google has agreed to make its LTE (4G) standard-essential patents, all or most of which previously belonged to Motorola, available through Via Licensing's LTE patent pool, is for all intents and purposes more meaningful than most settlements of patent disputes between industry players are. It means that Google is being Google again, and has distanced itself from the abusive conduct that gave rise to antitrust investigations in the U.S. (consent order) and Europe (decision, but no fine, which also looks like a compromise).

By "Google being Google again" I mean that the search giant and Android maker has given up on the notion that two wrongs (overwhelmingly meritless, at least impactless, patent assertions against Android on the one hand, and retaliatory abuse of FRAND-pledged standard-essential patents on the other hand) could make a right. Google temporarily used its SEPs in ways that ran counter to positions it was simultaneously taking on non-SEPs, even to the extent that Google, the parent company, submitted a public interest statement in an ITC proceeding that was amazingly inconsistent with what Motorola, the subsidiary, was saying in its own submission in connection with a parallel case. Also, Google's (ab)use of SEPs didn't really lend credibility to its positions on patent reform.

Now the "Don't Be Evil" company has apparently decided to become consistent again. In the LTE context Google is now aligned with companies that have never abused FRAND-pledged SEPs, some of which have even made significant efforts to advocate reasonable interpretations of FRAND. These are the other contributors to the Via Licensing LTE pool: AT&T, China Mobile, Clear Wireless, Deutsche Telekom, DTVG Licensing, Hewlett-Packard, KDDI, NTT DOCOMO, SK Telecom, Telecom Italia, Telefonica, and ZTE. Temporarily, Google's (Motorola's) FRAND positions were actually the same that some infamous SEP trolls and some failed businesses with an increasing or near-exclusive focus on patent licensing (and the privateers they feed with patents) tend to take.

This is the very Google that more than any other (IT) industry giant wants to make the world a better place through investments that the stock market doesn't reward in the short term but Google can afford, such as self-driving cars and "interventions that enable people to lead longer and healthier lives." More than any other large company I know, Google is truly about much more than just making money for its shareholders and other stakeholders. (Of course, this still doesn't give Google the right to violate antitrust rules in its core business, or to leverage excessive control over Android in anticompetitive ways.)

I find it hard to believe that the timing of the announcement--one day after an appellate hearing at which Google saw that it can't win the FRAND part of its Microsoft dispute, though it is winning the real war over Android royalties--is a coincidence. In that Microsoft v. Motorola case, Google's lawyers consistently argued that patent pool rates should not be used as an indicator of FRAND rates. Different standards (H.264 and WiFi) are at issue in that case, but still: Google wouldn't have wanted to undermine its anti-pool-rate argument. It certainly didn't want to give Microsoft's counsel the chance to mention its new position at the hearing, and if it had seen any realistic chance of Judge Robart's FRAND rate-setting opinion being overturned, it might have waited (possibly forever) with this move. Yes, this is speculative, but the connection is close and strong enough to support such a theory.

It's not clear whether Apple and Microsoft (which builds LTE devices as a result of the Nokia acquisition) will be able to benefit directly from Google's contribution to the Via Licensing LTE pool. With Apple, Google has a ceasefire in place, but no license deal (at least none that would have been announced). With Microsoft, it is still embroiled in litigation, though Microsoft hasn't brought any new offensive cases against Motorola in a while (at least none that would be discoverable).

Maybe Google's agreement with Via Licensing precludes Apple and Microsoft from licensing Motorola's LTE patents through that pool until comprehensive license agreements between those companies and Google are in place. In that case, Apple and Microsoft could still use the Via Licensing pool rates as pretty powerful evidence in any FRAND rate-setting dispute with Google.

Maybe Google doesn't even care if Apple and Microsoft license its LTE patents through that pool. Google could still assert older (3G) patents if necessary, as long as those haven't expired. And with the lack of success of Apple and Microsoft's patent assertions against Android devices so far, Google may not even be afraid and, therefore, may not feel it needs any leverage from LTE patents to counterbalance Apple and Microsoft's non-SEP enforcement. Apple started its enforcement against Android more than five years ago; Microsoft, more than four-and-a-half. After all this time, Google may be convinced that it doesn't need a good offense as its best defense because a defense-defense will always do the job to protect Android.

The main reason I used to criticize Google's position on patents so much was its inconsistency. It wanted to devalue non-SEPs while trying to gain undue leverage from SEPs. At first sight, one could also say that Apple and Microsoft are inconsistent because they want to bring SEP license fees down while exaggerating the value of non-SEPs. But FRAND-pledged SEPs are encumbered, and encumbrance is not a value enhancer. Consistency obviously depends on the particular arguments that are used and on whether any differences in value have a logical basis. For example, Apple is in my opinion being inconsistent by stressing its royalty base and "smallest saleable unit" point in connection with SEPs but arguing that even minor aspects of minor features (where the price of the smallest saleable unit, Android, is technically zero) make a substantial percentage of the entire value of a smartphone.

Overnight, Google has gone from "most inconsistent" to "most consistent" when it comes to patent licensing. This overnight change took years of litigation and a couple of antitrust investigations. Still it's great news, and I hope that some others, such as Apple, will soon match Google's level of consistency in this regard.

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