Posts Tagged: "FRAND"

Ericsson publishes FRAND licensing rates for 5G/NR after Qualcomm sued for chip licensing activities

On March 3rd, Swedish telecommunications company Ericsson publicly announced its fair, reasonable and non-discriminatory (FRAND) terms and conditions for the licensing of standard essential patents (SEPs) for 5th Generation New Radio (5G/NR) as standardized by the 3rd Generation Partnership Project (3GPP). The decision to announce these terms publicly may be an indication that Ericsson is looking to avoid the fate of other mobile wireless chip makers, which have come under fire in recent months for their own licensing practices.

Al Capone and Qualcomm: Why Section 5 of FTCA should not be a fallback to challenge conduct actionable under the Sherman Act

Last month, after a multi-year antitrust investigation, the United States Federal Trade Commission filed a complaint in federal district court charging Qualcomm with using anticompetitive business practices in violation of Section 5 of the Federal Trade Commission Act. The FTC’s decision to charge Qualcomm with violating Section 5 of the FTC Act, in lieu of alleging that Qualcomm’s conduct violated the Sherman Act appears to be the tactical equivalent of the government’s 1930’s decision to pursue Capone for tax evasion… Section 5 should not be used as a fallback device to challenge conduct actionable under the Sherman Act, but where the enforcement agency is unable or unwilling to meet the evidentiary rigor required by case law under the Sherman Act.

Korea announces $865 million fine on Qualcomm for standard essential patent license violations

The fine on Qualcomm is for allegedly refusing to license standard essential patents to competing companies on fair and reasonable terms. According to the Korean authorities, Qualcomm’s actions amounted to coercion for the purpose of strengthening its monopolistic power in the patent license market and chipset market… Not surprisingly, Qualcomm vehemently disagrees with the assertions made in the press release, has pointed out that a final written decision is not generally expected after an announcement like this for another 4 to 6 months, and promises to aggressively appeal… Rosenberg explained that Qualcomm was repeatedly denied access to documents and the right question witnesses, rights that are guaranteed to U.S. companies under the Korea-U.S. Free Trade Agreement.

SEP Licensing: Looking Beyond Essentiality

Unlike other technologies (e.g. User interface) where the manufacturers have a choice to design around the technology of the patent, in case of SEPs, there is no possible way to avoid infringement and still comply with the standard. On the other hand, non-compliance with standard is a commercially non-viable option. This situation gives the SEPs holders a great leverage to assert their licensing terms. While there have been several cases and rulings in favor of SEP licensees that put some restrictions on the SEP holders regarding their FRAND licensing commitments as well as their abilities to exercise an injunction for infringement of SEPs, lack of clarity on FRAND terms still make the negotiations tough for a potential SEP licensee.

A micro-economic estimate of the reasonable royalty rate for standard essential patents

The debate on RAND terms and conditions is mostly about the reasonability of the royalty rate, less about non-discriminatory part. So, what is a “reasonable rate”? Companies that manufacture products based on a standard will demand lower rates or royalty-free licenses, claim harm from patent hold-ups and from royalty stacking. These companies will argue that it is unfair when companies that contribute technology to the standard benefit from the lock-in of the standard because it is now unavoidable to use the essential patents in their products. On the other hand, companies that participated in standards development, and own essential patents because of that investment, claim that lower royalty rates will remove the incentives for future investments in standard setting and will stifle innovation. In the confusion generated by these lobbying interest groups, it makes sense to go back to the one thing everyone seems to agree on: Standards are good.

Keeping an eye on patent trolls

Regulators face a twofold challenge: First, they need to balance the legitimate interests of patent holders and licensees in order to determine which activities and contracts the law will enforce, or otherwise recognize as creating legal rights. Second, they need to establish rules that minimize both the costs of assessing a given case, and the costs of taking wrong decisions. One traditional approach has been to use antitrust law.

What Mattered in 2015: Insiders Reflect on Biggest Moments in IP

This year our panel of industry insiders is quite diverse, with commentary from Bob Stoll (Drinker Biddle), Ashley Keller (Gerchen Keller), Paul Morinville (US Inventor), Alden Abbot (Heritage Foundation), Marla Grossman (American Continental Group) and Steve Kunin (Oblon). Unlike last year where there was near unanimous agreement that the Supreme Court’s decision in Alice v. CLS Bank was the biggest moment of the year, this year our panel of industry experts focused on a variety of different matters. There was one recurring theme, however. The inability of patent reform to advance on Capitol Hill was undoubtedly one of the biggest stories of the year.

Emerging Antitrust Regulation of Intellectual Property Licensing in Asia

Both Korea and China are major players on the global patent stage, and the leading companies of these countries file and obtain thousands of patents annually. But it seems increasingly clear that the governments of these countries are attempting to support their domestic companies via antitrust enforcement to lower the price of access to patented technologies of foreign competitors.

Patent landscape suggests Bluetooth Low Energy tech has largely untapped potential

The two largest patent portfolios related to BLE technologies are owned by Irvine, CA-based fabless semiconductor company Broadcom and South Korean electronics giant Samsung. A market map view of the top innovators in the BLE space shows that not only does Broadcom have a slightly larger portfolio than Samsung, it has also dealt with far less litigation than the South Korean developer. The large collection of companies clustering in the lower-left quadrant of this market map represent companies with smaller patent portfolios and lower revenues. The dozens of companies dotting this portion of the map could be an indication that mergers and acquisitions in the IoT semiconductor chip space may be far from over this year.

Inside Intel’s Intellectually Dubious Patent Study

Instead Intel focuses on the potential evils of royalty stacking without at all acknowledging that market values for validly patented technologies exist because these technologies improve a standard and strengthen an industry that uses the standard. Intel notes that U.S. judges in some cases have made determinations on the value of specific FRAND royalties less than those sought by inventing companies. But Intel then argues even these FRAND royalties represent a breach of FRAND commitments. And then, to support its royalty-stacking argument, Intel presents a theoretical “stack” price based on multiplying a rate sought for one SEP by the estimated total number of SEPs in a standard. By using only a rate sought, as opposed to a rate accepted by an implementer or approved by a court; by ignoring cross-licensing; and assuming falsely that all patents are worth the same, Intel arrives at a large number intended – it seems – to provoke fears about the “grave threat.”

FTC Says Injunctions Related to Standard-Essential Patents Can Harm Competition, Innovation

The brief addresses this issue in the context of patent infringement claims that Motorola, Inc. has filed against Apple, Inc. regarding technologies used in iPhones and iPads that allegedly are covered by Motorola’s SEPs. It concludes that a district court correctly applied the governing legal principles when it dismissed Motorola’s request for an injunction that could have blocked Apple from selling iPhones and iPads in the United States.

Under FTC Settlement, Bosch Agrees to Make Certain Patents Available to Competitors

According to the FTC’s complaint, Bosch’s acquisition of SPX’s Service Solutions business would give Bosch monopoly power in the U.S. market for ACRRR devices. Following the transaction as proposed, Bosch would control an overwhelming share of the market. Four other firms are in the market, each with a very small share. The acquisition also would eliminate the current direct competition between Bosch’s RTI and Bosch brands and SPX’s Robinair brand, and would allow the combined firm to raise prices by unilaterally exercising its newly gained market power, in violation of the FTC Act, the FTC alleged. The FTC complaint also alleges that SPX has been pursuing a strategy of suing to enjoin competitors from using patents that may be necessary to meet the standards for manufacturing ACRRR devices.

Apple v. Motorola: Analyzing Judge Posner’s Decision

J. Posner also brought the value of the patents declared to be essential under standards bodies to bear on the damages question.  Essential patents must be evaluated for absolute value and relative value to the full-declared portfolio.  These values are needed where a non-linear function is proposed for a royalty determination based on infringement of a subset of the declared patents.  The difficulty presented by an assertion of a single essential patent from a much larger portfolio is “that if [the potential licensee] had wanted to license any of the patents in [the standard’s essential portfolio], the license fee would have exceeded the product of the percentage of the portfolio represented by the patent and the value of the entire portfolio.”  Objective data to present a non-linear function was needed, and even where presented, the notion of a FRAND royalty applied to “confine the patentee’s royalty demand to the value conferred by the patent itself as distinct from the additional value – the hold-up value – conferred by the patent’s being designated as standards essential.”

The Smart Phone Patent Wars: Is Government Action on the Horizon?

Last month, both the U.S. Senate and U.S. House of Representatives held hearings related to patent disputes, the ITC, SSOs and FRAND licensing – no doubt precipitated by the smart phone patent wars. On July 11, 2012, the full Senate Judiciary Committee held a hearing entitled “Oversight of the Impact on Competition of Exclusion Orders to Enforce Standard-Essential Patents.” Witnesses at the Senate hearing included the Acting Assistant Attorney General, Antitrust Division, U.S. Department of Justice, and the Commissioner of the Federal Trade Commission (FTC). A week later, on July 18, 2012, the House Judiciary Committee’s Subcommittee on Intellectual Property, Competition and the Internet held a hearing entitled “The International Trade Commission and Patent Disputes.” Witnesses at the House hearing included Professor Colleen Chien of Santa Clara University School of Law, IP Counsel for Ford, VP of Litigation for Cisco, the General Counsel of Tessera Technologies, and the President of The American Antitrust Institute (AAI).

Some Observations on the Market Reverberations of the Smart Phone Patent Wars

Commenting on the Yahoo! Inc. patent infringement lawsuit filed against Facebook in March of 2012, Mr. Cuban concludes his post by stating: “I hope Yahoo[!] is awarded $50 billion dollars. It is the only way that consumers will realize what is at stake with patent law as is. Then maybe we can get it right and further innovation and competition in this country.” These statements are from a very influential technology entrepreneur, investor and generally-recognized American business guru. Thus, it would seem that the continuous negative headlines from the smart phone patent wars are definitely giving patents a bad rap!