Saturday, August 17, 2019

Hot summer for Ninth Circuit motions panel: Qualcomm's motion to stay enforcement of FTC remedies still pending after more than 3 weeks

Imagine you're a judge on the United States Court of Appeals for the Ninth Circuit, and from time to time you serve on the Motions Panel that changes every month. Motions to stay the enforcement of injunctions are the most critical ones to resolve, short of anything related to executions, but there aren't any pending in the Ninth Circuit.

Most motions, including those motions to stay enforcement, involve relatively narrow issues. But from time to time, a "monster" motion comes along. That's what happened when Qualcomm, understandably though I mostly disagree with them on substance, sought a stay of the enforcement of the injunction the FTC had obtained from Judge Lucy H. Koh of the United States District Court for the Northern District of California.

Just the findings of fact and conclusion of law underlying the order span 233 pages. But there's also been a significant volume of briefing on the motion. Assistant Attorney General Makan Delrahim, a longstanding Qualcomm friend who represented Qualcomm while in private practice, heads the Antitrust Division of the Department of Justice, and his subordinates made a filing in support of Qualcomm that was also backed by a couple of other Administration officials. The FTC's solid but somewhat lackluster opposition to Qualcomm's motion was supported by industry body ACT | The App Association and by chipmaker MediaTek, whose filing showed a Qualcomm-internal presentation depicting competitors' exits from the cellular baseband chipset market with tombstones.

The national security arguments made by Qualcomm and its usual allies are bogus claims from different perspectives. Not only are products, not patents, relevant to security and is Qualcomm far too profitable that a requirement to extend patent licenses on fair, reasonable and non-discriminatory terms could threaten the innovative capacity of a company that spent far more on stock buybacks in recent years than on research and development, but Qualcomm's national-security argument also comes down to them saying that the elimination of competition (by means that the district court found illegal) has now made them, as the sole survivor, absolutely critical to U.S. national security. Meanwhile, Apple has acquired Intel's mobile chipset division, ensuring that there still is at least one major U.S. company investing in R&D in this field.

But let's again try to look at this from the vantage point of a judge on the Ninth Circuit motions panel. You get hundreds and hundreds of pages to review, which point to lots of external documents, such as other decisions. That's why, after Qualcomm was granted expedited appellate proceedings, they found even they, with their vast resources and their intimate knowledge of the issues, needed more time. You see a submission by the federal government that urges you to grant the motion lest the world descend into chaos.

It's not easy to brush aside those concerns by giving the motion short shrift. Judge Koh denied Qualcomm's original motion to stay enforcement quickly, but the original ruling had taken even her (as famous as she is for working smart and hard) well over three months after the January trial. I still remember the laughter in her courtroom when she said: "Sadly, this opinion's gonna take some time." It did, but the result was well worth it.

It's now been more than three weeks since briefing was completed, and some knowledgeable people had actually expected a decision to come down in July.

I'm not sure about how the Ninth Circuit organizes this internally, but I presume that the July motions panel (with a Democratic majority) is still in charge, given that the motion was fully briefed before the end of July and the judges on the motions panel are, according to the appeals court's website, "assigned to consider ready substantive motions matters," and this one was ready with almost a week left in July. The August panel has a Republican majority, so should that new panel be in charge now, then the DOJ's brief would likely be given more weight unless they see that a former Qualcomm lawyer's lobbying for his past client (and possibly also future client when he returns to private practice) doesn't make the idea of healthy competition an ideological cause.

The decision will be interesting, but whatever the outcome may be, let's not overrate it. An appeals court may well stay enforcement, especially for the duration of an expedited appeal, but nevertheless affirm, in whole or in large parts, when the focus is entirely on the merits, or it may deny a stay but identify serious issues later on.

The time that it's taking them to decide can't be reliably interpreted. The only safe assumption is that they are kind of overwhelmed. It might mean that they're working on a rationale that will enable them to grant the motion without taking such a strong position that would suggest the merits panel could decide only one way. It could also mean that they've concluded the motion should be denied, but in light of governmental brouhaha about the end of the world being nigh, the appeals court wants to write up a thorough denial. Qualcomm might internally--and reasonably--view the time that this is taking as a sign that is more likely than not to be positive, especially since I guess they feared a swift denial of their motion. Contrary to Qualcomm's representations, it's not like anything dramatic would happen to Qualcomm's business in the very short term, given that any license (re)negotiations would take a lot longer at any rate.

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Thursday, August 15, 2019

Avanci patent pool outlines how it seeks to duck Continental's U.S. antitrust action going for its throat

Continental, the Avanci patent pool, and the Avanci members named as co-defendants (mostly Nokia and patent assertion entities that hold formerly Nokia-owned patents) yesterday filed a joint case management statement with Judge Lucy H. Koh's court in the Northern District of California (this post continues below the document):

19-08-15 Joint Case Managem... by Florian Mueller on Scribd

The next important date in this case is August 21. That's when Judge Koh will hold the case management conference (in preparation of which the above statement was filed), and it's also the deadline (no coincidence, obviously) for the parties to file a briefing schedule for a consolidated motion to dismiss by all defendants. The motion to dismiss will be accompanied, simultaneously or near-simultaneously, by a motion to stay discovery. Surprise, surprise: Continental will oppose those motions.

While Continental accurately notes that the defendants put a whole lot of substantive stuff into this case management statement, I'm actually glad they did, as this gives all of us a better idea of the issues that Avanci and its co-defendants will put front and center.

This litigation has barely begun, and there already are some questions on the table for Judge Koh to resolve. The defendants would like to escape her jurisdiction by means of a transfer to the Northern District of Texas, and Continental's motion for an antisuit injunction has been fully briefed (in other posts I discussed Nokia's German anti-antisuit injunction and Continental's reply brief, which mentions five German Sharp v. Daimler patent infringement cases).

A transfer from San Jose to Dallas would help Avanci avoid unfavorable (to SEP abusers) case law in the Northern District of California, but ideally they want to get rid of this U.S. antitrust case altogether. That's why they're preparing the aforementioned motion to dismiss. Yesterday's joint case management statement provides an outline of the key theories underlying the forthcoming motion.

Some of those theories are about personal jurisdiction, disputing that various parties have sufficient close ties with the United States in general and the Northern District of California in particular to be sued there. Similarly, Avanci notes that it doesn't hold any patents itself--only its members do. Relatively speaking, the case for dismissal may be strongest with respect to the Optis entities. Defendants argue that "[b]ased on the information Continental provided, both parties agreed that there was nothing to negotiate because Continental stated that it was using CDMA2000, which is not part of the Optis Entities’ mapped holdings." Other than that, I'm unconvinced of those jurisdictional arguments, at least for now.

What needs to be analyzed on the basis of further briefing by both sides is the defendants' assertion that "[t]he Court lacks subject matter jurisdiction over this action under Article III of the Constitution because Continental has not alleged that it has suffered or will suffer an imminent and non-hypothetical injury-in-fact caused by Defendants' alleged conduct." Here, Avanci and its co-defendants argue that they aren't seeking royalties from Continental--only from its customers, "which hypothetically might assert a claim for indemnification against Continental," but that hasn't actually happened yet.

In other disputes, the refusal to honor an obligation to extend a SEP license on FRAND terms was deemed a sufficient basis for a complaint with an Article III court. In this case, there can be no doubt that Continental is economically affected (and would be even if without an obligation to indemnify customers) by SEP holders collecting royalties on cars that come with Continental's telematics control units. Given that Judge Koh is well aware of such commercial dynamics, the hurdle that Avanci and its co-defendants are talking about appears surmountable. What I certainly find weak is that they claim Continental voluntarily entered into an indemnity obligation: it's simply a business reality that this is expected of component suppliers in many cases, especially in the automotive industry.

In a somewhat related context, the defendants note that Avanci, Nokia, and those patent assertion entities wielding former Nokia patents would have been willing to grant licenses to Continental. However, the complaint doesn't say that they weren't going to do business on even the most prohibitive terms. Instead, the complaint is about Continental's desire for exhaustive licenses on FRAND terms, and notes that Avanci's pool license of $15 per car is supra-FRAND, given that this is roughly the price point of a baseband chip, and even the telematics control units in question sell at approximately $100 per unit. The royalty base is going to be outcome-determinative.

Unless Avanci and its members somehow manage to get rid of this case, be it by means of a dismissal or by coercion (based on leverage over Continental's customers, such as Daimler, as a result of injunctions that German courts grant far more readily than their U.S. counterparts), this dispute will shed a lot of light--and possibly some very harsh light--on Avanci's business model and the intentions of its contributors. In a nonjudgmental sense, this case is about a conspiracy theory. An alleged conspiracy to leverage FRAND-pledged SEPs in un-FRAND-ly ways, for the benefit of Avanci and its contributors.

This is Avanci's rosy depiction of its business model and raison d'être:

"The Avanci platform was created in response to product developers' need for an open and efficient way to access the licenses needed for the latest wireless technology. Prior to the creation of the Avanci platform, it was difficult for product developers to know what technology rights they might need, and how to get them, from the many different owners of SEPs. An Avanci platform license covers the entire SEP portfolio of the patent owners who participate in the platform, plus the SEPs of new patent owners who subsequently choose to participate."

The first sentence of that paragraph is a ridiculous example of fake altruism. Those patent holders pursue only one goal: to monetize their portfolios as aggressively and profitably as possible. They don't give a damn about what "product developers" need or want. Whether Avanci comes down to an anticompetitive and collusive scheme will have to be proven. But that's what Continental alleges, and as of now the theory doesn't appear entirely implausible.

The second sentence doesn't make much more sense. There still is a lot of uncertainty about what SEPs are truly essential and valid, and Avanci doesn't change that. Nor does Avanci cover all SEPs that its licensees need. Avanci's members collectively command a fairly high percentage of all cellular SEPs, but it's not like anyone would have legal certainty and peace of mind after taking an Avanci license.

I've heard different numbers as to the coverage provided by Avanci versus patents that belong to other entities. I may share some of that information on another occasion.

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Saturday, August 10, 2019

Foxconn-owned Sharp is suing Daimler over five patents in two German courts: concerted action by contributors to Avanci pool?

Through a filing with Judge Lucy H. Koh's court in the Northern District of California, I've become aware of the following patent infringement complaints (presumably but not necessarily involving one or more requests for injunctive relief) filed by Foxconn subsidiary Sharp Corporation against Daimler in Germany:

  • Mannheim Regional Court (Second Civil Chamber under Presiding Judge Dr. Holger Kircher):

    • EP2154903 on a "mobile communication system, base station device, and mobile station device" (case no. 2 O 46/19; complaint filed on 12 April 2019)

    • EP2129181 on a "mobile communication system, base station apparatus and mobile station apparatus" (case no. 2 O 87/19; complainted filed on 5 June 2019)

  • Munich I Regional Court (Twenty-First Civil Chamber under Presiding Judge Tobias Pichlmaier):

    • EP2854324 on a "communication system and mobile station apparatus" (case no. 21 O 8609/19; complaint filed on 25 June 2019)

    • EP2312896 on a "base station device, mobile station device and corresponding communication methods using carrier aggregation" (case no. 21 O 9918/19; complaint filed on 27 June 2019)

  • Munich I Regional Court (Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann)

    • EP2667676 on a "base station device, mobile station device, and uplink synchronization requesting method" (case no. 7 O 8818/19; complaint filed on 28 June 2019)

The sequence of those filings may be attributable to the following dynamics:

  • Sharp filed the first lawsuit in Mannheim in mid April just to demonstrate to Daimler that they were serious about forcing Daimler to license their patents through the Avanci pool.

  • When Daimler didn't bow, they brought another one in early June (same venue: Mannheim). It may have been assigned to the same chamber by coincidence, but more likely Sharp just amended the complaint, in which case German courts automatically sever any new patents-in-suit, but keep the case in the same chamber.

  • The three Munich filing in late June were presumably made to have a high likelihood of getting at least one case assigned to either of the two Munich panels hearing patent infringement cases. Historically, the 7th Civil Chamber used to be considered faster and more patentee-friendly than the 21st, but that may change now.

I haven't been able to find any other report on those Sharp v. Daimler cases prior to this blog post. Others have, however, reported on complaints brought by Broadcom and Nokia.

Like Nokia's German patent infringement suits against Daimler, those Sharp cases involve, at least in part, cars that come with a telematics control unit (TCU) supplied by Continental, which alleges that "Sharp's lawsuits are evidence of the immediate, substantial threat that Avanci will encourage or direct its members to engage in a concerted litigation campaign in an effort to force Continental’s OEM customers to take a non-FRAND license through Avanci." The allegation I just quoted is made in Continental's reply in support of its motion for a U.S. antisuit injunction against Nokia (this post continues below the document):

19-08-09 Continental Reply ... by Florian Mueller on Scribd

Some high-level observations on the reply brief:

  • Just like the original motion, it's strong on policy and economic reasoning, but suffers from some deficiencies. The document looks like a lot of effort has gone into it, as they are under significant pressure. However, at this stage Continental's lawyers can try to explain away some facts but can't change them anymore.

  • They keep pursuing the U.S. antisuit injunction, arguing that Nokia hasn't properly served its Munich anti-antisuit-injunction injunction under the Hague Convention. Consistently with that position, they haven't even objected to the Munich injunction yet, but they have announced their intent to do so once they believe the Hague Convention has been complied with.

  • Continental's lawyers want Judge Koh to gloss over their suboptimal structure. While it's true that the question of functional identity between the parties in the enjoining U.S. case and the enjoined foreign action shouldn't be looked at it in exceedingly formalistic terms, Continental simply could have made it a whole lot easier for Judge Koh. It's true, but besides the point, that Daimler wasn't in a position to serve a third-party notice under German law on Continental U.S. for lack of direct liability. But then Continental simply should have made sure that an entity with a closer connection with those German infringement cases would have been another plaintiff in the U.S. case (and, consequently, one of two or more movants seeking the antisuit injunction against Nokia).

  • With respect to the functionality identity of parties, Continental concedes that the proposed application of the customer suit exception (which usually governs motions to transfer cases within the U.S.) should be applied in the context of a cross-border antisuit injunction "is a case of first impression." I'm sympathetic to Continental's position on the customer suit exception, and as Continental notes, Nokia can't "point to any case wherein application of the customer suit exception doctrine was rejected in the context of a motion for anti-suit injunction." But, again, you make your bed and you lie in it. I still believe it was a major and potentially (though I hope it won't be) fatal for the motion that they didn't make a better choice as to the legal entities behind the U.S. antisuit motion. It would be great if Judge Koh granted the motion anyway, but Continental's lawyers have no one to blame but themselves in case she concludes otherwise.

  • As a matter of policy and industry practice, Continental is right that SEP licenses, also including the ones granted by Avanci, typically cover an entire corporate group. Therefore, Continental U.S. and the legal entities implicated in the German infringement proceedings are in the same boat: the whole purpose of the U.S. case (before they even brought an antisuit injunction motion) was to secure a license on FRAND terms that would benefit the entire Continental group.

  • Continental's reply brief says "Nokia's contention that 'under no circumstances will Daimler be 'forced' (in the German proceedings) to accept a license proposal on anything other than truly FRAND terms' is highly disingenuous." That is hyperbole. The two SEP antisuit injunctions in the Ninth Circuit that Continental points to are Microsoft v. Motorola and Huawei v. Samsung (where Samsung, the defendant, was the successful movant). The latter case was more recent, but about Chinese patent injunctions. The former case is older, and the case law in Germany regarding SEP injunctions subsequently changed fundamentally when the Court of Justice of the EU's Huawei v. ZTE ruling did away with Germany's misguided application of the Federal Court of Justice of Germany's Orange Book doctrine. In that Microsoft case, which I watched closely (both the U.S. FRAND case and the German infringement proceedings, where I attended the trial as well as the announcement of the decision), there was a far greater discrepancy between U.S. and German SEP injunction case law. It's true that Judge William H. Orrick defined the potentially-frustrated U.S. policy rather broadly in Huawei v. Samsung, but that was a FRAND determination case that Huawei itself had chosen to bring in the U.S.--and it's unclear how the Federal Circuit would have ruled as the parties settled before an appellate opinion came down.

  • They downplay--actually, deny--the relevance of timing, but comment on it anyway. In that context it strikes me as odd that Continental would point to the timing of an EU antitrust (DG COMP) complaint: that is simply not a substitute for bringing an action in the U.S. at an earlier point in time.

  • In another timing context, they still argue that Nokia sought an extension of time in the U.S. only to seek a German anti-antisuit-injunction injunction (though there are different lawyers working on the cases in those jurisdictions), and that Nokia overstated the urgency of that matter to the Munich court, with Continental saying a decision by Judge Koh ahead of the August 9 reply brief "would be virtually unheard-of in connection with a fully-noticed motion in the U.S.," though "virtually unheard-of" does not mean "procedurally impossible," but more importantly, I already explained in a previous post that Continental could have waived the optional reply brief, just like they now sort of waive the right to a hearing (Judge Koh might have taken this here under advisement anyway, which is one of her strategies for high efficiency), or they could have filed it very shortly after Nokia's opposition brief (the pace at which Continental's lawyers have moved so far suggests they always need a lot of time for anything, but again, procedurally it would have been possible).

  • The part of Continental's reply brief that I completely disagree with is where they claim it doesn't matter that Nokia's German lawsuits also involve Daimler cars that don't come with Continental components. Here's a key passage:

    "Although it is true that Continental is not Daimler’s only supplier, the purpose of Continental’s lawsuit is to confirm that suppliers like it are entitled to a license, and set the FRAND terms and conditions for such a license. It would be perverse, to say the least, if Nokia could avoid an anti-suit injunction in a lawsuit brought by a component supplier willing to take a license on FRAND terms, and thereby perpetuate its illegal strategy of only licensing OEMs rather than component suppliers, by relying on the existence of other component suppliers which Nokia also refuses to license!"

    Sorry, guys, but your explanation mark and rhetoric fail to convince me. It's your damn job to either seek an injunction that isn't overbroad (by limiting it to Daimler cars that come with Continental TCUs) or to persuade other suppliers to join you in this case. But just because your case may also have a bearing on--or may even be the next best thing to direct applicability to--the legal interests of some other entities doesn't mean you can behave like a class-action plaintiff... which is why there are special rules for class actions.

    The court can obviously tailor the requested injunction more narrowly, and should Continental prevail, I think that's more likely than not to happen. And if it were up to Avanci and Nokia, the court to decide wouldn't even be Judge Koh's court.

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Saturday, August 3, 2019

Update on Qualcomm's two Ninth Circuit antitrust appeals: delays in FTC case due to complexity; consumer class responds to certification appeal

Two Qualcomm antitrust appeals are pending with the United States Court of Appeals for the Ninth Circuit, awaiting three key decisions:

  • Earlier this year, the Ninth Circuit allowed Qualcomm an interlocutory appeal of the certification of a consumer class seeking $5 bilion in damages (an average of approximately $20 for an estimated 250 million consumers who purchased a smartphone in the U.S. during the relevant period) from Qualcomm on the heels of the FTC v. Qualcomm antitrust case. Judge Lucy H. Koh of the United States District Court for the Northern District of California had certified the class, but stayed the case when the Ninth Circuit allowed the interlocutory appeal. Meanwhile, Qualcomm received support in the form of an amicus brief from its long-standing friends at the Department of Justice in this context, too. Further below I'll publish the consumers' answering brief.

  • The strategically more important one is the appeal of the FTC's antitrust victory:

    • In the shortest term, Qualcomm is seeking a stay of the enforcement of the FTC's injunctive relief (antitrust remedies). The motion for a stay has been fully briefed, and most likely we'll see a decision in a matter of days. There's a bit of anxiety on Wall Street after Qualcomm missed estimates. In this climate it's possible that the QCOM stock price will be significantly affected by the ruling on the motion for an enforcement stay, though in my opinion the question of whether or not the stay is granted is unimportant compared to the future ruling on the merits.

    • The Ninth Circuit granted Qualcomm's motion to expedite the merits appeal. On that basis, we'd have seen the opening brief next Friday, and briefing would have been complete well ahead of the end of October. However, Qualcomm's lawyers realized that the case is so complex that they (and, quite likely, the FTC) will need a bit more time than anticipated. With the FTC's consent, Qualcomm has now asked for two more weeks (i.e., until August 23) for its opening brief. Normally, the TC's answering brief would then be due October 25 (and Qualcomm's reply brief on November 15), but should Qualcomm's opening brief be substantially in excess of the defalut word-count limitation, then the FTC would also get an extra two weeks, which Qualcomm would not oppose. Here's the consent motion (this post continues below the document):

19-07-30 Unopposed QCOM Mot... by Florian Mueller on Scribd

The extension is needed not only by Qualcomm but also by persons and entities who will submit amicus curiae briefs in support of Qualcomm's appeal.

The Ninth Circuit will schedule a hearing as soon as possible after briefing is complete. For various practical reasons, it appears highly unlikely at this stage that the hearing would still be held this year. The question is probably just exactly when in the first quarter of 2020 it will take place.

In the appeal relating to the consumer class certification, the schedule also had to be extended (by a total of two months). Yesterday (Friday, August 2), the consumers' attorneys made several filings:

19-08-02 Consumer Class Ans... by Florian Mueller on Scribd

At this point I can only share some general observations regarding the appellate argument. Not only am I more interested in the FTC case but I'm also a lot more familiar with IP and unilateral-conduct issues than with class certifications.

I noticed that the consumers' attorneys place particular emphasis on why California law (which allows such class actions) should apply even though the vast majority of the consumers falling under the class definition made their purchases in other states, many of them in states that don't have similarly permissive rules. Apart from Qualcomm's legal domicile, the consumer class stresses the impact of Qualcomm's dealings with Apple and Intel, two California companies.

The recently-adjudicated Apple v. Pepper Supreme Court appeal (which also involved the admissibility of a class action, as opposed to the underlying App Store-related merits, which have yet to be litigated) is mentioned in footnote 11:

"The DOJ is joined by Louisiana, Ohio, Texas, Alaska, Missouri, and Oklahoma. Several of these states took a contrary position just months ago in Apple v. Pepper, advocating in favor of the repeal of Illinois Brick and the virtues of indirect purchaser suits. See Br. for Texas, Iowa, and 29 Other States as Amici Curiae in Support of Respondents, Apple Inc. v. Pepper, 139 S. Ct. 1514, No. 17-1204."

Another key amicus curiae here is the Chamber of Commerce, which (according to the consumers' brief) "argues that applying California law violates the Due Process, Full Faith and Credit, and Dormant Commerce Clauses." Similarly, the DOJ "suggests that 'federalism' prevents California from applying its antitrust laws extraterritorially." Those are constitutional arguments, and the consumers' attorneys say that no new issues can be raised on appeal, so any such constitionality arguments have--they say--been waived by not raising them earlier.

The consumers' lawyers present different theories based on which Judge Koh's class-certification decision could be upheld, but I'd have to conduct more research to form an opinion on how strong those theories are.

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Wednesday, July 31, 2019

Avanci, Nokia trying to escape Judge Koh's jurisdiction over Continental case: motion to transfer venue from San Jose to Dallas

In soccer terminlogy, Nokia's "Munich Maneuver" may be the Goal of the Century, subject to whether or not the anti-antisuit-injunction injunction ("AAII") is lifted. As of now, it appears Daimler supplier Continental, which argues that is hasn't been properly served yet, still hasn't filed an objection to the preliminary injunction. An objection would lead to a hearing. But presumably Continental wants to stay consistent with its views on service (I can't offer any opinion on that procedural part).

Service (of process) is also an issue affecting Continental's U.S. FRAND/antitrust case against Avanci, Nokia, and others. The defendants (mostly, but not exclusively, the Avanci licensing firm, Nokia, and some privateers holding former Nokia patents) have asked Judge Koh to postpone the upcoming case management conference because "[d]efendant Sharp Corporation has not yet appeared in this case."

At the same time, Avanci-Nokia are trying to get the entire case transferred out of Judge Lucy H. Koh's court in the Northern District of California by way of a motion filed on Wednesday Pacific Time (this post continues below the document):

19-07-31 Avanci Et Al. Moti... by Florian Mueller on Scribd

The motivation for this is not in the above motion, which instead states all sorts of largely or entirely pretextual reasons for the desired transfer from the Northern District of California (in this case, San Jose) to the Northern District of Texas (which practically means Dallas). The real reasons for this are Judge Koh and her case law. Forget about the rest, which is irrelevant for such a high-stakes dispute involving in no small part organizations from overseas.

Qualcomm, which just missed estimates and is anxiously awaiting the Ninth Circuit's decision on its motion to stay the enforcement of the FTC's antitrust remedies, is an Avanci member. But even if it weren't, the key findings in the Qualcomm case regarding component-level licensing and the smallest salable patent-practicing unit (SSPPU), and the conclusions Judge Koh had previously reached in GPNE Corp. v. Apple with respect to the SSPPU, would have Avanci, Nokia and the rest of the group concerned to an undiminished degree.

In the Northern District of Texas, those questions haven't been resolved. But it's a different circuit, and that's why I'm sure Avanci and Nokia wouldn't even want to go to another West Coast district because once the Ninth Circuit affirms any parts of Judge Koh's ruling, the other districts in the circuit would follow suit. If Avanci and Nokia got their way, they'd be in the Fifth Circuit, and they could at least make an argument based on Judge Rodney Gilstrap's HTC v. Ericsson decision in a neighbor district within the same circuit, the notoriously patentee-friendly Eastern District of Texas. While a decision by another district in the same circuit isn't binding, proximity may yet give this one slightly more weight than Judge Koh's very well-reasoned holdings in FTC v. Qualcomm. By contrast, Judge Gilstrap has often made extremely patentee-friendly decisions, as have other judges in his district, and the related reputation of the Eastern District of Texas limits the persuasive impact of any of its case laws in other circuits. Also, Judge Koh is a rockstar judge who was in the process of being appointed to the Ninth Circuit and on Hillary Clinton's list for the Supreme Court. But... she's in the Ninth Circuit, and all Texas districts (and some others) are in the Fifth.

The Avanci-Nokia motion to transfer venue doesn't make extremely strong arguments for Texas. Where they are certainly right is that there was no particular reason for NorCal (other than case law, which obviously doesn't count, and probably that Continental's lawyers hoped the case would be assigned to Judge Koh, for which there was no guarantee but which fortunately happened). A former Apple licensing executive, Boris Teksler, is still based in Silicon Valley, and he manages Conversant, one of the patent assertion entities in the case that hold former Nokia patents. Then there are some offices of various defendants in the Northern District of California, but Avanci and its co-defendants deny that those offices really are relevant to the issues in the case.

The convenience argument for the Northern District of Texas is relatively weak. To give you an example, they argue that Europe-based witnesses and experts (Nokia, Continental etc.) have a slightly shorter flight time to Dallas than to San Francisco. It's like a little less than 10 hours in one case and slightly over 10 hours in the other--something no traveler (and I've gone back and forth dozens of times) would care about. In that context, they didn't even do their research homework properly: they base their estimates on the distance from Munich to the two alternative venues, but Continental is headquartered in Hanover (far up north from Munich), where the nearest airport serving direct flights to many U.S. cities is Frankfurt (which is also the #1 airport in Germany, though Munich has become more important over time).

That reminds me of a non-fatal but stupid mistake they had in their otherwise very well-crafted opposition to Continental's U.S. motion for an antisuit injunction: they described a consumer class action against Qualcomm as an Apple case. Since the consumer case was consolidated with FTC v. Qualcomm, it was Judge Koh who made the decision (not to grant an antisuit injunction at the given time) that they cited. It doesn't make the motion weaker, but since I criticized the Continental side, and in the context of the use of Munich instead of Frankfurt as the originating airport in the latest motion, I wanted to mention this anyway.

What weighs in favor of the Avanci-Nokia venue transfer motion is that there was no absolutely pressing reason for bringing the case in San Jose, other than case law. But case law doesn't count, though it is relevant to the efficiency argument: the Northern District of Texas is less busy, and slightly faster to adjudicate cases, as the Avanci-Nokia motion argues. Obviously, if they really wanted rapid adjudication, they wouldn't slow things down with a transfer motion. And the fact that Judge Koh knows the issues at the heart of the case so well, and can cite to some of her own holdings, really does make NorCal the ideal place even from a pure efficiency point of view--just that the outcome will likely not be the one that Avanci and Nokia like.

Continental's lawyers now have some homework to do. They have to identify and explain some weaknesses in Avanci-Nokia's arguments for Dallas, and they have to explain why the Northern District of California is just as good a venue for this as North Texas--or that even if Dallas seemed preferable, it wouldn't be the better choice by a wide margin, and given what's at stake and how deep-pocketed all parties to this dispute are, some convenience factors that may be more relevant to lower-profile cases shouldn't be given too much weight.

What Nokia's flash-of-genius Munich Maneuver and Avanci-Nokia's motion to transfer venue have in common is that they are on the run from the one and only Judge Koh.

Now I just hope that Continental will do a better job on its opposition to the motion to transfer venue than in the antisuit injunction context.

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Tuesday, July 30, 2019

Nokia persuades Munich court to issue anti-antisuit injunction against Daimler supplier Continental, pre-empting decision by Judge Koh

If the European Commission's Directorate-General for Competition (DG COMP) doesn't help Daimler and its suppliers such as Continental, then the Nokia v. Daimler patent assertion campaign is not going to end well. Unless something changes fundamentally, the most likely outcome is that Nokia will gain decisive leverage pretty soon, as a result of its patent assertions in Germany, with the question primarily being whether the Munich I Regional Court or the Mannheim Regional Court will be first to enter a provisionally-enforceable SEP injunction that will force Daimler to bow to the supra-FRAND royalty demands of the Avanci group. And its supplier will continue to be denied a direct license from key patent holders such as Nokia. A court may well find that they are entitled to such a license, but by the time they get there, their key customer (Daimler) will be bound to unfavorable and fundamentally unfair contract terms.

The two factors that unfortunately make me so pessimistic for the time being are

  • those injunction-happy, un-FRAND-ly German patent infringement courts and

  • the fact that Nokia has the best and most experienced patent litigation team of all SEP enforcers while its adversaries in this dispute need to get their act together and do a far better job than what I've seen from them lately.

Not only has Nokia apparently received a favorable claim construction from the Munich I Regional Court (on a preliminary basis) but it has also secured an unprecedented anti-antisuit-injunction injunction, while Continental, which is trying to shield Daimler from Nokia's German patent infringement actions, is making it unnecessarily difficult for Judge Lucy H. Koh of the United States District Court for the Northern District of California to grant a conventional antisuit injunction, even though there would actually be valid policy reasons to do so.

On two other occasions, this blog accurately predicted antisuit injunctions barring patent holders from the overseas enforcement of SEP injunctions: Microsoft v. Motorola Mobility in 2012 (Judge James L. Robart, affirmed by the Ninth Circuit), and Huawei v. Samsung last year (Judge William H. Orrick; the parties settled before the Federal Circuit ruled on Huawei's appeal). In the first case, Sidley Austin represented the movant and defeated Quinn Emanuel; in the other case, QE brought the motion and Sidley opposed.

Microsoft's position was simply perfect. In order to remove any doubt about the software giant's willingness to take a license on FRAND terms, Microsoft made a binding commitment to take a license on terms to be determined by Judge Robart. And Microsoft had won the race to the courthouse by bringing a FRAND complaint in the Western District of Washington just before Motorola Mobility's enforcement campaign started (and long before MMI's German complaints).

There really can be no reasonable doubt about Continental being a totally willing licensee, and Nokia an absolutely unwilling licensor (they may make some offers, but certainly not for an exhaustive component-level license on FRAND terms). However, it appears at least parts of the automotive industry have yet to learn the meaning of the expression "race to the courthouse!"

According to court documents, the Avanci group of SEP holders "first began targeting certain Continental customers (automobile OEMs) in early 2017, asserting that their connected cars practice the cellular standards purportedly covered by [those Avanci companies'] alleged SEPs, and offering a license to the alleged SEPs." Continental then contacted those SEP owners directly, and "on or about early 2018" they also contacted Avanci. In March 2019, Nokia finally filed patent infringement lawsuits in Germany against Daimler. But it took Continental until May 2019 to bring its U.S. FRAND/antitrust complaint in the Northern District of California (here's a link to the recently-amended complaint), and until June 12, 2019 to bring a motion for a U.S. antisuit injunction, asking Judge Koh's court to bar Nokia from enforcing SEPs against Daimler--Continental's customer--in Germany.

In a counterfactual scenario where Nokia would have been in Continental's shoes and vice versa, I'll tell you what would have happened. Nokia would have brought its U.S. complaint and U.S. antisuit injunction motion before its customer would have been hit by the first infringement complaint.

There is no hard and fast rule that only an earlier-filed case can serve as a basis for enjoining someone from pursuing a later-filed case. But there's this problem called "comity." It's about jurisdictions having respect for each other. While antisuit injunctions bind parties (by preventing them from pursuing a case or enforcing an injunction that isn't self-executing), not courts, they do constitute an interference with another case. A judge ordering an antisuit injunction will certainly feel better about it (and the appeals court will be more likely to uphold it) when there's a strong argument that the enjoined case (again, technically it's the party that gets enjoined) was actually interfering with the enjoining case. In other words, it's a self-defense kind of argument: a party brought a case in another jurisdiction just to thwart the earlier-filed one, so the antisuit injunction simply prevents this from happening.

Continental is right that the Northern California FRAND case will be rendered meaningless with respect to any customer (in this case, Daimler) Nokia forces (through the enforcement of SEP injunctions) into a license deal. The one thing in this context that I'm still optimistic about is that Judge Koh, the world's leading technology industry judge, will identify, or may already have identified, the holdup that is going on here.

But in the technology business, and in litigation, the fast often eat the slow.

Regardless of two obvious shortcomings of Continental's U.S. antisuit injunction motion, which I'll elaborate on further below, Nokia wasn't going to take its chances. What happened then was--and I'm not exaggerating--the most innovative and brilliant procedural move I've ever seen by a plaintiff asserting patents in Germany. Arnold & Ruess's Dr. Arno Risse ("Riße" in German) came up with the idea of pre-empting Continental's U.S. antisuit injunction effort by means of a German antisuit injunction. Before Continental would be in the position to prevent Nokia from continuing its German patent enforcement campaign against Nokia, Nokia wanted to be able to prevent Continental from obtaining and enforcing a U.S. antisuit injunction. Years ago Dr. Risse already impressed a Mannheim judge and me when he, then a young Freshfields associate, delivered oral argument on Apple's behalf with respect to a patent of enormous mathematical depth.

Together with lead counsel Cordula Schumacher (who likewise was on Freshfields' Apple team a long time ago), Dr. Risse filed a motion with the 21st civil chamber (a panel of judges, or division) of the Munich I Regional Court, which hears many patent cases, though traditionally most of the patent complaints filed in Munich have been assigned to the 7th civil chamber under Presiding Judge Dr. Matthias Zigann.

Presiding Judge Tobias Pichlmaier chairs the 21st civil chamber. Years ago, I saw Judge Pichlmaier serving as a side judge on the 7th civil chamber before becoming a judge on the appeals court, the Munich Higher Regional Court, from where he returned to the lower court to preside over a chamber.

Judge Pichlmaier's panel granted Nokia's ex parte motion straight away--on July 11, 2019--without holding a hearing as Nokia had credibly argued that a decision in the U.S. was imminent. A few days later, Nokia informed Judge Koh of this development by way of a letter, to which they attached an English translation and the German original of the Munich order (this post continues below the document):

19-07-17 Nokia Letter to Ju... by Florian Mueller on Scribd

Continental may still get a hearing by objecting to the injunction. And the court might lift the injunction then. But for now it stands, though Continental argues that it hasn't been properly served yet under the Hague Convention. Apparently Nokia served the injunction on the chairman of the board of the enjoined U.S. company by sending it to the person's German address instead of having it delivered, through international diplomatic channels, to the legal domicile of the enjoined company. I don't have an opinion on the service-of-process part, except that I agree with Nokia it's only a question of when, not if, Continental will have to comply, provided that it doesn't get lifted in the meantime.

When a legal team takes such a highly original initiative--the legal equivalent of the "flash of genius" sometimes invoked in U.S. patent law--and immediately secures an injunction, the people behind this deserve credit, regardless of the fact that I consider Nokia's pursuit of SEP injunctions against Daimler, while refusing to extend a component-level license to Continental on FRAND terms, downright patent holdup.

There's something odd about the anti-antisuit-injunction injunction. The order notes that antisuit injunctions of the kind that exists in the U.S. are not known in Germany. But then the court somehow threads the needle and actually does issue an antisuit injunction for the purpose of thwarting a potentially-upcoming antisuit injunction from overseas.

This is unchartered territory, and whether it will be upheld (especially if it goes up to the appeals court) remains to be seen. But an interesting development it certainly is.

I don't think Continental's German counsel (Freshfields Bruckhaus Deringer's Dr. Frank-Erich Hufnagel) can be blamed in the slightest. This initiative by Arnold & Ruess on Nokia's behalf was unforeseeable. Otherwise I'm sure he'd have filed a protective writ, in which case the court would likely have held a hearing before deciding.

That said, Continental does have a potential problem in the U.S. and needs fundamentally better (and, in some situations, faster) execution as far as I can see. And better coordination with Daimler in light of those pending German cases.

No matter how much I support Continental's desire to obtain a component-level license on FRAND terms, I can't help but conclude that Nokia's opposition to the U.S. antisuit motion is stronger and more persuasive. Anything's possible, and maybe Continental will be lucky and Judge Koh will attach more importance to the fundamental patent licensing and policy issues.

There is a structural problem here: the U.S. entity that brought the motion in the U.S. is not among the three (!) European Continental companies that received an official third-party notice from Daimler of the German patent infringement cases. Such third-party notices are issued to contractual partners who owe indemnification. And one of the Gallo requirements for the antisuit injunction Continental is seeking is the (at a minimum) functional identity of the parties between the enjoining case and the enjoined case. The defendant to the German patent infringement complaints is Daimler, and it's Continental's customer (though I'll have to nuance this in a moment). I agree with Continental that there's a certain analogy here to the "customer suit exception." But it's really odd that, in such a high-stakes litigation, Continental and Daimler wouldn't have ensured that the party bringing the U.S. antisuit motion is among the third parties receiving notices (of a potential risk for indemnification) in the German cases. Maybe Judge Koh will still grant an antisuit injunction, but this disconnect makes it unnecessarily difficult and would have been easy to avoid by means of cross-jurisdictional coordination (just like it would also have been easy to make those U.S. filings several months earlier).

Continental is also seeking relief that appears overbroad. They want to shut down all those Nokia v. Daimler cases in Germany, but Nokia represents that they also involve Daimler cars that don't come with a Continental telematics control unit (TCU). There's obviously no way that Continental could preclude Nokia from asserting patents against cars that don't even contain any accused Continental components.

Then there's a procedural argument that Continental makes and that I can't agree with though I wish I could. They claim that Nokia misrepresented the sense of urgency to the Munich court. Nokia told the Munich court that a U.S. antisuit injunction could come down as early as July 24, the deadline for Nokia's opposition brief. Continental still has time to file a reply brief. But that doesn't make sense to me. Reply briefs are optional. Whether Continental would have waived it, or filed way ahead of schedule, or whether Judge Koh would simply have decided without even waiting for the reply brief (since the prevailing party couldn't and wouldn't complain), there would have been multiple scenarios in which the antisuit injunction sought by Continental could theoretically have come down as early as July 24 (or not long thereafter).

For the technology industry (including the automotive sector) at large, it would really be good if Continental could still turn this around, and if Judge Koh could adjudicate the important FRAND licensing and competition issues in Continental v. Avanci. In almost a decade of litigation monitoring I've seen many reversals of fortune--especially the Apple v. Samsung cases offered more ups and downs for the parties than a visit to Six Flags Magic Mountain. It's not over yet. But for now, Nokia with its litigation superstars (both inhouse and outside) has the upper hand, and regardless of what happens, litigation history has already been made.

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Monday, July 29, 2019

Gaming the system: Qualcomm leverages 3GPP working group chairmanship to distort patent portfolio valuations

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.

Basics

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.

Specific issues

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.

Issue #1: sky-high number of SEP declarations

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):

NameWGchairmanvice chairman
Wanshi ChenRAN108/17-NOW08/13-08/17
Havish KoorapatyRAN110/17-NOW---
Younsun KimRAN1---08/17-NOW
Richard BurbidgeRAN208/15-NOW---
Frank MademannSA204/15-04/19---
Satoshi NagataRAN108/13-08/1711/11-08/13
Matthew BakerRAN108/09-08/1308/13-08/17

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.

Issue #2: rule changes for correction requests

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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