Wednesday, May 27, 2020

Nokia-fed Avanci-aligned patent troll Conversant stepped up litigation campaign against Daimler: now four cases pending in Munich

Nokia used to be the pride of Europe in its field, but it failed (as the saying goes, the higher you climb, the harder you fall), and a result, its patents have become not the, but certainly a scourge of Europe.

In October I discovered a German Conversant v. Daimler lawsuit because it was mentioned in a U.S. court filing. Nokia gave Conversant a package of cellular standard-essential patents (SEPs)--a practice commonly referred to as "privateering" that anybody in Brussels trying to dissuade the European Commission from enforcing EU antitrust law against Nokia should be ashamed of.

By now, Conversant has brought at least three more cases in Munich (and maybe others in different fora):

  • The first one I became aware of is over EP2934050 on an "apparatus and method for providing a connection" and was filed on August 13, 2019. The original complaint (case no. 21 O 11384/19) merely sought an accounting of Daimler's sales of infringing products, but Conversant could add--and by now might have added--a request for injunctive relief anytime (the patent is set to expire in early 2021).

    The case will go to trial on September 23, 2020 before the 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier).

These are the three new cases and the hearing dates I'm aware of (I have yet to find out whether those are first hearings--as I believe--or already trials):

  • Case no. 21 (<= that's the number of the chamber, i.e., court division) O 17752/19 over EP3300421 on a "slow mac-e for autonomous transmission in high speed uplink packet access (hsupa) along with service specific transmission time control" (hearing date: November 25, 2020)

  • Case No. 21 O 17753/19 over EP3267722 on a "fixed hs-dsch or e-dch allocation for voip (hs-dsch without hs-scch/e-dch)" (hearing date: December 2, 2020)

  • Case no. 7 (= Presiding Judge Dr. Matthias Zigann's division) O 17751/19 over EP1797659 on a "slow mac-e for autonomous transmission in high speed uplink packet access (hsupa) along with service specific transmission time control" (hearing date: December 2, 2020)

This further escalation of the Avanci-Daimler dispute shows that the problem wouldn't go away even if Daimler felt forced to settle after a decision such as the one that may come down in Mannheim next month. The issues needs to be addressed. The European Commission has been waiting and waiting and waiting--but its hesitance has not helped in the slightest.

As I just mentioned Mannheim, I have meanwhile learned that Presiding Judge Dr. Peter Tochtermann of the Mannheim Regional Court's 7th Civil Chamber (Presiding Judge Dr. Holger Kircher's division is the 2nd Civil Chamber) held a trial on Friday in a non-automotive case, and from what I hear, that division still has the same perspective on FRAND as before, thereby declining to perform the same about-face as Judge Dr. Kircher's panel. Case law works has merely persuasive weight in Germany, so--unlike in Common Law jurisdictions--inconsistent decisions by the same court on the very same legal question would not be unheard of (no stare decisis doctrine). While I'm unaware of a high-profile question of patent law that would have been decided differently by judges of the same German court, I have read about cases in other fields of law. In one such case, the owners of different condominiums in the very same building in the Northern Bavarian city of Nuremberg brought lawsuits over the very same issue (no difference in facts or law), and one judge found for a plaintiff while another judge did the opposite.

It will be interesting to watch how this SEP injunction issue settles out before the Karlsruhe Higher Regional Court, provided that an appeal is brought and adjudicated prior to a poor mistreated defendant feeling forced to cave.

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Thursday, May 21, 2020

Mannheim court reverses position on FRAND defense: standard-essential patent injunctions become readily available again

On Tuesday, the Mannheim Regional Court held a trial in a Nokia v. Daimler case (case no. 2 O 34/19 over EP2981103 on an "allocation of preamble sequences") and announced the most colossal about-face I've seen from a court so far on a key question of patent law:

Presiding Judge Dr. Holger Kircher of the Mannheim court's 2nd Civil Chamber explained to the parties and intervenors that he and his side judges had concluded their court's application of the Court of Justice of the EU's Huawei v. ZTE standard-essential patent (SEP) injunction decision had been erroneous for several years. They were now going to interpret the CJEU opinion differently, with severe implications for those defending themselves against SEP injunction requests in that court.

For the time being, I'm not going to comment on the technical merits, though a Tier 2 (= indirect) supplier to Daimler disclosed to the court its implementation of the relevant part of the cellular standard in question and it appears to be clearly non-infringing, given that patent law is all about using specific means to achieve a result, as opposed to the result viewed in isolation. Also there appears to be a very strong case for impermissibly-added subject matter, which would render the patent invalid. But let's focus on FRAND.

In Huawei v. ZTE, a case referred to the CJEU by the Dusseldorf Regional Court, the EU's top court wanted to prevent both holdup (SEP holders obtaining supra-FRAND royalties against the backdrop of an injunction) and holdout (implementers using delaying tactics as opposed to negotiating license terms with SEP holders in good faith). Therefore, injunctions shouldn't be available as long as good-faith negotiations are ongoing, but mere lip service to negotiation wouldn't suffice. The key paragraph that sums up the CJEU's position on both parties having to act in good faith (with the initial obligation of making a FRAND-compliant licensing offer falling upon the SEP holder) is paragraph 71 (click on the image to enlarge; this post continues below the image):

That one is the final paragraph of the relevant part of the CJEU's ruling. It's the answer to the most important parts of the questions the Dusseldorf court had raised. It states clearly that, for (chrono)logical reasons, the SEP holder must make a FRAND offer "prior to bringing that action," and the implementer is expected to respond diligently and without delaying tactics to that offer, which means it has to make a FRAND counteroffer. FRAND is a range, so both the SEP holder's offer and the implementer's counteroffer can be FRAND at the same time.

There are 2x2=4 possible combinations of FRAND and non-FRAND positions taken by the parties on the licensing terms they would accept (click on the image to enlarge; this post continues below the image):

What the CJEU meant was that only one of the four combinations would lead to an injunction. The SEP holder would not get one if it failed to discharge its FRAND licensing duty, and if both parties made offers within the FRAND range, the SEP holder wouldn't be entitled to an injunction either as it could simply accept the implementer's counteroffer (or negotiate further to find some common ground in between).

What the Mannheim court explained on Tuesday is that the test would, from now on, focus on the implementer's counteroffer. Judge Dr. Kircher and his colleagues have recently decided to interpret para. 66 of the CJEU's decision to that effect:

66. Should the alleged infringer not accept the offer made to it, it may rely on the abusive nature of an action for a prohibitory injunction or for the recall of products only if it has submitted to the proprietor of the SEP in question, promptly and in writing, a specific counter-offer that corresponds to FRAND terms.

We'll get to the interpretation of that paragraph in a moment. The net effect is that a SEP holder could get away with a FRAND violation if the court isn't convinced that the counteroffer is FRAND. Instead of one of the four FRAND/non-FRAND combinations resulting in an injunction, all but one would (click on the image to enlarge; this post continues below the image):

That approach is materially consistent with, and may very well have been inspired by, the Munich I Regional Court's recently-published SEP guidelines.

But is that really a correct interpretation of Huawei v. ZTE?

It's a highly problematic approach to say the least.

Paragraph 71 is the one that really matters. It refers to all previous paragraphs, such as para. 66, as "the foregoing considerations" and then states a rule.

It's not just about whether para. 66 would be considered way too important. It also takes para. 66 out of context in another way: para. 66 discussed a scenario in which "the alleged infringer [does] not accept the offer made to it." It says "the offer", not just "any offer." And "the" offer is previously defined as an offer on FRAND terms.

Focusing on the implementer's (counter)offer turns the CJEU's case law on its head. It used to be the German Orange-Book-Standard approach to place all the burden on the implementer. But then came the CJEU (in Huawei v. ZTE and basically said (in other words): "No, firstly the SEP holder has an obligation under the antitrust laws, but if it discharges its FRAND duties, then we're not going to tolerate holdout tactics by the implementer. The implementer can keep negotiating, but within reason."

Arguably, the new (but actually not so new) Mannheim stance on SEPs is even worse than Orange-Book-Standard was, given that in the old days defendants were at least able to avert an injunction by making a licensing offer that relegated the determination of royalty amounts to a future judicial proceeding (they still had to post a bond or make a deposit).

The problem is clear. The impact can be disastrous. But how can this be fixed?

If an injunction comes down (the decision will be announced on June 23), Daimler can appeal it to the Karlsruhe Higher Regional Court. That appeals court could stay the enforcement of the injunction rather swiftly and set the record straight.

Regulatory authorities such as the European Commission and Germany's Federal Cartel Office could make filings with the Mannheim court, or with the appeals court in Karlsruhe. The courts would be free to disagree, but less likely to disagree with, say, DG COMP than with Daimler.

Theoretically, a solution could also come from the legislature. However, the German patent reform process is much ado about (pretty much) nothing due to the ineptitude of those pushing for injunction reform to make lawmakers understand what benefits an economic majority. They've foolishly wasted time and energy within existing industry organizations instead of just simply forging a strong cross-sectoral alliance and taking matters into their own hands while the window of opportunity to influence the political opinion-forming process was open. Now that window is closed, not in formal but in practical terms.

The new un-FRAND-ly development in Mannheim is shocking, and I believe there will be some resistance by industry. For the sake of innovation, and in the ultimate interest of consumers, I can only hope that it will be forceful, intelligent, timely, and effective.

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Tuesday, May 19, 2020

Munich I Regional Court won't adjudicate Nokia v. Daimler case tomorrow, schedules new trial for 7/23: stay looms large

The Nokia v. Daimler patent ruling (patent-in-suit: EP1671505 on a "redundancy strategy selection scheme") that the Munich I Regional Court had originally scheduled for tomorrow has been postponed.

Instead of announcing a decision tomorrow, the court has reopened the proceedings and scheduled another trial date for July 23, 2020. On that additional trial date, the focus will be on validity. Based on what I've heard about the order, Nokia now has to overcome a significant hurdle: it needs to dissuade the court from staying the case pending the parallel invalidation proceedings.

More than three months have passed since the original trial in this case. It speaks to the court's diligence that the judges identified a need for an additional court session in order to carefully analyze Daimler's invalidity defense. With so much at stake in the wider dispute, it would have been unfortunate if a rush to judgment had resulted in an enforceable injunction over a patent that shouldn't have been granted in the first place (at least not in the form in which the European Patent Office granted it).

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Monday, May 18, 2020

Patent troll Sisvel files second case against Tesla in Delaware, asserting nine standard-essential patents from Nokia, LG, and BlackBerry

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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Munich court to hand down key Nokia v. Daimler patent decision on Wednesday (5/20)

This morning, a spokesman for the Munich I Regional Court ("Landgericht M√ľnchen I") confirmed to me that the 7th Civil Chamber (Presiding Judge: Dr. Matthias Zigann) is still on schedule to announce a decision in a Nokia v. Daimler standard-essential patent (SEP infringement case on Wednesday (May 20) at 10 AM local time. The trial was held in early February, and the original ruling date was postponed by about six weeks.

"Decision" doesn't necessarily mean final judgment; the case could also be stayed or the proceedings might be reopened. So what are the most plausible possibilities?

  • A finding of non-essentiality (Nokia's infringement theory is based on the specifications of the UMTS standard) appears very unlikely. Should it happen nevertheless, the complaint would be rejected. Nokia would likely appeal.

  • At trial time it looked pretty much like the court was going to find in Nokia's favor on all counts and order an injunction against Daimler. Most observers still expect that to happen, and I'll prepare a blog post for that event (because there's a sufficient probability to warrant such preparation on my side), but I'm a bit of an outlier because I'm far from convinced. The passage of time might have worked against Nokia. The court might have had second thoughts in the meantime, given that Nokia's case is deficient in more than one way.

  • The most obvious weakness of Nokia's case is the patent-in-suit itself. It's not realistically going to be deemed valid as granted once the Federal Patent Court of Germany looks at it. In most cases in this industry, settlements occur before the Federal Patent Court gets to decide, but this case is more likely than the average case to reach that point.

    Statistically, the Munich court stays only about 10% of its cases, while 80% of all patents-in-suit turn out invalid. That's a huge discrepancy. Injustice of the worst kind. But every once in a while, even the Munich court stays a case, and this patent--I repeat--is a particularly weak one.

  • The court could also identify a need for further FRAND analysis. In this regard I'd like to refer you to a previous post on this case, entitled How many times can a patent holder violate EU antitrust law in a single litigation? (Nokia v. Daimler)

Getting back to the scenario of an injunction, however unjustified it would be, it wouldn't be a general sales ban: Daimler would still be allowed to sell cars in Germany that come with telematics control units (TCUs) from Harman (a Samsung subsidiary). Nevertheless, Daimler argues that the financial impact of not being allowed to sell cars with non-Harman TCUs would amount to 4.5 billion euros.

What many people don't know is that it's easier in Germany to obtain a patent injunction than to persuade a court to impose contempt sanctions. The standard of proof would be higher: at the contempt stage, Nokia would no longer be able to base its infringement theory on a comparison between the patent claims and the specification of the standard.

An injunction could be lifted before it has any commercial impact whatsoever, depending on what the appeals court finds. Given the fundamental flaws of Nokia's case, and the possibility of one or more antitrust authorities taking action in the meantime, that's fairly possible.

But an injunction could set off a massive news cycle in Germany. Theoretically, that could benefit the camp pushing for patent injunction reform, but as I explained before, the pro-reform movement in Germany is so ridiculously incompetent (and the worst part is they don't even know how bad they are) that even the most spectacular German patent injunction ever (or at least in a long time) probably wouldn't change the political dynamics. But one never knows.

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Thursday, April 30, 2020

Nokia's patent assertion tactics conflict with von der Leyen's environmental and Vestager's industrial policy goals

Daimler brought its EU antitrust complaint against Nokia in 2018, and the Euporean Commission is still dragging its feet while another court decision (Nokia v. Daimler, scheduled for May 20) is around the corner. Just for a few seconds, let's imagine an alternative universe in which the target of the complaints would have been a cellular SEP holder like Qualcomm, InterDigital, Huawei, or LG--as opposed to Nokia. Those organizations, especially the American ones, might already have been fined by now, or at a minimum they'd have received a strong Statement of Objections (SO). But Nokia and, by extension, Ericsson benefit from such an obvious and indefensible kind of protectionism that this situation threatens to wreak havoc to the EU Commission's credibility as a competition watchdog on the global stage.

So Daimler's and its suppliers' tough luck here is that shrinking Nordic companies are above EU law in the eyes of some people in Brussels--according to what I've heard from a variety of sources, Nokia can also count on French commissioner Thierry Breton, who has a telecoms background that appears to be infinitely more important to him and his cabinet than the importance of the automotive industry to Europe as a whole and his native France. As an EU commissioner, he's supposed to focus on the European interest, which he is apparently not doing; and as a French appointee, there is a natural expectation in his country that he would keep French industrial interests in mind as opposed to personal preferences or loyalty conflicts.

But instead of regretting Daimler's and its suppliers' (politically, not legally) wrong choice by complaining about Nokia first, the Commission should also look at it from another angle: Nokia self-servingly seeks to leverage its increasingly-devalued patent portfolio without giving a damn about the EU's economic interests and the Commission's overarching policy goals.

  1. There's a simple reason for which Nokia decided to sue Daimler prior to any other automaker on this planet and previously bullied Volkswagen and BMW--two rather cowardly organizations--into Avanci license agreements of limited scope. That reason is Germany's unbalanced patent litigation system. While it's obvious that a patent holder like Nokia would firstly go after premium car makers in order to establish high royalty amounts, those three German corporations aren't the only ones operating in that segment. Nokia could have sued some non-European brands first, but preferred to go to Germany because an injunction in that country would give them maximum leverage over a company with major manufacturing operations and logistics centers in that country.

    As I mentioned in previous posts, Germany won't make more than a negligible modification to its patent injunction regime. Nokia is lobbying very actively for the status quo. In fact, I personally participated in a WebEx conference in which Nokia's chief in-house litigator, Dr. Clemens Heusch, lobbied the German parliament to ensure patents would remain superstrong in Germany.

    By milking and suing European companies that are falling behind in terms of digital technologies and need resources to confront some fundamental challenges, Nokia makes it harder for EU Commission EVP Magrethe Vestager to achieve her vision of "A Europe Fit for the Digital Age."

  2. As automotive supplier Continental publicly stated in March, Nokia's refusal to provide the prereqisite degree of legal and financial certainty to everyone in the supply chain has already prevented innovation from happening--digital innovation that in some cases has direct environmental impact.

    By impeding digital and environmentally-friendly innovation on the part of automotive suppliers like Continental, Nokia's patent licensing tactics run counter to both Commission President Ursula von der Leyen's "EU Green Deal" and Commission EVP Magrethe Vestager's "A Europe Fit for the Digital Age" policies.

  3. As I reported yesterday, the Avanci patent pool/platform, whose primary purpose it is to advance Nokia's (and Ericsson's, Qualcomm's etc.) agenda of refusing to license component makers, has singled out Tesla as its next target for its patent attacks. It doesn't even matter whether those parties explicitly coordinated their lawsuits or simply act uniformly because of a shared strategic interest. Either way, they've decided to gang up on Tesla like a clan of hyenas.

    While Nokia itself isn't suing Tesla yet, Nokia patents are being asserted against Tesla by Sisvel as well as Conversant, with the latter being a Nokia front no matter how much Nokia disowns its privateer. And even Nokia itself apears to have bullied Tesla before based on what I hear (and what I conclude from what was discussed in the closed-door part of a Nokia v. Daimler trial in Munich).

    Many patent holders (this also applies to owners of non-standard-essential patents) consider Tesla a perfect target: they believe it may be somewhat soft because it's a small organization regardless of its market capitalization being about as high as the aggregate of the caps of VW, BMW, and Daimler; and they know that Tesla is a company everyone's watching closely in the industry.

    By choosing Tesla its next strategic target after those German car makers, Nokia--directly and indirectly--attacks the most innovative company in the automotive sector (which even invests big-time in Europe) instead of letting Tesla focus on what it's best at: eliminating automotive emissions and keeping up the pressure on the car industry at large to abandon combustion engines.

    Targeting Tesla after Daimler creates another conflict between Nokia's opportunistic patent monetization tactics and Commission President von der Leyen's EU Green Deal policy agenda.

Nokia is being very inconsiderate, so the Commission should take off its velvet gloves, focus on the actual issues, and just disregard the countries in which the different parties are based. Europe doesn't even own 15% of all 5G patents, so from a strategic point of view, patent abuse by non-EU companies poses a several times greater threat than whatever Nokia and Ericsson are doing.

That said, it would of course be desirable for Europe to slow down Nokia's and Ericsson's demise, or to enable them to grow again. But there's a right way and a wrong way to do it. Condoning SEP abuse is a bad deal for Europe on the bottom line.

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Wednesday, April 29, 2020

Avanci conflict with Tesla escalates as Nokia-fed patent troll Conversant sues Tesla in Texas and Germany

Avanci, which usually refers to itself as a licensing "platform" though its lawyers also described it as a "pool" in at least one U.S. court filing, offers a license to cellular SEPs held by a group whose key members are notorious standard-essential patent (SEP) abusers such as Nokia and Ericsson as well as some trolls they fed with patents. Various additional patents have been contributed by numerous organizations, such as Deutsche Telekom, that elected to come in for convenience and lack the strategic sophistication and foresight to realize the Avanci approach (of refusing to extend licenses to component makers) runs counter to their interests.

One Avanci member, Foxconn-owned Sharp, sued Tesla in Japan last month, requesting the Tokyo District Court to impose an import ban. Sisvel, a patent troll and Avanci member, sued Tesla in the District of Delaware in December over former Nokia patents. Yet another Avanci member, Nokia, may have an interim agreement with Tesla in place as an unnamed American car maker "X" was referenced in the public part of a Nokia v. Daimler trial in Munich in February; should Tesla have been that mysterious U.S. company, then they actually provided a fair amount of information that Daimler presented to the Munich court while the courtroom was sealed. And now we're witnessing an all-out Avanci v. Tesla patent litigation campaign as Conversant Wireless Licensing is asserting various Nokia patents against Tesla in two complaints filed in the Western District of Texas last week (this post continues below the two documents):

20-04-24 TXWD20cv323 Conver... by Florian Mueller on Scribd

20-04-24 TXWD20cv324 Conver... by Florian Mueller on Scribd

Conversant previously filed some German SEP lawsuits against Tesla as well:

"After no further communication from Tesla, on or about February 26, 2020, Conversant filed patent infringement complaints against Tesla, Inc. and its German subsidiary Tesla Germany GmbH before the Manheim [sic] Regional Court in Germany."

The correct spelling of the German city name is, of course, Mannheim. There are a few towns named "Manheim" in the U.S., but anyone who's ever driven from O'Hare Airport to downtown Chicago has seen "Mannheim Road".

I'm trying to find out how many cases Conversant brought in Mannheim, and what the patents-in-suit are. I just emailed the Mannheim Regional Court's spokesman before writing this post. At this stage the Mannheim court can't provide case and patent numbers, but I hope this will change in the months ahead.

The combination of Sharp and Conversant suing Tesla in different jurisdictions is the usual bulling with which Avanci is trying to coerce Daimler into a SEP license agreement on supra-FRAND terms while the likes of Nokia and its trolls refuse to license automotive suppliers, an issue that I hope Tesla will raise as well. Tesla is far more of a digital company than Daimler and therefore may be vertically more integrated with respect to cellular data communications, so it wouldn't surprise me should Tesla not buy telematics control units (TCUs) from the likes of Continental, but even Tesla won't make its own baseband chips. In contravention of its FRAND licensing obligations, Nokia licenses only end-product makers.

With respect to component-level licensing, a new academic paper was published yesterday in reply to a write-up by Nokia's outside counsel (which also mentioned this blog because of a recent post).

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