Tuesday, November 15, 2016

Automotive companies fighting for FRAND: Daimler, Hyundai join Fair Standards Alliance

About four to five years ago, there was a time when "FRAND Patents" would have been a more suitable name for this blog than "FOSS Patents": the pursuit of sales and important bans over standard-essential patents (iun violation of pledges to license them to all comers on fair, reasonable and non-discriminatory terms), royalty demands far out of the FRAND ballpark and exorbitant damages claims were the three most important symptoms of a huge underlying problem, and I did what I could to shed some light on what was going on and going wrong.

While I'm glad that some of the worst potential consequences were avoided at the time, I have realized that there is some unfinished business in that area. Antitrust settlements and court decisions were helpful. Some of them, such as Judge Posner's 2012 Apple v. Motorola ruling, were really great. But attempts to abuse FRAND-pledged SEPs are still rampant. Various SEP owners are still seeking injunctions (not in all jurisdictions but definitely in some). Royalty demands and damages claims still appear to be out of line in too many cases.

Why hasn't the problem been solved yet?

  • For the most part, courts solved problems only in narrow contexts. Even Judge Robart's rate-setting decision in Microsoft v. Motorola (2013), which was wonderful in some ways, had a major shortcoming: it didn't require Motorola to base its royalty claims on the smallest saleable unit implementing a given standard, such as a WiFi chip for IEEE 802.11 patents or a baseband chip for patents on cellular network standards.

  • Antitrust authorities stopped short of establishing clear, bright-line rules. Instead, they entered into settlements with major loopholes. I particularly criticized, at the time, the FTC's Google/Motorola consent decree.

That said, I do have hope that significant progress will be made over the next few years:

  • Judges and competition enforcers can easily see that what was done a few years ago was generally good but simply not enough.

  • Android companies (Google and certain device makers) weren't the "perfect" FRAND offenders to crack down on as they weren't repeat offenders or aggressors. What they did was just retaliation for attacks on Google's Android mobile operating system and the related ecosystem. They hadn't done this before (Motorola maybe, but not Google, which owned Motorola at the height of the smartphone patent wars). They haven't done it since. What they wanted then was not to cause damage to the concept of FRAND licensing: at the most they were prepared to accept collateral damage in order to end the smartphone patent wars on the basis of (more or less) zero-zero license deals.

    Google's antitrust lawyers stressed all the time that their client hadn't drawn first blood -- and they pointed to assertions of patents on de facto industry standards and to what they called "commercially essential" patents. Microsoft said something very accurate at the time: two wrongs don't make a right. Unfortunately, however, regulatory agencies are controlled by politicians, and they just didn't want to take sides in the ecosystem wars between Android rivals and the Android ecosystem. As a result, some of the world's worst SEP abusers benefited from what Google/Motorola, Samsung and others were doing (and from those companies' political weight). But times have changed. Earlier this year, Google joined the Fair Standards Alliance. It's now fighting the good fight for FRAND.

  • The pro-FRAND coalition is now more broadbased and more powerful than ever. Case in point, I received a press release today from the Fair Standards Alliance announcing that Daimler and Hyundai have joined the Brussels-based organization, joining major IT companies such as Google, HP, Cisco, Intel, Dell, and Juniper Networks as well as rival car manufacturers Volkswagen, BMW, and Tesla.

    They are profoundly concerned about abusive assertions of patents on wireless and IoT (Internet of things) industry standards. That concern isn't new: automotive companies frequently have to defend themselves against patent assertions (in the Eastern District of Texas and elsewhere). I'm not allowed to disclose the name publicly but I also gave some advice a few years back to a major German automotive company, and I've talked to lawyers defending such companies in court. But if the problem wasn't huge, those organizations wouldn't have joined the Fair Standards Alliance.

Let's give meaning to FRAND. I'll make my little contribution again by blogging about FRAND developments, not only but also in a litigation context.

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