Tuesday, October 22, 2019

Ericsson privateer Unwired Planet seeking $8 billion from Apple over standard-essential patents, submission to UK Supreme Court says

Yesterday it became known that Apple is an intervenor (as is Qualcomm with its diametrically opposed views) in the UK Supreme Court appeal of Unwired Planet v. Huawei (consolidated with Conversant v. ZTE).

Day 2 of the hearing just started. Brick Court Chambers' Mark Howard, counsel for Huawei, came out swinging--he's more forceful today than he was yesterday, though the point he drove home on Monday that the implementer of a standard is entitled to dispute validity and infringement (an entitlement that would be vitiated by a SEP holder just being given all the leverage in a single jurisdiction to force the defendant into a global portfolio license).

Given how outrageous the lower courts' rulings in this case were, I would have expected more judges to make the kinds of statements we heard from Lady Black, who so far appears to have the best grasp at both the theoretical/dogmatic and practical levels of the case. And by now the most senior judge on the panel, Lord Reed (Deputy President of the Court) appears to have totally understood the difference between a declared-essential patent (with declarations being made even before it's clear what the ultimately-adopted standard looks like, which is but one of the various uncertainties between a declared-essential patents and an established-essential patent). This is closely related to that brilliant point I mentioned: it's not about turning SEP licensing (in my words) into an implementer's jukebox--it is, as Mr. Howard made clear yesterday, about the entitlement to dispute validity and essentiality, which involves issues on which one jurisdiction may very well reach a different conclusion from another (as has been proven in this case, where Unwired Planet is on the losing track in China so far).

Another strong point in this context was just made: "You get paid for the rights you have, not rights you assert." And that's the whole problem with portfolio-based determinations that are detached from the merits and substitute the law of the strong (strengths flowing from a single-patent, single-country injunction) for the rule of law.

A tipping point may have been reached by now, but we'll see. There will likely be some other observations to share on this second day of the hearing, but I did want to do a post early in the day because of a very important--in economic as well as legal terms--revelation.

Mr. Howard made reference to Apple's submission, and Apple itself is embroiled in litigation with Unwired Planet. That non-practicing entity is a patent privateer: it received patents from Ericsson in a transaction I once denounced as a "pseudo-sale" and is basically just serving as a licensing agency that uses the threat of, or actually brings, litigation in order to extract supra-FRAND royalties for Ericsson.

The new information is now that what Unwired Planet demands from Apple amounts to $8 billion.

If those patents are really that valuable--and it's not like Ericsson doesn't know a thing or two about cellular SEPS--, why would Ericsson have transferred them to Unwired Planet without a substantial one-time payment due upon the signing of the agreement? It's because Unwired Planet is not a regular and genuine acquirer. It's, as I just said, a licensing and litigation agent. No legal issues concerning the transaction itself or directly related to it, such as standing, are at issue in the UK case. But this is important context because it shows the policy implications of the lower courts' misguided decisions.

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