Tuesday, January 4, 2022

Still no Apple-Ericsson announcement: neither renewal of license nor renewed infringement litigation--key deadline may be mid-January

There still hasn't been any announcement by Ericsson of a renewal of its patent cross-license agreement with Apple, nor have I found any filings in the Eastern District of Texas or with the ITC that indicate renewed infringement litigation. Whether they are still negotiating or negotiations have broken down, Ericsson appears to be precluded from asserting patents against Apple at this stage.

There are accusations of FRAND violations flying both ways in the Eastern District of Texas, with the first "harbinger" of a new patent spat having been Ericsson's complaint in early October, shortly after which an even earlier motion for an anti-antisuit injunction in the Netherlands became known (the denial of that motion was affirmed in a December 16 decision following a November 18 hearing). But Ericsson can't assert patents as long as a license agreement, or a covenant not to sue, is in force and effect.

Many license agreements terminate at the end of a calendar year. Last year, Ericsson's patent assertions against Samsung started on New Year's Day (and resulted in a settlement less than five months later). However, Ericsson sued Apple in mid-January 2015 subsequently to the expiration of a license agreement. It could be that mid-January is again the key deadline, either because the license agreement won't expire before, or because of a covenant not to sue precluding immediate infringement litigation upon expiration of the license for another two weeks or so.

There would be a plausible explanation for different deadlines. Parties often negotiate such major contracts until the last day. For Samsung, there's nothing special about the Western world's New Year's Day as Korea celebrates the Lunar New Year a month later. For Apple, however, it would mean that the negotiators and other decision-makers would have to be dealing with the decisive phase of a negotiation during the Holiday Season.

In December 2020, Ericsson formally cautioned investors against the potential temporary revenue impact of non-renewals while also announcing a FRAND action against Samsung. No such warning has been issued yet with respect to the Apple license--but a renewal, at least on improved terms, would have resulted in the dismissal of the parties' FRAND cases in Texas.

Since the last Ericsson-Apple license agreement, the case law in various major jurisdictions has clearly become more favorable to licensors, and Ericsson is a net licensor who stands to benefit from such developments. Apple can claim to have a comparably large SEP portfolio, but there's just no comparison between the parties' exposure. So if Ericsson has to enforce, it's likely to get a much better deal than last time, regardless of Apple's SEP acquisitions.

Apple hasn't renewed its license agreements with some other major SEP holders lately, particularly Nokia (which has yet to renew the most important part of its license agreement with Samsung) and InterDigital--and Apple has to deal with App Store antitrust issues around the globe, which it may prefer to focus on. Sadly (and absurdly), Apple's app tax on developers (which increasingly includes Apple Search Ads, a business that is growing because of Apple's abusive practices in the in-app advertising context under a privacy pretext) far exceeds its own SEP licensing costs.

I've got blog posts prepared for either scenario--a renewal of the cross-license or a new round of infringement litigation--but for now we just have to wait, possibly another 10 days or so. It can't take long because the last agreement undoubtedly expired seven years ago, and we know from an Apple filing that the parties signed a seven-year license agreement, which I guess seamlessly resumed where the previous agreement left off.

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