Acer, IP Bridge patent infringement actions against Volkswagen withdrawn following Avanci 4G upgrade while EU politician voices concern over still-unlicensed non-European car makers

This is a follow-up to last week's big standard-essential patent (SEP) licensing news, Volkswagen's agreement with the Avanci patent pool to upgrade its license to 4G for the entire VW group (as opposed to only a few premium brands being licensed up to 4G). VW's initial press release suggested that some issues (presumably relating to litigation expenses) were left to be resolved in connection with patent infringement actions pending against the car maker at the time. It appears that the clean-up has been completed:

• Sterne Kessler, which represented VW against Acer, announced the voluntary dismissal of Acer's action in the Eastern District of Virginia.

• IP Bridge--another Avanci licensor--has also withdrawn its Munich case against Volkswagen. Today the Landgericht München I (Munich I Regional Court) confirmed to me that IP Bridge filed a notice of voluntary dismissal on March 9, 2022 in case no. 7 O 16858/21. As a result of this withdrawal, the trial date has been vacated.

While all German and German-owned automotive brands are now licensed under Avanci's 4G program, many car makers in the world still aren't licensed. In other words, barring the highly unlikely existence of thousands of unknown bilateral license agreements (49 Avanci licensors times numerous car makers), there's a lot of infringing products rolling on the world's roads.

This has a Member of the European Parliament (MEP) worried. Alfred Sant, a former prime minister of Malta with a long-standing interest in the EU's intellectual property policy, posed three written parliamentary questions to the European Commission last month. He's taking an interesting angle: when some companies in a given industry (here, automotive) are licensed while others are not, "competitive distortion" is indeed caused. When companies headquartered in some jurisdictions respect IP to a greater extent than their counterparts abroad, it's an issue of global trade policy.

Mr. Sant says it's "unfair to EU companies that pay for these rights when their competitors do not." To be fair, there are still some unlicensed EU companies. For example, I haven't heard of Stellantis (FIAT, Peugeot, Chrysler, Open, Citroën, Dodge, Maserati, and others) having taken an Avanci license. It's the world's sixth-largest car maker and headquartered in Amsterdam--just up the road from the EU's de facto capital of Brussels. But Mr. Sant is probably right that the degree--so many things are a question of degree rather than binary--to which EU automakers have licensed cellular SEPs is substantially greater than in other parts of the world.

All three of Mr. Sant's questions relate to measures the European Commission could take, such as raising this issue in bilateral trade talks (with "Japan, South Korea, the United States etc."). I find the second question particularly well-put:

"2. Has the Commission informed non‑EU governments that a failure by non‑EU car manufacturers to fulfil SEP licencing obligations would constitute a distortion of the competitive level playing field vis‑à‑vis EU car manufacturers that have the necessary SEP licences, and what commitments has it received?"

It would be unrealistic to expect any car maker--be it American icon Ford, which is being sued by some Avanci licensors, or a Toyota or Hyundai/KIA--to be scared into action only because of those parliamentary questions. Also, the Commission rarely gives surprising or enlightening answers to such questions. The standard response to "are you doing something about it?" is "Yes, of course we do our job" without going into the specifics one would really like to hear. But what those questions do get is mind share. They draw the Commission's attention to political concern over a problem. They show that there are politicians who want the Commission to make significant progress in a particular regard. I do believe Mr. Sant's questions have the potential to raise awareness and to persuade EC decision makers to assign a higher priority than in the past to this competitiveness issue.

It's like a law of nature in patent licensing that a party that has taken a license is interested in ensuring that its competitors, too, pay for their use of the same patents (and that they don't pay less). Daimler defended itself against Nokia for more than two years (only to get a result it could have had at a much lower cost); Volkswagen was advocating "Licensing Negotiation Groups" for a long time. By now, it's not in VW's or Daimler's interest that others remain unlicensed.

Mr. Sant's official questions also serve as a signal to the governments of countries like Japan that the EU probably won't take it lightly should those jurisdictions shield their local car makers from SEP enforcement. To some degree they're all susceptible to infringement litigation in Germany. In the United States, this month's Fifth Circuit decision in Continental v. Avanci et al. also ups the pressure on car makers to license cellular SEPs. But it obviously makes a difference whether a company has to fear effective enforcement in only a couple of export markets or may even have to close down factories if all else fails.

It's high time the car industry resolved its 3G/4G SEP licensing issues as the world is moving on to 5G at a fast pace.

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Volkswagen upgrades Avanci patent pool license from 3G to 4G for entire group, paving way for settlement of Acer's and IP Bridge's infringement cases in Virginia and Munich

On the last day of January, Volkswagen asked the United States District Court for the Eastern District of Virginia for an extension of time to respond to Acer 's 4G standard-essential patent (SEP) infringement complaint because the parties were discussing a settlement. Theoretically, this could have meant bilateral licensing talks, but Acer had filed its complaint because VW still hadn't upgraded a 2019 Avanci pool license from 3G to 4G. Only certain VW subsidiaries such as Audi and Porsche had a 4G license--but not the ones where most of the volume is. The VW group as a whole sells approximately 10 million vehicles annually.

We now know that VW has chosen a license to the 4G SEP portfolios of 49 different companies over countless bilateral deals: Avanci just announced that the Volkswagen Group has "expanded its existing relationship" with the patent pool so as to include 4G SEPs.

This makes a whole lot of sense. Volkswagen has now caught up with its German rivals BMW (Avanci's first announced licensee) and Daimler (which firstly settled with Nokia and then took an Avanci license in late 2021). Frankly, the previous state of affairs was an anachronism. Many of us remember when 3G was the latest and greatest in cellular telecommunications, so hot that carriers would bid huge amounts of money when spectrum was auctioned. Then the best is the enemy of the good. The best right now is, of course, 5G--for that standard, however, a pool rate has yet to be announced. 4G is now the lowest common denominator, given that some countries such as Germany, where Volkswagen is famously headquartered, have already switched off 3G.

Interestingly, when Volkswagen--through a supplier (Rolling Wireless according to media reports)--took a SEP license from Huawei last year, it was a 4G license.

The published Avanci rate for 3G is $9 per vehicle versus $15 per vehicle for 4G. Volkswagen's legal problem was that licensing is a binary question for each patent-product combination. You're licensed, or you're not licensed. If Audi--an almost-wholly-owned VW subsidiary--has a 4G license, it doesn't mean that its parent company's brand is licensed. If VW has a 3G Avanci license but implements the 4G, it simply infringes any 4G patents in the pool. But that's a thing of the past. A deal is a deal.

Not only Acer but also IP Bridge--another Avanci licensor--was enforcing 4G patents against Volkswagen. In the Acer case, the extended deadline for VW's response to the complaint ends tomorrow.

It shouldn't be hard to settle those cases now, but German business weekly Wirtschaftswoche quotes Volkswagen as saying that the Avanci license agreement "provides relief from pending litigation to an extent that is not clear-cut yet." VW also told Wirtschaftswoche that it has "reached a pragmatic solution that makes economic sense."

It is well known in the industry that LG is a Volkswagen supplier. The last major announcement by Avanci was that LG, one of the world's largest 4G SEP holders (if not the number one according to some statistics), joined the Avanci 4G pool as a licensor.

Just last week, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal of automotive supplier Continental's U.S. antitrust case against Avanci and some of its licensors, particularly Nokia. In what represents a ringing endorsement of Avanci's business model, the panel held that granting a license to "third parties up the [supply] chain [...] is unnecessary to effectuate the purpose of the FRAND commitments and reduce patent hold-up." Volkswagen used to advocate so-called Licensing Negotiation Groups (1, 2, 3), which would raise serious issues under cartel law. It looks like Volkswagen didn't need to form an LNG in order to work things out with Avanci--neither for the original license in 2019 nor the 4G upgrade announced today.

Volkswagen did what was certainly best for Volkswagen under the circumstances. They chose a negotiated agreement over potentially protracted litigation. It is now actually in VW's interest that its competitors also take an Avanci license. One example of a major VW rival without such a license is Ford, which may already be under significant pressure in Germany. With every car maker that takes such a license, others will find it harder to convince the courts that they are willing licensees even if they decline to take a one-stop license for $15 per car to 49 SEP portfolios, including some very large ones (LG, Ericsson, Nokia, Qualcomm). Whether Avanci has 75% or 80% of all 4G SEPs, there can be no doubt that its share is huge.

If history repeats itself, Volkswagen will take an Avanci 5G license when 4G has been switched off in Germany. I don't expect it to take that long, however. Car makers are relatively new to the cellular SEP licensing business, but some are learning faster--and especially at a lower cost--than others.

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Volkswagen told court of settlement talks--unclear if negotiating bilateral patent license from Acer and/or upgrade to 4G license from Avanci

Two weeks after Acer filed a patent infringement action in the Eastern District of Virginia over the insufficiency of Volkswagen's 3G Avanci license and refusal to pay for the 4G-essential IP it's actually been using, VW moved for an extension of time for its answer (or other form of response) to Acer's complaint until February 7, 2022 (yesterday). A first extension of time is always granted by U.S. district courts, while a second extension is not a given.

Today I thought I'd download VW's answer to Acer's complaint, which I mentioned last week in my commentary on Ford's response to Sisvel's patent suit in the District of Delaware. What I found instead was the following motion for another extension, which interestingly reveals settlement talks between the German car maker and Acer and/or Avanci (this post continues below the document):

22-01-31 VW Motion for Exte... by Florian Mueller

Here's the relevant passage:

"Good cause exists for this Court to grant this second extension because the parties are in negotiations to settle all matters in controversy between them. VWGoA respectfully requests that this Court grant the requested extension to allow the parties to more effectively continue with negotiations and finalize an agreement. Counsel for VWGoA has spoken with Plaintiff’s counsel, and Plaintiff does not oppose Defendant’s request for an extension of time." (emphases added)

On this basis, the judge granted the extension.

There are two possibilities here, which are not mutually exclusive:

• VW's objective may be a bilateral license from Acer.

• But Acer brought its complaint in the first place because it wanted VW to recognize that a 3G Avanci license fell short of the IP coverage needed for 4G cars. Also, a bilateral agreement with Acer would not resolve the dispute with Japan's IP Bridge, an other Avanci licensor suing VW (I discovered at least one case that was pending in Munich), nor would VW be licensed to roughly four dozen other cellular SEP portfolios in the Avanci pool. That's why an Avanci license would be a logical outcome.

It's possible that both options are being negotiated in parallel.

The extension gives Volkswagen another month: the new deadline is March 9, 2022.

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Acer sues Volkswagen over handful of 4G patents, decries VW's hold-out tactics against Avanci including 'licensing negotiation groups'

Intellectual Ventures predicted an "IP reckoning" for the automotive industry and did its part to turn this into a self-fulfilling prophecy (by suing GM, Toyota, and Honda). Just yesterday I reported on Sisvel v. Ford, and now I've become aware of the latest SEP enforcement action against a car maker: Acer, a Taiwanese device maker known to be a very reasonable patent holder (as that company is on the receiving end of patent suits all the time), is tired of Volkswagen's hold-out tactics vis-à-vis the Avanci 4G patent pool that offers a one-stop license to dozens of SEP portfolios. Acer has brought a patent infringement complaint against VW in the Eastern District of Virginia, which (as I'll show you further below) points to a couple of FOSS Patents posts:

21-12-15 Acer v. Volkswagen... by Florian Mueller

Some of you saw me at the short-lived Apple v. Qualcomm trial in San Diego in April 2019, and while I don't expect anyone to remember this, I used an Acer notebook for my live commentary from the overflow room. On the only occasion so far that I attended a patent trial involving Acer, they were being sued in Mannheim over WiFi SEPs, with the accused components being supplied by Broadcom. While Acer holds a number of standard-essential patents, it's primarily an implementer of standards, much more so than it is a patent enforcer.

So why does a peaceful and usually defensive company tell Volkswagen that "enough is enough" and bring an infringement complaint over five 4G standard-essential patents (SEPs)? The answer is in the complaint--and it's all about Volkswagen's Avanci license only covering 2G and 3G patents (as I noted in a post on Volkswagen's indirect license deal with Huawei), but not 4G SEPs (VW did, however, take a 4G license for some of its premium brands, namely Porsche and Audi, the latter of which is the corporate parent of, inter alia, Lamborghini).

Here are the sections of the complaint that expose Volkswagen's hold-out tactics (and we're now getting closer to the passage that points to FOSS Patents):

3. Plaintiff, through their licensing agent Avanci, LLC, has offered a license to the Patents in Suit on FRAND terms, and are prepared to grant a license agreement to Defendants’ infringing products on terms and conditions that are fair, reasonable, and non-discriminatory (“FRAND”). Plaintiff brings this action because Defendants have refused the FRAND offers of Plaintiff’s licensing agent, have refused to negotiate in good faith, but continue to sell products that practice, use, or otherwise comply with the standards covered by the Patents in Suit.

25. The Patents in Suit are part of a licensing platform that is managed by Avanci, LLC.

26. Plaintiff, through its licensing agent Avanci, has made a FRAND offer to Volkswagen AG to license the Patents in Suit as part of a license to the licensing platform managed by Avanci. This offer was on terms made to, and accepted by, other licensees who have taken licenses from the Avanci licensing platform. Notwithstanding the FRAND offer, Defendants have refused to license the patents for 4G LTE technology.

27. Specifically, Avanci first discussed a license with Volkswagen AG in 2016. Since that time, Avanci has had many meetings, phone conferences, and email exchanges with Volkswagen AG to discuss and explain Avanci’s 2G/3G and 2G/3G/4G license offers. Volkswagen AG concluded a 2G/3G license with Avanci in April 2019. Although Volkswagen AG affiliates Audi and Porsche also concluded 2G/3G/4G license with Avanci, Volkswagen AG did not execute a 2G/3G/4G license with Avanci at that time.

28. Over the past two years since signing the 2G/3G license agreement, and although Volkswagen AG has increasingly incorporated 4G connectivity into its connected vehicle line-up, it still has not concluded a 2G/3G/4G license with Avanci. Instead of signing a license on the same terms as others in the industry, Volkswagen AG has engaged in delay tactics, including efforts to create a “licensee negotiation group” including many companies in the auto industry to jointly negotiate more favorable licensing terms for Volkswagen AG and other participants in the group. See http://www.fosspatents.com/2021/07/sep-licensing-negotiation-groups-part-i.html; http://www.fosspatents.com/2021/07/sep-licensing-negotiation-groups-part.html; https://www.kidonip.com/standard-essential-patents/car-or-car-tels/.

FOSS Patents posts have been mentioned in various court filings over the years, not only but mostly in the U.S., but this may be the first time for FOSS Patents to be mentioned in a complaint. Here's a screenshot of that passage (click on the image to enlarge):

Let that sink in: for its high-volume brands, Volkswagen only has a license up to 3G, a standard that is already deprecated in some countries such as the country in which VW is headquartered, when in reality VW is already selling huge numbers of 4G-connected cars--and increasingly incorporates 5G into its products (I believe it won't take long before Avanci also announces its 5G rate). Acer decided not to tolerate that type of infringement after all those years, and turned to IP litigation boutiques Davidson Berquist Jackson & Gowdey (of Virginia) and TechKnowledge Law Group (of California). I wouldn't be surprised if other Avanci licensors were equally annoyed as Acer, so Volkswagen may face more 4G patent assertions soon unless it upgrades its license. Also, it would be a logical step for Acer to sue in Germany as well, and I'll try to find out more about that.

The complaint provides non-exhaustive lists of Volkswagen models that implement the relevant 4G techniques, such as VW ID4, Arteon, Atlas, Atlas Cross Sport, Golf, Golf GTI, Jetta, Passat, Taos, and Tiguan. Those types of cars may be less expensive than the average Porsche or Audi, but Avanci's 4G license costs $15 per unit, so there's no way Volkswagen could afford it only if a car costs $100K. As the complaint notes, "Defendants tout their communications technology marketed as Car-Net as including 4G LTE connectivity." According to the complaint, Car-Net "was introduced into Volkswagen cars at least as of the 2020 model year."

These are the five patents-in-suit:

• U.S. Patent No. 8,483,677 on a "method of managing mobility management layer of a mobile device"

• U.S. Patent No. 8,787,304 on a "method for reference signal pattern allocation and related communication device"

• U.S. Patent No. 8,798,66 on a "method of performing power headroom reporting and communication device thereof"

• U.S. Patent No. 9,363,059 on a "method of handling component carrier activation and deactivation and communication device thereof"

• U.S. Patent No. 9,426,765 on a "method of handling uplink synchronization and related communication device"

Some of the relevant claims are product claims, making Volkswagen a direct infringer if the allegations are proven. Other claims-in-suit are method claims, raising the question of contributory infringement (as Volkswagen directs and induces its customers to infringe, provided that Acer is right about 4G essentiality).

In the U.S., Acer is not asking for an injunction at this stage but seeking damages for past infringement as well as "post-trial damages in the form of a counter-determined royalty" and, which is granted in the U.S. only under exceptional circumstances, a recovery of its legal fees. Should Acer sue Volkswagen in Germany, chances are that VW would be considered an unwilling licensee and, as a result, enjoined.

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Chinese ministry and American creatives criticize Google's heavy-handedness in Aliyun case

Reuters reports on a new white paper by China's Ministry of Industry and Information Technology expressing concern over Google's stranglehold on the Chinese smartphone operating system market and the tight control it exercises over Android despite labeling it as an "open source" platform. In this context, particular concern relates to the treatment of Android forks (derivative operating systems incorporating some or all Android code):

"The paper said Google had discriminated against some Chinese companies developing their operating systems by delaying the sharing of codes. Google had also used commercial agreements to restrain the business development of mobile devices of these companies, it added."

On ChinaScope Financial I found an article on the same subject that specifically mentions the Acer-Aliyun case I blogged about in September:

"[S]ome OS [= operating system] research enterprises are facing discriminations from Google. On September 13, 2012, the OS developer AliCloud cancelled the launch of a new smartphone model equipped with Aliyun OS because of pressure from Google."

Google's conduct in this case -- bullying Acer to prevent the Aliyun platform from becoming more popular -- has recently also been criticized by organizations representing American creatives. The Picture Archive Council of America and the Graphic Artists Guild submitted amicus curiae briefs in support of Oracle in the Android/Java copyright infringement case against Google. ArsTechnica published the creatives' brief, which asks the Federal Circuit to reverse the district court's ruling on copyrightability and (which the brief focuses on almost entirely) its denial of a judgment as a matter of law on "fair use", a Google defense on which the jury reached no agreement. The creatives believe that District Judge William Alsup had not given enough thought to the wider implications of his decisions in this case for the income source of photographers and designers:

"The members of Amici [the two organizations who submitted the brief] depend on the licensing of their photographs and other creative works in order to support themselves. Licensing images for multiple purposes to a rich variety of customers generates revenue that they use to maintain themselves and to support their ongoing activities. By finding elements of Oracle's Java packages uncopyrightable, the district court's opinion evidences little respect for the creativity involved in Oracle's works. Of more immediate concern to Amici, however, is that the district court, in denying Oracle's motion for judgment as a matter of law on fair use, failed to appreciate that if Google's actions vis-à-vis Oracle are considered to be fair use, it would undermine copyright protection not only for computer programs but for all creative works. It cannot be a fair use to take the most valuable part of a work -- here, the key source code used to create, among other things, applications for mobile devices -- and to use it to undermine the market for the original work. Copyright law is intended to respect and incentivize investment in creative works for the benefit of creators and the public. If this Court affirms the holding of the court below, it will open the door to massive infringements of Amici's protected expression, threaten the ability of Amici’s members to earn a living from their work and limit their ability to bring the benefits of their work to the public. Ultimately, the Amici, all creators, and the public will be harmed."

The creatives' brief explains why Google's use of Java material in Android cannot satisfy any one of the "fair use" factors. In this context the brief accuses Google of hypocrisy given that it had no qualms about fragmenting Java but aggressively combats Android forks:

"Google’s bad faith [vis-à-vis Oracle] is further underscored by its hypocritical reaction to other companies' attempts to create incompatible versions of Android. Ironically, when Google's competitor Alibaba created and sold an incompatible version of Android -- doing to Google precisely what Google did to Oracle -- Google, failing to look into a revealing mirror, threatened to cut off any of its licensees who did business with Alibaba. See Roger Cheng, Google: Alibaba's OS is an incompatible version of Android, CNET News (Sept. 14, 2012), http://news.cnet.com/8301-1035_3-57513559-94/google-alibabas-os-is-an-incompatible-version-of-android/. At the time Google said in a statement, 'Compatibility is at the heart of the Android ecosystem and ensures a consistent experience for developers, manufacturers, and consumers . . . Non compatible version [sic] of Android, like [Alibaba's platform] Aliyun, weaken the ecosystem.' Id. Google's statement, however, reveals its Janus-like approach to compatibility, given that it was more than happy to decimate the Java ecosystem, which had existed for decades, in order to create Android."

The final section ("Conclusion") of the creatives' brief mentions Alibaba once again:

"For Google's copying to be fair use would be a perversion of the fair use doctrine and undermine the constitutionally based incentive. There is nothing 'fair' about appropriating the copyrighted works of others to leapfrog the effort necessary to create one's own code and develop one's own community of programmers. There is nothing 'fair' about confusing protectable expression with structural norms that all may use. And there is nothing 'fair' about doing this in a way that 'weakens the ecosystem,' as Google itself stated to Alibaba, to protect its own interests."

(emphasis added)

The Chinese ministry and the organization representing American creatives desire different outcomes, but their positions are not irreconcilable. The creatives would like the United States Court of Appeals for the Federal Circuit to toss Google's "fair use" defense, which in turn would require Google to respect Oracle's intellectual property in Java. The Chinese government would presumably like Google to let local players such as Alibaba fork Android the way Google forked Java. Google made Android available under an open source license that allows the creation of forks, but it's using its market power (such as the dependence of device makers on an official Android license) to ensure that forks will only lead a niche existence. Oracle/Sun also made Java available under an open source license, the General Public License (GPL), but Google did not want to be bound by the GPL's copyleft regime. The creatives' amicus brief also mentions this fact:

"Google requested a license from Oracle because it wanted to use Oracle's Java packages, showing that Google knew a license was required. Google also knew those licenses came with certain conditions. Specifically, if it took a General Public License (or 'GPL') it would need to make any changes available to the open source community [...]"

The Apache license, under which Google published Android, does not come with a contribute-back (copyleft) mechanism.

At the end of the day, China's Ministry of Industry and Information Technology simply wants Google not to exercise more control over Android (through bullying based on its market power) than it has under the Apache license, and the two organizations representing American creatives in the Android/Java case want the Federal Circuit to ensure that Google will either have to stop infringing or take a license, and the license could be a commercial license or Google could also use Java material under the GPL, provided that it contributes back. But Google wants to have it both ways.

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Android patent license deals continue to be struck: Microsoft-Nikon is (announced) deal no. 18

Litigation gets more publicity than licensing. It's bigger news if products are banned, or if someone is at least trying to get them banned, or if juries award damages in the hundreds of millions of dollars (or even in excess of a billion dollars). But licensing is how almost all intellectual property disputes are resolved, and how countless lawsuits are avoided in the first place.

Most Android and Chrome device makers understand that Google wrote most of the code, but did not do most of the pioneering work behind it. It implemented vast amounts of technology created and owned by others. Android has drawn and continues to attract more litigation than any other platform. At the same time its infringement issues give rise to a steadily-growing number of third-party patent license agreements.

Yesterday Microsoft announced a royalty-bearing license deal relating to certain Nikon cameras running Android. On this occasion I wanted to update my list of Android-related patent license agreements that have been announced (there may be others in place that no one ever talked about):

1. April 27, 2010: Microsoft Announces Patent Agreement With HTC

2. June 27, 2011: Microsoft and General Dynamics Itronix Sign Patent Agreement ("Agreement will cover General Dynamics Itronix devices running the Android platform.") (FOSS Patents coverage)

3. June 29, 2011: Microsoft and Velocity Micro, Inc., Sign Patent Agreement Covering Android-Based Devices (FOSS Patents coverage)

4. June 30, 2011: Microsoft and Onkyo Corp. Sign Patent Agreement Covering Android-Based Tablets (FOSS Patents coverage)

5. July 5, 2011: Microsoft and Wistron Sign Patent Agreement ("Agreement will cover Wistron's Android tablets, smartphones and e-readers.") (FOSS Patents coverage)

6. September 8, 2011: Microsoft and Acer Sign Patent License Agreement ("Agreement will cover Acer's Android tablets and smartphones.") (FOSS Patents coverage)

7. September 8, 2011: Microsoft and ViewSonic Sign Patent Agreement ("Agreement will cover ViewSonic's Android Tablets and smartphones.") (FOSS Patents coverage)

8. September 28, 2011: Microsoft and Samsung Broaden Smartphone Partnership ("Under the terms of the agreement, Microsoft will receive royalties for Samsung's mobile phones and tablets running the Android mobile platform.") (FOSS Patents coverage)

9. October 23, 2011: Microsoft and Compal Electronics Sign Patent Agreement Covering Android and Chrome Based Devices

10. January 12, 2012: Microsoft and LG Sign Patent Agreement Covering Android and Chrome OS Based Devices (FOSS Patents coverage)

11. April 25, 2012: Microsoft and Pegatron Corp. Sign Patent Agreement Covering Android- and Chrome-Based Devices

12. April 30, 2012: Barnes & Noble and Microsoft Form Strategic Partnership to Advance World-Class Digital Reading Experiences for Consumers" ("Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft's patents for its NOOK eReader and Tablet products.") (FOSS Patents coverage)

13. July 9, 2012: Microsoft and Aluratek Inc. Sign Patent Agreement Covering Android and Chrome Based Devices

14. November 7, 2012: Microsoft Signs Licensing Agreements for exFAT With Sharp, Sigma, NextoDi, Black Magic and Atomos Global ("The agreements cover Sharp Android tablets, Sigma and NextoDi high-end cameras and accessories, and Black Magic and Atomos Global broadcast-quality video-recording devices.")

15. November 11, 2012: HTC and Apple Settle Patent Dispute (FOSS Patents coverage)

16. December 11, 2012: Microsoft and EINS Sign Android Patent Agreement ("EINS manufactures Android tablets under the Cat brand in Germany.") (FOSS Patents coverage)

17. December 11, 2012: Microsoft and Hoeft & Wessel AG Sign Patent Agreement ("Agreement will cover Hoeft & Wessel devices running the Android platform.") (FOSS Patents coverage)

18. February 21, 2013: Microsoft and Nikon Sign Android Patent Agreement ("Agreement covers certain Nikon cameras running the Android platform.")

This list will grow considerably. At some point, even Google's Motorola Mobility will end up paying.

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Ericsson demands 1 eurocent per WiFi patent per device from Acer, much less than Google wants

Today I was in Mannheim for an IPCom v. HTC damages trial (I don't intend to blog about that one) and attended a subsequent (second) trial over one of three IEEE 802.11 (WiFi, or WLAN) standard-essential patent (SEP) lawsuits brought by Ericsson against Acer in the same wildly popular venue. There was one piece of information I picked up there that I'd like to share because it puts into perspective some of the out-of-this-world demands that companies like Motorola have made with respect to their SEPs.

Ericsson is prepared to extend a WiFi SEP license to Acer at a royalty rate of 50 eurocents ($0.66) per unit, covering Ericsson's portfolio of roughly 50 WiFi-related patent families. On a per-patent basis (1 eurocent, or $0.013, per patent per unit) Acer would even be willing to do a deal -- but at this stage it's willing to pay a royalty at this level only with respect to the three patents-in-suit, while Ericsson insists that Acer take a portfolio license including, for the most part, patents over which it hasn't sued yet. Judge Andreas Voss ("Voß" in German) did not take a definitive position on this but reminded counsel for Ericsson of the antitrust implications of tying (a behavior that seeks to leverage a position of strength in one area in order to force someone to do a package deal involving other elements as well).

I don't want to take a position here on whether Acer or Ericsson is right (or at least closer to being right). The only reason for which I wanted to mention Ericsson's demand is that Motorola, with an IEEE 802.11 declared-essential portfolio of a similar size, still defends its demand of a 2.25% royalty on the price of the relevant end product. Last year Microsoft submitted a couple of charts to the United States District Court for the Western District of Washington indicating an estimated annual royalty amount of $4 billion, and a rate of $4.48 per Xbox. The per-unit royalty Ericsson demands from Acer, whose notebook computers generally sell at higher prices than gaming consoles, is much closer to the FRAND royalty proposed by Microsoft in its post-trial brief ($0.03-$0.065) than to Motorola's position. What Ericsson demands is one thing, and what it ultimately gets is another. Acer apparently considers Ericsson's demand unacceptable, which is why litigation continues, for the time being at least. So a reasonably sophisticated player in this market doesn't even want to take a license at a $0.65 per-unit royalty rate for a 50-patent WiFi portfolio, but Google's Motorola Mobility claims that a hugely greater amount is "reasonable RAND".

The terms of FRAND license deals and offers are very difficult to find out about. Whenever real-world license agreements show up on court dockets, their financial terms are typically redacted out. When license agreements are discussed in court, the general public must usually leave the room. Ericsson and Acer's positions aren't the equivalent of a license agreement, but Ericsson's demand certainly indicates at which rate the Swedish telecommunications equipment giant would do a deal any day of the week, so it's a useful data point.

SEP owners will always argue about whether their patents are more valuable than other patents declared essential to the same standard. But it's hard to imagine that the average Motorola WiFi SEP is many times more valuable than the average Ericsson WiFi SEP. At least I'm not aware of any reason for which this should be the case.

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If Google can cancel Acer's license, why should Apple have to grant one to Google?

After a post in which I explained that "if Apple patented rounded corners, Google patented linked documents", I'd now like to comment on the IP licensing and competition issues relating to Google's pressure on Acer that resulted in the cancelation of a Chinese product launch. Acer is a member of the Google-dominated "Open Handset Alliance" and was about to release a smartphone running an Android fork named Aliyun, which was created by Alibaba, a Chinese Google competitor, but Google essentially says: "you're with us or you're against us". You can be a member of the OHA and an official licensee of Android, or you want to distribute forks (derivative programs), in which case we'll throw you out of the OHA and cancel your official Android license. Google got its way.

Alibaba's key allegation, which news agencies reported and Google never denied, is that "Google, owner of the Android OS, threatened to cancel Acer's license to use Android for its other phones if the launch [of the Aliyun-based phone] went ahead".

Android's non-openness is old news, and nothing I could say would counterbalance the deafening silence and open double standards of various "free software" and "open source" luminaries and entities. The Skyhook litigation and the Korean antitrust investigation, as well as some of the material presented at the recent Oracle v. Google trial, have brought to light some of Google's bullying tactics. And I previously reported on Google's representation to a court that the Galaxy Nexus source code is closed and proprietary as well as on HTC's representation to the ITC that it doesn't have the source code Google's closed-source apps.

What I want to focus on here is what Google's behavior and its attempts to justify it reveal about Google's attitude toward its own intellectual property, and what this means in turn for Apple, which is developing all over the world an astounding record of court decisions proving theft of its intellectual property by Google and its partners. Looking at what both companies are doing, Apple's enforcement of intellectual property rights against Android is far more legitimate than Google's exclusionary strategy, as I'll explain.

So let's look at what Google is doing, then recapture what Apple is doing, and then compare the two patterns of behavior.

Whatever Alibaba's Aliyun does, there is no indidication of Android trademark infringement

Many of the people who have commented on this conflate the issues. There are different reasons for which Google doesn't like Aliyun, and for each one of them there's a different answer as to what the legitimate response (including pre-emptive measures) would be.

The very latest and most serious allegation is "piracy" of closed-source Google apps as well as third-party apps from developers who purportedly never consented to the distribution of their apps on the Aliyun app store. I can't verify this and Alibaba is innocent until proven guilty, but let's assume here, for the sake of the argument, that it is true and that Google had hard evidence in its hands. In that case, Google would have been in its right to take the appropriate measures under civil or even criminal law against Aliyun for the hypothetical infringement and against Acer to prevent its impending infringement through distribution of unlawfully-acquired software, and third-party app developers would owe it a big "thank you" for also defending their rights. I would furthermore agree that a company (in this case, Acer) may lose its license to some software (in this case, Google's proprietary apps) if it infringes it through the sale of unlicensed products, just like a shop may refuse to do business with a customer who pays for some goods but steals others. But the problem is that Google went beyond the appropriate measures to stop or prevent infringement.

It's clear from Google's (and Alibaba's) statements that Google did not merely demand the removal of copyright-infringing material. If Google's had only given a takedown notice, the launch of that Aliyun-based smartphone would have been delayed, but not canceled altogether.

Another act of piracy would have been any unlicensed use of the Android trademark. But by merely saying that it wants Aliyun to become "the Android of China", Alibaba did not infringe the Android trademark. It's a legitimate reference by one competitor to another. There isn't even a scintilla of doubt: Acer and Alibaba were not going to name their product "Android". It has a distinctive name: "Aliyun".

Now we've addressed the entirety of the intellectual property rights (copyright license to closed-source Google apps and trademark license to Android) that Google threatened to stop licensing to Acer if it had gone ahead with the launch of its Aliyun-based product. Everything else that Google licenses to Acer is formally available under open source licenses. It's the closed-source software and the trademark that you don't get if you download "stock Android" from the Internet. And we've now seen that one category of rights -- trademarks -- wasn't going to be infringed, and if there had really been a threat of an infringement of copyrights, it could have been addressed very effectively without killing the entire product, just like Google doesn't have to take down all of YouTube just because of the illegal content that gets uploaded and accessed there literally every second.

That leaves only one kind of argument, and it's the one that Google's Andy Rubin has primarily stressed in his reactions on Google+: compatibility (or, conversely, fragmentation).

Google's promotion of compatibility and its fight against fragmentation obviously don't apply to Oracle's Java. It will be up to the United States Court of Appeals for the Federal Circuit to review the finding of non-copyrightability of Oracle's Java APIs and other aspects of that case. But even if Google uses double standards in the fragmentation context, fighting fragmentation is, per se, a laudable goal. As an Android user, I consider it an important issue, but only within reason. For example, I have some special Samsung apps that wouldn't run on an HTC or Motorola phone, and I still think it's good that they are available.

The worst form of fragmentation is not at issue here. Customers were not going to be sold incompatible devices that would have been labeled as Android devices. All that would have happened is that those Acer customers who buy an Android device get apps that don't run on the devices of other Acer customers who buy an Aliyun device, and vice versa, while some apps would have run on either kind of device.

Let's face it: this is the most permissible kind of fragmentation. Nobody forced Google to release large parts of Android under an open source license. But forks are part of the open source way of life. If Google had taken Oracle's Java material that is available under the GPL (a viral, or "copyleft", license) and then released it under that license, it could also have chosen to be incompatible. It could not have used the Java trademark, but it would simply have chosen one of the two options Oracle (as Sun previously did) offers everyone: be compatible and take a commercial license, or be open source and comply with the GPL. In Android's case, the GPL may very well apply to more parts than Google admits, but Google's own code is largely available on a non-copyleft basis, allowing companies like Alibaba to take it and build their own derivative versions without having to share their code.

Applying the logic I described above, a perfectly legitimate way of preventing Alibaba's kind of fragmentation would have been for Google to develop Android as a closed-source operating system. But it can't have its cake and eat it. Alibaba does what open source rules, which neither Alibaba nor any third party imposed on Google, allow.

That's why Google does not have any leverage against Alibaba itself (apart from the alleged piracy issue I addressed further above). It also can't prevent Amazon from using Android's open source code in the Kindle Fire, in the form of a fork. If Google could, it would already have sued.

Lacking legal leverage against Alibaba, Google chose to exert pressure on Acer. The only objective difference between Amazon and Acer is that Amazon doesn't make any officially-licensed Android devices -- those with the little green robot logo. It only makes a product line running on a fork. Acer, however, is a member of the "Open" Handset Alliance and does devices with the little green robot logo. Google, however, gave it Hobson's Choice: my way or the highway. And that is not legitimate. It raises serious antitrust issues, also in light of Google's promise to the antitrust division of China's Ministry of Commerce (MOFCOM), as a precondition for clearance of its acquisition of Motorola Mobility, to keep Android an open source platform (see the first of the three remedies listed toward the end of this article on the website of a major international law firm).

Acer also builds Windows products. Google cannot claim (and fortunately doesn't claim at this stage) that customers who buy an Acer Windows device may get confused about whether they bought Android, given that the same hardware manufacturer sells devices of either kind.

Google's behavior is exclusionary and grossly anticompetitive. It's a typical case of tying (that's the antitrust term) an unreasonable condition to the availability of a license that Acer needs for commercial reasons. While Acer accepted the OHA's terms on a formally voluntary basis, it didn't have the chance at the time to negotiate a better deal. The terms, however, are designed to protect Google's strategic interests (by the way, here's a Marketing Land article on Google's self-interest in this context).

Google knows that a company like Acer can't risk losing its Android license because of the material adverse effect on its marketing efforts. It's hard enough for anyone in the Android ecosystem to compete with Samsung (which is simply a great company and also the most flexible one of all large device makers). Acer is no Samsung. If Samsung decided to sell Android forks, I'm not sure Google would even dare to threaten with canceling a license. Acer is not even an Amazon that has the power to sell Android devices without Google's closed-source apps, most notably the Google Play app store. For Acer, the only short-term opportunity to have a viable Android business is to do Google's bidding.

Alibaba has a couple of little-known hardware partners, but the clout of those partners limits its market potential. The deal with Acer would have been its potential breakthrough, just like deals with Motorola and Samsung (which did not have the Android-related market share at the time that it has today) would have been the breakthrough for Skyhook.

It all comes down to this: Google doesn't want to compete with someone like Alibaba (or Skyhook) on the merits. That's what this is all about. Piracy of copyrighted software is a matter of a takedown notice, trademark violations weren't even going to occur here, and forks are an essential element of open source software development, so you have to live with fragmentation resulting from forks if you publish your stuff on open source terms.

Andy Rubin says that "if you don't want to be compatible, then don't expect help from OHA members that are all working to support and build a unified Android ecosystem". Alibaba didn't expect any help from OHA. It merely wanted to exercise its rights under the open source licenses under which Google elected to publish Android, and its right to compete. Nor did Acer expect any help from OHA as far as its Aliyun-based device is concerned. It just wanted to hedge its bets and meet the needs of as many consumers as possible.

In its tireless efforts to avoid competition on the merits, Google leverages both its intellectual property rights and the related market power. What it does here against Acer and Alibaba is no more legitimate than if it forced Acer to quit selling Windows devices.

If Google can cancel a license, Apple can withhold one

Google and some of its partners claim that Apple doesn't want to compete on the merits and leverages its patents and other intellectual property rights to limit consumer choice. Let's look at that allegation against the background of Google's own conduct.

Just like Google doesn't want Acer to sell devices running platforms that compete with Android (within their rights under open source rules), Apple doesn't want to compete with Android-based devices that make use of some of its ideas. But at least so far, Apple's IP enforcement doesn't raise any antitrust issues. They don't sue over standard-essential patents, for example. All of the Apple patents that have been enforced so far can be worked around.

There are people who criticize Apple for enforcing patents on "little things", as Apple co-founder Steve Wozniak ("Woz") just said. One way to look at it is that if those are just little things, then Samsung and others can and will work around them anyway. And the multitouch-related inventions Apple came up with are, even if viewed in the light most unfavorable to Apple, yet more innovative than the small (but relevant) pieces of proprietary software that Google threatened to withhold from Acer: the Google Mail, Talk and Maps clients, and especially the Google Play app store client, which is technologically so trivial that Acer could get the same thing reprogrammed by someone else within a couple of weeks, but which gives Google a lot of market power since customers want apps and Acer, unlike Amazon, cannot offer a critical mass of apps if it doesn't get a license from Google.

In other words, Google uses its intellectual property in technologically very unimpressive little apps in order to prevent others from competing legitimately with Android. None of the Apple patents I saw is a patent that I would have granted personally (since I'm a critic of software patents), but none of them is even nearly as trivial as little smartphone apps are.

Acer wasn't going to defect from the OHA, but it wanted to further hedge its bets. Google, too, could have chosen to continue its partnership with Apple instead of becoming a patent-infringing competitor. Eric Schmidt was on Apple's board. Various of Google's online services had privileged positions on Apple's platform. If Google had never done Android, it's possible that Google+ would now be the primary social network on iPhones and iPads.

Google just wasn't comfortable with a world in which it thought that Apple and Microsoft would sort of own the mobile platforms market. Google's fear of Microsoft is well-documented in some of the Google-internal and Google-to-Sun communications that were shown at the Oracle v. Google trial. Microsoft has Bing. Google was afraid that at some point Apple was going to be the only platform maker without a search engine of its own, and Google didn't want to depend on Apple as a kind of gatekeeper. After all, it couldn't know whether Apple would at some point have decided to acquire some search technology and build its own engine. Also, Google is not just about search but also about mail, and Apple had MobileMe then and has the iCloud now. So Google implemented Apple's ideas in its own platform (which would otherwise have been more BlackBerry-like) and decided to compete. In 2010, Apple decided that its competition must steer clear of infringement, and sued HTC.

Apple never promised to license its platform, or any of its patented elements, to third parties. Nor did it ever suggest that it would share its development with the world on open-source terms. Apple is what it is, but it's not hypocritical.

Google doesn't want to compete with Aliyun even if it's 100% infringement-free. Why should Apple have to compete with an Android that infringes on numerous of its patents? There's no reason why Apple shouldn't continue to defend its rights, or why it would have to grant a license to Google or its partners unless it really believes that a deal makes sense to do.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

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