Showing posts with label Huawei. Show all posts
Showing posts with label Huawei. Show all posts

Monday, March 10, 2014

Unwired Planet sues Samsung, Google, Huawei, HTC over six former Ericsson wireless patents

Unwired Planet, a patent licensing firm that has acquired more than 2,600 patent assets, today announced the filing of parallel patent infringement lawsuits in London and Dusseldorf involving six former Ericsson wireless patents. Samsung, Google, and Huawei have to defend themselves in the UK and in Germany, and HTC only in Germany.

In January, Samsung signed a new patent license agreement with Ericsson, but it appears that patents previously divested by Ericsson were not included because Ericsson presumably could, at that point, not have done anything to prevent Unwired Planet from asserting them against a third party. Transactions such as Ericsson's sale of patents to Unwired Planet, which in turn asserts them against other companies, are sometimes referred to as "privateering". Such agreements frequently come with deal terms under which the NPE and the former patent holders share the royalty income. Buy-back provisions are also common.

Today's UK and German filings by Unwired Planet were made by EIP's Benjamin Grzimek, a patent litigator based in Dusseldorf. Unwired Planet's patent attorney in the German cases is David Molnia, who is also licensed as a U.S. patent agent and counts IPCom, another NPE holding wireless patents that once belonged to a device maker that has meanwhile exited the handset market (Bosch), among his clients.

The press release states that the two venues, London and Dusseldorf, where chosen because they "are among the fastest and most efficient ways to protect intellectual property rights" and "offer strong remedies if a license cannot be reached on FRAND terms, including the potential for injunctive relief". This statement is very interesting when considering that three of the defendants (Samsung, Google, Huawei) are among the members of an industry coalition urging European policy-makers to ensure that Europe's future Unified Patent Court won't have rules of procedure that make it an exceedingly attractive venue for NPEs because of easy access to injunctive relief, coupled with German-style bifurcation (i.e., no full invalidity defense in an infringement proceeding because infringement and validity are determined separately). I guess these companies and their allies in the push for balanced rules, such as Apple, Microsoft and some major European mobile network operators, will point the European Commission and the governments of the EU member states to Unwired Planet's European lawsuits as yet another example of NPE litigation in Europe.

The EU's Internal Market Commissioner, Michel Barnier, did not appear to be impressed by that alliance's first open letter on the subject, but in response to the second one he wrote the following on Twitter: "[I]ndustry letter Unified #Patent Court: We share goal, balanced system closing gap that give way to #trolls. Confident we'll achieve that"

I'm not sure that Mr. Barnier is truly behind the cause of a balanced system, but I'd be happy to see some progress in the months ahead. The European Commission's Directorate-General for the Internal Market is, among other things, responsible for intellectual property policy, and it regrettably has a long-standing tradition of favoring the interests of the patent system (more patents, stronger enforcement) over those of the economy at large (higher-quality patents, balanced enforcement). But I'd be happy to be proven wrong and to see Mr. Barnier deliver on the tweet I just quoted...

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Tuesday, February 25, 2014

Growing industry coalition urges the EU (again) not to turn Europe into a patent trolls' paradise

While Apple and Samsung still haven't been able to settle their global patent dispute, they do agree that patent assertion entities (PAEs), or "patent trolls", cause serious "problems that continue to plague innovators". In September the world's two largest smartphone makers were already among an impressive group of signatories of an open letter to European policy-makers that warned against an increasing patent troll problem in Europe and, especially, the ways in which the problem could exacerbate as a result of shortcomings in the rules of procedure of the Unified Patent Court system that is at the preparatory stage.

Apple and Samsung's concerns were already shared back then by other major players such as (a non-exhaustive list in alphabetical order) adidas, Cisco, Deutsche Post DHL, Google, HP, and Microsoft. This morning the UPC Industry Coalition released another open letter addressing the issue, and notable new members include Broadcom, Dell, Huawei, and Vodafone. Here's the letter (this post continues below the document):

25 February 2014 - UPC Industry Coalition - Open Letter by Florian Mueller

Once again, these companies -- mostly but not exclusively tech giants -- stress their support of "an effective and balanced unified patent system", but they apparently think that more work still needs to be done on the rules of procedure in order for Europe to "achieve the stated purpose of the UPC to defend 'against unfounded claims and patents,' 'enhance legal certainty,' strike 'a fair balance between the interests of right holders and other parties,' and allow for 'proportionality and flexibility.'"

The signatories have read with concern "[r]ecent press reports suggesting that some PAEs welcome bifurcation within the UPC further show that a system with perceived loopholes has the potential to open the floodgates to a detrimental form of patent litigation", pointing to an IAM (Intellectual Asset Management magazine) article entitled "Why the US's most litigious NPE is a huge fan of the German patent system".

The two primary issues that have tech-producing and tech-using companies concerned are that without clarity in the procedural rules, the UPC might grant injunctions too readily, and especially do so over patents that shouldn't have been granted in the first place. The second problem, which exacerbates the first one dramatically, is also called "bifurcation": validity and infringement remedies are addressed on separate tracks, with validity often taking considerably longer and even a short window of opportunity to enforce an actually-invalid patent giving a patentee enough leverage to obtain a settlement (which then includes the withdrawal of the bogus patent, so it remains a threat to everyone else).

Programmers of multi-threaded software call this a "race condition": a system will work properly only if the worked performed by one thread (here, the invalidation proceedings) is indeed concluded before a certain critical stage of a second thread (here, the infringement proceedings that can result in a sales ban) is completed -- but the system will fail if, for whatever reason, the second thread gets ahead of the first one because, which is simply a flaw, there is nothing in the system that makes the second thread wait for the first if necessary.

I'd like to say something here about my personal experience in discussing patent policy matters with the European Commission years ago (and based on what I hear, things haven't really changed in this regard). There are some great people working for the Commission who perfectly understand the economic dimension of these legal issues and are committed to balance and reasonableness. But there are also some people who are very dogmatic about IP enforcement and, unlike most researchers, have not yet understood how serious certain problems caused by the excesses of the patent system (too many invalid patent, overly powerful enforcement) are -- or maybe they don't even want to understand because they have a strong interest in growing the patent (including patent litigation) industry, not so much the real economy. The ultimate, high-level decision makers will hopefully listen to those who have a strategic and economic perspective, not to the ones whose dogmatic approach is that if there's any problem about the patent system, the system itself will solve it anyway.

There are also some who deny that Europe faces a PAE problem and that things may get a whole lot worse. I will talk about this in more detail on another occasion. I'd just like to say that PAEs are definitely not a US-only phenomenon. Case in point, on Friday the Mannheim Regional Court will rule on three cases brought by patent licensing firm IPCom, two against Apple (including a case in which a "partial" damages claim of EUR 1.57 billion ($2.2 billion) has been brought) and one against HTC. I attended the combined trial in the two Apple cases and I believe the complaints will be rejected. The court was noticeably unconvinced of there being an infringement of the patent in its narrowed form, if properly construed, after a recent decision in an opposition proceeding before the EPO. IPCom is not seeking an injunction against Apple anyway. But if IPCom had done so, and if the case had not been stayed to await the outcome of the opposition proceeding, it could have won, due to the way patent litigation works in Germany, a sales ban against the iPhone and all 3G-capable iPads in Germany.

With the Unified Patent Court, unless sufficiently clear rules of procedure are put in place, such lawsuits could result in Europe-wide injunctions on a premature basis (i.e., before the validity of a patent-in-suit has truly been ascertained). This would make Europe a patent trolls' paradise, and the policy-makers who can rein in the extremists now should so so, lest they will be responsible for massive damage to the European economy that will also affect European consumers.

[Update] I just saw this post on Google's EU policy blog by Catherine Lacavera, Google's litigation director, on "Curbing patent trolling in Europe", and also wish to recommend strongly this Technet blog post by Microsoft's deputy general counsel and corporate vice president Horacio Gutierrez who says very clearly that "[m]ore work [is] needed to protect [the] European Union from patent trolls" . [/Update]

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Thursday, January 23, 2014

Bad news abounds for Google's patent lawsuits as Apple, SimpleAir and Vringo are winning

Things haven't been going too well for Google in the patent litigation arena recently. And there's potential for further bad news as an Intellectual Ventures v. Motorola Mobility trial started in Delaware on Tuesday and the Federal Circuit is likely to issue its ruling on the "Posner appeal" (which will most likely result in a remand requiring Motorola to defend itself against the "Steve Jobs patent" and other Apple patents) soon, given that the appellate hearing was held four months ago. And while not a verdict or ruling, it's also bad news for Google that Huawei settled with the Rockstar Consortium.

These are the three patent decisions that became known this week and favored different Google rivals:

At the moment Google appears to be on a losing streak in U.S. patent courts, and as I said further above, more bad news is probably coming in the near term. Google's patent infringement issues are definitely a key reason for its push for patent reform legislation, and I doubt that Congress will solve Google's problems anytime soon. There will either be a quick agreement between both chambers of Congress on a targeted and limited reform bill or things will take much longer.

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Huawei settles with Rockstar Consortium, will pay for Android's infringement of ex-Nortel patents

The Google-led group of Android device makers sued on Halloween 2013 over former Nortel patents fails to present a united front to the Rockstar Consortium, a patent holding firm jointly owned by Apple, BlackBerry, Ericsson, Microsoft and Sony (see this IAM article). The first one of the seven Android OEMs, China's Huawei, has already accepted to pay up. On Tuesday (January 21), Huawei, the Rockstar Consortium and the latter's MobileStar Technologies subsidiary filed a joint motion to dismiss with prejudice Rockstar's claims against Huawei (this post continues below the document):

14-01-21 Rockstar-Huawei Joint Motion to Dismiss by Florian Mueller

Rockstar's lawsuits are continuing against Google (over its search engine as well as Android)

While the motion to dismiss does not explicitly state that the parties have settled, it would be utterly unrealistic to believe that Rockstar would let Huawei use those patents without a royalty-bearing license. Whatever the basis of this settlement may be, a "freebie" it's certainly not.

This is already the second time over the last couple of months that Huawei has become the first defendant to settle litigation targeting multiple companies. Huawei also reached an agreement recently with standard-essential patent (SEP) troll InterDigital to resolve the dispute through arbitration of the royalty fee. It's possible that the settlement with Rockstar also involves arbitration of license fees, but the parties may already have agreed on financial terms.

The remaining defendants, besides Google, are Samsung, ZTE, LG, HTC, Pantech, and ASUSTeK. Google is trying to get those lawsuits transferred out of the Eastern District of Texas to the Northern District of California. The Huawei settlement is a problem for the remaining defendants because it suggests to the court and possibly one day to a jury (or multiple juries) that Rockstar's infringement allegations have merit. It increases the likelihood of other "defections" from the Google-led defensive alliance.

23rd announced or discoverable Android patent license deal

Huawei's settlement with the Rockstar Consortium

  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. July 9, 2012: Microsoft and Coby Electronics Sign Patent Agreement Covering Android and Chrome Based Devices ("Although the contents of the agreement have not been disclosed, the parties indicate that Microsoft will receive royalties from Coby under the agreement.")

  15. 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.")

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

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

  18. December 11, 2012: Microsoft and Hoeft & Wessel AG Sign Patent Agreement ("Agreement will cover Hoeft & Wessel devices running the Android platform.") (FOSS Patents coverage)
  19. February 21, 2013: Microsoft and Nikon Sign Android Patent Agreement ("Agreement covers certain Nikon cameras running the Android platform.") (FOSS Patents coverage)

  20. April 16 (U.S.)/17 (Asia/Europe), 2013: Microsoft and Foxconn Parent Hon Hai Sign Patent Agreement For Android and Chrome Devices ("Agreement provides broad coverage under Microsoft's patent portfolio to manufacturer of more than 40 percent of the world's consumer electronics.") (FOSS Patents coverage)

  21. April 23 (U.S.)/24 (Asia/Europe), 2013: With ZTE, Most Major Android Makers Choose Licensing ("Under the agreement, Microsoft grants ZTE a license to Microsoft’s worldwide patent portfolio for ZTE phones, tablets, computers and other devices running Android and Chrome OS")

  22. October 24, 2013: LG agrees to pay Vertical Computer Systems for another Android patent license

  23. January 21, 2014: Huawei settles with Rockstar Consortium, will pay for Android's infringement of ex-Nortel patents

There are probably numerous other Android patent license deals in place that just weren't announced.

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Friday, December 20, 2013

Standard-essential patent troll InterDigital keeps failing: ITC clears Nokia, Huawei, ZTE, soon LG

At close of business on Thursday, the United States International Trade Commission (USITC, or just ITC) handed down its final ruling on InterDigital's July 2011 complaint against Nokia, Huawei, and ZTE. The Commission, the six-member decision-making body at the top of the U.S. trade agency with quasijudicial powers, affirmed the bottom line -- a finding of no violation whatsoever by these three defendants -- of a June 2013 preliminary ruling by an Administrative Law Judge (ALJ).

Two aspects of the ITC's announcement make things even worse for the infamous standard-essential patent (SEP) troll:

  • To the extent that the Commission overruled the ALJ at all, it apparently adopted narrower claim constructions. InterDigital's official statement calls the ITC's claim constructions "extremely disappointing" and vows to appeal.

  • For a ruling with respect to a fourth defendant, Korea's LG Electronics, the ITC set a February 17, 2014 target date, suggesting that it's pretty much a no-brainer to dismiss InterDigital's claims against LG. InterDigital's assertions against LG (a fourth defendant the troll tried to add a little later) were referred to mediation in a decision reversed by the Federal Circuit, resulting in a remand. Recently there have been some filings in which the Office of Unfair Import Investigations (OUII, commonly referred to as the "ITC staff"), LG and InterDigital made proposals for the procedural implications of the remand. The fact that InterDigital's patents-in-suit have now been held by the ITC not to be standard-essential, LG is presumably in the clear as well. (Even if it wasn't, it could easily work around those patents-in-suit that weren't deemed invalid anyway.)

InterDigital is far from the only company suing over allegedly-essential patents that turn out to be invalid or, if valid, too narrow to be truly essential. The failure rate of SEP assertions by the likes of Samsung and Google's Motorola Mobility is also sky high, though InterDigital is particularly bad. Many SEP holders including InterDigital and the two aforementioned companies seek to benefit from overdeclaration: they declare their own patents essential during the standardization process but courts of law and other fora (such as the ITC) overwhelmingly reach other conclusions. Nevertheless those SEP holders demand royalties based on the assumption that pretty much all of their declared-essential patents are actually essential to practicing a standard.

The only way to prevent that overdeclaration gets rewarded is to fight SEP hold-up. Those who argue that SEP disputes should be referred to opaque arbitration proceedings (or else the SEP holder should be free to seek injunctions, including ITC import bans) are wrong because it's absolutely key that courts and other public fora construe the claims of allegedly-essential patents and make (in)validity determinations. If the parties to this ITC investigation (and possibly any other parties, but let's just focus on those now) had all agreed to separate arbitration proceedings, InterDigital could have tried in four separate cases (Nokia, Huawei, ZTE, LG) to argue that the related patents are valid and actually essential. In arbitration, no final, public and binding determination would have been made -- there's only an assessment, and the result of that assessment would and could have been used only in the arbitration proceeding in which it was performed.

InterDigital's hold-up strategy raises another issue, and I guess that's why it is (and in my view, absolutely should be) in antitrust trouble in China: while its U.S. patent assertions are weak, as yesterday's decision once again shows, its patent holdings are even weaker in the rest of the world. So InterDigital tries to leverage the threat of a U.S. import ban (which is much less of a threat since the Presidential veto in the Samsung-Apple case) in order to extract worldwide supra-FRAND royalties as Nokia and Huawei told the ITC earlier this year. If this is the reason (or one of the reasons) for which Chinese antitrust regulators are investigating InterDigital, then I totally agree with the Chinese. No antitrust enforcer should tolerate that a SEP holder distorts competitions in country C (here, China) by threatening to exclude a defendant (here, Huawei or ZTE) from a market U (here, the U.S.) unless the defendant accedes to the SEP holder's royalty demands on a global basis. I think the European Commission should also take action against InterDigital because it's trying to distort competition in Europe in the same way as it is doing with respect to China.

Earlier this week InterDigital claimed that its executives couldn't go to a meeting in China because antitrust regulators didn't guarantee that they wouldn't be arrested. I don't know what China's competition enforcers told InterDigital's local counsel, but I doubt that InterDigital benefits in any way from telling this story (true or untrue). There is an increasing number of people in all parts of the world, especially in the U.S., who actually would like patent trolls to be sent to jail (whether or not they say so explicitly). And while I personally feel that InterDigital should simply be fined (but at a substantial level that really hurts) for its extortionate practices, it's the case not only in China but also pretty much everywhere else that antitrust offenders can go to jail -- the question is just how bad their conduct must be, and in terms of how this harms competition and innovation, InterDigital's attempt to leverage its U.S. patents (should those ever give it much leverage) in order to impose excessive royalties in China or Europe is very bad.

Yesterday's ITC decision wasn't too surprising. In October I already highlighted the fact that the ITC didn't want to receive any public interest submissions on FRAND issues and concluded from it that the ITC, at that stage, didn't see a need to discuss FRAND here because of InterDigital's inability to prevail on liability. If InterDigital had won a liability finding in its favor, the ITC would have had to request a new round of submissions in light of the aforementioned Presidential veto in the Samsung case.

InterDigital can and will keep on suing (for example, it brought another ITC complaint against Nokia, Huawei, ZTE and Samsung earlier this year). The only other option it has is to lower its demands to levels reflective of the apparent weakness of its portfolio. Nokia's wireless devices will soon belong to Microsoft, which has already shown in its dispute with Google's Motorola Mobility that it doesn't bow to SEP-based extortion. Huawei and ZTE are pretty tough in this regard as well, and while InterDigital fails to win anything in the U.S., its Chinese antitrust problem may get worse. LG is a pretty aggressive SEP monetizer, but it has much stronger patents than InterDigital and won't overpay either. InterDigital is asserting some of the same patents that have just failed against Samsung in that newer ITC case I just mentioned. Samsung won't be frightened.

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Wednesday, November 6, 2013

Dell, Ford, Google and HP file submissions to up the ante for patent trolls at the ITC

Google, HP, Ford and Dell have filed statements (which are not themselves publicly accessible, but which are referenced by a public filing by Nokia, Huawei and ZTE) in connection with an ITC investigation of a complaint by non-practicing entity InterDigital.

In parallel to a political debate and legislative process on U.S. patent reform, some companies are also trying to achieve fundamental change through amicus curiae briefs. As a general rule, you really need to change the law for major change. On key issues, limited progress -- moving the goalposts just a little bit in your preferred direction -- is all you can realistically hope to achieve if you raise a policy argument with a court.

One of the topics in the patent reform debate is the ITC's immense popularity with patent trolls. In the headline of a Wall Street Journal op-ed, a former ITC commissioner even referred to the U.S. trade agency as the "International Trolling Commission". Without a doubt, the ITC is under pressure and may see its jurisdiction over patent infringement cases restricted.

There are three ways in which lawmakers or the ITC itself could make it harder, or even impossible, for patent trolls to obtain ITC exclusion orders (import bans). Some argue that an eBay v. MercExchange type of equitable standard should be imported into the ITC's governing law. I don't consider this a promising approach because the ITC has only one remedy, which is a form of injunctive relief, but eBay is all about deciding whether legal remedies (monetary compensation) are sufficient or an injunction is warranted. Also, I believe that ITC exclusion orders are a special kind of remedy. The second approach would be centered around public interest considerations. I can see how this works for certain issues, such as FRAND-pledged standard-essential patents (SEPs), but doubt that it's an answer to the problem of rampant, increasingly industrialized patent trolling. The third approach is the ITC's domestic industry requirement (DIR): you don't have access to an exclusion order without proving that a domestic industry exists or is in the process of being created in the U.S. with respect to the asserted patent(s). And that's the one I'm going to focus on for the remainder of this post.

Just like Congress liberalized the DIR in 1988 by enabling complainants to satisfy it through the proof of licensing activities (as opposed to the manufacturing of products implementing the patents in question), it could again narrow it. It's like "Congress giveth, Congress taketh away". But at this point there doesn't seem to be momentum behind legislative change in that regard (for as much as I would prefer a stricter DIR over an attempt to make eBay work for the ITC). So some of the companies who are generally critical of the ITC, and particularly of the many ITC investigations instituted at the request of patent trolls, hope that ITC rulings and, especially, appellate opinions can result in a more exacting DIR. Unfortunately for them, this is a steep challenge because Section 337, the statute governing the ITC's unfair import investigations, defines the DIR very inclusively.

In January 2013, Dennis Crouch wrote on his PatentlyO blog that "NPEs [Non-Practicing Entities] Solidify Enforcement Jurisdiction at USITC". That post discussed the Federal Circuit's order denying a petition by Nokia for a rehearing of a decision relating to InterDigital's first ITC complaint against Nokia, holding that InterDigital satisfied the DIR. The following passage from the Federal Circuit's opinion supports PatentlyO's assessment:

"Under the clear intent of Congress and the most natural reading of the 1988 amendment, section 337 makes relief available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing. It is not necessary that the party manufacture the product that is protected by the patent, and it is not necessary that any other domestic party manufacture the protected article. As long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337."

Let's take a quick look at the relevant part of the statute:

(2) Subparagraphs [regarding import bans against infringing products] apply only if an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask work, or design concerned, exists or is in the process of being established.

(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned --

(A) significant investment in plant and equipment;

(B) significant employment of labor or capital; or

(C) substantial investment in its exploitation, including engineering, research and development, or licensing.

I'll further enhance legibility now by replacing "patent, copyright, trademark, mask work, or design" with "IPR" (for "intellectual property right"):

(2) Subparagraphs [regarding import bans against infringing products] apply only if an industry in the United States, relating to the articles protected by the [IPR] concerned, exists or is in the process of being established.

(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the [IPR] concerned --

(A) significant investment in plant and equipment;

(B) significant employment of labor or capital; or

(C) substantial investment in its exploitation, including engineering, research and development, or licensing.

Item (C) is the one that patent trolls invoke -- in particular, the last item ("licensing"). For example, litigation expenses can constitute a substantial investment in licensing. Without litigation it's probably hard to satisfy the DIR on a licensing basis.

The structure of the statute has a major flaw. It lumps together all the criteria for satisfying the DIR through a product business with those that apply to a licensing business. It would have been better to have a clear set of criteria for product-based DIR arguments, and another set for licensing-based DIR theories. But the statute is what it is, and various companies are now arguing that even a non-practicing entity like InterDigital, which relies on licensing, must show "articles protected by the [asserted IPR(s)]". In the case of an NPE, such articles would be products made by licensees.

For product-based business, the DIR has an economic prong (investment, employment) and a technical prong (a showing that the products the investment and/or employment relate to actually implement an asserted patent). The statutory basis for the technical prong is the term "articles protected by the [IPR] concerned". Does this even make sense for licensing firms? Or should there be no technical prong at all in their case? That's the question the ITC recently asked parties and third-party stakeholders in connection with its ongoing review (which does not, at least not yet, involve FRAND issues) of a preliminary ruling clearing Nokia, Huawei and ZTE of infringement of various InterDigital patents. This is the Commission's request for input in its September 4, 2013 review notice:

"Please discuss, in light of the statutory language, legislative history, the Commission's prior decisions, and relevant court decisions, including InterDigital Commc'ns, LLC v. Int'l Trade Comm'n, 690 F.3d 1318 (Fed. Cir. 2012), and 707 F.3d 1295 (Fed. Cir. 2013), whether establishing a domestic industry based on licensing under 19 U.S.C. § 1337 (a)(3)(C) requires proof of 'articles protected by the patent' (i.e., a technical prong). If so, please identify and describe the evidence in the record that establishes articles protected by the asserted patents."

This question about whether there is any technical prong of the DIR for licensing-based businesses was interesting enough all by itself. But those advocating a strict, NPE-unfriendly DIR saw another invitation to make submissions to the ITC in last month's Federal Circuit opinion on Microsoft's appeal of certain unfavorable parts of the ITC ruling on its complaint against Motorola. On page 11 of that opinion, there's the following passage that stresses the need to show articles protected by an asserted IPR (and that these must be the ones that a domestic industry is established for):

There is no question about the substantiality of Microsoft's investment in its operating system or about the importance of that operating system to mobile phones on which it runs. But that is not enough under the statute. Section 337, though not requiring that an article protected by the patent be produced in the United States, unmistakably requires that the domestic company's substantial investments relate to actual 'articles protected by the patent.' 19 U.S.C. §§ 1337(a)(2), (3). A company seeking section 337 protection must therefore provide evidence that its substantial domestic investment—e.g.,in research and development—relates to an actual article that practices the patent, regardless of whether or not that article is manufactured domestically or abroad. InterDigital Commc'ns v. Int'l Trade Comm'n, 707 F.3d 1295, 1299, 1304 (Fed. Cir. 2013).

So there's the above passage, building on and citing to the earlier decision in the InterDigital case, and it emphasizes the reuqirement to show articles protected by an asserted patent. The respondents in the InterDigital investigation that is at the review stage -- Nokia, Huawei, and ZTE -- have tried to capitalize on this in their reply briefs. But I don't agree with them (not because I don't like what they want to achieve, but because I don't think they provide a compelling logic) that the Microsoft decision clarifies/modifies the InterDigital opinion to the effect that a licensing firm needs to show actual products. In the InterDigital opinion, the Federal Circuit actually declines to go into much detail on decisions relating to product-based DIR cases. I'm sure the reference in Microsoft to InterDigital is only about the part that clarified once again a domestic industry article doesn't have to be manufactured domestically but can also be imported.

Still, some companies now hope to up the ante for patent trolls by requiring them to show DIR products (and, even though InterDigital appears to suggest the opposite, those would obviously have to be other products than the accused devices). Nokia (which is in the future going to be more of a patent licensing firm than a product business), Huawei and ZTE try to defeat InterDigital's ITC complaint, in the event any of the preliminary findings on (non-)liability is reversed, just on the basis of the DIR.

In a reply brief (the public redacted version of which just became available this week) they also point to positions taken by third-party stakeholders that are allegedly consistent with their own opening brief on domestic industry:

"Respondents [Nokia, Huawei and ZTE] were also served with filings from non-parties Hewlett Packard, Dell, Ford and Google that address the domestic industry issue identified in the September 4 Notice. These submissions largely are consistent with the positions taken by Respondents in their initial brief."

Those submissions have actually not appeared on the ITC document system yet.

Now that briefing on the Commission's DIR-related review question is complete, it's clear that there are basically three positions: InterDigital argues that there is no technical prong and it also wants to have an extremely low hurdle as far as the economic prong is concerned. Respondents and third-party stakeholders opposing patent trolls' access to ITC exclusion orders want there to be a technical prong, which would not make it impossible for NPEs to win ITC cases, but it would be too late for InterDigital in this case and it might discourage some other NPEs from bringing ITC complaints. The Office of Unfair Import Investigations (commonly referred to as the "ITC staff"), which is participating in this investigation with respect to only two of the patents-in-suit and overall FRAND issues, has stated a position that is closer to InterDigital's -- no technical prong -- but still comes down to a more exacting standard: the ITC staff would like to see proof that a substantial investment in licensing relates to the asserted patents. The ITC staff says that InterDigital failed to provide such proof. Presumably InterDigital just argued based on licensing activities relating to its overall portfolio. The ITC staff wants a more granular showing of substantial investments relating to particular patents out of a large portfolio. It's not clear to me how this would work in practice.

My guess is that if the Commission, the six-member decision-making body at the top of the ITC, reaches the domestic industry question at all instead of just throwing out InterDigital's complaint for failure to prove infringements of valid patents, it will rule more or less consistently with InterDigital's position. Maybe it will agree with the staff that the economic prong, which would be the only relevant prong for NPEs, must be satisfied on a patent-by-patent basis. But I doubt that it will agree with the likes of Google. Companies like Google will, however, continue to lobby Congress for a reform of overall patent law and also the statute governing the ITC.

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Friday, November 1, 2013

Failed $4.4 billion bid for Nortel patents comes back to haunt Google and friends on Halloween

Almost two and a half years ago, Google lost the Nortel patents auction to a consortium of six industry leaders (Apple, BlackBerry, EMC, Ericsson, Microsoft, Sony) who just wanted to clear the market before anyone would abuse Nortel's patents, particularly its 4G/LTE patents, the way Google's Motorola Mobility still tries to abuse its standard-essential patents. The price for preventing abuse was $4.5 billion, several times what analysts expected before the auction. Google had won a "stalking-horse" bid, which was not the real game, with a $900 million bid. It famously bid pi billion dollars and other multiples of mathematical constants, showing a strange sense of humor with shareholders' money. Its highest bid, as is now documented in a publicly-accessible court filing, was $4.4 billion -- then it dropped out, Rockstar won, and Google later, in panic mode, wasted $12.5 billion on the acquisition of Motorola Mobility, over whose patents Google currently has precisely zero (you know, the number that looks like the letter O) enforceable injunctions in place against its rivals on a worldwide basis and whose video codec and WiFi patents entitle it to less than $2 million a year in royalties from Microsoft.

Fast forward to Halloween 2013. Apparently the Rockstar Consortium's efforts to subsequently negotiate patent license deals with Google and the wider Android ecosystem have been unsuccessful because at least eight Rockstar lawsuits were filed in the Eastern District of Texas: separate actions against Google, Samsung, Huawei, ZTE, LG, HTC, Pantech, and ASUSTeK. I don't know what happened in those negotiations, but maybe Google was a sore loser and tried to defy logic. The simple logic here is, in my view, that if you bid $4.4 billion for a patent portfolio (just not enough to win the auction), you can hardly dispute later that the patent portfolio in question is a treasure trove. And if you want to license a treasure trove, it costs you more than licensing something of little value such as some Motorola patents covering pre-World-War-II-style interlaced video and minor WiFi features. You can't just bid $4.4 billion -- thereby validating the portfolio in the commercially most meaningful way -- and later refuse to pay a significant amount for a license. This is, figuratively speaking, a case of venire contra factum proprium. No jury, whether in East Texas or elsewhere, is going to buy that.

No one can assert thousands of patents at the same time. Rockstar has now made its initial picks, and it presumably thought very carefully about which patents would likely give it leverage in litigation. It has apparently taken its time and tried hard to resolve the issue through licensing rather than litigation. But litigation turned out inevitable, and it surely prepared for that scenario, too. That's the nature of patent licensing.

There are two categories of lawsuits. A lawsuit against Google's core business -- its search engine -- involves different patents (all from the same family of associative search engine patents, which goes back to the time before Google was even founded!) than the seven lawsuits against certain Google hardware partners. Google has been proud of its own search engine patents, including the patent without which Google might not even exist today (the PageRank patent) or at least not be a monopolist. It now has to respect the work Nortel did in this area and which Google built on. It will have to pay up because Congress is not going to bail it out. The Rockstar Consortium is a co-plaintiff in all eight cases (Google and the OEM cases). Against Google, it is joined by its subsidiary NetStar Technologies, and by another subsidiary, MobileStar Technologies, against the device makers.

Defendants will presumably try to move these cases out of the Eastern District of Texas to other districts. It would be more efficient to keep at least the device maker cases in Texas since it's all about the same patents, but I can understand that defendants have different preferences. In Rockstar's case, resources are not going to be an issue. If necessary, it can pursue these cases in eight different districts in parallel, or bring even more lawsuits if others don't get the message from the Halloween lawsuits and continue to refuse to pay up.

I'll now publish the complaint against Google, followed by a list of the patents asserted against Google, and then the Samsung lawsuit (the lawsuits against the other device makers appear to be consistent), also followed by a list of the patents-in-suit.

13-10-31 Rockstar Patent Complaint Against Google by Florian Mueller

Patents-in-suit against Google

13-10-31 Rockstar Patent Complaint Against Samsung by Florian Mueller

Patents-in-suit against Google's hardware partners (Samsung, Huawei, ZTE, LG, HTC, Pantech, ASUSTeK)

Rockstar and MobileStar are seeking a permanent injunction ove the above patents.

Some of these device makers also build Windows Phone products, but the infringement allegations are limited to "mobile communication devices having a version (or an adaption thereof) of Android operating system", showing once again that Google's intellectual property stategy for Android is a failure that exposes its ecosystem to liability issues. Some of the infringement allegations appear to be Android-specific, possibly resulting in interventions by Google in the device maker lawsuits and suggesting that no one will be able to build Android devices without a license from Rockstar/MobileStar.

22 royalty-bearing Android patent license deals have already been announced. It also appears that Nokia has reached, or is very close to reaching, a tipping point in its dispute with HTC, which will result in another such deal pretty soon -- and not just a Nokia-HTC deal but deals between Nokia and the rest of the Android ecosystem (it's also negotiating with Samsung). And RockStar will strike patent license deals with each and every Android device maker. One Android device maker, Sony, is a member of the consortium -- and patent licensing could increase Sony's competitiveness within the market for Android devices.

By the way, as Intellectual Asset Management (IAM) magazine points out on Twitter, "[a]ccording to the FTC definition, Rockstar should not be regarded as a patent assertion entity (PAE)". Google got more help from U.S. antitrust regulators than any other company in this industry, but there's a limit even to that, and it will now be left to its own devices to sort out this situation. It can sort it out with money. A rather substantial amount of money, I guess.

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Friday, October 18, 2013

ITC starts first FRAND-related public interest consultation since Presidential veto of iPhone ban

In early August, the Obama Administration vetoed an ITC exclusion order relating to older iPhones and iPads on public interest grounds and indicated that it expects the U.S. trade agency to carefully consider the public interest before ordering import bans over FRAND-pledged standard-essential patents (SEPs). But there are still various SEP cases pending before the ITC, and patent holders have already made different suggestions as to how the U.S. trade agency could justify SEP-based exclusion orders in a post-veto world.

Two SEP investigations have reached the stage of a Commission review (the Commission being the six-member decision-making body at the top of the ITC) since the Presidential veto. On September 4, the Commission decided to conduct a full review of a preliminary ruling clearing Nokia, Huawei and ZTE of violation of various InterDigital patents. But in its review notice it stated that it "is not interested in receiving written submissions that address the form of remedy and bonding, if any, or the public interest at this time". This means that if InterDigital obtains a reversal of any non-liability finding, a second round of submissions will have to be requested to address FRAND-related public interest issues.

The fact that the ITC does not request FRAND-related submissions right away on a "just in case" basis could mean that the probability of a liability finding in InterDigital's favor is not too high. But it could also be due to the fact that there are so many liability-related questions to be analyzed in that investigation that the trade agency would need more time anyway if any FRAND questions later became outcome-determinative.

With a view to ITC complaints by the likes of InterDigital I'd like to highlight an opinion piece recently published by the Wall Street Journal, authored by a former ITC commissioner who says the agency "has drifted from its original mission" and has become the "International Trolling Commission". The debate over the ITC's role is part of a wider patent reform discussion in the U.S., and the ITC's jurisdiction over complaints by patent troll as well as its jurisdiction over SEP cases will remain controversial until abolished.

Yesterday the ITC decided to conduct another full review of an investigation involving FRAND issues. That investigation of an LSI/Agere complaint against Funai and Realtek was of interest to a very few people in the world until a federal judge in the Northern District of California ordered a preliminary injunction barring complainants from enforcing an exclusion over over a SEP should they win one against Realtek.

In the LSI/Agere case, the Administrative Law Judge did not find (in a preliminary ruling) Realtek to infringe a SEP, but the ITC's review notice does raise FRAND-relate public interest questions right away. All of the Commission's public interest questions are about FRAND, with a particular focus on negotiations between the parties:

  1. Please discuss and cite any record evidence of the allegedly [F]RAND-encumbered nature of the declared standard essential '663, '958, and '867 patents. With regard to the '958 patent and the '867 patent, what specific contract rights and/or obligations exist between the patentee and the applicable standard-setting organization, i.e., the Institute of Electrical and Electronic Engineers, Inc. (IEEE)? With regard to the '663 patent, what specific contract rights and/or obligations exist between the patentee and the applicable standard-setting organization, i.e., the International Telecommunication Union (ITU)?

  2. Please summarize the history to date of negotiations between LSI and Funai and between LSI and Realtek concerning any potential license to the '663, the '958, and the '867 patents, either alone, in conjunction with each other and/or the '087 patent, and/or in conjunction with non-asserted patents. Please provide copies of, or cite to their location in the record evidence, all offers and communications related to the negotiations including any offer or counteroffer made by Funai and Realtek.

  3. Please summarize all licenses to the '663, the '958, and the '867 patents granted by LSI to any entity including evidence of the value of each patent if such patent was licensed as part of a patent portfolio. Please provide copies of, or cite to their location in the record evidence, all agreements wherein LSI grants any entity a license to these patents. Please also provide a comparison of the offers made to Funai and/or Realtek with offers made to these other entities.

  4. If applicable, please discuss the industry practice for licensing patents involving technologies similar to the technologies in the '663, the '958, and the '867 patents individually or as part of a patent portfolio.

  5. Please identify the forums in which you have sought and/or obtained a determination of a [F]RAND rate for the '663, the '958, and the '867 patents. LSI, Funai and Realtek are each requested to submit specific licensing terms for the '663, the '958, and the '867 patents that each believes are reasoanble and non-discriminatory.

  6. Please discuss and cite any record evidence of any party attempting to gain undue leverage, or constructively refusing to negotiate a license, with respect to the '663, the '958, and the '867 patents. Please specify how that evidence is relevant to whether section 337 remedies with respec to such patents would be detrimental to competitive conditions in the U.S. economy and other statutory public interest factor.

The fifth question is the most interesting one in this particular case because it relates to the proceedings in Judge Whyte's court in Northern California.

The ITC's questions are broad and general. All that can be said at this stage is that the ITC wants to look at these questions in detail, including reasonable royalty rates, an area in which it doesn't have much expertise (if any). I interpret this FRAND questionnaire as an attempt by the ITC to encourage SEP holders to pursue import bans despite the recent veto. Even though it's now going to be harder than before to win a SEP-based exclusion order from the ITC and to actually enforce it, the ITC portrays these FRAND issues as highly case-specific, which is a way of creating legal uncertainty that could result in settlements. And such uncertainty is, in and of itself, not in the public interest.

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Tuesday, August 13, 2013

Microsoft, Nokia, Huawei oppose InterDigital's push for ITC import ban on public interest grounds

Last week I reported and commented on public interest statements filed by Ericsson and the Innovation Alliance in the ITC investigation of InterDigital's June 2011 complaint against Nokia, Huawei, and ZTE. The Administrative Law Judge identified no violation, but he also rejected all FRAND defenses. Should the Commission (the six-member decision-making body at the top of the U.S. trade agency) overrule him on one or more standard-essential patents (SEPs), then the decision on whether to issue an exclusion order will depend on public interest considerations -- and in light of the Presidential veto of a SEP-based import ban won by Samsung, I can't see how InterDigital would get its way.

It's not 100% impossible that the ITC will at some point issue an exclusion order over FRAND-pledged SEPs. But I interpret the vagueness of the United States Trade Representative's veto letter as a clear sign that SEP-based import bans are acceptable only under very rare circumstances. InterDigital doesn't pursue Samsung's strategic objective (which is a cross-license involving non-SEPs), but that fact alone, though it is an important difference from an antitrust point of view, doesn't entitle it to an import ban either.

Three more public interest submissions -- made by Microsoft, Nokia and Huawei -- have become publicly available since my last post on this case, and I've uploaded them to Scribd. I can see that ZTE and InterDigital have also filed statements, but no public redacted versions of those submissions were available at the time of publication of this post.

Microsoft's statement stresses the importance of the Windows Phone platform as "the primary remaining competition for the Apple/Google 'duopoly' in the United States smartphone market". This claim is certainly supported by BlackBerry's decision to put its company up for sale, which was announced after Microsoft's submission to the ITC, which was made on August 7.

Microsoft's concern relating to SEP-based exclusion orders is well-known, but there's a five-page limit for such submissions, so Microsoft decided to focus on platform-specific considerations. At the end of its submission, Microsoft requests "that the Commission, should it find a violation of Section 337, take steps to allow further briefing and the development of a much fuller evidentiary record on the public interest implications of remedial orders". I believe the Commission could deny InterDigital's request for an import ban on SEP-specific grounds without even needing any further briefing. But I agree that at the very least there would have to be some further briefing on FRAND issues if an import ban would otherwise be ordered.

Nokia's filing starts with a reference to the Presidential veto in the Samsung-Apple case, in light of which "the Commission must decline, on public interest grounds, to issue an exclusion order" based upon patents declared essential to cellular standards (WCDMA and CDMA2000 in this case). I'm pleasantly surprised that Nokia takes such a clear "no exclusion order" position here, given that it supports Google's (Motorola's) appeal of the FRAND part of Judge Posner's ruling. In my observation Nokia's SEP-related actions have been far more reasonable than Motorola's, but its policy papers and public interest statements were closer to Google's position than that of, for example, Apple, Cisco and Microsoft.

Nokia mentions that it has asked the United States District Court for the District of Delaware to make a FRAND determination and says that "[t]he willingness to have a third party set a FRAND rate where parties cannot agree is tangible evidence that a licensee is willing, according to the US Federal Trade Commission".

Also, Nokia quotes Commissioner Pinkert's dissent from the majority ruling on Samsung's complaint against Apple.

The final part of Nokia's submission talks about Windows Phone, which it describes as "the only presently feasible alternative to iOS and Android". A footnote says that "[w]hen Nokia first announced its entry into the WP market in 2011 there were only 5,000 apps available for WP at that time; today, just 2 years later, there are 165,000 and counting".

Huawei's submission says that in the event of a reversal of the preliminary finding of no violation, "the Commission would be obligated [as a result of the veto letter in the Samsung-Apple case] to undertake further proceedings to develop a comprehensive record [particularly with a view to a DoJ/USPTO policy paper] and to permit the parties to set forth their views on how the principlesin the Policy Statement should be applied to that record". Huawei interprets the Samsung veto the way I do: there are only "narrow exceptions to the general rule against issuance of 337 injunctive remedies in aid of [SEPs]", which Huawei (again, just like me) believes InterDigital's complaint fails to meet.

Like Nokia, Huawei declares itself a willing licensee who has requested a FRAND determination, and refers to Commissioner Pinkert's dissent in the Samsung case, which "represents the efforts of one Commissioner to create [...] a framework" relating to FRAND/SEP-specific public interest factors.

In connection with the collective U.S. market share of the respondents in this investigation (which is relevant to the public interest from the perspective of consumer choice and healthy competition), Huawei also mentions Samsung, against which InterDigital brought an ITC complaint earlier this year (in that investigation, Nokia, Huawei and ZTE are Samsung's codefendants).

The debate continues, and it appears that InterDigital is desperately trying to achieve the impossible and win an import ban over FRAND-pledged SEPs.

[Update] Right after publication of this post I found the public version of InterDigital's statement. InterDigital argues that the circumstances are completely different here from the Samsung case and that exclusion orders must remain the norm. Also, InterDigital says that "one of the asserted patents (the '970) is not even arguably essential as to any standard practiced by the accused products, and therefore no FRAND considerations are applicable to the ‘970 patent in any event." (emphasis in original) [/Update]

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Thursday, August 8, 2013

Shocked by Presidential veto, Ericsson and other FRAND patent holders make impractical proposals

The Presidential veto of Samsung's standard-essential patent-based ITC import ban against older iPhones and iPads, it's going to be very difficult (though not 100% impossible) for holders of FRAND-pledged SEPs to win such exclusion orders. While I believe it would make sense for SEP holders to focus on federal lawsuits in which they can seek monetary compensation, some are going to keep on trying regardless. In particular, those who have an ITC investigation going at an advanced stage are probably going to pursue those cases before they eventually focus on litigation in district court.

The two most advanced ones of all pending ITC investigations involving FRAND-pledged SEPs are the investigation of InterDigital's mid-2011 complaint against Nokia, Huawei and ZTE (another complaint filed in early 2013 targeted these three companies plus Samsung) and that of LSI and Agere's complaint against Funai and Realtek. In both cases, initial determinations rejecting FRAND defenses but finding no SEP violation have come down (in the InterDigital case, all patents-in-suit are SEPs, but not a single one was found valid and infringed; in the LSI/Agere case, there is presently no finding of a SEP violation by Realtek, a company that won a preliminary injunction in district court barring the complainant from enforcing an exclusion order in the event one issues). The Commission could still make liability findings involving one or more SEPs-in-suit, so parties making submissions in the public interest at this stage have to address FRAND issues anyway, just in case this becomes relevant. This was also the situation in the Samsung-Apple case: an Administrative Law Judge had cleared Apple's products in a preliminary ruling. And as all know by now, FRAND issues did play a role in the end.

The first public interest statements in the InterDigital case have just come in. Such submissions have been requested in the LSI/Agere case.

The Innovation Alliance, a SEP holder lobby group that counts InterDigital among its members, proposes that the Commission issue an exclusion order on the basis that "the [Administrative Law Judge] has already found that the complainant negotiated in good faith and did not breach any obligations to grant licenses on FRAND terms". I don't see how this entitles InterDigital to what Samsung was ultimately denied. Granted, there's a key difference: InterDigital undoubtedly wants a cash-only license deal as the outcome, while Samsung makes prohibitive demands in pursuit of a cross-license involving Apple's non-SEPs. But InterDigital also engages in tying because it insists on a license deal of worldwide scope without any chance of proving, in the ITC investigation, infringement of its SEPs in more than one jurisdiction (the U.S.). That's why I believe an import ban in InterDigital's favor would ultimately also be vetoed.

The Innovation Alliance tries to portray Chinese companies (Huawei and ZTE) as infringers:

"The best way to continue encouraging investment in innovation and technology development is to protect valid intellectual property rights from infringement by others, particularly foreign-based manufacturers who operate in exporting countries that do not have an established culture of respect for intellectual property."

I don't like this insinuation at all. Most mobile devices are manufactured in China, thus subject to the ITC's jurisdiction regardless of where their developers are based. The Innovation Alliance doesn't explain why U.S. innovators can't be protected by district courts awarding monetary relief as far as SEPs are concerned. If one thinks it through, allowing SEP abuse would even result in the very opposite of protecting U.S. innovators. If the U.S. did this, other countries could do the same. And companies like Huawei and ZTE, which the Innovation Alliance means to criticize, own plenty of SEPs. They could use them everywhere (not only in China) to force (other) innovators to grant them a license to non-SEPs.

Ericsson is a major SEP holder embroiled in two-way litigation with Samsung (at the ITC and in federal court). In January I warned against the consumer harm that might result from exclusion orders granted in favor of one or both parties. These days, presumably influenced (if not triggered) by Saturday's Presidential veto, Ericsson and Samsung filed a stipulation relating to their FRAND commitments in their two ITC investigations. The filing isn't publicly accessible yet. Whatever they've agreed upon, the parties can't stipulate to waive the public interest. At least Ericsson and Samsung have agreed on something, but if two citizens of a civilized country signed a contract under which they want to duke it out in a duel somewhere in the desert, law enforcers still have reasons -- and a basis -- to intervene.

I've uploaded Ericsson's submission in the InterDigital investigation to Scribd. To me it looks like what someone would write in a state of despair, trying to somehow preserve access to ITC exclusion orders over FRAND-pledged SEPs despite the Presidential veto. It's the quality of Ericsson's proposals that appears desperate to me. While I agree with Ericsson that non-identical license terms offered to different would-be licensees can nevertheless be non-discriminatory (though I may apply a considerably higher standard to the justification required for such differences than whatever Ericsson has in mind), I don't see how Ericsson's primary suggestion would work. The Swedish company would like the ITC to "issue conditional exclusion orders subject to the refusal of the respondent to accept a license on FRAND terms adjudicated by the Commission".

The ITC is a trade agency, not a federal court or an arbitrator. I disagree with those who actually want to abolish all Section 337 investigations (the ones that can result in import bans of infringing products), but the ITC needs more focus, not less, and Ericsson now wants it to address questions of monetary relief, which it hasn't done so far. In the meantime, a body of case law exists in U.S. federal court with respect to patent damages, a large part of which is about the determination of reasonable royalties, and case law concerning FRAND rate determinations is evolving rapidly. Ericsson doesn't explain why the ITC needs to do the job of the federal courts.

Ericsson argues that SEP holders need access to exclusion orders to have leverage against unwilling licensees. But even if the ITC made a royalty determination (which it may never want to) for parties that can't agree on a deal, this would have to be appealable. An appeal is only an option if the appellant doesn't face the threat of exclusion from a major market. And an appeal takes time. Also, a FRAND determination takes time. In the Microsoft v. Motorola case in Seattle, a special rate-setting trial was held, and a decision came down roughly six months later. Ericsson's half-baked proposal doesn't explain how and when the ITC should make a FRAND determination. Ericsson wants quick leverage, so presumably it wants a FRAND determination to be part of a final Commission decision, but I doubt that the ITC would want to set FRAND rates unless liability is established. Rate-setting requires briefing, and the related issues must be discussed at a trial. A trial must be properly prepared. So an ITC investigation involving FRAND-pledged SEPs would (if liability is established) take years to resolve, and an appeal would take well over a year.

Ericsson also defends InterDigital's tying practice (requiring a worldwide license) and generally wants to enable SEP holders to force alleged infringers into portfolio licenses without having to establish infringement (at least on the basis of a representative sample of patents from a portfolio) and validity.

I doubt that any of this helps the ITC to shape its policies, rules and procedures in the post-veto situation.

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