Xiaomi announces new patent license agreements with IP Bridge, Orange, Siemens: another sign of Access Advance pool being sidestepped

An interesting announcement hit the news wires yesterday:

"Patent owners IP Bridge, Orange, Siemens and Xiaomi, a world-leading consumer electronics and smart manufacturing company, today announced an end to long lasting disputes through an innovative patent licensing transaction to enable efficient licensing of patent rights across multiple technologies from the companies to Xiaomi. Novus IP, a company owned by Mr. Paul Lin, the former "Head of IP Strategy" at Xiaomi, worked as a deal facilitator and helped Xiaomi and the three licensors successfully close this licensing transaction in a highly efficient manner."

This looks like a virtual and temporary pool: three licensors (IP Bridge, Orange, Siemens) concluded an agreement with one licensee (Xiaomi). It's an interesting new approach, and adds to Mr. Lin's reputation as a patent licensing dealmaker who gets things done. By the way, last month I reported on a webinar moderated by Mr. Lin.

In early November, information I obtained from German court sources indicated to me that Xiaomi might have decided to enter into bilateral license agreements with the Access Advance's licensors instead of taking an HEVC pool license. Also, Xiaomi remains licensed to some patents--especially Samsung's HEVC patents--by virtue of having taken an MPEG LA license before Samsung left. As the saying goes, the early bird catches the worm--and the worm in question (a given company's HEVC standard-essential patent portfolio) keeps growing after it's been caught, like the gift that keeps on giving. Some Access Advance licensors don't want to face that fact, which is why some (in my opinion meritless) litigation is pending in state court.

Of the three companies who yesterday announced their new license agreements with Xiaomi, one is a key HEVC Advance licensor: IP Bridge was suing Xiaomi in Germany over its implementation of HEVC. Not so anymore. Another HEVC Advance licensor has settled with Xiaomi on a bilateral basis.

What's happening here doesn't generally call into question the ability of patent pools to provide transactional efficiencies. I'm sure we'll continue to hear about Xiaomi taking patent pool licenses. The situation between Xiaomi and Access Advance is an outlier, but Xiaomi must have reasons for what it's doing.

Let's see what 2023 will bring in terms of next-generation codec (VVC etc.) patent pool announcements.

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To counter Apple's devious ATT money and power grab, the European Commission should allow Deutsche Telekom, Orange, Telefónica, and Vodafone to form their proposed ad network joint venture

Last week, Apple was fined for privacy violations in France, making it clearer than ever--if any more clarity had been needed--that App Tracking Transparency (ATT) is nothing but an abusive money and power grab by an aftermarket monopolist. The macroeconomic damage is huge, and entire product categories such as hypercasual games are on the verge of extinction as a result of Apple's actions and the impact on the Android ecosystem.

I'm no fan of cartels as I've made abundantly clear in the Licensing Negotiation Group (LNG) and Journalism Competition and Preservation Act (JCPA) contexts. However, it's a question that must be answered case by case, and on Friday the European Commission was notified of a proposed joint venture between four major European mobile carriers that I believe should be cleared because its procompetitive effects will benefit the EU economy and European consumers.

Deutsche Telekom, Orange, Telefónica, and Vodafone have told the European Commission's Directorate General for Competition (DG COMP) that they "plan to create a jointly controlled [with each party owning an equal share], full-function joint venture [...] via their respective subsidiaries [...] [which] will offer a privacy-led, digital identification solution to support the digital marketing and advertising activities of brands and publishers" (PDF). This is how it will work:

• User consent must be provided to a brand or publisher (opt-in),and can be revoked via "a user-friendly privacy portal".

• The new network then generates " secure, pseudonymized token derived from a hashed/encrypted pseudonymous internal identity linked to a user’s network subscription which will be provided by participating network operators." The network operators can do this without needing anything from Apple. They don't have to run their apps by Apple's arbitrary, self-serving, and inconsistent app review. They simply have this information by virtue of providing the expensive infrastructure without which Apple's gadgets would be as useless on the road as a piece of scrap metal. And with the token that the networks generate, targeted ads can be served, which would revive in-app advertising on iOS after Apple killed it.

• There are some ways in which the Evil Empire could theoretically strike back:

  1. It could threaten the network operators with not letting them resell iPhones and potentially even with disabling the use of those networks with iPhones. In the U.S. I believe Apple's market power would make that kind of foreclosure illegal. In Europe, Apple's market share is lower, but given high switching costs and low switching rates, the threat would hurt. A joint venture of multiple major network operators, however, would be in a structurally better position to discourage such blackmail in the first place--and if Apple engaged in such conduct anyway, its market power (because of customer lock-in) would be shown more clearly than if it acted like this against a single carrier.

  2. Apple could block apps (also including updates to existing apps, of course) that use the new advertising network. But that would raise antitrust issues for sure (as Apple wouldn't even have a privacy pretext)--and once the EU's Digital Markets Act (DMA) really requires Apple to allow alternative app stores, such stores could then distribute apps that would make use of the new network.

  3. In theory, Apple could also block communications with the new ad network, but that would be so crazy that I don't even want to discuss its implications. Suffice it to say it wouldn't be a good idea for Apple to do that.

The only thing I'd like the Commission to ensure is that other network operators will also have a chance to join that network on fair terms. Other than that, I'm all for this initiative. The EU should let those carriers join forces against abusive platform makers.

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Apple and other WiFi implementers pressuring IEEE not to abandon its 2015 patent policy--but serious impact of negative Letters of Assurance can't be denied

Early last week, largely the same Apple-led crowd that is behind the "Save Our Standards" campaign (whose deceptive lobbying I've recently called out) sent a letter to Sophia Muirhead, the General Counsel of the Institute of Electrical and Electronics Engineers (IEEE). I'm in possession of that six-page PDF, which is dated May 3 and entitled Industry and Public Interest Support for Maintaining 2015 IEEE-SA Bylaw Updates. It's a pressure group effort ahead of a (fairly confidential) meeting of the IEEE-SA's Standards Board; the letter was allegedly authored by outside counsel for Apple; and from what I heard, it's more or less unprecedented for industry players to lobby the IEEE in that fashion.

It looks like some folks are panicking, though a little over a year ago they had reason to celebrate: the Biden DOJ silently downgraded a letter that the Trump DOJ (specifically, then-Assistant Attorney General for the Antitrust Division, Makan Delrahim) had sent to IEEE, urging it to undo significant parts of its 2015 policy change favoring implementers. As I noted at the end of the post I just linked to, the wrangling over IEEE's standard-essential patent (SEP) policy was sure to continue. Mr. Delrahim is now a Latham & Watkins partner (oddly, a firm frequently used by Apple), so he's no longer in a position to push IEEE in the direction he outlined while in public office. But IEEE still has a problem on its hands that no one with an interest in a functioning standard-setting system can responsibly ignore or convincingly explain away.

We'd be having a totally different conversation now if the following sentence from the first paragraph of Apple et al.'s letter were true:

"The IEEE-SA’s Patent Policy is and remains the model for standard setting organization (SSO) IPR policies, particularly following the 2015 update to the patent policy."

The letter says "IEEE-SA distinguished itself positively" in 2015. Now, if SSOs like ETSI had gone in a similar direction, Apple et al. would be in a position to make that claim of IEEE's 2015 policy being and remaining "the model for [SSO] IPR policies." But the reality--certainly a sad one from the implementers' perspective--is that seven years on, IEEE is still an outlier among SSOs. That may simply be due to the fact that other SSOs are more consensus-driven than IEEE, where a majority can just brush aside objections no matter their merit.

Neither does the last sentence of the first paragraph withstand scrutiny once one looks at the broader picture:

"By almost any measure, standardization work at IEEE has thrived in the wake of these updates."

Via a footnote, that sentence refers to a 2018 IPlytics report (PDF) that says "contributions to IEEE standards and technical work within IEEE working groups have only increased since the updated patent policy was approved." But as standards grow more complex, the number of contributions are on the rise--and more than anything, that conclusion reflects a disconnect:

A number of major wireless SEP holders and innovators (including, but not necessarily limited to, Ericsson, GE, Huawei (notably, a large-scale WiFi implementer as well), InterDigital, LG, Nokia, Orange, Panasonic, and Qualcomm (in alphabetical order)) have declined to provide Letters of Assurance ("LOAs") that would force them to adhere to the IEEE's 2015 policy. Some if not all of them clarified that they remained willing to abide by the prior policy (which was more similar to what is still found in the cellular standards space). But a refusal to be bound by the new policy is deemed a "negative LOA," regardless of a contributor's stance on a superseded version of that policy.

The disconnect here is that there wasn't a major disruption on the technical side (though Professor Ron Katznelson, a member and past Chair of the IEEE's U.S. IP committee, did identify some negative impact in his paper The IEEE controversial policy on Standard Essential Patents -- the empirical record since adoption) despite those negative LOAs. That approach is not sustainable. Sooner or later, an SSO runs into a serious problem if a significant part of all technical contributions isn't subject to positive LOAs.

We're talking about a legal issue, a licensing problem--not just a political one that may simply be solved by an Administration overriding its predecessor's policies.

Unlike in politics, where a majority vote is often the answer, that won't work here either. Apple et al.'s letter stresses that there are far more companies favoring implementer-friendly policies than a proposal to revert to the previous one. That means nothing. Seriously, there are more people out there buying bread than owning or working at bakeries, yet customers can't just set the terms on which they want the supply side of the market to do business with them. The fact that there are so many implementers makes successful standards valuable. It doesn't devalue them. And even if a vast majority of SEP holders preferred a policy (typically because they are net licensees), in the end implementers need a license to all the SEPs, not just some or most of them.

WiFi 6 is the first generation of IEEE 802.11 to have been affected by negative LOAs. WiFi 7, which is now in the works, will be the first one to have been developed with some companies having submitted negative LOAs at the outset.

Those negative LOAs--coupled with the continuation of standards development as if nothing had changed--are a ticking time bomb. Arguably, it has detonated in some places already. IEEE ran into problems with the American National Standards Institute (ANSI) finding itself unable to approve as national U.S. standards those IEEE standards that were clearly impacted by negative LOAs. The International Organization for Standardization (ISO) has similar problems according to a JDSupra article and a LinkedIn article (both by the same author, David Cohen)). It's not a question of whether those organizations like IEEE's patent policy: it's all about the fact that there are negative LOAs in place, normally a no-go in standard-setting, for good reason.

The current situation is a mess. Contrary to what Apple et al.'s letter claims (asking this rhetorical question: "Why would IEEE-SA want to return to a world in which the cost of implementing IEEE-SA standards like 802.11 was uncertain, inevitably discouraging adoption?", negative LOAs are anything but a path to legal certainty. That is not a question of whether or not one would like to bring down SEP royalties. Apple et al.'s letter fails to present a solution as it only advocates perpetuating the problem. With Apple's annual litigation budget in the billions of dollars, that may be workable. For the technology industry at large it is not.

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