Update on IP and Antitrust March 24, 2018

EU

Is Unwired Planet consistent with Huawei v. ZTE? SEP owner “cannot, without infringing Article 102 TFEU, bring an action for a prohibitory injunction or for the recall of products against the alleged infringer without notice or prior consultation with the alleged infringer, even if the SEP has already been used by the alleged infringer.” “However the judgment does not hold that if the circumstances diverge from the scheme set out in any way then a patentee will necessarily abuse their dominant position by starting such a claim. In those circumstances the patentee’s conduct may or may not be abusive.” Privileged & Confidential

Is Unwired Planet self-consistent? UP In my judgment the FRAND rate ought to be generally non-discriminatory in that it is determined primarily by reference to the value of the patents being licensed and has the result that all licensees who need the same kind of licence will be charged the same kind of rate. Therefore I conclude that the true interpretation of the ETSI FRAND undertaking from the point of view of non-discrimination is that a benchmark FRAND rate should be derived which is applicable to all licensees seeking the same kind of licence. That is what I have called general non-discrimination. If, contrary to this view, the FRAND undertaking also includes a specific non-discrimination obligation whereby a licensee has the right to demand the very same rate as has been granted to another licensee which is lower than the benchmark rate, then that obligation only applies if the difference would distort competition between the two licensees. I find that for a given set of circumstances there will only be one set of FRAND terms and only one FRAND rate. Privileged & Confidential

EC Communication on SEPs – What It Says Willing licensor must provide a detailed and relevant proposal under H v ZTE ND is “hard-edged” – giving a rate to one licensee gives other similarly-situated licensees the right to demand the same terms – contrary to Unwired Planet v Huawei Global portfolio licensing may be efficient Top-down royalty calculation (takes account of total royalty stack) Patent pools are efficient but must comply with EU competition law

EC Communication on SEPs – What It Does Not Say Is there an explicit obligation to license upstream? Royalty base, end product or smallest saleable unit? What specific discrimination is allowed (e.g., grantbacks)? “Parties are best placed to arrive at a common understanding of what are fair licensing conditions and fair rates, through good faith negotiations”

US

US Enforcement Shifting from “Hold-up” to “Hold-out”? “Too often lost in the debate over the hold-up problem is recognition of a more serious risk: the hold-out problem…” “Antitrust laws should not be used to transform an inventor’s one-time decision to offer a license to a competitor into a forever commitment that the inventor will continue licensing that competitor in perpetuity.” Makan Delrahim – Assistant Attorney General for the Antitrust Division

Recent Agency Activity DOJ Investigation re DensiFi / IEEE IEEE investigation re “dominance” in 802.11ax Appeal of remedies dismissed Principal Deputy Assistant AG Andrew Finch indicated that the DOJ is investigating “buyer or seller cartel types of behavior” within SSOs that “artificially shift bargaining leverage” BUT, FTC continues its Qualcomm “hold up” case

(F)RAND and Contractual Enforcement - TCL v. Ericsson Follows other notable FRAND cases such as Microsoft v. Motorola; Ericsson v. D-link; CSIRO v. Cisco Issue TCL v. Ericsson SEP holder’s offer Failure to offer FRAND terms does not breach FRAND Contract or antitrust Harm to competitor actionable under contract law Non-discrimination Hard-edged; use the “similarly situated” standard Court’s role Authority to determine FRAND terms (but not a single set of terms that is necessarily FRAND) Rate calculation Top down, cross checked with similar licenses Royalty base Assumed end-product rather than SSPPU Geographic scope 3 regions: USA, Europe, ROW