1. More Row and Ruction than at Finnegan’s Wake Pat N. Byer
Asserts SEP(s) against
Tim Plementer
ANSI Meeting October 2016
Jorge Contreras
Marc Sandy Block
© MSBlock 2016

2. [Infringement letter sent to Tim] [Complaint Filed –
Pat Byer
Tim Plementer
[Infringement letter sent to Tim]
[Complaint Filed –
Breach of RAND alleged]
Assignee made no RAND assurance (even if patent is SEP)
Commitment derived from prior owner where assignee had notice [MvM, Innovatio, N-Data, Rembrandt…]
No knowledge of SEP or RAND; you should pursue predecessor assignor

3. Third party beneficiary [MvM]
Pat Byer
Tim Plementer
SDO Policies now provide that assurance survives SEP transfer [ANSI, ETSI, IEEE, others]; Assurance survives in any event under law
Disagree. I’m not a party to SDO or assurances. No legal basis. And what standing to sue?
Third party beneficiary [MvM]
Licensing terms offered were reasonable in any event

4. Patent Holdup  Excessive rates [Huawei, MvM, Innovatio]
Pat Byer
Tim Plementer
Patent Holdup  Excessive rates [Huawei, MvM, Innovatio]
What about bad faith and Patent Holdout ? Unwilling licensee not responsive, countering with unviable terms, unjustifiable delays [Huawei, MvM, ITC Interdigital ALJ contingent opinion]
Parties “should consider” factors for RAND rate, such as smallest saleable infringing implementation (“SSII”), “patent stacking” with all possible essential patent claims, comparable agreements where no threat of injunction [IEEE Policy]

5. Policy “factors” on Rates only a “recommendation” [IEEE]…
Pat Byer
Tim Plementer
Policy “factors” on Rates only a “recommendation” [IEEE]…
Seeming limitation on what comparables can be considered excludes valuable information
SSII generally works; patent stacking warranted for standards vitality [MvM, Innovatio]
SSII flawed. “Holdup” and “stacking” need proof, not hypothetical theory [Ericsson]
Georgia Pacific v US Plywood factors include apportioning

6. Policy “factors” on Rates only a “recommendation” [IEEE]…
Pat Byer
Tim Plementer
Policy “factors” on Rates only a “recommendation” [IEEE]…
Seeming limitation on what comparables can be considered excludes valuable information
SSII generally works; patent stacking warranted for standards vitality [MvM, Innovatio]
SSII flawed. “Holdup” and “stacking” need proof, not hypothetical theory [Ericsson]
Georgia Pacific v US Plywood factors include apportioning  rates reflect patent abuse

7. U.S. law applies; should not extend non-U.S. law extraterritorially
Tim Plementer
U.S. antitrust laws do not recognize pricing/royalties as a competition antitrust issue; need impact on competition not just competitor
Other countries consider excessive pricing as exploitative and anticompetitive
U.S. law applies; should not extend non-U.S. law extraterritorially
Some products and patents affect market outside the U.S.

8. Pat Byer
Tim Plementer
[Injunction filed against Tim in US and elsewhere; ITC Section 337 action]
Anti-injunction injunction based on RAND [MvM] SEP holder RAND assurance obstructs injunction.
SEP holder may be liable for costs incurred in foreign country by implementer based on foreign injunction “improperly” approved [MvM]

9. Pat Byer
Tim Plementer
eBay case (Supreme Court case)  Apply traditional equitable factors for patent infringement injunction in US; RAND can be part of analysis along with implementer “unwillingness” and undue delay; no special rule for SEPs [AvM]
“Irreparable harm” and “inadequate remedies at law” eBay factors  injunction difficult for RAND SEP [MvM]

10. eBay should dispel implementer concerns over injunction
Pat Byer
Tim Plementer
eBay should dispel implementer concerns over injunction
Even the threat of injunction can seriously impact business. Not all adjudicators follow eBay.
As implementers are concerned about unwarranted threat of injunction, SEP holders are concerned about unwarranted agency monitoring and setting of licensing terms and rates … RAND is a commercial not an antitrust or competition matter.

11. Pat Byer
Tim Plementer
Interest, attorney fees, enhanced damages obviate need for injunction regardless of implementer conduct [Core Wireless finding wilful infringement of SEP that is subject to RAND; enhanced damages a separate [later] issue]
RAND is not immunity from injunction for all Tim’s conduct. Remedies not certain and cover prior acts not future infringement. How would an anti-injunction premise impact my patents generally?

12. But other patents do not cover a formal standard of a recognized SDO
Pat Byer
Tim Plementer
Some patents are not SEPs; SEP claim elements A,B, but not C, are in the standard’s Specification
While not in the standard Spec, C is still “needed”  ergo such patent (claims) are SEPs [Innovatio]
But other patents do not cover a formal standard of a recognized SDO

13. [Regulator agencies: Some country Guideline drafts – (i) impose “reasonable royalties” for de facto standard or “influential” patents held by dominant market position patentees and (ii) extend SEP rules to cross-licensing in general  much public opposition]
[Regulators: Major fines for SEP abuse]

14. Pat Byer
Tim Plementer
Asserted encumbered SEPs were not identified to SDO as SEPs by the prior SEP owners
Some SDO Policies cover all SEPs of standard participants, even if SEPs not identified
Some of the asserted patents, needed to implement, are not subject to any SDO assurance + SDO even knew about patents when setting standard
For third party patents [i.e., with no assurance], effects of standardization still must be excluded from royalty rate determination [CSIRO]

15. Pat Byer
Tim Plementer
RAND need not extend to component suppliers; there is compliance if just box makers are licensed  component licenses can seriously reduce payments and incentives
All requesting implementers can get SEP license needed to comply with spec [see ANSI Policy]
SEP holder has latitude in SEP licensing terms as commercial transaction, subject to any RAND assurance

16. But negotiations and royalty reasoning not made public
Pat Byer
Tim Plementer
Not offering same terms as offered to others in like circumstances  “unfair discrimination” violates RAND
Different assets and different conditions justify different terms under RAND
But negotiations and royalty reasoning not made public
Such discussion [research and product plans, pricing, planned acquisitions] may adversely impact parties’ competitiveness

17. Requesting license to some but not all of Pat’s SEPs
Pat Byer
Tim Plementer
Look at patent pool rates [MvM]; special pool member interests and value can be accounted for
Pools have other considerations that affect acceptable rates [MvM] (e.g. access to otherwise unavailable patents)
Requesting license to some but not all of Pat’s SEPs
Portfolio licensing practice complies with RAND assurance. Does piecemeal licensing make sense?

18. Pat Byer
Tim Plementer
License-back provisions are not RAND they extend to patents of Tim (and Affilates) beyond applicable SEPs…
Also, terms do not account for value of the reciprocal license [Qualcomm China patent abuse proceeding]
Same terms offered to all requesters; license-back value is a commercial matter

19. Pat Byer
Tim Plementer
License payments should be re-evaluated over time as licensed SEP portfolio changes [Qualcomm China proceeding]
That undermines a basic purpose of licensing  to provide certainty for both parties and not require successive valuations that prompt costly, successive negotiations and disputes. Can impact both parties as SEPs enter and leave the license.

20. Pat Byer
Tim Plementer
Arbitration?

21. Pat Byer
Tim Plementer
Outcome should promote robust standards with balanced policies that address innovator interests, so potential SEP holders will join, invest in, submit valuable patented technology to, and commit to license SEP technology based on RAND (and possibly other) obligations, without undue threat of patent abuse or other regulatory competition investigation or action. Outcomes should achieve benefits of standards in achieving safety, security, interoperability, customer convenience, etc.
Outcomes should promote standards with balanced policies that address implementer interests of reasonable (RAND) access to SEP technologies of others (who may be competitors), without undue threat of injunction, so they will assume the risk and sunk-in costs of adopting such technologies, and perhaps develop future generations of the standard. Outcomes should achieve benefits of standards in achieving safety, security, interoperability, customer convenience, etc.
[ETSI Slides 2016]

22. Case cites
Rambus v FTC, 522 F.3d 456 (Fed Cir 2008) (For Section 5 violation, “but for” failure to disclose, another DRAM technology (other than SEP) would have been selected for standard)
In re Unocal, FTC Opinion Docket No [2003] (5cents a gallon; resolved when acquired by Chevron)
Broadcom Inc, v Qualcomm Corp, Case No (3rd Cir 2008, competition claim); CASE NO. 08cv1829 WQH (LSP) (NDCal 2009)(allegedly discriminatory terms)
In the Matter of Negotiated Data Solutions LLC, FTC Matter/File Number: (2008)
Apple Inc v Samsung Corp, 735 F3d 1352 (Fed Cir 2013)
Apple Inc v Motorola Inc., 757 F.3d (Fed Cir 2014)
Rembrandt Techs, LP v Harris Corp., 2009 Del. Super. LEXIS 190 (Sup Ct Delaware 2009) (transferee assumed upstream owner’s licensing assurance)

23. Case cites
In re CERTAIN 3G MOBILE HANDSETS AND COMPONENTS THEREOF [Interdigital v Nokia], ITC 337 TA 613 (2014) (Administrative Law Judge Essex imposed obligations on implementer/licensee in FRAND context in contingent opinion. However Commission found patent invlaid or not infringed.)
Microsoft Corp v Motorola Mobility Inc/Google , 2013 U.S. Dist. LEXIS [DWash], 2013 U.S. Dist. LEXIS 602, (WDWash) affirmed 9th Cir (applied Georgia Pacific factors excluding some. Concluded patents not of great importance.)
In re Innovatio, 2013 US Dist Lexis [ND ILL] (Applied formula for royalties; transferee knew of FRAND assurance.)
Ericsson v Dlink, 2013 WL (EDTexas)(Holdup and stacking require evidence.)
CSIRO v Cisco Systems Inc, 809 F3d 1295 (Fed Cir 2015) (Smallest unit not followed in view of existing rate data. Standards context affects royalty assessment.

24. Orange Book Case, Doc. KZR 39/06 (German Supreme Court, 2009) (FRAND defense if escrows “objective royaltyC.”)
Philips v Kassetten GmbH, Doc /HA ZA
(District Court of the Hague 2010) (If request for license rejected, sue on competition law.) Parallels Orange Book Case.
Huawei v ZTE, Case C-170/13 (Court of Justice European Union 2015)(German Court asks CJEU to resolve issues. CJEU outlines conduct of licensor to ffer FRAND and Licensee to counter, etc.)
eBay Inc v MercExchange LLC, 547 U.S. 388 (2006)
Core Wireless v LG, 2016 U.S. Dist. LEXIS (EDTexas)
Georgia Pacific v U.S. Plywood, 318 FSupp 1116 (SDNY 1970) affirmed at 446 F2d 295
Case cites

25. Caveat
This presentation, including cites (which are representative only), is aimed at educating on current, significant issues. Although in a dialog format, there is no representation that the presentation is free of bias or that it is complete or up-to-date on decisions in the various cases and policies being advanced worldwide. Inclusion of argument does not suggest aptness in all cases or our approval. Statements are not to be attributed to our employers or anyone else.