Posts Tagged: "standards"

Several weeks ago, the Antitrust Division of the U.S. Department of Justice announced a positive Business Review Letter (BRL) concluding an eight-month review of Avanci’s new platform for licensing 5G standard essential patents. “In sum, the proposed 5G Platform has the potential to yield efficiencies by reducing transaction costs and streamlining licensing for connected vehicles,” wrote Assistant Attorney General Makan Delrahim, who heads the DOJ Antitrust Division. “Together these efficiencies may allow cellular standards-essential patent owners and vehicle manufacturers to focus resources elsewhere, such as investment in further research and development in emerging 5G technologies and applications. This possibility could enhance competition in these technologies, improve safety, and benefit American consumers.” The finding that the Avanci 5G platform could enhance competition is critically important for Avanci, and positively affects the technology licensing landscape.

As far back as the Roman Empire, standardization has improved the efficiency of human endeavors. In the present day, as high-bandwidth communication and Internet of Things (IoT) applications expand, standardization continues to be key in advancing new technologies. From the standpoint of protecting intellectual property, however, the collaboration required to standardize a technology presents unique challenges, as industry competitors disclose and assess various options for the standard. Standard Development Organizations (SDOs), each directed to a particular technical area, adopt standards that allow devices to communicate with each other and process information consistently. Technical experts representing companies or trade associations in an SDO may submit proposals for consideration and adoption. However, such proposals may include patentable solutions invented within the submitting organizations. By virtue of submitting such proposals for consideration, the solutions could be considered publicly disclosed – or, at the very least, disclosed to industry competitors.

Versatile video coding (VVC), also known as Future Video Coding (FVC) or H.266, is a video compression standard that was released on July 6 and is being positioned as the successor to High Efficiency Video Coding (HEVC or H.265). CPA Global has reviewed the key aspects of the standard and factors which could impact its licensing and adoption and we have identified and analyzed the key patented technologies that have a possibility of being relevant to the VVC standard. The standard was in the process of being finalized at the time we conducted our analysis and we have therefore referred to Draft 8 of VVC, which was approved by JVET in the Brussels meeting from January 7-17, 2020.

Speaking at IPWatchdog’s Patent Master’s Symposium today, Professor Kristen Osenga of The University of Richmond School of Law gave attendees a glimpse of her upcoming paper examining problems with the Institute of Electrical and Electronics Engineers – Standards Association’s (IEEE-SA) 2015 amendment to its intellectual property rights (IPR) policy. In reference to the title of the panel on which she was speaking, “Balance, Transparency & Reasonableness: Converging Approaches to SEP Licenses and FRAND Royalties,” Osenga explained that “balance transparency, and reasonableness simply were not part of the process” by which IEEE adopted the new policy. Osenga’s paper, which is due to be published on the Social Science Research Network (SSRN) by the end of 2019, will examine the actions leading up to the adoption of the 2015 amended policy, as well as the aftermath. Below is an abstract of the paper; many of the issues it will touch upon were also covered in Osenga’s 2018 paper, “Ignorance Over Innovation: Why Misunderstanding Standard Setting Organizations Will Hinder Technological Progress.”

In his luncheon keynote address to attendees of IPWatchdog’s Patent Master’s Symposium: “Standard Essential Patents: Striking a Balance Between Competition and Innovation” on Tuesday, former Federal Circuit Chief Judge Randall Rader drove home a point made by multiple speakers during the event that the concept of “patent hold-up”—in which innovator companies use SEPs to hold up implementer companies from getting products to market via anti-competitive practices—is “one of the largest misnomers in our discipline.” Earlier in the day, David Kappos, former Director of the USPTO, explained that— although he signed off on the Joint Policy Statement, that it was thoughtfully and heavily negotiated and edited, and that he felt at the time that it was a good document and a compromised agreement—he stepped back after Delrahim’s announcement last year and has now reconsidered his view. “I was defending the IP system given everything we knew at the time,” Kappos said. “I didn’t think the guidelines were anti-innovation; I thought they were balanced. But in stepping back, I realized—between 2013 and 2019 we’ve learned a lot. Multiple empirical studies have shown us that the phenomena on which we based the guidelines— hold-up and royalty stacking — aren’t occurring. There is no evidence of our predictions.”

Later this year (likely in October), the United Kingdom’s highest court will hear arguments on questions arising in two disputes concerning standard essential patents (SEPs). The UK Supreme Court has agreed to hear appeals in Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another UKSC 2018/0214 and the joined cases Huawei Technologies Co Ltd and another v Conversant Wireless Licensing SARL UKSC 2019/0041 and ZTE Corporation and another v Conversant Wireless Licensing SARL UKSC 2019/0042. The arguments are likely to focus on one question: can a national court impose a global license in SEP cases? The closely watched appeal will be the culmination of years of litigation between the parties. In the Unwired Planet case, Mr. Justice Birss of the High Court heard five trials on the validity and infringement/essentiality of Unwired Planet’s patents. In April 2017, he then gave a mammoth judgment determining what a fair, reasonable and non-discriminatory (FRAND) license would be, and setting royalty rates. Critically, he found that only a worldwide license would be FRAND in the circumstances of this case. The England and Wales Court of Appeal upheld this conclusion, in a judgment in October 2018. The Supreme Court will likely sit in a five-judge panel in a hearing that will last about two days and will be live streamed on its website (the date and panel details have not been confirmed yet). It will hand down judgment later this year or early in 2020. (Ironically, patent specialist Lord Kitchin is a member of the Supreme Court but will not be sitting in this case as it is his own judgment that is under appeal.) You might have thought that—after decades of legal debate and academic writing, dozens of judgments addressing questions such as what constitutes a FRAND license and what are reasonable royalties, and extensive discussions between technology companies—the questions around SEPs would be close to being resolved. But that is far from the case. The outcome of the UK Supreme Court hearing, for instance, will have an impact on negotiations between owners of SEP portfolios and implementers worldwide, at a time when standards are set to become critical to many more industries.

The decision came down to two technologies for detecting and correcting noise in signals transmitted over the air for 5G—one of the most fundamental features for wireless communications. Scientists and engineers in 2016 vigorously debated for months which one was technologically superior and most efficient. China had lined up Chinese companies’ and allies’ votes behind the “polar codes” technology led by Huawei. Ultimately, the technology that had broader technical support would share a role in the 5G standard with Huawei’s preferred polar coding. But the heightened political battle in a traditional technical arena was unprecedented. This incident highlights a growing threat. “China has politicized the standards-making process,” the Center for Strategic and International Studies (CSIS) reports. “Beijing expects Chinese companies to vote for [China-backed technologies] whether or not they are the best.”

Earlier this summer, Intel announced that some 8,500 patent assets (i.e., issued patents and pending patent applications) would be auctioned. Approximately 6,000 assets related to 3G, 4G, and 5G cellular standards, while 1,700 assets relate to wireless implementation of cellular standards. According to initial reports from IAM, Intel was hoping to sell these patents separately from the smartphone modem business, although they were open to the possibility that a prospective buyer might seek to acquire both the patent assets and Intel’s smartphone modem business. Shortly after the Intel patent assets were announced as available for sale, Intel abruptly took the assets off the market in favor of negotiating with a single interested suitor. Very quickly, news broke that the negotiations with that unidentified suitor were quite advanced, suggesting that the Intel auction announcement was nothing more than a negotiating ploy to get the unidentified suitor back to the table and for the suitor to realize that they could lose the patent assets if they did not play their hand correctly and misidentified the leverage involved in the negotiation. It has recently come to light that the unidentified suitor for the Intel patent assets was none other than Apple, just as IAM has predicted in its initial reporting. So, now we know that Apple will buy the majority of Intel’s modem business, including the patent assets, for $1 billion. 

On May 2, the Antitrust Division of the U.S. Department of Justice (DOJ) took the unusual step of submitting a Statement of Interest in the Federal Trade Commission’s (FTC’s) case against Qualcomm to take a position contrary to the FTC. The DOJ argued that “[b]ecause an overly broad remedy could result in reduced innovation, with the potential to harm American consumers, this Court should hold a hearing and order additional briefing to determine a proper remedy that protects competition while working minimal harm to public and private interests.” In response, the FTC informed the court that it “did not participate in or request” the DOJ’s filing, that it “disagree[d] with a number of contentions” made by the DOJ, and that the DOJ “misconstrues applicable law and the record.” In the end, the court agreed with the FTC and issued injunctive relief against Qualcomm without conducting the further remedy proceedings the DOJ advocated. The public feuding between the two federal antitrust enforcement agencies about how to resolve a case litigated by one them was a remarkable spectacle. It also brought into focus a broader divide between the FTC and DOJ on the role of antitrust law in addressing patents that are essential to industry standards (SEPs) and subject to commitments to license on fair, reasonable, and non-discriminatory (FRAND) terms.

Yesterday, we discussed patenting trends in the cleantech industry. Today, we turn to the mobile phone industry, which has matured with fewer reasons for frequent consumer upgrades while standards drive toward better efficiency and data rates to find even more uses for the platforms. The mobile phone industry has exploded over the last decade with nearly all U.S. consumers owning a smart phone. Additionally, many Internet of Things (IoT) devices have gained cellular modems, along with modern heavy equipment having a data connection for telemetry. The wireless standards have innovation that comes in waves, with 3G and 4G/LTE reaching maturation, while 5G has a solid upward trend. The supply chain for mobile phone manufacture has largely moved overseas and many brands have disappeared or moved overseas. Even though the two mobile operating systems are just over a decade old, we are seeing the pace of software innovation plateau with a couple million apps in the respective platform stores. The ubiquity of cellular data will bring the underlying technology to many different industries in the years to come, as the maturity of the industry allows the focus to move away from the platform itself.

On March 20, U.S. District Judge Gonzalo Curiel of the Southern District of California issued an order denying a motion by Apple, which was seeking partial judgment against Qualcomm on that company’s claim that it had fulfilled its fair, reasonable and non-discriminatory (FRAND) obligations for licensing its standard-essential patents (SEPs). As a result, Qualcomm can move ahead with its efforts to prove that its SEP portfolio licensing activities have met the company’s FRAND obligations and that Apple has forfeited its right to FRAND licensing because it hasn’t been a willing licensee.The court sided with Qualcomm in finding that Apple’s arguments regarding the unsuccessful licensing negotiations presented a definite and concrete controversy. Qualcomm had cited to a 2017 Eastern District of Texas case, Huawei Techs. Co. v. T-Mobile US, Inc., to show an instance where a court had found subject-matter jurisdiction in a case where a patent holder sought a declaration that it had complied with FRAND obligations. In the current case, Apple hadn’t stated unequivocally that it wouldn’t pursue a stand-alone breach of contract action, giving rise to a substantial controversy with sufficient immediacy and reality to justify declaratory relief. A favorable outcome to Qualcomm on this claim would afford additional relief, as Qualcomm could demonstrate that Apple had engaged in unreasonable holdout behavior, relieving Qualcomm of further FRAND obligations towards Apple.