{"id":69671,"date":"2016-06-09T05:15:15","date_gmt":"2016-06-09T09:15:15","guid":{"rendered":"https:\/\/ipwatchdog.com\/?p=69671"},"modified":"2016-06-24T17:11:11","modified_gmt":"2016-06-24T21:11:11","slug":"sep-licensing-beyond-essentiality","status":"publish","type":"post","link":"https:\/\/ipwatchdog.com\/2016\/06\/09\/sep-licensing-beyond-essentiality\/id=69671\/","title":{"rendered":"SEP Licensing: Looking Beyond Essentiality"},"content":{"rendered":"

Cellular standard essential patents (SEPs) have been at the center stage of many litigations, arbitrations and licensing disputes in the last couple of years. European Telecommunications Standards Institute (ETSI) defines essential IPR as follows:<\/p>\n

\u201cESSENTIAL” as applied to IPR means that it is not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of the art generally available at the time of standardization, to make, sell, lease, otherwise dispose of, repair, use or operate EQUIPMENT or METHODS which comply with a STANDARD without infringing that IPR.<\/em><\/p><\/blockquote>\n

Unlike other technologies (e.g. User interface) where the manufacturers have a choice to design around the technology of the patent, in case of SEPs, there is no possible way to avoid infringement and still comply with the standard. On the other hand, non-compliance with standard is a commercially non-viable option.\u00a0 This situation gives the SEPs holders a great leverage to assert their licensing terms. While there have been several cases and rulings in favor of SEP licensees that put some restrictions on the SEP holders regarding their FRAND licensing commitments as well as their abilities to exercise an injunction for infringement of SEPs, lack of clarity on FRAND terms still make the negotiations tough for a potential SEP licensee.<\/p>\n

\"licensing-road-sign\"<\/a>The traditional lines of defense against SEPs (non-essentiality and invalidity) continue to remain effective. However, all the patents that survive these two tests are not equally important and do not merit the same royalty. There has been rising interest in exploring other aspects of SEPs that affect their true worth. These aspects rely on the fact that a SEP is implemented (and hence infringed) not only due to its unique advantages, but also due to the fact that the technology of the SEP was selected (among various other alternatives) to be incorporated in the standard even if the incremental advantage was non-substantial or even non-existent in some cases. Therefore, the true worth of a SEP should be determined based on the degree of superiority it had compared to other alternatives at the time of standard development. While the tasks of evaluating a technology\u2019s superiority compared to other alternatives may sound complex, it is very much doable in the context of cellular SEPs due to the transparency offered by 3GPP \/ ETSI in the process of standard development and the appropriate documentations. In some cases, the study of standard development process reveals that the owner of the patent was not the entity that introduced the corresponding feature in the standard, but was merely the first one to file for a patent on a jointly developed concept or even someone else\u2019s concept, which raises serious validity issues.<\/p>\n

Let me demonstrate a few examples of what can be uncovered through the study of standard development process and how it affects the perceived value of a SEP. I picked up a few patents from one of the most actively licensed portfolios in the cellular SEP space i.e. InterDigital and provide specific findings.<\/p>\n

Example 1: USP 6,973,579<\/strong><\/h2>\n

The \u2018579 patent<\/a> relates to UE specific scrambling \/ descrambling code for high speed shared control channels (HS-SCCH). A \u00bd rate convolutional encoder processes 16 bit user identification code with eight appended zero bits to produce a 48 bit code for use in scrambling \/ descrambling a high speed shared control channel (HS-SCCH).<\/p>\n

1. An apparatus comprising:<\/em><\/p>\n

an input configured to accept a user identification comprising L bits; and<\/em><\/p>\n

a \u00bd rate convolutional encoder for processing at least the bits of the user identification by a \u00bd rate convolutional code to produce a code used for scrambling a high speed shared control channel (HS-SCCH). <\/em><\/p>\n

Essentiality<\/strong><\/h2>\n

The patent appears to be essential to UMTS standard specification 25.212 (see section 4.6.7).<\/p>\n

\"Image<\/p>\n

Superiority<\/strong><\/h2>\n

At the time the topic of UE specific scrambling code was discussed at 3GPP (RAN WG 1), several proposals were made (e.g. R1-02-0715 by InterDigital, R1-02-0771 by LGE, R1-02-0723 by Lucent, R1-02-0541 by LGE etc.).<\/p>\n

As per the minutes of the meeting RAN WG1#26, the main reason for selection of the InterDigital proposal was its simplicity and consistency with Release 99 specification and lack of support by the members for the alternative scheme, rather than any significant performance advantage. Below is an excerpt from the meeting minutes:<\/p>\n

After having all these paper presented, Chairman stated that we should stick to something simple and something that is already existing in R99 specifications unless there is really really good reason to use new schemes. Chairman asked the floor if people think that we should have the time variant scheme. There were no supporting comments made. Having this, chairman concluded we should take the scheme proposed in R1-02-0715 (InterDigital), that is, \u00bd rate convolutional code and puncture it to 40 bits<\/em><\/p><\/blockquote>\n

Further, InterDigital itself identified two leading choices in its proposal giving similar performances. The patent covers the first choice only. See the below excerpts from InterDigital proposal:<\/p>\n

\u201cWe have identified the following two leading choices:<\/em><\/p>\n