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Sunday, 14 June 2015

A prelude to patent litigation? Ericsson tackles Apple in Europe

FRAND fight. Occasional IP blogger and Katfriend Thomas Dubuisson has sent us the following account of some forthcoming patent litigation which should be of the greatest interest to fair, reasonable and non-discriminatory (FRAND) IP licence enthusiasts in Europe. He writes:

Actions speak louder than words: Ericsson files lawsuits In Europe against Apple

After more than two years trying to reach an agreement with Apple, and after exhausting all other options to conclude a licence on FRAND terms, multinational telecommunications giant Ericsson has now decided to use a less amicable means of forcing Apple to obtain a valid licence for Ericsson’s technology.

... or taking you to court.
With one of the industry's strongest IP portfolios (which includes more than 37,000 patents granted worldwide), Ericsson –- after offering to enter into arbitration to reach a mutually beneficial global licensing agreement for their patents on FRAND terms –- has filed suits against Apple in Germany, the United Kingdom and the Netherlands. The central question in this case is how much can the Swedish mobile telecoms equipment maker charge for its technologies through the medium of a licence? To give some idea of the scale of the sums the parties may have in mind, Samsung, another smartphone maker, agreed to pay Ericsson $650 million to end a licence dispute last year.

As readers may know, every Apple smartphone and tablet with cellular capability uses technology from Ericsson. That’s quite a big deal, but not a big surprise, when one considers the long history of Ericsson’s innovative technical contributions -- a history that is briefly explained in a complaint filed in the U.S. As stated 
“in 1878, Ericsson sold its first telephone; in 1977, Ericsson introduced the world’s first digital telephone exchange; in 1991, Ericsson launched 2G phones on the world’s first 2G network; in 1994, Ericsson invented Bluetooth; in 2001, Ericsson made the world’s first 3G call for Vodafone in the UK; and in 2009, Ericsson started the world’s first 4G network and made the first 4G call”.
The current “Apple-Ericsson battle” started in January 2015 in the United States. Apple shot first, with a declaratory judgment action in the U.S. District Court of Northern District of California alleging that some patents were not essential and that the royalties requested for their use were excessive. Two days later, Ericsson filed a complaint in the U.S. District Court for the Eastern District of Texas asserting its rights under 41 patents covering many aspects of Apple's iPhones and iPads. It followed this action by lodging two complaints with the U.S. International Trade Commission (ITC), seeking to exclude Apple's product from the U.S. market. More precisely, the proceedings refer to the 2G GSM and 4G LTE standards (which have enabled the creation of high speed data networks that connect the world and which, for instance, enable people to send pictures, video chat, etc), as well as other technology that is not standardized but is related to, for instance, the design of semiconductor components and non-cellular wireless communications.

Just checking the software
When a patent holder declares that a patent is “essential” (a patent that is necessary in order to implement an industry standard technology so as to enable products and services offered by different vendors to interoperate), he makes an irrevocable commitment to license that patent on FRAND terms and conditions i.e. fair (no anti-competitive or unlawful licensing terms), reasonable (no excessive or extreme licensing rates), and non-discriminatory (the licensor treats each individual licensee in a similar fashion). Under the FRAND commitment, essential patent owners like Ericsson are compensated proportionally in relation to their contribution to the standardized technology. But in this case, according to Ericsson, “Apple does not currently have any license for Ericsson’s technology, but continues to sell products, for which its licenses have expired, on a global scale”. In other words, Apple continues to profit without having a valid licence in place. That’s the reason why the Swedish multinational has filed some European lawsuits, also asserting non-standard essential patents, against Apple.


It could take quite some time before we get a decision but, in any event, with so much money at stake, it’s going to be an exciting battle. The venue of the fight is also worthy of note. Apple won the race to court in Silicon Valley, a place where the company is perhaps more likely to be defended than anywhere else in the States. However, in Europe, the outcome of the various patent disputes may well differ depending on how the different national courts deal with infringement and validity claims. In any case, this patent licensing case will be interesting to follow. 

2 comments:

Anonymous said...

Perhaps now some attention will be paid to the massive royalty revenues generated by FRAND 2G/3G/4G licenses. A handful of companies, Ericsson amongst them, dominate the standards bodies and thereby perpetuate their royalty income. They already sell 2G/3G/4G equipment to mobile operators, but they're not satisfied with those profits -- and therefore they "double dip" by collecting royalties on the terminal equipment. Even a 1% royalty is big money when billions of people are buying the products.

Anonymous said...

I'm slightly confused here - you say Ericsson's aim is "forcing Apple to obtain a valid licence" - is that essentially sueing them for infringement, or something else?

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