Your FRANDly Update: Ericsson v HTC, FRAND in India, jurisdictional issues (again), Unwired Planet v Huawei, ASUS v Interdigital and more

The AmeriKat pleading
that someone will bring her
 Hatch green chile enchiladas

The AmeriKat is a fiend for spicy food.  Being born near the border of Mexico makes any Kat yearn for chile (particularly Hatch green chile) and connections with India gives her a yearning for spicy, fragrant curries. A long desire to travel Thailand has caused her to be a home-cook connoisseur of the incredible mixture of spice, saltiness and citrus that make up the region's diverse cuisine (for those who want some authentic Thai, the AmeriKat suggests Kin+Deum which she tried last week with friends, and is still annoyed that, somehow, another helping of the Claypot Prawns wasn't ordered).  What does spicy food have to do with FRAND?  Not really anything, save that a majority of the stories in this post come from regions that are not unfamiliar to spicy cuisine and issues which are current "hot" topics in FRAND (that pun made even the AmeriKat cringe...sorry!).  First, to Texas:  

Texas jury says Ericsson offer is FRAND:  After an almost 2 year dispute between Ericsson and HTC, two weeks ago a Texas jury found that Ericsson's offers to HTC were FRAND.   One of the key issues between the parties was whether the licence offer was based on the end products or the components, i.e. the smallest saleable patent practising unit (SSPPU) (see Kat friend Richard Vary's comment in the last update here).  The jury ruled that, to be FRAND, the royalty did not need to be based on the SSPPU (i.e. the chipsets), as opposed to the whole phone.  Interestingly, the jury also found that both Ericcson and HTC breached their obligation to negotiate the licence in good faith (see jury form here). 

Bloch QC takes on jurisdictional issues in IP disputes:  Michael Bloch QC will be speaking on "Jurisdictional issues in IP disputes" at the next Competition Law Association (CLA) event being held on 18 March 2019 at 6PM (for 6:15PM) at the London office of Freshfields Bruckhaus Deringer.  The event is free for members.  The event blurb reads:

"Jurisdictional issues have increasingly come to the fore in IP disputes in recent years, from Lucasfilm v Ainsworth and Actavis v Eli Lilly to FRAND disputes such as Unwired Planet v Huawei, Apple v Qualcomm and Conversant v Huawei & ZTE, as parties clash on forum-shopping and attempts to reach one-stop resolution of their IP disputes." 

The AmeriKat will be there, so hopes to see you too!  To sign up and for more details click here.  Similarly related, is this forthcoming article in the Boston University Journal of Science and Technology Law entitled "The New Extraterritoriality: FRAND Royalties, Anti-Suit Injunctions and the Global Race To The Bottom In Disputes Over Standards-Essential Patents".  The Kats are looking forward to getting their paws on that one, which will surely be one of many as the global FRAND race heats up.  

FRAND in India:  Although the focus of FRAND can be drawn to UK, US and China, it is important not to forget that India is the second largest telecommunications market in the world.  Despite this, the definition, determination and enforcement of SEPs and FRAND in India is in its early stages.  The Indian competition authority - Competition Commission of India (CCI) - has investigated the licensing practices of SEP holders and is in the process of building its "back catagloue" of materials to judge SEP licensing agreements.   The CCI has invariably ruled that (i) bundling of patents irrelevant to the implementer's products in the licence agreement is violation of FRAND terms and section 4 of the Competition Act (iBall v Ericsson, Case No 04 of 2015); royalties based on a handset as opposed to a SSPPU was in violation of the Competition Act on the basis of discrimination (Micromax v Ericsson, Case No 50/2013, although the Delhi High Court had a different view holding that the price of the handset may act as a basis to calculate the royalty rate); use (or over use) of NDAs could raise questions as to whether SEP holders were charging different rates (Intex v Ericsson, Case No 76/2013).  The Delhi High Court has also addressed some of these cases and the issue of the grant of injunctions for SEP holders - the key point being that injunctions are available if certain conditions are met under the Indian Patents Act.  Although no FRAND determination has yet been made by an Indian court (as far as the AmeriKat is aware), it can only be a matter of time as the CCI and the judicial bodies keep an eye on the developments in the US and Europe.  To get up to speed on India and FRAND, the AmeriKat suggests these articles - here, here, here and here.  

California court dismisses ASUS FRAND summary judgment motion against Interdigital:  Although from the end of December, the AmeriKat has just read about the decision of Judge Beth Labson Freeman of the Northern District of California dismissing ASUS' summary judgment motion that Interdigital breached its contractual FRAND obligations in ongoing negotiations between the parties.  The Kat's friends over at IPWatchdog (not everyone is a Kat person, after all) published this helpful summary of Judge Labson's decision - here.   In referring to the recent TCL v Ericsson decision from the Central District of California (see Kat post here), Judge Labson stated:

"The Court is not persuaded by Plaintiffs’ argument that summary judgment on Count III of the FAC is warranted. Even assuming arguendo that the first prong of Plaintiffs’ argument—that Defendants are required to provide similarly situated companies with similar licensing terms and conditions—is ironclad, the Court finds numerous genuine issues of material fact as discussed below that preclude summary judgment. Moreover, to the extent Plaintiffs’ premise their motion on TCL Commc’n Tech. Holdings, Ltd. v. Telefonaktiebolaget LM Ericsson, 2017 WL 6611635 (C.D. Cal. Dec. 21, 2017), amended and superseded, 2018 WL 4488286 (C.D. Cal. Sept. 18, 2018), TCL is not binding on this Court and is not settled law considering its pending appeal before the Federal Circuit. Plaintiffs’ motion for summary judgment is DENIED. The Court discusses (1) examples of disputed issues of material fact precluding summary judgment for Plaintiffs and (2) the TCL case.

In their motion, Plaintiffs contend that the TCL court held “there is no legitimate basis under the ETSI IPR Declaration or ETSI Directives for using volume to discriminate among established, global firms.” Plaintiffs’ Motion at 20. However, Plaintiff’s twelve-line block quote of TCL that follows this contention, see Plaintiffs’ Motion at 20, omits precisely one sentence: “Sales volume alone does not justify giving lower rates to otherwise similar firms.” TCL, 2017 WL 6611635, at *33 (emphasis added). Therefore, the Court finds Plaintiffs’ reading of TCL overbroad. . . .

In other words, TCL does not hold that volume discounts incorporated into SEP licensing contracts under the ETSI Directives necessarily discriminate, but instead that sales volume alone is not a legitimate basis for such discounts. Id. Thus, the Court is not prepared to hold that as a matter of law, volume discounts that differ between similarly situated companies are completely and totally forbidden as discriminatory under the ETSI Directives. Moreover, as discussed in Section IV.B.1 supra, the Court finds genuine issues of material fact exist as to whether ASUS and are similarly situated. Accordingly, the Court is not persuaded by Plaintiffs’ assertion (as part of prong two of their argument) that “volume discounts discriminate among competitors in the global cellular device market.” See Plaintiffs’ MSJ at 19.

Finally, the Court notes that TCL has been appealed to the Federal Circuit and the appeal remains pending. See Federal Circuit docket for TCL Communication Technology v. Telefonaktiebolaget LM, Case No. 18-1363. To the extent Plaintiffs rely on TCL to persuade the Court, the Court is unwilling to grant summary judgment based on non-binding law unsettled over the pending appeal before the Federal Circuit."

SEP transfer attracts the attention in Unwired Planet v Huawei dispute:  At a hearing at the Higher Regional Court in Dusseldorf two weeks ago, Juve reported that Judge Kühnen criticized the transfer of SEPs when the transfers are used to achieve higher licence rates and revenues.  According to Juve, the judge said "It is crystal clear to us that this is a flagrant violation of the ban on discrimination under the FRAND rules.  It’s like the Wild West".  Although a fun soundbite, it does not seem terribly controversial if similarly situated licensees are treated different before and after a transfer.  What do readers think?

Second meeting of Commission's SEP Expert Group held:  Two weeks ago, the second meeting of the Commission Expert Group on Licensing and Valuation of SEPs was held in Brussels.  The draft Agenda -published here - dealt with whether licensing in IOT was different, the level of licensing in the supply chain and non-discrimination.  The mission of the Expert Group is to inform the Commission of developments in the SEP licensing markets that may require policy measures to ensure a "balanced framework for smooth, efficient and effective licensing".  To find out more about the Expert Group, click here, but you will be in for a short read as none of the meetings are public.