Huawei and ZTE security issues, again

“US lawmakers have long worried about the security risks posed the alleged ties between Chinese companies Huawei and ZTE and the country’s government. To that end, Texas Representative Mike Conaway introduced a bill last week called Defending U.S. Government Communications Act, which aims to ban US government agencies from using phones and equipment from the companies.”

https://www.theverge.com/2018/1/14/16890110/new-bill-ban-huawei-zte-phones-tech-congress-mike-conaway-cybersecurity

Engineering and “Engineering” and the consequences of the difference

While I can’t say I feel sorry for Google, with the growth of the Internet of Things these kinds of problems are going to become far more common unless and until people start caring about engineering, not the faux activity that Silicon Valley calls “Engineering”  https://lnkd.in/eq_a8Mb

 

http://www.businessinsider.com/google-casting-devices-causing-problems-home-wifi-networks-2018-1

Huawei’s injunction against Samsung – a universally applicable rule or something else?

I wonder whether this logic will be applied to Chinese companies like ZTE – last I heard Nokia hasn’t been able to secure a license for some 15+ years.  (See para 2.5 https://lnkd.in/e_46B3A)

 

Trade Secrets in China

I would have thought so.  Probably in Chinese companies’ own interests to make sure trade secret protections are strong as well.  From the article: A senior executive at Taiwanese memory chipmaker Nanya Technology said Tuesday that Chinese rivals will face increasing global scrutiny over trade secret violations as Beijing aggressively builds up a domestic semiconductor industry in large part by acquiring foreign companies and poaching talent. “These emerging Chinese competitors will face stricter reviews on how they obtain memory chip technology and whether they are involved in trade secret theft,” said President Lee Pei-Ing of Nanya Tech.

 https://asia.nikkei.com/Business/AC/Taiwan-chipmaker-Chinese-rivals-will-face-scrutiny-over-trade-secrets

Something that those who are concerned about trade secrets need to keep an eye on.

Something that those who are concerned about trade secrets need to keep an eye on.  While there may be a backlash against over use of trade secrets in certain circumstances, the law has an unfortunate way of throwing out the baby with the bathwater on a routine basis.   Of particular danger here would seem to be negative knowhow. From the article: AB 889 would solve this. It provides that in an action based upon the existence of a danger to the public health or safety, information relating to the danger that was discovered during the course of litigation cannot be kept secret in an agreement between the parties or a court order. There is a necessary exception, however, if a court finds that revealing the information would disclose “trade secrets.” A secret formula or design for a product is a trade secret; the dangers it poses are not.

 

http://www.sacbee.com/opinion/california-forum/article194929754.html

“Working” Patents in India

Great article providing lots of empirical information on India’s working requirements and a lot of discussion of the issues raised by the requirements. That said there doesn’t appear to be any discussion of the important issues of:   how long it takes Indian applications to clear the office (VERY long) – if it were shorter, like under 5 years, then having to show working within 3 years might be a real issue, since, I would argue, most non-pharma patents aren’t “Worked” by anyone for at least 5 if not 10 years after filing; the mess that is the Indian patent office – unless something has changed recently, while much of an Indian patent is on line, the ACTUAL ISSUED CLAIMS are NOT and must be found at Individual patent offices.  If that is still the case, then any reform of Working must first account for the fact that third parties have no easy way of really knowing the true scope of Indian patents are.

These points and the issues raised in the article (including nightmare of trying to assign value for Individual patents on a product like a cellphone outside of a litigation and prospectively as the patent issues; how the working requirement seems to impose a duty on global licensors to monitor whether the licensees are in fact “working” in India as opposed to having the right to do so; concerns about the fact that most licensees prefer to keep their licenses confidential; among other issues) make one wonder whether the entire point of the working system in India is to provide a self-destruct option for the Indian patent system by making it impossible to enforce patents coming from complex patent ecosystems (E.g., SEPs) or at least requiring compulsory licenses.

 

SMEs, IP and the Internet of Things

Another good article on SMEs, IP and the internet of things.  From the depressing conclusion (which just show how widespread IP ignorance is): “the survey [discussed in the article] showed that young innovative firms lack IP awareness and do not understand the role that IP management could play for their firm. A good illustration of this issue is that respondents showed two apparent contradictory views on the IP system. On the one hand side they lacked awareness on IP, on the other hand, they felt that the patent system should be urgently reformed. This suggests that the senior managers in YICs have, at best, a layperson’s understanding of the IP system and it underlines the need for further IP awareness-building campaigns. The interviewees also had a minimal understanding of standard essential patents and the accompanying FRAND debate, especially the early stage firms. This leaves them exposed to unexpected licensing requests, while depriving them of the opportunity to pursue their own licensing programs.”

Ericsson – the TCL/Ericsson decision and more!

Some big decisions have come out this year that really have put a value marker on Ericsson’s portfolio – Interestingly both courts (in the California, vs. TCL, and in the UK in the Unwired Planet decision) which have provided portfolio rates utilized a top down approach (some version of proportionality) to determine the royalty  (for the fair and reasonable part) and crosschecking the rates with comparable licenses (for the non-discriminatory part – which in the Cali decision argues that smaller competitors likes TCL must be treated the same as larger competitors lick Apple).

That said, using very similar methodology for the number crunching, the UK decision found a “Major Market” rate of 0.8% for multimode LTE handsets (applied to the entire device) for Ericsson, and the Cali decision for a US rate (as opposed to other jurisdictions which were less) for 4G devices of 0.45%.

This does not appear to be that huge of a variance in the grand scheme of things – and in both cases much less than the $3/device floor that is apparently Ericsson’s opening ask.

An interesting project for licensing geeks would be to compare the terms of the two licenses ordered – the UK license in the Unwired Planet cases and the Cali license in the TCL cases to see what the differences are.

Far more interesting is how will be to see how the recent case Ericsson brought against TCL in EDTX where Ericsson received a judgment for $75M for infringement of a single non-SEP, meshes with these two cases – especially since the order for past damages in the California case is for $16.4M for the whole portfolio.  Also, it is odd to note that Ericsson was only asking for $97M in the Cali case for the entire portfolio but was asking(? or received?) $75M for a single non-SEP patent in the EDTX case.  I wonder what that is about and whether there is an inconsistency there which will cause Ericsson problems.

SOURCES

The Recorder article summarizing the California TCL case can be found here:

https://www.law.com/therecorder/sites/therecorder/2017/12/22/calif-judge-in-first-of-its-kind-ruling-sets-frand-rate-on-ericsson-patent-portfolio/

Main point in the article is that the judge “set a FRAND 4G rate at 0.45 percent of TCL’s U.S. sales and 0.31 percent for overseas sales. Ericsson had been looking for an effective rate of between 0.87 and 1.01 percent based on its two best offers before TCL sued in 2014. Selna also ordered TCL to pay Ericsson $16.4 million for past unlicensed sales from 2007 through 2014, much less than the $97 million Ericsson had been seeking.”

The findings of fact and conclusions of law in the Selma decision can be found here https://www.scribd.com/document/368029124/TCL-v-Ericsson-Decision

The Declaratory judgment/license can be found here https://www.scribd.com/document/367797012/Document-4

A great summary of the decision by Prof Contreras can be found here:  https://patentlyo.com/patent/2017/12/contreras-ericsson-decision.html

Bottom line of the summary is:

On the basis of these findings, the court prescribes that the parties enter into a 5-year license agreement reflecting the FRAND rates described above (p. 115). In addition, TCL must pay Ericsson approximately $16.5 million for past unlicensed sales.

While the outcome of this case will likely make it easier for firms such as TCL to compete in the U.S. and other major markets, it also establishes several important guideposts for future FRAND license negotiations. First, the case establishes that, for non-discrimination purposes, even low end vendors like TCL will be considered “similarly situated” to high end vendors like Apple, giving them the benefit of the rates that high end vendors negotiate with SEP holders for much more expensive products. Equally importantly, it highlights the growing predominance of top-down royalty calculation methodologies for FRAND licenses.

For contrast, the Birss decision in the UK in Unwired Planet (UPIP) can be found here

http://www.bailii.org/ew/cases/EWHC/Patents/2017/711.html

See paragraph 464 where he finds Ericsson’s rate for multimode handsets to be 0.8%

The declaratory judgment/license issued can be found here: http://www.bailii.org/ew/cases/EWHC/Patents/2017/1304.html

A great summary of the UPIP decision by Prof Contreras can be found here: https://patentlyo.com/patent/2017/04/unwired-perspective-royalties.html

And here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2949449

I would note, in an interesting development, contrary to the top-down approach favored by Birss and Selman, a recent EDTX judgment awarded $75M for infringement of just ONE patent by TCL – judgment can be found here: https://www.scribd.com/document/368030000/11164825-0-1803-pdf

 

 

New Ericsson Portfolio rate determination for 4G Handsets

Well this is big.   A judge in California found a FRAND 4G rate for Ericsson as against TCL.  I wonder how this will sit with the Birss opinion in the UK. The commentators will surely review the papers over time, but the nutshell according the first reports is that the judge ordered a rate At .45 percent of TCL’s U.S. sales and .31 percent for overseas sales. Ericsson had been looking for an effective rate of between .87 and 1.01 percent based on its two best offers before TCL sued in 2014. Selna also ordered TCL to pay Ericsson $16.4 million for past unlicensed sales from 2007 through 2014, much less than the $97 million Ericsson had been seeking.

Here is the injunction https://www.scribd.com/document/367797012/Document-4

Here is an article about the judgment https://www.law.com/therecorder/sites/therecorder/2017/12/22/calif-judge-in-first-of-its-kind-ruling-sets-frand-rate-on-ericsson-patent-portfolio/

5G & IoT licensing

http://kidonip.com/wp-content/uploads/2017/12/IoT-5G-and-the-Next-Patent-Wars-Dec-20-5.pdf