[License-discuss] FRAND in telecommunications

[Lawrence Rosen]

Dear OSI,

 


I attach an interesting read about FRAND and about patent licenses for
telecommunications standards: “Unwired Planet International Ltd and another
(Respondents) v Huawei Technologies (UK) Co Ltd and another (Appellants)
Huawei Technologies Co Ltd and another (Appellants) v Conversant Wireless
Licensing SÀRL (Respondent) ZTE Corporation and another (Appellants) v
Conversant Wireless Licensing ÀRL (Respondent)”

Unfortunately, this decision makes no mention of the requirement that open
source implementations cannot accept FRAND licensing because our software
generates no revenue to pay royalties. I submit this case for your reading
pleasure because, as the UK court pointed out, the cost of patent litigation
is outrageously high. The results are of no use to free software!

 

A few key quoted paragraphs are below
.

 

/Larry

 

36. It is clear from the UK, German and Chinese proceedings that
ascertaining the validity, essentiality and infringement of national patents
within a portfolio by legal proceedings in several different jurisdictions
involves the expenditure of a prodigious amount of money and effort by both
claimants and defendants, although the proceedings in China are
significantly less costly than those in the West. It is not disputed that it
would be impracticable for the parties to litigate these matters in each of
the countries which the portfolio covers. It also appears to be clear and it
is not disputed that within a substantial portfolio of patents there may be
many patents, which (if subject to examination in proceedings) would be
found to be invalid in whole or in part or not infringed by the technology
used in the standard. These are in our view relevant facts when one
addresses the fair balance between the interests of the SEP owner and the
implementer which the IPR Policy seeks to achieve.

 

60. The submission also fails adequately to take into account the external
context which we have discussed. Operators in the telecommunications
industry or their assignees may hold portfolios of hundreds or thousands of
patents which may be relevant to a standard. The parties accept that SEP
owners and implementers cannot feasibly test the validity and infringement
of all of the patents involved in a standard which are in a sizeable
portfolio. An implementer has an interest in taking its product to the
market as soon as reasonably possible after a standard has been established
and to do so needs authorisation to use all patented technology which is
comprised in the standard. The implementer does not know which patents are
valid and infringed by using the standard but needs authority from the
outset to use the technology covered by such patents. Similarly, the owner
who declares a SEP or SEPs does not know at this time which, if any, of its
alleged SEPs are valid and are or will be infringed by use pursuant to the
developing standard.
 By taking out a licence of an international portfolio
of generally untested patents the implementer buys access to the new
standard. It does so at a price which ought to reflect the untested nature
of many patents in the portfolio; in so doing it purchases certainty. The
IPR Policy was agreed against that background and the undertaking required
from the SEP owner likewise needs to be interpreted against that background.

 

63. We now turn to the submission (para 51 above) that the English courts
have no jurisdiction to determine the terms of a licence involving disputed
or potentially disputed foreign patents. We disagree.

 

114. The text of clause 6.1 lends itself naturally to being read in this
unitary way. The “non-discriminatory” part of the relevant phrase gives
colour to the whole and provides significant guidance as to its meaning. It
provides focus and narrows down the scope for argument about what might
count as “fair” or “reasonable” for these purposes in a given context. It
indicates that the terms and conditions on offer should be such as are
generally available as a fair market price for any market participant, to
reflect the true value of the SEPs to which the licence relates and without
adjustment depending on the individual characteristics of a particular
market participant. Put another way, there is to be a single royalty price
list available to all.

 

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