SEPS, FRAND, AND ANTITRUST LAW – PART II

01.08.2017

By Lawrence Hoffman

In this part of our three part series, we look at a pre-Ericsson decision in In re Innovatio IP Ventures, LLC, a case involving a Patent Assertion Entity that surely earned the name “patent troll”. While it might seem reasonable to concentrate on post-Ericsson cases, there is much to be gained by looking first at the pre-Ericsson opinion of Judge James Holderman of the Northern District of Illinois in the Innovatio case. Bear in mind that he was making new law to a large degree, which he then had to apply to a complex set of facts. To me, he seems to have done a rather good job.

The plaintiff, acquired the patents in suit from Broadcom Corporation, one of the early developers of the Wi-Fi wireless technology described in Part I. The patents were all SEPs to the 802.11 Wi-Fi standard and were all subject to FRAND commitments. As part of the transaction, Broadcom received licenses under the patents.

Innovatio sent typical troll letters, not to the manufacturers, but to coffee shops and the like which provided Wi-Fi capability to its customers. The letters, of course, provided no details, and offered licenses at costs ridiculously below litigation costs. The manufactures of the equipment needed to provide Wi-Fi capability brought declaratory judgment actions in several different courts against Innovatio, and Innovatio responded with infringement actions based on the patents. Because of the numerous related cases, the so-called “multi-district litigation” procedures were invoked and the cases were transferred to the Northern District of Illinois for pretrial coordination. The case ended up before Judge Holderman.

Following discovery, the parties and the court agreed to take a detour and evaluate the potential damages available to Innovatio if the patents were found to be valid and infringed. The hope was that determining potential damages at that point would encourage settlement by allowing the parties to better evaluate the potential risks and benefits of going forward with the litigation. The full article describes how things went from that point.

We also take a look at a trial court decision in a recent FRAND case in the UK, Unwired Planet v. Huawei, also involving a PAE. It is the first UK court decision in this area. We look at several interesting general principles decided and their application to a specific set of facts and possible differences in how UK law may end up diverging from that in the U.S.

Next, we take a look at a recent decision by the Korea Fair Trade Commission (“KFTC”) which imposed an $865 Million fine and a corrective order against Qualcomm, the largest fine ever imposed by the KFTC. We will also mention briefly antitrust investigations and litigation elsewhere involving Qualcom’s licensing practices.

Finally, we note the settlement of the world-wide patent disputes between Nokia and Apple, apparently including the antitrust suit filed by Apple against Nokia and several patent assertion entities to whom Nokia sold portfolios of its patents – many of them SEPs subject to FRAND commitments.

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