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Increasing Transparency and Reducing Transaction Costs in 5G SEP Licensing

The advent of 5G promises a new era of speed, throughput and bandwidth for cellular networks, however the world of telecommunications and licensing faces several challenges in preparation for its arrival. Although wireless technology has continued to evolve over the years, traditional SEP licensing models have seemingly been left behind and may no longer be adequate to address the needs of companies seeking to implement 5G into their products. As the Internet of Things becomes an increasingly integral part of products across market areas, more and more companies of all industries and sizes will need to invest in 5G technology to become part of the network. The growing number of players and technology complexity involved with 5G has created an unprecedented need for simpler and more transparent frameworks for licensing, patent pools and standards that can be scaled across diverse market segments. Existing methods require significant investments of time, budget...

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Standard Essential Patent Licensing Practices Do Not Violate Antitrust Laws

The US Court of Appeals for the Ninth Circuit vacated a district court decision that found Qualcomm’s patent licensing practices violate antitrust laws and reversed a permanent, worldwide injunction against several of Qualcomm’s business practices. Fed. Trade Comm’n v. Qualcomm Inc., Case No. 19-16122 (9th Cir. Aug. 11, 2020) (C.J. Callahan). Qualcomm sells modem chips that are incorporated into cellular handsets (i.e., smartphones) made by companies such as Samsung, Huawai, Apple and others. Qualcomm also holds a number of standard essential patents (SEPs) implemented by modem chips that are essential to cellular communication standards. A core part of Qualcomm’s business model is that it only licenses its SEPs to smartphone makers, i.e., its original equipment manufacturer (OEM) customers, not to rival modem chip suppliers—even though its rivals’ chips practice Qualcomm’s SEPs. Doing this allows Qualcomm to maximize its profits by charging royalty rates...

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Landmark Decision in German FRAND Case

On May 5, 2020, an oral hearing in Germany’s most recent landmark case on standard-essential patents (SEPs) and fair, reasonable and non-discriminatory (FRAND) licensing (Sisvel v. Haier, docket no. KZR 36/17) took place before the German Federal Court of Justice (FCJ). Key takeaways from the oral hearing According to the provisional view of the FCJ, as expressed during the oral hearing, a SEP holder is obliged to provide the information that an implementer needs for making a FRAND offer or for assessing FRAND compliance of an offer that the SEP holder made. This includes information on existing licenses and, if applicable, on why the SEP holder feels it may treat the implementer differently from certain existing licensees. An implementer must not delay negotiations and must constructively work together with the SEP holder in FRAND negotiations. In particular, it is important for an implementer to clearly declare that it is willing to take a FRAND license on...

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District Court Violated Ericsson’s Right to Trial by Jury in Setting FRAND Rate

The US Court of Appeals for the Federal Circuit vacated a district court decision setting license rates for standard-essential patents (SEPs), holding that the district court deprived the patent owner of its constitutional right to trial by jury. TCL Commc’n Tech. Holdings Ltd. v. Telefonaktiebolaget LM Ericsson, Case Nos. 8-1363, -1732 (Fed. Cir., Dec. 5, 2019) (Chen, J.). Ericsson holds a number of patents that are essential to the 2G, 3G and 4G mobile communications standards set by the European Telecommunications Standards Institute (ETSI). As a member of ETSI, Ericsson has agreed to license its SEPs to implementers of the ETSI standards on fair, reasonable and non-discriminatory (FRAND) terms. TCL manufactures mobile devices that implement the ETSI standards. Ericsson and TCL have been engaged in a long-running dispute over rates for Ericsson’s SEPs. In 2014, TCL filed suit seeking declaratory judgment that Ericsson had failed to offer FRAND rates for...

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