Ericsson is a company that holds a significant number of standard-essential patents, and often seeks to monetize and enforce them. (They were just awarded infringement damages in Texas, and they’re engaged in an SEP duel with Samsung in the ITC and in Texas). It wasn’t surprising, then, when Ericsson last week suggested a framework for the ITC to consider FRAND issues in Section 337 investigations. But yesterday, Ericsson went even further, submitting a “Notice of New Authority” to the ITC in its offensive case against Samsung and expressly requesting that ALJ David P. Shaw (who seems to get all of the SEP cases at the ITC!) make a determination of FRAND licensing terms for several Ericsson SEP portfolios.
[337-TA-862 Ericsson Notice of New Authority]
In Ericsson’s complaint that led to this investigation, Ericsson asserted six patents that it claims are essential to various 2G, 3G, and 4G (LTE) cellular standards, and well as the IEEE 802.11 wireless networking standard. In its response to the complaint, Samsung alleged that Ericsson breached its FRAND obligations to various standard-setting bodies, such as the IEEE and ETSI. Ericsson does not dispute that the patents are subject to FRAND obligations, but does not believe that its licensing and enforcement activities violate any of these obligations. Ericsson points out that in the -862 investigation, FRAND issues have been the subject of “at least 16 depositions, 9 expert reports, more than 250 written discovery requests, and thousands of pages of produced documents” — and that experts have already opined on the the appropriate FRAND royalty rates for Ericssons patents essential to 2G, 3G, LTE, and 802.11 standards (it’s worth pointing out that it’s unclear which particular cellular standards Ericsson is referring to as “2G” and “3G” here, as these can encompass multiple standards from multiple SSOs).
Based on this evidentiary record — which Ericsson calls “extensive” — Ericsson expressly requests that ALJ Shaw include in his Final Initial Determination explicit factual findings on FRAND issues, including but not limited to an express finding as to whether the royalty rates offered to Samsung by Ericsson for a license to Ericsson’s worldwide portfolio of patents essential to the 2G, 3G, LTE, and 802.11 standards are FRAND (and if they are not FRAND, what royalty rates would be FRAND). Ericsson asserts that this would allow it to make a judicially-determined FRAND offer to Samsung before any exclusionary relief might be issued by the ITC, an approach consistent with the “conditional exclusion order” framework Ericsson proposed to the ITC last week.
Specifically, Ericsson submits that the ALJ (and/or the Commission) consider the following factors in making its FRAND determination:
- The extent of the patent owner’s contribution to the standard and how thepatent owner’s contribution compares to the contributions of other patent owners;
- The licensing terms entered into by the patent owner with other licensees;
- The licensing terms in other comparable licenses for patents essential to the same standard;
- The nature of and revenues and profits associated with the infringing products sold by the putative licensee;
- Whether the licensing terms will ensure the patent owner’s continued participation in standard-setting activities and fairly reward the patent owner’s technological breakthroughs in relation to standardized technologies;
- The extent to which the patent owner’s standardized technology is incorporated into the putative licensee’s standard-compliant products and the value of the standardized technology to those products;
- The value conferred on the end user by the patent owner’s patented standard-essential technology;
- The strength of the patent owner’s standard essential patents; and
- Whether the licensing terms will deny the putative licensee access to the standard and/or contribute to an unsustainable aggregate royalty burden.
Some of these factors are similar to those considered by Judge Robart in his RAND-modified Georgia-Pacific analysis, while others are different. Essentially, though, it appears that Ericsson is asking the ALJ to undertake a Microsoft-Motorola-like analysis for at least four different portfolios — a process that took over two years in Judge Robart’s court for just two portfolios. But it’s worth noting that unlike in the -794, -800, and -837 cases, certain public interest issues (i.e., the FRAND issues) have been delegated to ALJ Shaw in this case, so it appears that Ericsson’s request may be within his power to opine on. We’ll have to see what he intends to do (and how Samsung responds to Ericsson’s request as well).