Magistrate Judge K. Nicole Mitchell of the Eastern District of Texas recently denied patent owner Cellular Communications Equipment LLC (“Cellular” or “CCE”) motion for summary judgment that its asserted patents were not essential to a cellular standard, ruling that there was a factual dispute based on statements made by patent owner Cellular during the litigation.  This case illustrates problems in loosely referring to standard essential patents generically as patents relevant to a standard or erroneously stating that a patent was “declared essential.”  Declarations that patent owners submit to standard setting bodies typically do not declare that patents are essential to the standard, but identify patents that may be essential to the standard and what licensing terms, if any, they would offer if the patent actually is essential.  A patent is not actually a “standard essential patent” or “SEP” unless it is “essential” to the standard under the standard setting body’s intellectual property rights (IPR) policy.

Further, this case illustrates that,  just because a patent is infringed by one way of implementing the standard does not mean that the patent covers every way to implement the standard and, thus, may be “essential” and subject to a standard-setting licensing commitment.

In sum, for convenience, speakers, writers and parties may loosely talk about a patent or patent portfolio as being SEP(s) as a short-hand for patents that were declared potentially an SEP.  But, when making statements on which a court, agency or other decisions may rely, it may be helpful to be more precise or provide a caveat that the term SEP is being used as a short-hand and does not mean that a patent actually is essential to the standard.


In 2010, Nokia Siemens Network (“Nokia” or “NSN”) submitted a declaration to the European Telecommunications Standards Institute (ETSI) that its U.S. Pat. No. 7,941,174 (“the ‘174 Patent”) was potentially essential to a cellular standard and that  Nokia was prepared to office a license on fair, reasonable, and non-discriminatory (FRAND) terms to the extent the patent is essential to the standard.   Specifically, Nokia’s declaration stated it would grant FRAND licenses “[t]o the extent that the IPR(s) disclosed in the attached IPR Information Statement Annex are or become, and remain ESSENTIAL in respect of the ETSI Work Item, STANDARD and/or TECHNICAL SPECIFICATION.”  ETSI’s Rules of Procedure define “essential” to mean “that it is not possible on technical (but not commercial) grounds … to make, sell, lease, otherwise dispose of, repair, use or operating EQUIPMENT or METHODS which comply with a STANDARD without infringing that IPR.”  ETSI’s IPR Policy also required Nokia to ensure that its FRAND commitment is binding on future owners of the patent.

Nokia later assigned the ‘174 Patent to Cellular.  Cellular filed an infringement lawsuit against, among others, ZTE Corp. (“ZTE”).  During the litigation, the court required Cellular to submit a FRAND Statement that identified which patents were standard essential patents.  Cellular stated that the ‘174 Patent was one of the “patents that have been declared essential to practicing a standard” and that Cellular “considers each of the above-listed patents to be standards essential, and CCE [Cellular] is prepared to grant irrevocable licenses to the above -listed patents on fair, reasonable, and non-discriminatory terms.”

Cellular later brought a motion for summary judgment seeking to dismiss ZTE’s FRAND defenses and counterclaims, arguing that there was no FRAND commitment because the ‘174 Patent was not essential to the standard.  Cellullar argued that there was no evidence that the patents were essential to the standard, its technical expert did not find it was impossible to comply with the standard without infringing the ‘174 Patent, ZTE’s expert concluded that the ‘174 Patent is not essential and no expert did a limitation-by-limitation reading of a claim of the ‘174 Patent onto the standard.

ZTE argued, however, that Plaintiff’s responses during the litigation created a genuine issue of material fact of whether the ‘174 Patent was essential to the standard.  ZTE argued that Cellular’s FRAND Statement should not be easily dismissed, because it was given in response to a court order.  Further, Cellular’s infringement contentions and expert reports effectively equated infringement of the ‘174 Patent with implementing the standard, thus implicating essentiality.

In response, Cellular argued that the “effectively equating infringement … with implementation” of a standard is not the proper test for essentiality.  Rather, there must be a stringent analysis showing that complying with the standard necessarily requires infringing the ‘174 Patent.  In contrast, Cellular’s infringement contentions and expert reports analyzed a specific implementation of the standard by certain source code.  The did not analyze implementation of the standard generally — e.g., whether it is not possible on technical grounds to implement the standard without infringing the ‘174 Patent.

Further, Cellular’s discovery responses stated that it had not determined whether the ‘174 Patent claims are essential as defined under the ETSI IPR Policy and that Cellular did not contend that the ‘174 Patent was essential to the standard.  Cellular argued that its FRAND Statement did not declare the ‘174 Patent to be essential under ETSI’s IPR Policy, but simply used the generic phrase “standards essential” to indicate that the patent covers some aspect of certain standards.


At the outset, Judge Mitchell explained the difficult summary judgment standard that required Cellular to show that there is no genuine dispute of material facts — i.e., no reasonably jury could return a verdict in favor of ZTE based on all of the evidence with all facts and inferences viewed most favorably to ZTE.

Judge Mitchell ruled that Cellular’s FRAND Statement to the court “clearly indicates that it considered the ‘174 Patent to be standards essential and that it was prepared to license the ‘174 Patent at a FRAND rate.”  Further, Cellular’s expert’s report stated that he has “never come across a single incidence where the Qualcomm code did not encompass the 3GPP standards” and that, as such, ZTE’s accused products using that code were “designed to comply with the 3GPP standards.”  Judge Mitchell found that this statement “equates [ZTE’s infringement] of the ‘174 Patent with compliance of the 3GPP standards, thus implicating the essentiality of the ‘174 Patent.”  Accordingly, when viewed in the light most favorable to ZTE, there are genuine issues of material fact that precluded granting summary judgement.

Note that the procedural posture of this ruling under the summary judgment standard is important when considering its scope.  For example, the expert report statement about the software code probably was intended by patent owner Cellular to indicate that ZTE’s products that use the software code practice the standard.  But it probably was not intended to mean that it was the only possible way to implement the standard and, thus, was “essential” under ETSI’s IPR Policy.  Basically, ZTE probably was trying to straddle the line between an essential and non-essential patent that is infringed by a standard-compliant product:

  1. Not Essential To the Standard: ZTE used one way to implement the standard which also infringes the ‘174 Patent, but there may be other technically feasible ways to implement the standard without infringing the ‘174 Patent.  So the patent is not essential under the ETSI IPR Policy.
  2. Essential To the Standard: ZTE used the only possible technical way to implement the standard and that way infringes the ‘174 Patent.  So the patent is essential under the ETSI IPR Policy.

Said another way:  All standard essential patents are infringed by products implementing the standard, but not all patents that are infringed by products implementing the standard are standard essential patents.  Distinguishing between the two types of patents, at least under the ETSI IPR Policy, require’s determining whether the patent covers all possible technical ways to implement the standard.

This is where the summary judgment standard comes in:  Judge Mitchell was not necessarily ruling that the expert report statement meant that the patents actually were essential to the standard.  Rather, if viewed in the light most favorable to ZTE, a reasonable juror could find as a matter of fact that the ‘174 Patent was essential to the standard under ETSI’s IPR Policy based on the expert report statement taken along with Cellular’s FRAND Statement.  Then again, a reasonable juror could find that the patent was not essential based on that same evidence.  Reasonable jurors could find either way, so the issue must be presented to the jury to make the call.