Update on major FRAND/SEP cases and developments during 2021-22

1. State Bar of Michigan Intellectual Property Law Section (IPLS)
47th Annual Intellectual Property Law Institute
Patent Advanced Session:
Standards, Patents and Fair, Reasonable and
Nondiscriminatory Licensing (FRAND)
July 21, 2022
Professor Jorge L. Contreras
University of Utah, Salt Lake City, Utah, USA

2. Overview
1. Standardization Overview
2. Patents and Standards
3. Essentiality and Disclosure
4. FRAND
5. Nondiscrimination
6. Competition and Standards
7. Injunctions and Standards
8. Global FRAND Litigation
9. Ways Forward

3. Part 1
Introduction to Standardization

4. Types of Standards
• Informational
• Quality
• Health and Safety
• Interoperability
4

5. The universe of interop standards

6. But adoption is not universal…

7. The Benefits of Interoperability
7
Network Effects

8. Importance of standards for the future

9. Where are Standards Developed?
• Government
• Companies (Adobe .PDF  de facto standard)
• Standards-Development Organizations (SDOs)
and Standard-Setting Organizations (SSOs)
• Voluntary, consensus SDOs

10. Standards Development Organizations
1. Formally-Recognized
2. Quasi-Formal
3. Consortia
Voluntary consensus paradigm

11. Firm-Level SDO Participation
Source: Baron & Spulber (2018)

12. Voluntary Consensus Standard Setting
• Industry membership
• Volunteer participation
• Consensus-based approval
• Voluntary adoption
• Patents can be obtained by participants

13. Trade Law and Standards
• WTO Agreement on Technical Barriers to
Trade (TBT)
• Do not let standards become “unnecessary
obstacles” to trade
• E.g., standards that bar imports of goods
• WTO TBT Code of Good Practice (Annex 3)
• Procedures for open standard review and adoption

14. Direct Regulation of SDOs
• EU Reg. 1025/2012
• Applies to European standards bodies and
national SDOs
• Transparency
• stakeholder participation (including by
consumer, environmental and social
organizations, SMEs and public authorities
• U.S.
• National Technology Transfer and
Advancement Act (1995) and OMB Circular A-
119 (2016)
• US federal agency preference for private
standards over government-specific standards
• Applies both to regulation and procurement

15. Is this traditional model still accurate?

16. Part 2
Patents and Standards

17. Patent families and Standards
• GSM (2G)
• 2,200 Baron & Pohlman, 2018)
• UMTS (3G)
• 9,400 (Baron & Pohlman, 2018)
• LTE (4G)
• 11,600 (Baron & Pohlman, 2018)
• 5G
• 32,000 (Buggenhagen & Blind, 2022)
251 Standards
17
(Biddle et al. 2010)

18. Top Holders of 5G
patents
(Buggenhagen & Blind, 2022)

19. 19
Patent Issues in Standard Setting
Patent stacking
• Many independent patent holders each
require a royalty
Patent “hold up”
• Patent holders use leverage to demand
excessive royalty

20. Lock-In and Switching Costs
20

21. Standards Hold-Up
the imposition of excessive patent royalty demands after a
standard has been widely adopted in the market
21

22. How SDOs attempt to address hold-up
22
• Disclosure Policies
• SDO participants must disclose essential
patents prior to approval of standard
• Licensing Policies
• SDO participants commit to license
essential patents
• Terms are Fair, Reasonable and
Nondiscriminatory (FRAND)
• Either royalty-free (RF or RAND-z) or
• At FRAND rates

23. Part 3
Essentiality and Disclosure

24. Essentiality
• SDO Policies require disclosure (and licensing) of
“essential” patents
• Patent claim that would necessarily be infringed by implementation
of the standard
• Technically v. Commercially essential
?
=

25. Patent Policy (Selections)
Standards that call for the use of a patented item or process
may not be considered by a JEDEC committee unless all of
the relevant technical information covered by the patent or
pending patent is known to the committee, subcommittee, or
working group.
No program standard shall refer to a patented item or
process unless all of the technical information covered by the
patent is known to the formulating committee or working
group . . . .
25

26. Rambus v. Infineon (Fed. Cir. 2003)
• US Dist Ct – ED Virginia (Aug. 2001)
• Rambus committed fraud in JEDEC standard-
setting activities
• CAFC (Jan. 2003)
• Numerous areas of unclarity in JEDEC policy
• No affirmative duty to disclose
• Unclear what patents are covered
• Unclear when a duty arises
• “there is a staggering lack of defining details in the
EIA/JEDEC patent policy”
• Rambus may have “dubious business ethics”,
but it did not breach the JEDEC policy
26

27. 27
FTC v. Rambus
FTC decision (2006)
•Monopolization (Sherman Sec. 2)
•Deception  unfair method of
competition (FTC Act Sec. 5)
DC Circuit (2008)
•Reversed: no antitrust injury

28. The Rambus Disputes - Results
28

29. Qualcomm v. Broadcom (Fed. Cir. 2008)
JVT ToR, Sec. 3.2 Collection of IPR information
during the standardization process:
“According to the ITU-T and ISO/IEC IPR policy,
members/experts are encouraged to disclose as soon as
possible IPR information (of their own or anyone else’s)
associated with any standardization proposal (of their own
or anyone else’s). Such information should be provided on
a best effort basis.”

30. An implicit duty
“while the district court concluded that there was no
express disclosure requirement in the written policies
apart from the submission of technical proposals, it found
“clear and convincing evidence that JVT participants
treated the JVT IPR Policies as imposing a duty to
disclose”

31. Qualcomm: Remedies
• Implicit Waiver
• Qualcomm waives right to enforce patents
• Unenforceability
• Result of waiver
• Patents cannot be asserted against H.264-
compliant products
• Not all products
 Severe penalties for under-disclosure
have led to over-disclosure

32. Over-Disclosure
• Severe penalties for failing to disclose SEPs
• But few penalties for over-disclosing
• Result?
• Over-disclosure rates of >50%
• Implications?
• Over-values some portfolios compared to others
• Unjustified royalties when based on comparables
• Increased difficulty/cost analyzing asserted
portfolios

33. Verifying Essentiality
• Focus by EC
• Essentiality checks done for
patent pools
• But not for standards
• Too expensive ($10K per patent)
• Too many standards fail
• Too slow
• SDOs are administrative only
• Not required by Antitrust law

34. Part 4
FRAND LICENSING

35. How SDOs attempt to address hold-up
• Disclosure Policies
• SDO participants must disclose essential
patents prior to approval of standard
• Licensing Policies
• SDO participants commit to license
essential patents
• Terms are Fair, Reasonable and
Nondiscriminatory (FRAND)
• Either royalty-free (RF or RAND-z) or
• At FRAND rates
35

36. Origins of FRAND
• Early-mid 20th Cen.
• DOJ antitrust enforcement against
anticompetitive activity involving
patents
• Patent holders ordered to grant
licenses to all applicants on
FRAND terms
• US v. Hartford Empire, 324 U.S.
570 (1945)
• Approx. 100 US court orders
1940s-1970s
• Contreras, A Brief History of
FRAND, 80 Antitrust L.J. 39 (2015)

37. What SDO Licensing commitments are
supposed to accomplish
• Assure implementers that
licenses to all essential patents
will be available
• Remove hesitation over adopting
a patent-encumbered standard
• Patent holders cannot “hold up”
the market
• Patent holders cannot lock-out
competitors
• No implementer will be
advantaged over another
37

38. Royalty-Free Standards

39. FRAND Commitments
A holder of standards-essential patents must
offer all implementers of the standard
“reasonable terms and conditions that are
demonstrably free of any unfair discrimination”
ANSI Essential Requirements, 3.1.1.b
“the Director-General of ETSI shall immediately
request the owner to give within three months
an irrevocable undertaking in writing that it is
prepared to grant irrevocable licences on fair,
reasonable and non-discriminatory (“FRAND”)
terms and conditions”
ETSI IPR Policy 6.1
39

40. Structure of FRAND Commitments
40

41. The Smart Phone Wars

42. The Standards War to Come?

43. What went wrong (with FRAND)?
• FRAND obligation is vague
• Implementers and Patent Holders do not
engage widely in bilateral ex ante negotiations:
• High transaction costs
– Many standards, many patent holders
• Reliance on cross-license history
• Uncertain product markets
• Uncertain patent quality
• Over-Disclosure
• Sleeping Dogs
• False security blanket
43

44. FRAND Royalty Disputes
Issues/Questions:
• Did SEP holder comply with its FRAND obligation?
• Direct “breach of contract” claim or defense to infringement action
• Is implementer entitled to benefit of the FRAND
commitment? (third party beneficiary)
• What is the FRAND rate/range?
• Did implementer act in bad faith (holdout)?

45. Major Cases Calculating FRAND Royalties
• US
• Microsoft v. Motorola
• Innovatio
• Ericsson v. D-Link (jury)
• Realtek v. LSI (jury)
• CSIRO v. Cisco
• TCL v. Ericsson
• HTC v. Ericsson
• UK
• Unwired Planet v. Huawei
• Japan
• Apple Japan v. Samsung
• China
• InterDigital v. Huawei
• InterDigital v. Xiaomi
• Huawei v. Conversant Colin Birss, J.
Judge James Robart

46. Microsoft v. Motorola (W.D. Wash. 2013)
• Bench trial on FRAND
• Recognizes
 Stacking
 Public Interest
Based on relative value
 Patents to standard
 Standard to product
Modified Georgia-Pacific
analysis
Moto patents not very
valuable
$4B  $1.8M/year
46

47. Ericsson v. D-Link (Fed. Cir. 2014)
• Jury verdict on FRAND rate
• Challenges to jury instructions on appeal
• Royalty “must be based on the incremental value that the patented
invention adds to the end product … not any value added by the
standard’s adoption of the patented technology.”
• “ex ante” rule - SEP value = value of technology before adoption of the
standard

48. Royalty Base
Cornell v. Hewlett-Packard (N.D.N.Y. 2009)

49. Entire Market Value vs.
Smallest Salable Patent Practicing Unit (SSPPU)
• Entire Market Value as royalty base if:
• Infringing component is basis for customer demand for the entire
product
• Individual infringing and non-infringing components sold together to
form a functional unit
• Individual infringing and non-infringing components must be
analogous to a single functioning unit, not sold together for mere
business advantage
• Otherwise SSPPU?

50. Ericsson v. D-Link (Fed. Cir. 2014)
• Apportionment
• Entire market value rule (EMVR): royalty base can be end product
price when the patented feature is the “sole driver” of demand
• Otherwise, base should be the smallest saleable patent-practicing
unit (SSPPU): smallest component that can be priced and that fully
captures the patented feature

51. Bottom-up Methodologies
• Traditional patent damages calculation (reasonable
royalty)
• Used in Microsoft and Ericsson v. D-Link
• Hypothetical negotiation
• Incremental value
• Comparable licenses
• SEP-by-SEP, Patentee-by-patentee
• No coordination among patentees/cases/courts
• Every patentee overvalues its own SEPs
• Little consideration of other components/patents
• Plaintiff: incentive to under-value others
• Defendant: has little knowledge of others
• Total not known until all proceedings complete
• Total royalties attributable to standard are likely to differ
(widely) from actual value of standardized feature

52. Your results may vary:
U.S. Judicial FRAND Rates for 802.11
• 35 out of 3,000 patents
• 4.5% combined royalty
• Differing methodologies, results
Source: Bartlett & Contreras (2017)

53. An Alternative: Top-Down Royalty Calculation
1. Establish total aggregate value attributable to standard
2. Allocate appropriate share to each patent holder
Benefits:
• Accuracy - Total value attributable to standard is computed
deliberately, not thru aggregation of independent, serial
cases
• Fairness to patentees – every patentee can participate in
the aggregate and share determination; eliminates inequities
due to forum/timing of suit
• Fairness to licensees – payment consistency among
competitors, superior planning opportunities
• Precedent – this is already done with patent pools and
group pledge commitments

54. Top-Down Approach
Wi-Fi Patent Value (12)
Total Device Value (100)
Allocated value (0.3)

55. Apple Japan v. Samsung (IP High Ct. 2014)
 Top-down FRAND royalty calculation
 5% aggregate royalty for ETSI’s 3G UMTS standard
 Based on four public statements and informal agreements among
industry participants relating to an aggregate 5% royalty cap for UMTS
SEPs
• Court: “many owners of the UMTS standard essential patents
support the 5% aggregate royalty cap with a view to preventing the
aggregate cap from being excessively high.”

56. Top-Down Global FRAND Rates
• Unwired Planet v. Huawei (UK EWHC 2017)
• Major Markets - baseline rate
• 17 countries w/ 3+ patents
• China + Minor Markets -50% of baseline
• TCL v. Ericsson (CD Cal. 2018, rev’d Fed. Cir.)
2G 3G 4G
United States 100% 100% 100%
Europe 72.2% 87.9% n/a
China/ROW 54.9% 74.8% 69.8%

57. HTC v. Ericsson (5th Cir. 2021)
• Affirms jury FRAND determination in EDTX
• Apportionment of damages not necessary to
FRAND determination
while the Federal Circuit's patent law
methodology can serve as guidance in
contract cases on questions of patent valuation
… it does not explicitly govern the
interpretation of contractual terms, even terms
that are intertwined with patent law.
• French law
• needs to be considered for ETSI FRAND
commitments, though not in detail

58. Apple v. Ericsson (EDTX, WDTX)
• Expiration of 2015 licensing deal for 2G/3G/4G SEPs
• Oct 2021
• Ericsson sues in EDTX for declaration of FRAND compliance
• Challenges Apple’s 2019 FRAND “manifesto”:
• Licensed patents must be essential, infringed, valid and enforceable
• Royalties based on SSPPU
• Pricing based on value to end users is discriminatory
• Refusing to license component manufacturers is discriminatory
• Jan. 2022
• Ericsson sues in WDTX for infringement of 12 SEPs
• Apr. 2022
• Apple counterclaims in EDTX asserting 3 patents covering Ericsson
base stations

59. Non-U.S. FRAND rate cases
• Access Advance (Düsseldorf)
• 2020: Dolby GE, Philips v. MAS Elektronik
• HEVC pool rates are FRAND
• 2022: GE, Dolby, Philips and IP Bridge v. Vestal
• HEVC rate not FRAND due to “duplicate” royalty policy
• Some AA patents may already be licensed under MPEG-LA pool
• AA does not guaranty reimbursement of duplicate royalties paid
• But injunction denied due to conduct of members

60. Pre-Commitment to Judicial Rates
• Optis v. Apple (UK High Ct. (Pat.), Sep. 27, 2021)
• “Apple can only rely on Optis’ undertaking to ETSI if it (Apple) commits
to enter into the FRAND licence determined at Trial”
“To the extent that an implementer might exit the UK market simply to
try to avoid the consequence of having to enter into a worldwide
licence, with a view to avoiding paying Royalties in respect of some
territories altogether by leveraging the resulting delay, that is not
something that deserves any sympathy or militates in favour of Apple’s
interpretation of clause 6.1 [of the ETSI policy]”
• Apple agrees to take court-determined FRAND license (Nov.
2021)
• FRAND rate trial scheduled for summer 2022

61. Part 5
Nondiscrimination

62. Typical FRAND Language
A holder of standards-essential patents must
offer all implementers of the standard
“reasonable terms and conditions that are
demonstrably free of any unfair discrimination”
ANSI Essential Requirements, 3.1.1.b
“the Director-General of ETSI shall immediately
request the owner to give within three months
an irrevocable undertaking in writing that it is
prepared to grant irrevocable licences on fair,
reasonable and non-discriminatory (“FRAND”)
terms and conditions”
ETSI IPR Policy 6.1
62

63. “All Applicants” and the Origins of FRAND
• U.S. v. Hartford-Empire (U.S.
1945)
• Antitrust actions for
anticompetitive activity
involving patents
• Patent holders ordered to
grant licenses to all
applicants on FRAND terms

64. Level Discrimination
• Refusal to license upstream
producers to capture greater
% of downstream product
value
• Conflict with “all applicants”
language?
• Banned by IEEE (2015)
Chinese iPhone Wi-
Fi/BT chip
$5.00
Apple iPhone
$800
Audi A7 w/
Apple CarPlay
$70,000

65. Similarly situated
TCL v. Ericsson (CD Cal. 2018), rev’d on other grounds
• ND based on companies similarly situated to TCL
• Chinese “low end” phone manufacturer (sold as Alcatel, Blackberry)
• Basis for comparison is “all firms reasonably well-established
in the world market” [for telecommunications products]
• Exclude: “local kings” – firms that sell most of their products in a
single country (e.g., India’s Karbonn and China’s Coolpad)
• Include: Apple, Samsung, Huawei, LG, HTC and ZTE
• “prohibition on discrimination would mean very little if the largest,
most profitable firms could always be a category unto themselves
simply because they were the largest and most profitable firms”

66. Unwired Planet v. Huawei (UK 2017), aff’d 2020
No Size-Based Discrimination: “An appropriate way to
determine a FRAND royalty is to determine a benchmark rate
which is governed by the value of the patentee’s portfolio
…The rate does not vary depending on the size of the
licensee ... Small new entrants are entitled to pay a royalty
based on the same benchmark as established large entities”
¶806(8)

67. Hard-Edged ND
Unwired Planet: “The non-discrimination limb of FRAND
does not consist of a further “hard edged” component which
would justify a licensee demanding a lower rate than the
benchmark rate because that lower rate had in fact been
given to a different but similarly situated licensee. If FRAND
does include such a component, then that obligation would
only apply if the difference would distort competition
between the two licensees ”

68. Other open ND Questions
• How much can prices vary:
• Based on licensee size?
• Based on volume?
• Is every licensee entitled to the same % rate, no matter how
expensive or inexpensive its products?
• Is “use-based” pricing permitted?
• Price varies based on usage
• Exhaustion issues?
• ND over time
• Can licensee retroactively adjust rate if a better one is found later?
• Can licensor ever offer a lower rate (i.e., does ND = MFN?)

69. Part 6
Standards and Competition

70. Antitrust and Competition Laws
• Protect competition against private restraint
• Unilateral conduct - monopolization, abuse of dominant position
• Concerted conduct - cartel
• Enforcement
• Government agency
• Private claims

71. Process Abuse
ASME v. Hydrolevel (U.S. 1982)
SDO
misrepresentations,
failure to certify can
amount to
anticompetitive
conduct
Contreras - Standards - May 17,
2013
71

72. Allied Tube v. Indian Head (US 1988)
Final vote: 394-390
Contreras - Standards - May 17, 2013
72

73. Improper Exclusion
Addamax v. Open Software Fnd. (1st Cir. 1998)
Addamax
DEC, HP,
IBM,
Siemens,
etc.

74. Due Process in Standard Setting
• Fair, open and transparent process
• Membership open to all interested parties on a non-
discriminatory basis
• Prohibit sharing of competitive information
• Compliance with standards is voluntary
• Participation not conditioned on use of standards
Contreras - Standards - May 17, 2013
74

75. U.S. FTC v. Qualcomm
• FTC alleges violations of FTC Act, Sherman Act
• Linking sale of baseband chips to patent licenses
• Refusal to license at component level
• Exclusive license with Apple forecloses competition, market entry
• District Court (ND Cal., 2017) - finds violation
• Ninth Circuit reverses (2020):
[Qualcomm] has asserted its economic muscle with vigor,
imagination, devotion, and ingenuity. It has also acted with
sharp elbows—as businesses often do. Our job is not to
condone or punish Qualcomm for its success, but rather to
assess whether the FTC has met its burden under the rule of
reason to show that Qualcomm's practices have crossed the
line to conduct which unfairly tends to destroy competition
itself. We conclude that the FTC has not met its burden.

76. Continental v. Avanci (5th Cir. 2022)
• Avanci and members’ refusal to license automotive component
manufacturer breached FRAND obligation (i.e., “level
discrimination”) and violated Sherman Act
• NDTX (2020)
• Continental lacks antitrust standing
• Continental has Article III standing for breach/injury claim
• 5th Cir.
• Rehearing in progress
 Antitrust claims for FRAND are increasingly difficult to sustain in
the US

77. Part 7
Standards and Injunctions

78. Theories: why a FRAND commitment
may preclude seeking injunctive relief?
• Economic
giving a patent holder the unjustified leverage of an injunction threat
after a standard is adopted allows it to extract excess rent
• Legal
If a FRAND commitment has been made, then monetary
compensation is, by definition, acceptable to the patent holder, there
is no irreparable harm and public interest is served by prohibiting the
injunction
• Antitrust
Seeking injunctive relief after a standard has been broadly adopted is
an abuse of market power conferred by the standard
78

79. 1. Private Waivers of Injunctive Relief
• Private parties may voluntarily consent to waive right to
injunctive relief
• SDO policies could include such waivers
• IEEE 2015 amendments included such a waiver
• MITI sample Chinese IPR Policy

80. 2. U.S. - eBay v MercExchange (U.S.
2006)
To get an injunction, Plaintiff must demonstrate:
1. That it has suffered an irreparable injury;
2. That remedies available at law, such as
monetary damages, are inadequate to
compensate for that injury;
3. That, considering the balance of hardships
between the plaintiff and defendant, a remedy in
equity is warranted; and
4. That the public interest would not be disserved
by a permanent injunction

81. FRAND and eBay Analysis
Apple v. Motorola (Fed. Cir. 2014)
• N.D. Ill (Posner): existence of a FRAND commitment
categorically precludes injunctive relief
• Federal Circuit
• Majority (Reyna): no per se rule, but ct. correctly applied eBay
and found no irreparable harm
• Concurrence (Prost): there should be a presumption against
injunctions for FRAND
• Dissent (Rader): Ct. should have evaluated Apple’s behavior as
to (un)willingness to license in conducting eBay analysis
81

82. FRAND and ITC Exclusion Orders
• Apple v. Samsung (2013)
• FTC files public interest statement
• USTR disapproves (reverses) exclusion order against Apple:
• Acknowledges importance of standards to economy
• insufficient factual record regarding “the presence or absence of
patent hold-up or reverse hold-up”
• No ITC exclusion order for SEPs since 2013
• Philips v. Thales (Fed. Cir. 2022)
• FTC public interest statement (May 2022)
“exclusionary relief is incongruent and against the public
interest where a court has been asked to resolve FRAND
terms and can make the SEP holder whole”
• Fed. Cir -- No preliminary inj. to prevent Philips from seeking exclusion
order at ITC
• no evidence that Thales lost customers, had customers
delay purchases, or struggled to acquire new business
because of the ongoing ITC proceedings.
• Thales affidavits from clients that they had voiced concerns
and expressed doubt regarding Thales' continued reliability
as a supplier  not sufficient evidence of likelihood of
irreparable harm
Pres. Obama and USTR Michael Froman

83. DOJ’s flip-flopping views on SEP injunctions
• 2013: DOJ + PTO Statement
“In some circumstances, the remedy of an injunction or exclusion order
may be inconsistent with the public interest.”
• 2019: DOJ + PTO + NIST Statement
• Withdraw 2013 Statement
“the remedies that may apply in a given patent case include injunctive
relief, reasonable royalties, lost profits, enhanced damages for willful
infringement, and exclusion orders issued by the U.S. International
Trade Commission. These remedies are equally available in patent
litigation involving standards-essential patents.”
• 2021: DOJ + PTO + NIST
• Draft 2021 Statement released for public comment
• Withdraw 2019 Statement
• Did not reinstate 2013 Statement

84. 3. EU: Huawei v. ZTE (CJEU 2015)
• In Germany, injunctions issue
automatically if infringement is found…
• But does a SEP holder’s seeking an
injunction in the EU constitute an abuse
of dominance?
• Is a dominant position created by holding
SEPs?
• When is seeking an injunction an abuse of
dominant position?

85. EU Injunctions Framework
• Huawei v. ZTE establishes “choreography” for SEP holder
and implementer

86. The Huawei Choreography
1. patentee must notify the defendant of the alleged
infringement;
2. defendant must show its willingness to license on FRAND
terms;
3. patentee must make a specific, written offer for a license
on FRAND terms;
4. defendant must diligently respond to that offer without
delaying tactics;
5. If defendant rejects the patentee’s offer, it must make a
counter-offer on FRAND terms; and
6. If patentee rejects the counter-offer, the defendant must
provide appropriate security (including for past use) and
be able to render an account of its acts of use.
86

87. Abuses of Dominance today
• Philips v. Wiko (Supreme Court of
Netherlands 2022)
• Affirms Appellate Court decisions holding that it is
not an abuse of dominant position under Huawei v.
ZTE for
• SEP holder to refuse to share other FRAND
agreements with a potential licensee
• SEP holder to seek an injunction against a potential
licensee who has not made a FRAND counteroffer
until after suit has been filed by the SEP holder

88. 4. China: Huawei v. InterDigital (2013)
IDC holds 2G/3G/4G SEPs
FRAND licensing negotiation with Huawei fails
2011: IDC brings US ITC action against Huawei
2012: Huawei sues IDC in Shenzhen Intermediate P.C.
2013: Shenzhen court rules:
• IDC violated AML by seeking injunctive relief in face of FRAND
commitment
• IDC demanded excessive royalties from Huawei
• 2% royalty demand  0.019% FRAND royalty

89. Huawei v. Samsung (Shenzhen 2018)
2011: Negotiations for 3G/4G SEPs begin
2018:
• Huawei sues Samsung in Shenzhen
• Shenzhen court finds:
• Samsung infringed
• Huawei complied with FRAND obligations
• Samsung did not comply with its FRAND obligations
• 6-year delay
• Shenzhen court issues injunction against Samsung sale
of products in China

90. Part 8
International FRAND Litigation

91. Underspecified FRAND Commitments
A holder of standards-essential patents must
offer all implementers of the standard
“reasonable terms and conditions that are
demonstrably free of any unfair discrimination”
ANSI Essential Requirements, 3.1.1.b
“the Director-General of ETSI shall immediately
request the owner to give within three months
an irrevocable undertaking in writing that it is
prepared to grant irrevocable licences on fair,
reasonable and non-discriminatory (“FRAND”)
terms and conditions”
ETSI IPR Policy 6.1
91

92. National Determination of Global FRAND
Rates - How it happens?
• FRAND license talks break down
• Patentee sues for infringement
• Implementer sues for breach of
FRAND obligation
• One court determines global FRAND
rate
• Because portfolios/markets are global,
rate/license should be global
• But asserted patents are national …
• If Implementer does not accept
court’s global FRAND license, it may
be subject to national injunction

93. Jurisdictional Competition in FRAND Cases
• If a UK court (Unwired Planet) can force
a global FRAND rate on parties, so can
a court in any other country with a
sufficient domestic market to threaten
parties with a national injunction
• U.S., UK, Germany, France, Japan, China,
Korea, India, etc.

94. The Race to the Courthouse
“first strike” strategy
Patent-friendly?
• Germany
• Texas
• UK?
Patent unfriendly?
• UK?
• India?
• China?
• California?

95. A Global Race to the Bottom?
Jurisdictions compete to
make rules/laws most
attractive to litigants

96. A B
v. B A
v.
ASI Enjoined
AASI
Enjoined
Enjoined
AAASI
Anti-Suit Injunctions
Jorge L. Contreras, It’s Anti-suit
Injunctions All the Way Down – the
Strange New Realities of International
Litigation over Standards-Essential
Patents, IP LITIGATOR, 14-21,
July/August 2020

97. U.S. Anti-Suit Injunction (ASI) Analysis
E & J Gallo Winery v. Andina Licores, 446 F.3d 984, 991 (9th Cir. 2006)
• Are the parties the same?
• If yes, are the issues functionally equivalent?
• If yes, will resolution of local action dispose of foreign action?
• If yes, will foreign action have any of the following effects
(Unterweser, 428 F.2d 888 (5th Cir. 1970)):
(1) frustrate a policy of the local jurisdiction;
(2) be vexatious or oppressive;
(3) threaten the local court’s in rem jurisdiction;
(4) prejudice other equitable considerations
• If yes, will ASI have a significant impact on international comity?
• If no, then ASI may issue.

98. Ericsson v. Samsung: ASI, AASI, AAASI
• Ericsson SEPs covering 3G/4G/5G
• Samsung sues in Wuhan for FRAND
breach and royalty determination
• Wuhan court grants
• ASI -- don’t bring suit elsewhere
• AAASI - don’t try to undo this ASI
• Ericsson sues in Texas
• AASI - prohibits Samsung form enforcing
ASI
• Samsung must indemnify Ericsson for
penalties imposed by Wuhan court

99. SEPAnti-Suit Injunction Scorecard
Case Year 1st Juris. Foreign Juris.
ASI
Granted
AASI
Issued
Microsoft v. Motorola 2012 US DE Yes N/A
Vringo v. ZTE 2015 US CN No N/A
TCL v. Ericsson 2015 US FR,BR, RU, UK, DE, AR Yes N/A
Apple v. Qualcomm 2017 US UK, JP, CN, TW No N/A
Conversant v. Huawei and
ZTE
2018 UK CN Yes* N/A
Optis v. Huawei 2018 US CN No N/A
Huawei v. Samsung 2018 US CN Yes N/A
Continental v. Avanci 2019 US DE N/A DE
IPCom v. Lenovo 2019 US UK, FR N/A UK, FR
Conversant v. Huawei 2020 CN DE Yes N/A
InterDigital v. Xiaomi 2020 CN IN, DE Yes IN, DE
Oppo v. Sharp 2020 CN JP, DE, TW Yes DE
Ericsson v. Samsung 2020 CN US Yes US
IPBridge v. Huawei 2021 CN DE N/A DE
Philips, GE, Mitsubishi v.
Xiaomi
2021 CN DE N/A DE
Ericsson v. Apple 2021 US NL N/A No

100. Pre-Emptive AASIs against Chinese Action
• Jun 2021 - Munich AASI against Huawei (IPBridge v.
Huawei)
• likelihood “that Huawei will file an anti-suit injunction with a Chinese
court in order to prevent [the opposing party] from making SEP
claims in Germany.”
• Jul 2021 - Düsseldorf AASI against Xiaomi (Philips v.
Xiaomi)
• Oct. 2021 - Hague ct. warns Apple that AASI is possible if it
goes to China (Ericsson v. Apple)

101. What’s wrong with jurisdictional competition?
• Distortion of natural (rational) development of law
• Incentivizes parties to litigate early and often (when
negotiation/compromise might be preferable)
• Perceived favoritism/nationalism
• Increases international tensions

102. EU Actions at WTO
• Jul 2021 EU requests information
under TRIPS Art. 63.3
• “further information on the reasoning and
application of” recent CN ASI decisions
• Sep 2021 - China contests obligation
to provide information
• Feb. 2022 - EU Request for
Consultation at WTO re CN ASIs
• Apr. 2022 - U.S., Canada, Japan request
joinder

103. Part 9
Ways Forward

104. Fixing FRAND?
• Fairness/accuracy
• Consistency
• Same methodology for all SEPs in all
countries
• Transparency
• Rates are published and known to market
• Comprehensiveness
• All SEPs are addressed in calculations
• Efficiency
• Reduce unnecessary transaction costs
(negotiation, litigation)
• Eliminate jurisdictional competition

105. Proposals
1. Ex Ante disclosure
2. Policy Clarifications
3. Judicial Harmonization
4. Bilateral Arbitration
5. SDO Aggregate Rates
6. Interpleader
7. Legislation: DACA and Anti-Rate Setting
8. Judicial Stand-Down
9. Global Rate-Setting Tribunal

106. 1. Ex Ante Royalty Disclosure
• Require patent holders to disclose maximum rate before
standard is approved
• Should moderate royalty demands and establish predictability
• Adopted by VITA in 2006 (over objections)
• Approved by DOJ in 2007 (pro-competitive)
• IEEE and ETSI: voluntary ex ante (DOJ 2007)

107. But…
• Ex Ante approach not widely adopted
• Opposition from patent holders
• Scalability (stacking)
• Over-bidding (NGMN)

108. 2. Policy Clarifications
• SDOs can more clearly state what their FRAND
commitments mean
• IEEE 2015
• Must offer to license to all applicants
• No injunctions
• Reasonable royalty may be based on SSPPU
• But significant opposition
• SDOs may not be most qualified

109. 3. International Harmonization
• Different legal systems can harmonize FRAND calculation
methodologies
• Can be implemented by:
• International agreement/treaty
• International guidance
• National statute
• Can eliminate/reduce
• jurisdictional competition
• Inconsistent results

110. 4. Bilateral Arbitration
• Resolve disputes over FRAND rates via private arbitration
• “best offer” arbitration (Lemley & Shapiro 2014)
• Each party provides a sealed offer
• Arbitrator must choose one of these
• Intended to drive parties toward the reasonable level
• But does not help the industry generally
• No rationale given for FRAND determination
• Secrecy/confidentiality of rationales
• Other disputes could be decided differently
• No guidance for industry

111. 5. SDO Aggregate Rates
• “Pseudo-Pool” approach (Contreras 2013)
• SDO convenes all interested parties (SEP holders,
implementers, consumers, government) to agree on
• Aggregate “top down” value of standard
• Allocation of proceeds among SEP holders
• Penalty for over-declaration reduces allocated share
• SEP holders continue to license bilaterally, but charging only
the agreed portion of total rate
• Avoids need/cost of essentiality analysis
• Achieves top-down result (eliminates stacking)
• BUT, needs acknowledgement by antitrust agencies that
collective, neutral rate-setting is procompetitive
• And SDOs not (yet) willing to do this…

112. 6. Interpleader
• Judicial requirement that all
interested parties appear in a single
action (Bartlett & Contreras 2017)
• Possible to “summon” all parties
when the first dispute over a
standard arises
• Need to determine top-down rate
• Each party must bring evidence of its SEP
value
• Judge determines aggregate rate
and allocation

113. 7. Judicial Stand-Down (national rates)
• National courts decline to
determine global FRAND rates
• Limit decisions to national rates
• Eliminates need for ASI arms race,
• Eliminates judicial competition
• Allows time to develop
international solutions

114. 8. Protective US Legislation
• Defending American Courts Act (DACA)
• Statutory Anti-Anti-Suit Injunction (AASI)
• Enforcing a foreign ASI results in:
• Presumption of “willful” infringement (for treble damages)
• Presumption of “exceptional” case (for cost recovery)
• Inability to challenge asserted patents at PTAB
• Rate Setting Legislation (SERA)
• FRAND royalty payable for US patents must be
determined by a US court or rate-setting tribunal
• Foreign-set rates are not recognized for US patents

115. 9. Global Rate Setting Tribunal
Global FRAND rates determined by a single non-
governmental tribunal and publicly disclosed
• Consideration of all essential patents
• Consistent, top-down methodology
• Transparent decisions
• Reduce litigation costs
• Reduce uncertainty (improve planning)
• Reduce opportunities for hold-up and holdout
• Avoid jurisdictional gamesmanship/race to the bottom
• Precedent exists
• Copyright Royalty Board (CRB)
Contreras (2019)

116. Further Reading
Contreras JL (2013). Fixing FRAND: A Pseudo-Pool Approach to Standards-Based Patent
Licensing, 79 ANTITRUST L.J. 47-97
Contreras JL (2013). Technical Standards and Ex Ante Disclosure: Results and Analysis of an
Empirical Study, 53(1) JURIMETRICS 163-211
Contreras JL (2015). A Market Reliance Theory for FRAND Commitments and Other Patent
Pledges, 2015(2) UTAH L. REV. 479-558
Contreras JL (2015). A Brief History of FRAND: Analyzing Current Debates in Standard-Setting
and Antitrust through a Historical Lens, 80(1) ANTITRUST L.J. 39-120
Contreras JL (2017). Aggregated Royalties for Top-Down FRAND Determinations: Revisiting
‘Joint Negotiation’, 62 ANTITRUST BULLETIN 690-709
Contreras JL (2017). National Disparities and Standards-Essential Patents: Considerations for
India in COMPLICATIONS AND QUANDARIES IN THE ICT SECTOR: STANDARD ESSENTIAL PATENTS AND
COMPETITION ISSUES (Ashish Bharadwaj, Vishwas Deviah & Indraneth Gupta, eds., Springer)
Contreras JL (2017). Essentiality and Standards-Essential Patents in CAMBRIDGE HANDBOOK OF
TECHNICAL STANDARDIZATION LAW - ANTITRUST, COMPETITION AND PATENT LAW 209 (Contreras,
ed., Cambridge)

117. Further Reading, cont.
Contreras JL & Layne-Farrar A (2017). Non-Discrimination and FRAND Commitments in
CAMBRIDGE HANDBOOK OF TECHNICAL STANDARDIZATION LAW - ANTITRUST, COMPETITION AND
PATENT LAW 209 (Contreras, ed., Cambridge)
Contreras JL (2019). Global Rate-Setting: A Solution for Standards Essential Patents? 94(2)
WASH. L. REV. 701-57
Contreras JL (2019). The New Extraterritoriality: FRAND Royalties, Anti-Suit Injunctions and
the Global Race To The Bottom In Disputes Over Standards-Essential Patents
25 BU J. SCI. & TECH. L. 251-90
Contreras JL (2020). Sometimes FRAND Does Mean License-to-All, INTELLECTUAL ASSET
MANAGEMENT, Oct. 10, 2020
Contreras JL, Gilbert R. (2020). Non-Discrimination: FRAND's Last Stand? CPI ANTITRUST
CHRON. (Dec.)
Contreras JL (2021). Anti-Suit Injunctions and Jurisdictional Competition In Global FRAND
Litigation: The Case For Judicial Restraint, 11 NYU J. INTELL. PROP. & ENT. L. 171-84

118. Thank you!
Jorge L. Contreras
University of Utah
Salt Lake City, UT
jorge.contreras@law.utah.edu
SSRN page: http://ssrn.com/author=1335192