Wireless Standard Essential Patent Issues & Strategies

Wireless Standard Essential Patent:
Issues & Strategies

1Q. 2013

©2013 TechIPm, LLC All Rights Reserved www.techipm.com

1. Essentiality Analysis for Standard Essential Patent

A standards essential patent is defined as patent that contain one or more
claims that are infringed by the implementation of a specification for
standardized technology. Thus, if a product is implemented following the
standard specifications, it should infringe some essential patents.
LTE Patent Claim Mapping Example
Claim Specification
1. An apparatus for transmitting a random 3GPP TS 36.211 V8.9.0 (2009-12)
access signal comprising:
5.7.2 Preamble sequence generation
a CAZAC root sequence selector coupled to a
CAZAC root sequence generator, wherein the The random access preambles are generated
CAZAC root sequence generator generates at from Zadoff-Chu sequences with zero
least one CAZAC root sequences, and correlation zone, generated from one or
wherein the CAZAC root sequence selector several root Zadoff-Chu sequences. The
selects a preamble root sequence from the at network configures the set of preamble
least one CAZAC root sequences. sequences the UE is allowed to use.

2. The apparatus of claim 1 wherein:
the CAZAC root sequence generator is a prime-
length Zadoff-Chu sequence generator.
©2013 TechIPm, LLC All Rights Reserved www.techipm.com 2

2. InterDigital’s Standard Essential Patents: Dilemmas to US
Patent System -1

Recently, ITC (U.S. International Trade Commission) started investigation for
InterDigital‟s complaint against major foreign smartphone manufactures
including Samsung that the accusers infringed its 3G and 4G standard essential
patents. This is not the first time alleging infringement of standard essential
patents and asking ban for importations of infringed products. However,
considering the current debate that increasing activities of patent trolls and
intensive smartphone patent infringement litigations caused the current patent s
ystem in crisis, InterDigital‟s litigation will be a hard-to-decide case for ITC.

Generally, it is not presumed that holding a patent means its owners have mark
et power in the context of antitrust violation analysis (35 U.S.C. Section 271(d);
Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006)). However,
a standard locks in a specific industry because the products should be
compatible with the standard specifications.


Patent System -2

Thus, holding a standard essential patent can be considered as having a
market power because all products compatible with the standard specifications
should infringe the standard essential patents. For example, the European
Commission recently announced its preliminary view that Samsung's seeking
of injunctive relief basis on its 3G mobile communication standard essential
patents can be considered as abuse of exclusive IPRs prohibited by EU
anti-competition laws.

To avoid the antitrust issue with the standard essential patents, therefore, a
patentee should license the patents on „fair, reasonable and non-discriminatory
(FRAND)‟ terms. Thus, when a patentee tries to obtain an injunction from courts
or ITC for enjoining potential infringers of the standard essential patents, it can
be considered as contractual violation with respect to FRAND terms. In parallel
with the current movement to limit the IPRs of standard essential patents,
several US government agencies (DOJ, USPTO, FTC) insisted that, in some
instances, standard essential patents cannot be used for block sales or imports
of infringed products.


Patent System -3

Furthermore, after the U.S. Supreme Court decision in eBay v. MercExchange
(547 U.S. 388 (2006)), federal courts are very cautious in granting injunctive
relief, especially for NPEs. Therefore, even if ITC does not need to reflect court
s‟ decisions and follow other administration agencies‟ policy suggestions,
InterDigital‟s case will be very burdensome to ITC‟s rulings considering the fact
that injunction is its only relief.


3. LTE Patent Pool

According to GSA (Global mobile Suppliers Association) there were 87
manufacturers for 666 LTE-enabled user devices as of January 2013.
LTE user devices are Modules, Tablets, Notebooks/netbooks, PC Cards,
Smartphones, Routers, Femtocells, and USB dongles.

Among 87 manufacturers, only 13 manufacturers – Apple, Ericsson, Huawei,
LG, Motorola, NEC, NSN, Qualcomm, RIM, Samsung, Sharp, TI, and ZTE –
were LTE standard essential patent shareholders based on TechIPm's LTE
patent analysis.

Recently, AT&T, Clearwire, HP, DTVG Licensing, KDDI, NTT DoCoMo,
SK Telecom, Telecom Italia, Telefonica, and ZTE formed LTE patent pool,
of which only ZTE is the LTE standard essential patent shareholder.


4. LTE Royalty Rates for Bilateral Licensing -1

Qualcomm revealed that the company had put royalty rate at 3.25 % for LTE
patent licensing.

Nokia expects Nokia‟s rate for devices that deploy LTE as the only wireless
communication standard to be in a range of 1.5 % from the sales price of an
end-user device. To avoid unfavorable effects of royalty stacking, Nokia will not
charge royalties higher than 2.0 % from the sales price of an end-user device
for IPR that is essential to wireless communication standards irrespective of the
number of wireless standards deployed in such a device.

Ericsson said all of its LTE agreements will be made according to Ericsson's
proportional share of the standard IPR that relates to the relevant product
category. Ericsson likewise honors the same industry practice by ensuring a
maximum cumulative rate on LTE technology not exceeding a single-digit rate.
Ericsson´s fair royalty rate for LTE is therefore expected to be around 1.5 % for
handsets.


4. LTE Royalty Rates for Bilateral Licensing -2

Huawei believes it will hold 15-20% of all essential patents relate to LTE
standard, therefore, a royalty rate with some flexibility, but not to exceed 1.5 %,
is expected.

ZTE will license its LTE essential patents for mobile communication terminals
with a maximum 1 % from the sales price of an end-user device. However, ZTE
will not be restrained to this amount, if ZTE is involved in any licensing
negotiations. While in multi-mode terminals, ZTE will follow similar principle in
setting the royalty rate for LTE essential patents, which will be determined in
bilateral negotiation.

Motorola expects that its essential patent royalty rate for LTE systems and
equipment (e.g. infrastructure and subscriber handsets) will be approximately
2.25 %.


5. Samsung Galaxy S III: Center of LTE Patent War -1

Samsung Galaxy S III is the bestseller smartphone that was sold more than 40
million units worldwide. In the US, Samsung Galaxy S III is now connecting its
customers through 4G LTE networks. As the market dominance of Samsung
Galaxy S III increases, it is also placed on the center of LTE patent war.

Ericsson filed patent infringement complaints against Samsung in ITC (US
International Trade Commission) and the District Court for the Eastern District
of Texas. The complaints claimed that, among other claims, Samsung Galaxy S
III infringed its LTE patents. TechIPm‟s essentiality analysis confirms that two
patents claimed in the lawsuits are LTE standard essential patent candidates:

US6445917 (Mobile station measurements with event-based reporting): this
patent provides a perfect mapping between the claims at issue and the LTE
standard specification. It relates to measurements in the process of handover
operation as described in TS 36.331 Sec. 5 and TS 36.300 Sec. 10.1.3.


5. Samsung Galaxy S III: Center of LTE Patent War -2

US8169992 (Uplink scrambling during random access): this patent relates to
contention based random access procedure utilizing CRC scrambling for RNTI
as described in TS 36.213 Sec. 6, TS 36.300 Sec. 10.1.5, TS 36.321 Sec. 5.1,
and TS 36.212 Sec 5.3.

InterDigital filed patent infringement complaints against Samsung in ITC and
the District Court for Delaware. TechIPm‟s essentiality analysis confirms that on
e patent claimed in the lawsuits is a LTE standard essential patent candidate:

US7941151 (Method and system for providing channel assignment information
used to support uplink and downlink channels): this patent relates to providing
channel assignment information to support uplink and downlink transmissions
utilizing the DCI and CRC scrambling for RNTI as described in TS 36.213 Sec.
7 & 8, TS 36.300 Sec. 11.1, and TS 36.212 Sec 5.3.3.1.


6. Standard Essential Patent Strategy: Lesson from Samsung’s
ITC Litigation against Apple -1

Generally, it is not presumed that holding a patent means its owners have
market power in the context of antitrust violation analysis (35 U.S.C. Section 27
1(d); Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28
(2006)). However, a standard locks in a specific industry because the products
should be compatible with the standard specifications. Thus, holding a standard
essential patent can be considered as having a market power because all
products compatible with the standard specifications should infringe the
standard essential patents.

To avoid the antitrust issue with the standard essential patents, therefore, a
patentee should license the patents on „fair, reasonable and non-discriminatory
(FRAND)‟ terms. Furthermore, a patentee should be careful when he or she
tries to obtain an injunction from courts or ITC for enjoining potential infringers
of the standard essential patents. For example, the European Commission
recently announced its preliminary view that Samsung's seeking of injunctive
relief basis on its 3G standard essential patents can be considered as abuse of
exclusive IPRs prohibited by EU anti-competition laws.


6. Standard Essential Patent Strategy: Lesson from Samsung’s
ITC Litigation against Apple -2

In recent Samsung‟s ITC case, Samsung sued Apple for 3G iPhones‟
infringement of Samsung‟s 3G standard essential patents. Samsung insisted
that, because Apple‟s iPhones use Intel‟s standard compatible baseband
modem chip, Apple‟s iPhones should infringe Samsung‟s 3G standard essential
patents. Considering the fact, however, that injunction is the only relief for ITC
litigation it would be better bring a suit in a district court exploiting standard e
ssential patents‟ easy-of -proof characteristic (patentee should demonstrate to a
preponderate degree that the accused products meet every limitations of the
claim at issue) and the monetary damage options.

Furthermore, a patent used by Samsung in the ITC litigation turned out to be
not a 3G standard essential patent: it was proposed and accepted during the
standardization process, but never included in the final standard specifications.
This fact shows the importance of alliance in standardization and IP creation
processes. Samsung should have checked the status of proposal during the
standardization process and/or the essentiality of related patents afterward for
amending the relevant claims during the patent prosecution process.


7. Apple’s Defense Strategy against Samsung’s Patent
Litigations

The Mannheim court, a German patent court, recently postponed its final ruling
for Samsung due to invalidity possibility of Samsung‟s 3G patents used in
lawsuit against Apple. Most of Samsung‟s 3G patents used in the litigation are
filed during its participation in the 3GPP‟s UMTS standardization, especially afte
r 1999 publication of the initial WCDMA standard specifications. Apple is
exploiting the initial WCDMA standard specifications combined with other
prior arts such proposals presented by other participations during the 3GPP‟s
UMTS standardization process: Samsung‟s sequential and accumulative
inventions should be obvious!

For example, in ITC litigation, Apple alleged that the asserted claims of
Samsung‟s US7706348 are invalid in light of initial WCDMA standard
specifications and a well-known technical book: “Reed-Muller codes were the
only codes that had ever been used for encoding TPCI information in the initial
WCDMA standard specifications. … MacWilliams‟ book is considered to be the
Bible of error correcting codes (to a person of ordinary skill in the art). … 1999
Standard and MacWilliams text together disclose all of the elements of the
asserted claims, and therefore render those claims invalid for obviousness.”

8. Steelhead Licensing LLC’s Patent US5491834: FRAND Defense
against the Lawsuit? -1

Recently, Steelhead Licensing LLC, an NPE, sued several mobile phone
manufactures (Apple, HTC, LG, Motorola , RIM etc.) and Telcos ((AT&T,
MetroPCS, Sprint, T-Mobile) for infringement of US5491834, which was
acquired from BT (British Telecommunications). A key issue with this patent
litigation will be whether US5491834 is a standard essential patent for some
mobile communications standards.

TechIPm‟s preliminary research for US5491834 shows that it is a potentially
essential patent for 3G WCDMA standard. As the title, mobile radio handover
initiation determination, suggests it relates to handover determination between
cells in a cellular radio system handling communications between mobile
terminals and base stations. The preamble of the claim 1 also shows the
purpose of the invention: a handover determination system for a mobile radio
network including a plurality of cells, each cell having associated with it a base
station for supporting communications with a mobile unit, the system
comprising.



A potential part of the standard specifications that covers handover
determination is 3GPP TS 25.331 V3.21.0 (2004-12: Radio Resource Control
(RRC) protocol specification). Especially, Sections 8.4
(measurement procedures for Intra-frequency measurements) and 14.1.6
(report quantities in intra-frequency measurements) describe the claim terms:

means for monitoring a quality of a signal respectively transmitted between
each of a plurality of candidate base stations and the mobile unit: upon
reception of a MEASUREMENT CONTROL message the UE shall perform
actions ……means for producing an indication of the rise or fall in the said
quality as a function of time: the quantities that the UE shall report to UTRAN
when the event is triggered…..



control means for initiating a handover from a serving base station, supporting
communications with the mobile unit, to another base station, the initiation
being based on the rise/fall as a function of time in the said quality of the
signals associated with the plurality of candidate base stations being monitored:

the UTRAN may request a measurement by the UE to be setup…..
said mobile unit including the means for monitoring and the means for
producing, the mobile unit further comprising signalling means for addressing
the serving base station with an indication of the need for a handover to be
initiated: cells in the active set are involved in soft handover.

said signalling means being arranged to address the serving base station with
an indication of the level of priority of a handover and/or with an indication of
the possibility of a handover contingent upon the proceeding results of
monitoring the quality of the transmitted signal: quality measurements is the
measurements of downlink quality parameters … cells that the UE is monitoring
are grouped in the UE into …..


9. Standard Essential Patent Claim Drafting Strategy: Lesson
from Samsung’s ITC Litigation against Apple -1

In recent Samsung‟s ITC case, Samsung sued Apple for 3G iPhones‟
infringement of Samsung‟s 3G standard essential patents. Samsung insisted
that, because Apple‟s iPhones use Intel‟s& amp; Qualcomm‟s standard
compatible baseband modem chip, Apple‟s iPhones should infringe Samsung‟s
3G standard essential patents.

US7486644 is one of Samsung‟s 3G standard essential patents exploited in the
litigation. It describes coding process of E-AGCH (Enhanced Absolute Grant
Channel) in the HSUPA enable base stations, as specified in 3GPP TS 25.212
Sec. 4.10. Claims l and 5 are directed exactly to the standard specification, and
thus US7486644 is the HSUPA standard essential patent with respect to the
standard compatible base station modem products.


9. Standard Essential Patent Claim Drafting Strategy: Lesson
from Samsung’s ITC Litigation against Apple -2

The disputed issue in the litigation, however, was that, even if US7486644 is
the standard essential patent for transmitters, it cannot also be the standard
essential patent for receivers like Apple‟s accused products. Apple argued that
TS 25.212 does not specify what a receiver must do in order to receive a signal
and, therefore, the receiver does not need to follow decoding process exactly
reciprocal to the encoding process. Thus, Apple‟s iPhones perform the
decoding process in different ways that do not have to practice the asserted
claims 9 and 13 of US7486644, which describe exactly reciprocal way to the
encoding process.

This case provides a valuable lesson for drafting patent claims for wireless
standards:
(1) There must be separate claims for each receiver and transmitter
independently.
(2) If the standard specification only describe a component, for example a
transmitter, the claims and their terms should be construed such that cover not
only exactly reciprocal way but also other possible ways to practice.


10. Standards Essential Patent Ex-Post Development

A typical way to develop the essential patent is to participate in the
standardization process and try to get IPRs for the standards in parallel
(strategic alignment between standardization and IPR).

Without the strategic alignment between standardization and IPR process,
however, there is an alternative way to develop the essential patent portfolio
through patent engineering process:

Step 1: Audit the existing patents to compare with standard specifications.

Step 2: Investigate the embodiments of the patent which are relevant to the
specifications.

Step 3: Design the claim terms to be essential to the implementation of the
specification.

Step 4: File the essential patent candidate through continuation or reissue
process.

Thank you!

• If you have any questions
please contact Dr. Alex G. Lee
at alexglee@techipm.com


Wireless Standard Essential Patent Issues & Strategies

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