Beyond FTC v Qualcomm: the emerging FRAND playbook for standards implementers
The litigation between u-blox and InterDigital is another example of how some companies are looking to upend the world of SEP licensing
The confetti had not yet been cleared on 1 January 2019 before fabless semiconductor firm u-blox brought suit in the US District Court for the Southern District of California against InterDigital. According to the complaint, InterDigital – owner of a large portfolio of patents declared essential to telecommunications standards such as long-term evolution (LTE) – had breached its obligation to offer u-blox, an implementer of those standards, a licence on FRAND terms. Instead, claimed u-blox, InterDigital’s licensing offers and negotiation tactics breached antitrust laws. u-blox asked the court to set a FRAND royalty rate, to find InterDigital in violation of Section 2 of the Sherman Act, and to enjoin InterDigital from enforcing its SEPs against u-blox or its downstream customers or from requiring u-blox to license InterDigital’s whole portfolio. The same day that it filed the complaint, u-blox moved separately for a temporary restraining order (TRO) to enjoin InterDigital “from contacting u-blox’s customers and downstream manufacturers, demanding royalty payments from them for products incorporating u-blox technology, or otherwise disrupting or interfering with u-blox’s relationships with its customers and downstream manufacturers”.
The trial in Federal Trade Commission v Qualcomm began elsewhere in California a few days after u-blox’s complaint and has justifiably captivated the attention of the SEP licensing community. The immediate stakes of that trial, plus the treatment of the FRAND commitment by a US agency, merit the attention being lavished on the dispute. However, it would be a mistake for the licensing community to overlook u-blox v InterDigital, which itself presents important issues for those interested in or affected by the licensing of SEPs. First, it will afford a new court the chance to weigh in on how to determine a FRAND royalty rate. Second, it could be the first application of the US Department of Justice’s (DoJ) ‘New Madison’ approach to SEP licensing disputes, which minimises the role of antitrust law in such actions. Third, the US Federal Circuit has suggested of late that it may pare back US courts’ discretion to issue anti-suit injunctions in FRAND disputes. If recent US FRAND cases are any indication, the issue may arise in u-blox, offering the court the chance to anticipate (or, perhaps, to react to) the Federal Circuit’s direction on the issue.
From a larger perspective, u-blox could also be a bellwether. Consider the implementer. In its dispute with Qualcomm, Apple has the resources and business case to orchestrate a worldwide campaign to drive down the royalties that it winds up paying the chip maker. At Apple’s sales volumes, every penny saved off a per-unit rate amounts to millions of dollars per year and the tech giant has the resources to mount a worldwide royalty reduction strategy. It makes sense, then, that Apple is pursuing all options available to it to drive its royalties down. However, u-blox – which does not approach Apple’s sales volume – lacks Apple’s resources and incentives to drive royalties down, perhaps explaining why, before bringing suit, u-blox licensed the InterDigital portfolio for the better part of a decade without apparent incident. When even u-blox rebels against the licensing practices of another venerable SEP owner, the portents for SEP owners are ominous.
Consider also u-blox’s tactics and their implications. The manner by which it is prosecuting its claims suggests coordination with other implementers, which in turn suggests that other implementers may deploy similar tactics in SEP licensing discussions. Certainly, pre-emptive actions for declaratory judgment of non-infringement or invalidity brought by prospective licensees are nothing new in the United States or abroad. Nor is it unusual for a standards implementer to ask a court to set a FRAND royalty rate or otherwise decide the nature of the FRAND obligation owed by an SEP owner, as demonstrated in cases such as Microsoft v Motorola and TCL v Ericsson. u-blox could be the next step for implementers. Here, the implementer did more than simply employ the same approach and arguments as its predecessors. u-blox retained the team behind TCL’s litigation with Ericsson to recreate that strategy, then relied on a study of declared-essential patents in support of its FRAND arguments, which appears to be the same one commissioned by TCL in the course of its dispute with Ericsson. In other words, u-blox not only borrowed the gist of TCL’s FRAND argument and the team that developed it, but also appears to have adopted TCL’s work product as its own. This prêt-à-porter FRAND case reduced the lead time for u-blox to bring suit and created a significant asymmetry of costs and risk with InterDigital, which may now have to invest in its own, competing study. Even if u-blox’s efforts fail here (ie, no real delay or reduction in the royalties that u-blox pays InterDigital), SEP owners should expect other implementers to follow this playbook.
Of course, the success of this playbook at driving down the licensing cost of implementing standards is not preordained. The 31 January 2019 hearing on the TRO, for example, did not go u-blox’s way after the DoJ weighed in strongly in InterDigital’s favour. Still, it stands to reason that other implementers – including those that historically and regularly have resolved licensing disputes without litigation – could follow u-blox’s tactics. SEP owners should take affirmative steps to control the pace and forum of their licensing disputes.
About u-blox v InterDigital
u-blox designs LTE-enabled cellular modules for industrial, the Internet of Things and other applications, among others. At some point, InterDigital licensed its essential portfolio to u-blox on terms that it now contends are inconsistent with its FRAND obligations. That licence eventually terminated. According to u-blox’s complaint, InterDigital contacted some u-blox customers during negotiations over a new licence. The substance of InterDigital’s alleged communications with these customers is redacted in the public version of the complaint.
u-blox argues that InterDigital’s licensing offers are inconsistent with the SEP owner’s FRAND obligations. According to the complaint, the royalty rates sought by InterDigital are discriminatory when compared to the rates paid by other implementers – including so-called ‘free riders’. Further, u-blox contends that InterDigital’s proposed rates are unreasonable because they do not reflect the value of the contributed technology apart from any value that it derives from inclusion in the standard. In support of this argument, u-blox points to a study by Concur IP that purportedly evaluated approximately one-third of all patents declared essential to LTE for essentiality. Based on that data, u-blox contends that InterDigital’s share of the total number of patents that are actually (and not merely declared) essential to LTE is materially lower than InterDigital believes and, as a result, its share of overall royalty stack for LTE should be correspondingly lower.
Emerging playbook for standards implementers
- Act pre-emptively, securing a forum, probably in the United States, that is unlikely to drive a worldwide licensing outcome favourable to SEP owners and, in some cases, staying concurrent SEP enforcement
- Create asymmetry of costs and risk between the implementer and licensor by taking advantage of the groundwork and work product of other implementers
- Add to the patchwork of findings and case law that other implementers can use in licensing discussions and lawsuits
Another FRAND data point
The u-blox case may afford another court the opportunity to weigh in on the metes and bounds of FRAND obligations and to set a judicially determined FRAND royalty rate.
As a general rule, fully litigated SEP lawsuits inform SEP negotiations writ large. Often when such an opinion issues, it provides the licensing community with data points that can inform implementer and licensor expectations, rationale and strategy (eg, findings on the royalty stack for a given standard and/or the number of patents that are actually essential). The methodology endorsed by the courts can also provide parties with guidance for determining whether the support offered by an SEP owner for the proposition that a given offer is consistent with FRAND passes muster.
Of course, in the course of setting FRAND rates for ongoing SEP licensing programmes, courts occasionally disregard and diminish longstanding licensing practices. u-blox’s complaint points out that:
[a] number of cases… have been litigated in U.S. courts [that found] SEP owners [in violation of] their FRAND commitments by making royalty demands significantly above the adjudicated FRAND rates. See, e.g., TCL Commun. Tech. Holdings, LTD v. Telefonaktiebolaget LM Ericsson, 2017 WL 6611635, at *51-52 (C.D. Cal. Dec. 21, 2017) (determining FRAND rates of 0.314%-0.45% for 4G, 0.224%-0.30% for 3G, and 0.09%-0.16% for 2G, as compared to Ericsson’s demand of 1.5% for 4G, 1.2% for 3G, and 0.8%-1.0% for 2G); In re Innovatio IP Ventures, LLC Patent Litig., 2013 WL 5593609, at *43 (N.D. Ill. Oct. 3, 2013) (for 19 asserted patents, assessing damages of $0.0956 per unit as compared to the proposed royalty of $16.17 per unit for tablet computers); Microsoft Corp. v. Motorola, Inc., 2013 WL 2111217, at *100 (W.D. Wash. Apr. 25, 2013) (determining FRAND rate of $0.03471 per Microsoft’s xBox unit, as compared to Motorola’s initial demand of $6-$8 per xBox unit).
The court in TCL v Ericsson, for example, set aside Ericsson’s decades-long SEP licensing programme in favour of a computed rate. The court set this rate based largely on statements that it attributed to Ericsson regarding the royalty stack for the standard in question and certain calculations on the proportion of actually essential patent families that Ericsson owned relative to the rest of the world. Less than a decade ago, many courts would have found Ericsson’s standard offer consistent with FRAND solely on the basis that many sophisticated implementers (including TCL itself) previously accepted those terms, implicitly endorsing the reasonableness and non-discriminatory nature of the offer. However, venerable licensing programmes such as Ericsson’s have had their licensing approaches scrutinised in light of cases such as those cited by u-blox. This case could further erode judicial deference to longstanding, successful SEP licensing practices.
The FRAND arguments raised by u-blox build on those raised by TCL in TCL v Ericsson. As discussed later in this article, u-blox appears to follow TCL’s methodology to support its position that InterDigital’s offers are in excess of a FRAND royalty rate. The wisdom of that reliance may depend on the Federal Circuit’s treatment of Ericsson’s appeal of that ruling.
To TCL’s argument, u-box adds an antitrust count and the proposition that InterDigital’s offers are unfairly discriminatory because some implementers are free-riders. Taken to its logical extreme, u-blox’s argument can be construed as: all implementers must pay or none must pay. However, pointing out the alarming speed of others on the highway does not often get one out of a speeding ticket. Working by a similar logic, one would not expect the argument that patent hold-out by some justifies patent hold-out by the rest. Still, this argument can be seen as an attempt to inject concern into FRAND jurisprudence over whether a given SEP licensing outcome can have a distorting effect on the market (eg, whether an offer, if accepted, would place the licensee at a material competitive disadvantage). This line of thinking would place SEP owners in the position of monitoring the implementers’ market to safeguard competitive balance. Under this rationale, SEP owners could even be required to refund portions of lump-sum payments already received if affected units prove lower than anticipated (which would otherwise drive the per-unit effective rate higher than the parties’ intended).
Recent timeline of US Department of Justice and FRAND
Assistant Attorney General Makan Delrahim has changed the US Department of Justice’s (DoJ’s) views on the applicability of antitrust law to SEP licensing. He is not the first. Over the past 15 years, the DoJ has repeatedly updated its positions on that issue, the prevalence and harm of patent hold-up versus hold-out, and the meaning of the FRAND commitment.
2006 The DoJ provides a business review letter to standards-setting organisation (SSO) VMEbus International Trade Association, which analysed a proposed IP rights policy whereby participants in standard setting would disclose – along with patents and applications they believed to be essential to the technology proposed for inclusion in the standard – the highest royalty rates that the SEP owners intended to seek for any essential patent claims. The business review letter described this proposal as “an attempt to preserve competition and thereby to avoid unreasonable patent licensing terms that might threaten the success of future standards and to avoid disputes over licensing terms that can delay adoption and implementation after standards are set”. The DoJ declines to take enforcement action to prevent the implementation of the policy, as it is “a sensible effort… to address a problem that is created by the standard-setting process itself”; the proposal “should preserve, not restrict, competition among patent holders”.
2007 The DoJ and the Federal Trade Commission issue the joint report, “Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition”, finding that “the owner of [SEPs] may be able to hold up firms wishing to implement the standard by setting higher royalties and less favorable licensing terms than it could have done before the standard was set”. Measures taken by SSOs to address this concern, such as requiring SEP owners to offer licences to implementers on FRAND terms, “can be successful in preventing hold up, however, only if participants comply”.
2008 The DoJ, through Deputy Assistant Attorney General, Antitrust Division, David Meyer, publishes remarks entitled “How to Address ‘Hold Up’ in Standard Setting Without Deterring Innovation: Harness Innovation by SDOs”. The DoJ explains that: “[patent] [h]old up… should not be taken to refer to every situation in which the incorporation of IP into a standard enhances the value of the IP. Efficient standards typically expand output, unlocking new markets for the technologies used to implement them. This added value should not necessarily be attributed to the standard rather than the IP. If particular IP provides a uniquely efficient way to solve a problem that must be overcome in order for a standard to work, the IP holder’s desire to earn a return reflecting the value of solving that problem is not hold up; it is better thought of as a reflection of the intrinsic value of the IP.” Low royalty rates for SEPs are not necessarily optimal – “one cannot say as a general matter that either maximizing patent owner participation or maximizing user adoption is always the better policy choice”. With that in mind, antitrust, in the DoJ’s view, has a limited role to play in overseeing SEP licensing practices: “standards for antitrust liability that appear to provide insurance against hold-up may threaten IP owner participation despite US [standards-development organisation] efforts to encourage it. If the goal is to foster the efficient adoption of standards that take advantage of the optimum technology (giving consideration to benefits and costs), participation by owners of technology is vital.”
2012 The DoJ approves Google’s acquisition of Motorola but chastises the former over its “ambiguous” public statements on licensing its SEPs. In a statement, the DoJ notes that “Google has stated to the IEEE [Institute of Electrical and Electronics Engineers, Incorporated] and others on Feb. 8, 2012, that its policy is to refrain from seeking injunctive relief for the infringement of SEPs against a counter-party, but apparently only for disputes involving future license revenues, and only if the counterparty: forgoes certain defenses such as challenging the validity of the patent; pays the full disputed amount into escrow; and agrees to a reciprocal process regarding injunctions”. This formulation of the FRAND commitment could result in patent hold-up, according to the DoJ, which “continues to have concerns about the potential inappropriate use of SEPs to disrupt competition and will continue to monitor the use of SEPs in the wireless device industry”.
2013 The DoJ and the USPTO jointly publish the “Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments”. As per this policy statement, standard setting raises risks of anti-competitive behaviour, which FRAND commitments mitigate. To give effect to the FRAND commitment, courts and administrative bodies should issue injunctions or exclusionary relief for infringement of SEPs in extraordinary circumstances only, the joint statement concludes.
2015 The DoJ, in a business review letter to SSO the IEEE, approves a proposed IP rights policy that would bar SEP owners from injunctive relief against willing licensees and would delineate factors relevant to the determination of a reasonable royalty rate for SEPs.
2017 Delrahim reverses the DoJ’s course, announcing that the department would not enforce the Sherman Act against SEP owners that allegedly breach their FRAND commitments, including by pursuing injunctions against willing licensees. Patent hold-out by implementers posed a more serious risk of antitrust violation than hold-up, Delrahim explained, and the DoJ’s new focus would reflect that determination.
2018 Delrahim describes in detail the DoJ’s present understanding of the relationship of antitrust law to SEP licensing, the New Madison approach. Under this, antitrust law is inapplicable to most disputes over SEP licensing. Instead, contract law should govern, with aggrieved standards implementers able to enforce (as an intended beneficiary) the agreement between the SSO and the applicable standard-setting participant. A FRAND commitment does not ordinarily affect the right of an SEP owner to obtain exclusionary relief: “If a patent holder effectively loses its right to an injunction whenever a licensing dispute arises, or is deterred from seeking an injunction due to the prospect of treble damages, an implementer can freely infringe, knowing that the most he or she will eventually have to pay is a reasonable royalty rate[.]” The 2013 DoJ/USPTO policy paper “overly indulged theories of patent hold-up as a supposed competition problem”. “Stating that a patent holder can derive higher licensing fees through hold-up simply reflects basic commercial reality. Condemning this practice, in isolation, as an antitrust violation, while ignoring equal incentives of implementers to ‘hold out,’ risks creating ‘false positive’ errors of over-enforcement that would discourage valuable innovation.” A larger problem is concerted efforts by implementers to skew SSO rules in their favour.
Later in 2018, the DoJ formally withdraws its support of the 2013 policy paper that it published with the USPTO.
2019 After u-blox includes an antitrust count in its complaint against InterDigital, the DoJ submits two brief statements on the case’s record expressing the DoJ’s “concern… that u-blox seems to continue to advance a theory that the patent rights belonging to Defendants … are somehow curtailed by concerns for consumer welfare or allocative efficiency. Without naming precisely the legal prohibition it seeks to invoke, u-blox suggests InterDigital’s ‘attempts to collect royalties from u-blox’s customers’ is improper or illegitimate”.
First test of New Madison
Beginning in November 2017, Assistant Attorney General Makan Delrahim, leader of the DoJ’s Antitrust Division, articulated a new emphasis for the DoJ on the applicability of antitrust law to SEP licensing. Preceding years had seen the DoJ take the position that inclusion of a given SEP in a standard can confer market power on the SEP owner, abuse of which could run afoul of antitrust law. Delrahim repositioned the DoJ, deploying what he coined the New Madison approach: antitrust should rarely govern SEP licensing disputes, he determined, arguing that these are best settled using contract law.
u-blox argues directly to the contrary, claiming that inclusion of a given patent in a standard confers monopoly power on the SEP owner. It further argues that efforts to extract above-FRAND royalty rates for SEPs abuse of this power and raise antitrust issues.
While Delrahim has explained and defended the New Madison approach numerous times since 2017, the DoJ had not, before u-blox, actually intervened in a proceeding to advocate for the approach. That the DoJ took the extraordinary step of intervening at the TRO stage of litigation, even after u-blox disclaimed the antitrust arguments that it raised in its TRO motion, demonstrates the department’s intent to drive a policy outcome in this case. It was unsurprising, then, that the department argued in a filing that u-blox’s argument “is not properly sound in antitrust law” – InterDigital’s alleged failure to offer FRAND terms amount to a breach of the contract that governed the participation by InterDigital in standard setting that gave rise to its essential portfolio, and u-blox’s remedy for that alleged failure is therefore a claim predicated on the alleged breach of contract between that company and the standard-setting organisation. The fact that u-blox even pleaded an antitrust count drew the DoJ’s ire, with it expressing “concern that u-blox seems to continue to advance a theory that the patent rights belonging to… InterDigital are somehow curtailed by concerns for consumer welfare or allocative efficiency”. A TRO barring InterDigital from seeking to exclude u-blox’s infringing articles would materially impair a high-profile SEP holder’s negotiating leverage under commonplace circumstances, an outcome that could gravely affect licensing on a widespread basis and disincentivise participation in standard setting.
The 25 January 2019 TRO hearing reflected the DoJ’s concerns. Judge Cathy Ann Bencivengo was sceptical of u-blox’s motion from the outset of the hearing and eventually accused the company of patent hold-out, saying “you just want to practice the patents without a license in the hope that you’ll reach a deal later”. There was no reason to conclude that hold-up was more prevalent, more likely in this case, or more detrimental as a rule than hold-out. “Hold-up or hold-out, either way you’re both in the same position,” she explained to u-blox. That InterDigital reached out to u-blox’s customers to inform them that its licence had lapsed was, she found, neither harassment nor any other “legal ground to stop [InterDigital] from enforcing their patents”. The judge thus denied the TRO.
The negative reception to u-blox’s TRO application may not deter similarly situated implementers from advancing similar arguments in future proceedings. Other courts have received comparable arguments differently. In Realtek Semiconductor Corp v LSI Corp (946 F Supp 2d 998 (ND Cal, 20 May 2013)), for instance, the US District Court for the Northern District of California agreed with an implementer that the SEP owner had, in essence, forsaken its right to exclude by agreeing to license SEPs on FRAND terms. Judge Bencivengo’s treatment of u-blox’s motion may just prompt implementers to engage in more selective forum shopping.
Another voice on anti-suit injunctions
u-blox v InterDigital could also wind up considering whether an anti-suit injunction is warranted, a move which the Federal Circuit appeared sceptical of in another recent case.
The Federal Circuit case in question, Huawei v Samsung, resolved in February 2019 after spirited oral argument in early December. The matter involved Chinese and Northern District of California actions filed at approximately the same time, with Huawei seeking an injunction against Samsung in the Chinese action for infringement of Huawei’s SEPs and Samsung seeking an adjudication as to whether the two sides – Samsung and Huawei are each implementers and SEP owners – had met their respective FRAND obligations in seeking a licence from the other. The Chinese action concluded with the award of an injunction (presently on appeal in China), prompting the Northern District to stay that foreign injunction until it had adjudicated Samsung’s claims. At issue on appeal was whether a district court can and should stay extraterritorial actions and judgments in FRAND disputes in light of pending US actions that concern the same operative facts and parties. The tenor of the panel hearing argument was generally hostile to the Huawei court’s anti-suit injunction, with judges questioning a US court’s right to deny foreign courts’ consideration of FRAND issues before them.
Major SEP licensing disputes tend to be global, like Huawei. InterDigital may elect to bring its own actions against u-blox, in the United States or abroad, in order to raise the risk profile of the dispute for u-blox and therefore drive a settlement. If so, u-blox would likely argue that the US District Court for the Southern District of California should stay InterDigital’s actions. The tone of the Federal Circuit’s questioning in Huawei could loom large in the court’s consideration of such an issue and a ruling on the point in u-blox could be influential in its own right.
In any event, SEP owners and implementers should carefully consider all guidance on the circumstances under which courts – particularly US courts – will stay other matters in a global SEP dispute. That calculus plays a direct role in the developing implementer tactic of pressing ahead with a complaint in a preferred forum before the SEP owner can enforce.
An emerging playbook for implementers
Tactically, logistically and substantively, the steps that u-blox has taken with this action resemble those taken by another SEP implementer – TCL against Ericsson in TCL v Ericsson (CA No 14-341 (CD Cal)).
In fact, u-blox’s team comprises much of the team engaged by TCL. u-blox, like TCL before it, is represented by Sheppard Mullin, and TCL’s FRAND argument was also based on a study by Concur IP (likely the precise study that Concur IP performed for TCL). The TCL team already undertook the effort of developing a methodology for determining a FRAND royalty rate for an LTE portfolio that at least the TCL v Ericsson court found reliable (albeit in a ruling now on appeal). This methodology is extremely laborious, requiring evaluation of the essentiality of thousands of declared-essential patents, but the burden of that methodology does not fall equally on implementers and SEP owners:
- TCL already expended the necessary resources, engaging Concur IP to perform such a study and positioning that work product in a way that the TCL court ruling on appeal accepted.
- That work product now exists for other LTE implementers, such as u-blox, to use in their own FRAND arguments, perhaps for free.
- SEP owners such as InterDigital have no competing study on which to rely.
The FRAND arguments that u-blox raises resemble TCL’s as well, particularly the argument that InterDigital’s proposed rates are excessive given the share of the LTE royalty stack to which the Concur IP study suggests InterDigital is entitled. To TCL’s arguments, u-blox adds antitrust and consideration of market distortion, perhaps pioneering new grounds for other implementers to assert in future actions.
TCL, too, filed first in an effort to select the forum where the FRAND dispute would be heard. Choice of forum can be critical to the outcome of a FRAND dispute and the first mover tends to have an advantage when courts consider staying co-pending SEP actions between the parties. Even aside from different forums accepting different methodologies for determining a FRAND rate and offering different remedies, only a few can plausibly motivate a resolution that reflects global exposure. A UK FRAND injunction may do so, depending on the implementer’s exposure in the United Kingdom, while a Chinese injunction preventing infringing sales in and exports from China could also do so in many cases, to name two. Whether a US district court outcome, without the threat of injunction against the sale of infringing products, can also achieve this remains to be seen – TCL and Ericsson have not yet resolved their dispute, more than a year after the US District Court for the Central District of California ruled on it. It may be the case that an SEP owner involved in a US district court FRAND proceeding can drive a worldwide licensing outcome only by spending the additional time and resources to enforce against an implementer elsewhere after a US action concludes.
From the commonality in team, arguments and tactics among TCL and u-blox, one can discern an emerging playbook for SEP implementers, particularly implementers of telecommunications standards such as LTE. Relying on work already performed and paid for and arguments at least provisionally successful in other matters, implementers can bring suit in a favourable district, quickly and for little cost. Bringing suit before the SEP owner may give the implementer control over the forum that will first consider the FRAND issues presented by the dispute and may drive up costs and delay for SEP owners seeking a worldwide licensing outcome. Implementers in such actions can build on arguments advanced in other cases but may also include some new points in hopes of advancing the pro-implementer body of law.
From an SEP owner’s perspective, an unresolved FRAND negotiation can jeopardise the integrity of an SEP licensing programme. SEP owners should embark on such negotiations by planning and preparing for the possibility of enforcement, systematically taking the necessary steps to make and support a FRAND offer and to exhaust negotiations, then bringing suit as soon as feasible against an unwilling licensee in a forum that they believe will drive their preferred licensing outcome. Dithering with regard to enforcement leaves the choice of where, when and how to proceed to the implementer; this emerging playbook suggests that in such cases they will happily avail themselves of that choice.
FRAND litigation, once exclusively the domain of large-scale implementers such as Apple, is now a tactic available to comparatively smaller implementers, such as u-blox. SEP owners should enter into every SEP licensing negotiation with a strategy to maintain control of the negotiations and any ensuing litigation:
- If possible, engage in licensing discussions with a given implementer only after a final decision on enforcement – including funding, counsel and forum – has been made.
- Set forth at the outset of negotiations the SEP owner’s expectations of an implementer bargaining in good faith (eg, substantive responses to communications within a reasonable, defined timeframe).
- Also make it clear at the outset of negotiations the conditions that would not justify significant delays in substantive responses to communications. Repeated overhauls of the implementer’s IP department over the course of negotiations, for instance, may not justify a delay.