The top 10 patent market developments of 2019

Last year represented 12 months of considerable change for IP owners around the world with major assets sales, rising geopolitical tensions, new in-house leaders taking over and more

At the end of 2019 the IAM team reflected on some of the biggest IP market stories of the year, covering what we considered to be the most significant developments – either immediately or potentially.

As usual, there was a distinct US bias in the stories that we identified. Although things are not what they were stateside, the US market remains by far the most important globally. Whether that will continue, though, remains to be seen.

To add a little more interest, we have ranked these stories according to their impact.

1. Intel auction ends in Apple deal

For a few weeks over the summer it appeared that we were going to see the biggest patent auction since the Nortel sale in 2011. Intel’s decision to put around 8,000 patents related to its smartphone modem business up for sale offered interested parties a rare opportunity to get their hands on a high-quality stockpile of wireless assets, including a valuable portfolio of 5G grants.

But the excitement was interrupted when Apple stepped in to cut a deal for Intel’s smartphone chip business in its entirety. This was no big surprise; the iPhone giant had been tagged as the likely buyer from the start. With the deal having now closed, it is still unclear just what impact the portfolio is likely to have on Apple’s IP strategy, although a statement on its SEP FRAND position suggests that the company will be doubling down on a familiar line.

To round off 2019, just a couple of weeks ago, IAM broke the news that more than 400 connected devices assets not taken by Apple as part of its purchase were to be auctioned off by Intel later this year.

2. Qualcomm settles with Apple, gets hit by the FTC

Since the Federal Trade Commission (FTC) and Apple filed lawsuits against Qualcomm within days of each other in early 2017 a considerable cloud has hung over the chipmaker’s licensing business. In April, its long-running fight with Apple took an unexpected, but decisive, turn when the companies announced that they had reached a settlement. This was after it became clear that the iPhone maker would struggle to get a 5G handset onto the market without Qualcomm’s chips.

While this prompted much celebrating in the Qualcomm camp and a big jump in the company’s share price, it was not to last. In May, Northern District of California Judge Lucy Koh announced her decision in the case brought by the FTC and handed the DC-based agency a resounding victory. The ruling was sharply critical of Qualcomm’s licensing practices, including its controversial no licence, no chips policy.

3. US scrutiny of Huawei intensifies

In a year when the US/China trade war escalated, Huawei continued to be at the heart of the dispute. In May, the Chinese tech leader was placed on the US Department of Commerce’s Entity List on the basis that it was “engaged in activities that are contrary to US national security or foreign policy interest”.

Huawei was given a temporary reprieve, but the listing underlined its status as the Chinese company most squarely in the sights of the Trump administration. The business responded by letting it be known that it was actively looking to license its giant patent portfolio with the news that it had sent a $1 billion licensing demand to Verizon.

This move highlights how Huawei could seek a return on its global portfolio regardless of any US ban and prompted one US legislator, Senator Marco Rubio, to suggest that the company be blocked from asserting its IP rights. While this has been widely dismissed as unworkable, it demonstrates the considerable shadow that Huawei continued to cast on Washington DC through much of 2019.

4. FRAND scrutiny increases worldwide

An issue that has been bubbling up for several years became a lot more prominent during 2019 as courts and regulators took a closer look at SEP FRAND licensing issues. In the United Kingdom, the Supreme Court heard arguments in the Unwired Planet and Conversant cases, which could see the availability of the so-called FRAND injunctions and the ability of UK judges to set worldwide FRAND rates finally confirmed.

Meanwhile, in the United States, the Court of Appeals for the Federal Circuit (CAFC) handed down its much-anticipated judgment in the TCL v Ericsson appeal. Although the Swedish company won, the big questions raised by the original decision were left unanswered, much to the frustration of many. However, a joint policy statement issued by the USPTO, the Department of Justice’s antitrust department and the National Institute of Standards and Technology would certainly have been music to SEP owners’ ears given its strong argument that injunctions should be available to them in cases where negotiations with potential licensees break down and subsequent litigation is successful.

But while SEP owners may have had cause for quiet celebration on the European and US fronts, things have begun to look a lot less rosy in China. Courts there are beginning to take up requests to set FRAND rates that – on the face of it – look a lot more favourable to implementers than to originators.

5. Nokia and Ericsson appoint new IP heads

The top IP roles at Ericsson and Nokia are two of the biggest corporate jobs in the industry. Both companies saw them change hands within months of each other in 2019.

At Ericsson, company veteran Christina Petersson was handed the plum role after her predecessor, Gustav Brismark, unexpectedly departed in March. Since then, Ericsson’s IP team has notched up a number of highlights, including a resounding victory at the Federal Circuit in its SEP FRAND fight with TCL and a big deal with Xiaomi, following one struck with Oppo in February.

In June, Nokia also saw change at the top, with Maria Varsellona handing over leadership of Nokia Technologies to Jenni Lukander. Like Petersson, Lukander is an experienced company hand who knows IP deal making and litigation inside out. As head of Nokia Technologies she has oversight of the telco giant’s $1 billion-plus licensing business and a prominent position from which to influence the SEP FRAND conversation worldwide.

6. Microsoft IP group cuts jobs and gets a new boss

Microsoft’s IP priorities continued to evolve during the course of 2019, with the software titan confirming that it had made a round of job cuts, primarily in its licensing function. In total 24 members of staff headed for the exit as the IP group continued its move away from pure monetisation.

This was closely followed by the surprise announcement that IP head Erich Andersen was also departing for a general counsel role with an as yet unnamed company. After five years in the top role Andersen had overseen a period of significant transformation in Microsoft’s IP strategy, as it developed to support the business’s wider shift to focus more in areas such as cloud technology and open source.

In the week before Christmas, former Apple IP executive Jennifer Yokoyama was named as Andersen’s successor.

7. Avanci signs up VW brands

Avanci, the licensing platform set up to focus on the auto and Internet of Things (IoT) sectors, signed up BMW as its first licensee back in 2017. However, 2019 was arguably its breakthrough year. In April, the platform announced that Porsche and Audi had become licensees; a little later, it confirmed that a further group of brands in the Volkswagen group had also signed up – a considerable boost given that VW is the world’s largest auto manufacturer. Towards the end of the year, Avanci also announced that Volvo had taken a licence, suggesting that the platform is starting to pick up considerable traction.

8. US NPE asserts patents in China, secures global Xiaomi deal

In mid-December, the news broke that US NPE Advanced Codec Technologies had secured a global licensing deal from Xiaomi following its assertion of Chinese patents against the smartphone maker. The dispute came to an end before it got to court hearings and involved the payment of a seven-figure sum by Xiaomi. This could be of major significance.

The fact that a US NPE asserting in China against a big domestic company has received a positive result is highly significant. This has happened despite a widespread assumption, shared among domestic players as well as foreign operators, that such an outcome would be highly unlikely – especially without a judge playing a direct role.

Given that it is not expensive to litigate in China, Xiaomi must have concluded that it would lose the case, so decided to settle. This sends a strong message about the Chinese courts and the remedies that they can offer. If an NPE can assert in China and secure this kind of deal, then surely others can as well.

9. Deloitte makes major IP play

There was big news in June when IAM revealed that Deloitte had acquired UK consultancy Clearview IP. The deal involved Clearview founder Jon Calvert becoming a Deloitte partner and a team of more than 20 other specialists becoming an integral part of the Big Four firm’s IP advisory group. In short, this was a significant development, confirming that intellectual property is moving to the centre of corporate strategy. After all, if Deloitte is significantly building its IP capability, then other major business consultancies and advisories are likely to be thinking carefully about doing the same.

10. CAFC issues Arthrex decision

A year in patents always gives us a few standout decisions from the CAFC. Two big 101 rulings – in Athena Diagnostics and American Axle – prompted more calls for legislative action on patentable subject matter, with the latter decision allowing Judge Moore, in dissent, to refer to the United States’ current “validity goulash”.

However, it was another opinion from Moore, this time writing for the majority, which sent even greater shockwaves through the patent community. That came in Arthrex v Smith, in which the court ruled that the selection of PTAB judges violated the appointments clause of the US Constitution and then suggested a possible workaround with a slight tweak to the patent statute.

For a PTAB that USPTO Director Iancu has admitted has a “perception problem”, it was not a good look.

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