The Real FRAND Scam Part 1

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Last month, Unified Patents, also known as a PTAB reverse troll, launched its new service called Unified Consulting. Citing from its website, Unified Consulting “can meet the needs of their companies through IP consulting and data service and support.[1] U[nified] C[onsulting] provides innovative solutions to clients […].” Unfortunately, the solutions Unified advertises are to “problems” of Unified’s own making. To drum up its reverse trolling business, Unified misdirects its readers with an article titled “FRAND SCAM” that focuses on a vacated court case on fair, reasonable, and non-discriminatory (FRAND) licensing, without telling its readers that this case has since been by the Federal Circuit, that later court cases have contradicted its reasoning and analysis, and that industry analysts have heavily criticized it for some time. In this manner, Unified describes “problems” that do not actually exist to sell a solution that won’t actually work.

FRAND licensing has widely been recognized by courts and competition agencies as providing a balanced approach that allows access to the patented technology on fair terms. Through FRAND licensing, consumers can enjoy the very best standardized, patented technology, and innovators can reinvest in the necessary R&D to drive the next generation of technology forward to the benefit of consumers. FRAND helps power the most cutting-edge telecommunications technology to improve all of our lives – from next-generation 5G phones to connected cars, to the broader Internet of Things. Unfortunately, Unified’s article offers very little ti the current discourse on FRAND and comes across more as a deceptive advertisement than a sincere effort “to help companies make informed decisions”, to cite Unified’s CEO, Kevin Jakel.

The most egregious error in the article is the long discussion of a vacated court decision that fails to mention that the case was overturned and vacated. Those familiar with the industry know the December 2017 TCL v. Ericsson case is no longer good law. It was overturned by the U.S. Court of Appeals for the Federal Circuit (CAFC) on December 5th, 2019. For Unified to base the entire premise of its article on a vacated case, without mentioning this to its readers, is highly misleading, to say the least.

While it is true that the TCL case was overturned on 7th Amendment grounds (for failure to try the case before a jury) and not on the merits of the FRAND decision, nevertheless, it has been fully vacated and has no precedential value.  Admittedly, before it was vacated, the TCL trial decision seemed helpful to positions favored by Unified and SEP implementors.  But outcome-oriented reasoning aside, the authors do their readers a disservice by failing to look to the only case with a SEP portfolio determination that has survived appeal, namely, Unwired Planet.  While a decision on the appeal to the UK Supreme Court is due to issue any day now, few expect the portfolio determination aspect of the case to be overturned (as opposed to the injunction aspect).

The failure to even refer to the Unwired Planet case is as close to an admission as any that the authors of the Unified Piece are either amateurs or intentionally being misleading.  Simply put, anyone who has been involved in SEP licensing or litigation – even tangentially – knows that it is a global phenomenon and failure to account for how an assertion in one country will be impacted by the laws in another could have disastrous consequences.  Moreover, and just as important, the overturned TCL decision was been contradicted by the Unwired Planet case in the United Kingdom, and more recently in the United States. Importantly, those two cases, unlike the TCL decision, are still good law.  It is therefore ironic that in a discussion criticizing “information asymmetry,” Unified Patents fails to inform readers about legally relevant decisions and instead exclusively focuses on a legally irrelevant one.

For example, Unified Patents fails to mention HTC v. Ericsson, a 2019 decision involving Ericsson (the same party in the TCL decision) that reached the opposite conclusion as the overturned TCL decision, i.e., that Ericsson’s offered rates are indeed FRAND. This is notable because these 4G FRAND offers were 2-3 times higher than the rates calculated in the overturned TCL decision. In HTC v. Ericsson, the court analyzed Ericsson’s 4G licenses, found them to be “the best market-based evidence” of the value of Ericsson’s portfolio, and ruled that Ericsson’s “offers to HTC […] were fair, reasonable, and non-discriminatory.” Unified Patents also fails to mention that in Unwired Planet the court found that Ericsson could charge a 4G FRAND rate up to 2-3 times higher than the rates calculated in the overturned TCL decision, and a 2G/3G FRAND rate up to 7 times higher based on extensive analysis of Ericsson’s comparable licenses. Unlike the overturned TCL decision, the Unwired Planet decision has been upheld in all relevant respects on appeal.  It seems entirely misleading for Unified Patents to base its conclusions of wrongdoing on an overturned case whose conclusions on FRAND differ so drastically from those that are still legally valid.

In the next post, we turn to Unified Patent’s failure to address the many criticisms made of the TCL decision.

 

[1] The General Manager of Unified Consulting was the founder of an apparently successful NPE and former Senior Vice President for intellectual property at Alcatel Lucent and Vice President for Legal and IP at Nokia.  As such he definitely had access – even if he was not involved on a day to day basis in key decisions –  to significant material non-public or insider information that should belie many of the claims Unified’s article is making.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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