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18-10-04 FTC Reply Iso Motion For Partial Summary Judgment
18-10-04 FTC Reply Iso Motion For Partial Summary Judgment
1 Table of Contents
2 I. INTRODUCTION ............................................................................................................ 1
3 II. ARGUMENT .................................................................................................................... 2
4 A. Modem chips are designed to support cellular standards and fall within the
scope of Qualcomm’s licensing commitments. .................................................... 2
5
6 1. There is no factual dispute as to the function of the modem chip. ........... 3
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1 Table of Authorities
2 Cases
3 Apple, Inc. v. Samsung Elecs. Co., 876 F. Supp. 2d 1141 (N.D. Cal. 2012) .................................. 3
4 Apple, Inc. v. Samsung Elecs. Co., 877 F. Supp. 2d 838 (N.D. Cal.),
rev’d on other grounds, 695 F.3d 1370 (Fed. Cir. 2012).......................................................... 3
5
6 Brobeck, Phleger & Harrison v. Telex Corp., 602 F.2d 866 (9th Cir. 1979) ......................... 10, 13
7 Microsoft Corp. v. Motorola, Inc., 795 F.3d 1024 (9th Cir. 2015)................................................. 9
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1
2 References
3 All references to “Mot. Ex. __” are to the exhibits attached to the Aug. 30, 2018
4 Declaration of Jennifer Milici in Support of the FTC’s Motion for Partial Summary Judgment.
5 (ECF No. 792-1.)
6 All references to “Opp. Ex. __” are to the exhibits attached to Qualcomm’s Request for
7 Judicial Notice (ECF No. 871) or to the Declaration of Geoffrey Holtz in Support of Defendant
8 Qualcomm’s Opposition to Motion for Partial Summary Judgment (ECF No. 870-1).
9 All references to “Reply Ex. __” are to the exhibits attached to the accompanying
10 Declaration of Jennifer Milici in Support of the FTC’s Reply in Support of Partial Summary
11 Judgment.
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1 I. INTRODUCTION
2 Qualcomm does not dispute any material facts relating to its relevant licensing
3 commitments for standard essential patents (“SEPs”). Qualcomm agrees that it has committed to
4 make licenses available to companies for the purpose of implementing ATIS and TIA standards;
5 that it is not entitled to withhold a license from an applicant simply because that applicant
6 competes with Qualcomm; and that modem chips “facilitate” and “support” the implementation
7 of relevant standards, including by fully practicing the claims of Qualcomm SEPs. (Opp. at 16,
8 17.) All that remains is a purely legal question: whether modem chips, whose function is not
9 disputed, fall within the scope of Qualcomm’s licensing commitments. The clear language of
10 those commitments provides that they do.
11 Qualcomm tries to manufacture a factual dispute by presenting detailed evidence about
12 how cellular standards are articulated and arguing that the operation of modem chips is not fully
13 spelled out in these standards. (Opp. at 5-7, 15-16.) But this cannot obscure that there is no
14 dispute about the function of a modem chip: It is a core handset component supporting the
15 implementation of cellular standards. The parties’ only dispute is legal, namely, how to construe
16 the language of the ATIS and TIA intellectual propriety rights (“IPR”) policies. And this
17 language is plain. It extends FRAND commitments to firms seeking a license “for the purpose of
18 implementing” ATIS standards or “for the practice of any or all . . . portions” of TIA standards.
19 Neither IPR policy requires that an applicant’s product be expressly referenced in the standard or
20 supply all standardized functionality on its own. It is thus of no consequence that a modem chip
21 cannot by itself achieve full compliance with cellular standards. (Opp. at 16.)
22 Of more consequence is Qualcomm’s admission that its modem-chip competitors infringe
23 its FRAND-encumbered SEPs, coupled with its position that nothing in the ATIS or TIA IPR
24 policies prevents Qualcomm from asserting these SEPs against competitors. Were Qualcomm’s
25 interpretation accepted, Qualcomm could seek to use its SEPs to drive competitors from the
26 market—an absurd result contrary to a core purpose of Qualcomm’s FRAND commitments.
27 Qualcomm also cannot inject any ambiguity into the ATIS and TIA contracts through
28 parol evidence concerning purported “industry practice.” As a matter of California law, parol
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1 evidence of industry practice can introduce ambiguity into contractual language only when that
2 practice is certain and uniform. The evidence on which Qualcomm relies does not meet this test.
3 To the contrary, undisputed evidence establishes that there is no widely known, uniform practice
4 of refusing to grant licenses to make and sell modem chips. Over 100 companies, including
5 major SEP holders, have licensed Qualcomm itself to make and sell modem chips. Given
6 Qualcomm’s market position, this means that major SEP holders have licensed a substantial
7 portion of relevant modem chips sold. Indeed, when Qualcomm wanted a modem-chip license
8 from Ericsson, Qualcomm sought to enforce the FTC’s interpretation of the TIA policy in
9 litigation (on summary judgment), and obtained that license via settlement.
10 Nor do Qualcomm’s arguments regarding other SSOs preclude partial summary
11 judgment. The ANSI decision that Qualcomm cites explains that ANSI’s standard IPR Policy
12 language requires granting licenses for activities “within the field of use of the standard.” This is
13 precisely the FTC’s position here—a product designed to provide standard-compliant cellular
14 functionality is within the field of use of the standard, whether it provides all of the functionality
15 or only a portion of it. And the ETSI IPR Policy is a separate contract that cannot modify the
16 terms of the ATIS and TIA contracts.
17 II. ARGUMENT
18 A. Modem chips are designed to support cellular standards and fall within the
scope of Qualcomm’s licensing commitments.
19
20 Qualcomm’s licensing commitments expressly require it to make SEP licenses available
21 to applicants “for the purpose of implementing the standard” (ATIS) or that “practice any or all
22 of the Normative portions of the [Standard]” (TIA). There is no dispute that modem chips are
23 based on ATIS and TIA standards and “facilitate” implementation of those standards in cellular
24 handsets. (Opp. at 16.) Chips with these properties are plainly supplied “for the purpose of
25 implementing the standard” and practice at least “portions” of it, and therefore modem-chip
26 suppliers are within the scope of Qualcomm’s licensing commitments as a matter of law.
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1 And a simple glance at Qualcomm’s own website confirms that modem chips are
2 designed to implement cellular standards. Qualcomm states that its “Gigabit LTE and 5G cellular
3 modems are designed to empower tomorrow’s smartest devices with fast, efficient and reliable
4 connections to the world’s mobile networks.” 4 The product comparison page highlights the
5 “LTE Category” each modem supports, and each individual modem’s webpage lists the
6 “Supported Cellular Technologies” by standard (e.g., LTE, UMTS, CDMA). 5
7 Even Qualcomm’s Annual Report states that the company’s modem chips are “based on”
8 cellular standards, and are designed “for the LTE standard” and “to support . . . existing 3G
9 technologies.” 6 And in court filings, Qualcomm has explained that it is “the world’s leading
10 supplier of the wireless communications (“baseband”) chips that are the heart of a cellphone.” 7
11 These statements confirm that the FTC’s motion did not take testimony out of context; whatever
12 portions of a standard may be implemented by other components, modem chips are “based on”
13 cellular standards and “designed” to achieve standard-compliant cellular communications.
14 Qualcomm’s own contracts within “the context of cellular SEP licensing” (Opp. at 17)
15 confirm that modem chips (a type of application specific integrated circuit or “ASIC”)
16 “implement” cellular standards, or portions of them.
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21 4
Reply Ex. 2 (Qualcomm, “Cellular Modems,”). As Qualcomm notes, the court may take
judicial notice of easily verifiable information from web pages, especially where the FTC seeks
22 only to rely on Qualcomm’s own statements.
5
Reply Ex. 3 (Qualcomm, “Product Finder”); e.g., Reply Ex. 4 (Qualcomm, “Snapdragon X16
23 LTE Modem”).
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24 Reply Ex. 5 (Excerpts of Qualcomm Annual Report for the Year Ended Sept. 25, 2016), at 10.
Although not critical to the decision here, it is notable that modem chips can be certified for
25 compliance with cellular standards, contrary to Qualcomm’s assertions. (Opp. at 7.) The Global
Certification Forum (“GCF”) tests for compliance with cellular standards, including at the
26 component level. See Reply Ex. 6 (GCF, “Certifiable Technologies”) (identifying relevant
standards as within GCF’s certification regime)) and Reply Ex. 7 (GCF, “Certified Platforms,”
(identifying “chipsets” as certified products)).
27 7
Reply Ex. 8 (Excerpts of Brief of Amicus Curiae Qualcomm Inc. in Support of Affirmance on
28 RAND Issues, Ericsson, Inc. v. D-Link Sys., Inc., No. 2013-1625 (Fed. Cir. Feb. 27, 2014)
(emphasis added)).
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13 Thus, despite Qualcomm’s criticisms, it is clear that the FTC’s motion did not rely on facts or
14 testimony taken out of context, and that there is no genuine dispute that the function of a modem
15 chip is to support the implementation of cellular standards.
16 2. The ATIS IPR Policy’s requirement that licenses be available “for the
purpose of implementing the standard” plainly extends to applicants that
17 supply modem chips to enable standard-compliant cellular
communications.
18
19 With no dispute over the function of a modem chip, the only dispute is a legal one: the
20 construction of the contracts formed by Qualcomm’s FRAND commitments under the terms of
21 the ATIS and TIA IPR policies. The relevant ATIS language is plain. Qualcomm’s commitments
22 under the ATIS IPR Policy expressly require it to license applicants “for the purpose of
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1 implementing the standard.” 12 That language clearly applies to applicants that wish to design
2 products based on the standard for the purpose of providing functions specified by the standard,
3 even if those products do not perform every standardized function. Qualcomm argues the policy
4 requires only making licenses available for products that are expressly referenced in the standard,
5 which it equates with “implementing” the standard. (Opp. at 15-16.) 13 This argument ignores the
6 phrase “for the purpose of implementing” as contained in the ATIS IPR Policy. The core
7 function of a modem chip is to put cellular standards into operation when combined with other
8 components. 14 Implementing cellular standards is the purpose that modem chips are “designed
9 to” accomplish, and modem chips are “based on” these standards. 15 Modem chips serve no
10 purpose at all if they fail to implement cellular standards.
11 Qualcomm argues that the FTC’s interpretation reads the phrase “for the purpose of
12 implementing” the standard out of its commitment. (Opp. at 18.) That is not true. The limitation
13 ensures that a patent holder that commits to license its SEPs for the purpose of implementing one
14 standard need not license those patents for the purpose of implementing other products. For
15 example, a patent holder’s commitment to make SEP licenses available for purposes of
16 implementing an LTE standard does not require it to license LTE SEPs for use in CDMA-only
17 products. 16 This is an important limitation. But the language in no way dictates that every aspect
18 of the standard must be fully implemented in a single product before the licensing commitment
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20 12
Mot. Ex. 2 (Q2017MDL1_00024028, Operating Procedures for ATIS Forums and Committees
§ 10.4.1, at 10, Mar. 1, 2015).
21 13
In some places, Qualcomm appears to suggest that a product only falls within the scope of its
licensing commitment if “by itself, [it] practices (or implements) all of the functionality required
22 to comply with the standard.” (Opp. at 17.) If that were the standard, no applicant or product
would fall within the scope of the licensing commitment, because there is no single product that
23 implements all of the functions described in the standard—a handset does not implement cell
tower functions, and vice versa.
24 14
See supra § II.A.1.
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25 See supra § II.A.1.
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1 applies. Nor does it require that the product be expressly referenced in the standard—only that
2 the applicant’s purpose for the license is to implement the standard.
3 3. The TIA IPR Policy requires that licenses be available for applicants
“for the practice of any or all of the Normative portions” of the
4 standard.
5 As with ATIS, the relevant TIA contractual language is plain and may be construed as a
6 matter of law. Qualcomm’s commitments under the TIA IPR Policy require it to make licenses
7 available to applicants desiring to obtain such licenses for the purpose of practicing “any or all
8 of the Normative portions of the [Standard] for the field of use of practice of the Standard.” 17 By
9 its express terms, this means that applicants seeking a license for the purpose of practicing “any
10 . . . portion[]” of the relevant standard are entitled to a license.
11 Qualcomm argues for an interpretation that limits its license commitments to products
12 that are expressly described in the standards, which it equates with the word “practice” in the
13 TIA IPR Policy. (Opp. at 15-17.) But this ignores the contradictory language under which
14 Qualcomm promised to license applicants that wished to practice “any or all . . . portions” of the
15 standard. Qualcomm’s entire argument is based on the specific phrasing of the TIA IPR Policy
16 from 2001 to March 2005, when the Policy required licenses for “applicants only and to the
17 extent necessary for the practice of the TIA Publication.” 18 Before 2001, Qualcomm submitted
18 declarations that it would “make a patent license available to any qualified applicant upon
19 reasonable terms and conditions that are demonstrably free of any unfair discrimination,”
20 without further qualification. 19 After 2005, it submitted numerous additional declarations that it
21
22 17
Mot. Ex. 47 (QNDCAL01532503, TIA Engineering Manual, 4th Ed., Annex H, at 88, Mar.
23 2005 (emphasis added)). The term “Normative,” refers to mandatory, optional, and alternate
specifications within a TIA Standard. (Mot. 13.) This is distinct from “informative” text that
24 explains the standard without imposing any requirements on standard-compliant products. See,
e.g., Mot. Ex. 47 (QNDCAL01532503, TIA Engineering Manual, 4th Ed., at 55, Mar. 2005).
18
25 Mot. Ex. 39 (Q2017MDL1_01473574, TIA Engineering Manual, 3d Ed., Annex H at 87, July
1, 2002).
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26 Mot. Ex. 37 (Q2017MDL1_00013628, Letter from Louis Lupin (SVP, Proprietary Rights
Counsel, Qualcomm Inc.) to TIA regarding IS-95A, Sept. 17, 1998). In addition, from 1993 to
27 2001, the TIA IPR Policy required licensing applicants “for the purpose of implementing” TIA
Standards, just as the ATIS IPR Policy does now. See Mot. Ex. 32 (Q2017MDL1_0143111, at -
28 112), TIA Advisory Note #11 re TIA Intellectual Property Rights Policy, May 18, 1993). That
language had the same meaning in that version of the TIA IPR Policy, as described above in
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1 would license all applicants “to the extent necessary for the practice of any or all . . . portions” of
2 TIA Standards. 20 Accepting Qualcomm’s position would require believing that TIA materially
3 changed the IPR Policy in 2005, which Qualcomm concedes did not occur. (Opp. at 5 (2005
4 modifications were “modest[]” and not “relevant here”)). But even if that strained position were
5 accepted, summary judgment would still be appropriate with respect to Qualcomm’s
6 commitments under the 1993-2001 versions of the policy, and with respect to commitments
7 under the current (post-2005) version of the policy.
8 As with the ATIS IPR Policy, the FTC’s interpretation does not read any language out of
9 the TIA IPR Policy. The limitation that licenses must be granted only for “the field of use of
10 practice of the Standard” ensures that Qualcomm need not license patents essential to practicing
11 the relevant standard (i.e. CDMA standards) to applicants that wish to implement other
12 standards, but it does not limit Qualcomm’s obligation to make licenses available to competitors
13 that sell modem chips that support “any or all . . . portions” of the TIA standards. 21
14 4. Qualcomm’s interpretation would lead to absurd results.
15 Qualcomm’s interpretation of its FRAND commitments would lead to absurd results in
16 markets for modem chips. Cal. Civ. Code § 1643 (“A contract must receive such an
17 interpretation as will make it . . . reasonable.”); Oliver v. Men’s Wearhouse, No. 16-cv-01100,
18 2017 WL 6888490, at *2 (C.D. Cal. Dec. 6, 2017) (explaining the purpose of § 1643 includes “to
19 eliminate interpretations that are extraordinary or absurd”) (citation omitted). Qualcomm does
20 not dispute that it holds SEPs that modem chips infringe. (Opp. at 17.) If Qualcomm’s FRAND
21 commitments did not require it to make licenses available to competitors, they would not prevent
22 Qualcomm from suing its competitors, seeking to enjoin their manufacture of standard-compliant
23 modem chips and thus completely entrench the Qualcomm monopoly. This would be contrary to
24 a core purpose of the TIA and ATIS FRAND commitments—to prevent monopolies—and
25
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connection with ATIS.
27 20
See Mot. at note 48 (listing example commitments).
21
28 For example, a commitment to make licenses available for the purpose of practicing
CDMA2000 standards would not require Qualcomm to license an LTE-only product.
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1 contrary to the non-discrimination prong of the commitments, which provides that competitors
2 cannot be singled out for unfavorable treatment. 22 As the TIA IPR Policy Guide states:
3 “[r]equiring reasonable and non-discriminatory (RAND) licenses to all applicants prevents the
4 inclusion of patented technology from resulting in a patent holder securing a monopoly in any
5 market as a result of the standardization process.” 23 Qualcomm itself has recognized this
6 principle. When Ericsson alleged that Qualcomm infringed its cellular SEPs, Qualcomm moved
7 for summary judgment to require Ericsson to grant Qualcomm a license on FRAND terms.
8 Qualcomm stated that the TIA IPR Policy “ensures that all industry participants will be able to
9 develop, manufacture and sell products compliant with the relevant standard without incurring
10 the risk that patent holders will be able to shut down those operations.” 24 But Qualcomm now
11 seeks to hollow out this basic FRAND principle by retaining the right to seek to shut down its
12 competitors’ operations through assertion of FRAND-encumbered SEPs.
13 B. Parol evidence does not create ambiguity as to the meaning of Qualcomm’s
FRAND commitments.
14
15 Because Qualcomm’s proposed interpretation of the ATIS and TIA IPR Policies is
16 contradictory to their plain language, there is no need for the Court to consider the parol
17
18 22
See generally Microsoft Corp. v. Motorola, Inc., No. 10-cv-1823, 2012 WL 4827743, at *1
19 (W.D. Wash. Oct. 10, 2012) (noting IPR policies “often require or encourage members of the
standards setting organization to identify patents that are essential to a proposed standard and to
20 agree to license their essential patents on RAND terms to anyone who requests a license. Such
rules help to insure that standards do not allow essential patent owners to extort their competitors
21 or prevent them from entering the marketplace.”); see also Microsoft Corp. v. Motorola, Inc.,
795 F.3d 1024, 1041 (9th Cir. 2015).
23
22 Mot. Ex. 30 (Q2017MDL1_00025969, Guidelines to the Intellectual Property Rights Policy of
the Telecommunications Industry Association, at 5, March 2005). Qualcomm argues that the
23 TIA Guidelines are “not part of the TIA IPR Policy,” but admits that courts have used IPR
guidelines to interpret FRAND commitments. Opp. at 19. Indeed, in TCL Commc’ns Tech.
24 Holdings, Ltd. v. Telefonaktiebolaget LM Ericsson, No. 14-341, 2017 WL 6611635 (C.D. Cal.
21, 2017), the court relied on the ETSI Guide on IPRs—even though the ETSI Guide, like the
25 TIA Guidelines, states that it provides explanatory information but does not replace the IPR
Policy itself. Id. at *6 (“For this case, the two relevant parts of the ETSI Directives are the ETSI
26 IPR Policy . . . and the ETSI Guide on IPRs.”); Reply Ex. 13 (Excerpts of ETSI Guide on IPRs at
1). Moreover, the TIA Guidelines are expressly referenced in the TIA IPR Policy itself. See Mot.
Ex. 47 (TIA Engineering Manual, 4th Ed., at iii).
27 24
Reply Ex. 14 (Q2017MDL1_01431072, -077, Qualcomm’s Motion for Partial Summary
28 Judgment to Limit Ericsson’s Requested Relief for the Alleged Infringement of the Patents-in-
Suit, Ericsson Inc, v. Qualcomm, Inc., No. 96-cv-183 (E.D. Tex. Oct. 6, 1998)).
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1 evidence Qualcomm submits. See, e.g., Brobeck, Phleger & Harrison v. Telex Corp., 602 F.2d
2 866, 871 (9th Cir. 1979) (“[E]xtrinsic evidence cannot be received for the purpose of varying the
3 terms of the contract.”); see also Supervalu, Inc. v. Wexford Underwriting Managers, Inc., 175
4 Cal. App. 4th 64, 75, 96 Cal. Rptr. 3d 316, 325 (2009) (affirming summary dismissal when
5 “declarants suggest an industry definition . . . that is antithetical to the contractual language.”).
6 Even if Qualcomm’s parol evidence is considered, it is clearly insufficient to defeat
7 summary judgment. There is no consistent and clear industry practice of SEP holders refusing to
8 license the manufacture and sale of modem chips that can support a reading of the TIA and ATIS
9 IPR polices that is contrary to their plain meaning, nor is there a genuine dispute as to whether
10 such an industry practice exists. And the IPR Policies of other SSOs are either consistent with
11 the FTC’s interpretation (ANSI and ETSI) or irrelevant (ETSI).
12 1. Undisputed evidence shows that chip-level licensing is common in the
industry.
13
14 Industry practice can only introduce ambiguity into contractual language when the
15 practice is “certain [and] uniform.” Webster v. Klassen, 109 Cal. App. 2d 583, 589 (1952). Even
16 accepting the evidence that Qualcomm cites regarding industry practice, that requirement is
17 plainly not satisfied here—chip-level licensing has not been uniformly absent across the
18 industry. It is undisputed that Qualcomm itself has received licenses covering its modem chips
19 from “over 120” licensors, including cellular SEP holders. 25 Qualcomm acknowledges that these
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1 modem-chip licenses exist, but suggests that they are distinguishable because Qualcomm did not
2 want to be sued. (Opp. at 10, n. 3.) That argument must fail. Affording a licensee freedom from
3 suit is the reason for every license agreement, not a basis to disregard numerous agreements that
4 contradict Qualcomm’s purported “industry practice.” And given Qualcomm’s position in
5 modem chips, this means that a substantial portion of chips that have been sold have been
6 licensed under more than 100 different companies’ patents, including those companies’ cellular
7 SEPs. Qualcomm is not alone—at least have entered licenses at
8 the modem chip level under cellular SEPs according to the very sources cited by Qualcomm. 26
9 Nor can Qualcomm demonstrate that a purported industry practice of handset-only
10 licensing was “so generally known and notorious that knowledge and adoption thereof must be
11 presumed.” Webster, 109 Cal. App. 2d at 589. Once again, Qualcomm’s own actions are
12 sufficient to negate any genuine issue of fact. Until at least 2007, Qualcomm widely publicized
13 its practice of entering patent-related agreements with competing modem chip companies
14 relating to cellular SEPs. 27 Although these agreements were not exhaustive licenses, Qualcomm
15 listed these agreements on its website under the heading “Licensing,” with a sub-heading for
16 “Component Related Products,” that identified a number of prominent modem chip companies,
17 such as Infineon and Texas Instruments. 28 Qualcomm made similar representations in
18 presentations to carriers, such as Vodafone,
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Reply Ex. 22 (Qualcomm “Licensing” website page, June 10, 2007, as indexed by
web.archive.org).
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1 29
Even though Qualcomm’s agreements were not, in fact, exhaustive
2 licenses, Qualcomm’s highly public representations that it did grant licenses to modem chip
3 companies are impossible to reconcile with a “generally understood” industry practice as would
4 be required to alter the plain meaning of the TIA and ATIS IPR Policies.
5 Qualcomm itself, when litigating with Ericsson, argued that the TIA IPR Policy required
6 Ericsson to grant Qualcomm a license covering modem chips. In September 1996, Ericsson filed
7 suit against Qualcomm, alleging that Qualcomm’s modem chips and other products infringed
8 five patents that Ericsson had declared essential to 2G CDMA standards. 30 In October 1998,
9 Qualcomm filed a motion for partial summary judgment, in which Qualcomm asserted that
10 Ericsson’s commitments to TIA required that Ericsson “license to Qualcomm, ‘under reasonable
11 terms and conditions that are demonstrably free from any unfair discrimination,’ those patents, if
12 any, essential” the relevant TIA standard. 31 Qualcomm further represented that, for three years, it
13 had “relied on Ericsson’s . . . promises and built a multi-billion dollar business based on IS-95
14 [2G CDMA] technology, secure in the knowledge that it could license any patents determined to
15 be necessary for those products.” 32 To establish its reliance on Ericsson’s FRAND commitments,
16 Qualcomm attached an affidavit in which its chairman, Irwin Jacobs, attested that, based on
17 Ericsson’s representations in the TIA process, Qualcomm believed that Ericsson would not “seek
18 to prevent our production of products, if it were eventually determined that [its] patents were, in
19 fact, essential” to the TIA standard. 33 Qualcomm’s request for summary judgment on the TIA
20
29
21 Reply Ex. 15 (Q2014FTC03371611, CX5840 at -015, Sept. 2005 Presentation to Vodafone).
30
Reply Ex. 23 (Press Release, Qualcomm, Inc., “Ericsson Drops Three ‘Essential’ Patents from
22 Lawsuit Against Qualcomm and Surrenders Two Others” (Oct. 20, 1998)); Reply Ex. 24
(Q2017MDL5_10628522, -525, Second Amended Complaint for Patent Infringement, Ericsson
23 Inc. v. Qualcomm Inc., No. 2-96-cv-183, ¶ 11 (E.D. Tex. Jan. 14, 1997) (identifying
Qualcomm’s Baseband Analog Processor (BBA-2) and Mobile Station Modem (MSM-2) as
24 accused products)).
31
Reply Ex. 14 (Q2017MDL1_01431072, -091, Qualcomm’s Motion for Partial Summary
25 Judgment to Limit Ericsson’s Requested Relief for the Alleged Infringement of the Patents-in-
Suit, Ericsson Inc. v. Qualcomm Inc., No. 2-96-CV-183 (E.D. Tex. Oct. 6, 1998)).
26 32
Id. at -075.
33
27 Id. at -149, ¶ 9. At his deposition in this case, Dr. Jacobs testified that the products to which he
referred were the accused products in the Ericsson litigation, which included standard-compliant
28 modem chips. Reply Ex. 1 (Deposition of Irwin Jacobs (former Qualcomm), 116:14–118:3, Mar.
2, 2018).
12
REPLY IN SUPPORT OF FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893 Filed 10/04/18 Page 17 of 20
1 IPR policy, which advanced the same interpretation as the FTC advances here, clearly shows that
2 there was no contrary industry understanding at the time. Qualcomm eventually obtained a
3 license from Ericsson that applied to its modem chips and sold millions of chips that were
4 exhaustively licensed by Ericsson. 34
5 Other companies, including two of the licensors that Qualcomm holds out as exemplars
6 of a contrary understanding, also made official filings consistent with the FTC’s interpretation.
7 In 2006, both Nokia and Ericsson cited Qualcomm’s attempts to terminate the patent agreement
8 of Texas Instruments, a potential modem-chip competitor, as a “breach [of] Qualcomm’s duty to
9 license on FRAND terms.” 35 Ericsson elaborated that, “[h]aving given FRAND commitments to
10 the standard setting organisations, it is not for Qualcomm to refuse to license its essential patents
11 on FRAND terms.” 36
12 In sum, Qualcomm has not identified the type of “certain, uniform and . . . generally
13 known” trade usage that is legally capable of amending the express terms of a contract. Webster,
14 109 Cal. App. 2d at 589. Even accepting Qualcomm’s proffered evidence of industry practice as
15 true, Qualcomm cannot dispute that its own statements and licenses exist. These indisputable
16 counter-examples preclude any material factual dispute as to whether any industry practice of
17 refusing to license modem chips is “certain, uniform and . . . generally known.” Where, as here,
18 preliminary evidence fails to identify ambiguity in contract language, summary judgment
19 remains appropriate. Brobeck, 602 F.2d at 871-72 (quoting Pacific Gas & Electric Co. v. G.W.
20 Thoma Drayage Co., 69 Cal.2d 33, 37 (1968) (if extrinsic evidence does not create a genuine
21 textual ambiguity, “[t]he case may then be disposed of by summary judgment, because
22 interpretation of the unambiguous contract is solely a question of law.”).
23
24 34
25
26
35
Reply Ex. 25 (Q2017MDL1_00276794, -844 Nokia, Complaint Against Qualcomm Inc., Feb.
27 13, 2006).
36
28 Reply Ex. 26 (Q2017MDL1_00276673, -724, Ericsson, Complaint to the European
Commission, June 28, 2006).
13
REPLY IN SUPPORT OF FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893 Filed 10/04/18 Page 18 of 20
1 2. The other SSOs’ IPR policies Qualcomm cites do not create any
ambiguity in the policies of TIA or ATIS.
2
3 a. The ANSI Decision is consistent with the FTC’s interpretation
4 Qualcomm’s reliance on a decision of the ANSI Executive Standards Council is
5 misplaced. ANSI is an organization that accredits SSOs to develop “American National
6 Standards.” To maintain accreditation, an SSO must satisfy ANSI’s “Essential Requirements,”
7 including by adopting a patent policy consistent with ANSI’s Patent Policy. 37 In the matter
8 Qualcomm cites, the council’s initial decision, which its appellate panel affirmed, explained that
9 an SSO may allow SEP holders to restrict the scope of their licensing commitments, provided
10 that the SSO makes any permissible restrictions “clear in its own patent policy.” 38 Neither the
11 ATIS nor the TIA IPR Policy makes such a clear statement, and the TIA IPR Policy in fact
12 expressly requires SEP holders to make licenses available to applicants that practice “portions”
13 of TIA standards.
14 Qualcomm cites language in which the ExSC discusses whether ANSI’s Patent Policy
15 “requires licensing at the component level.” (Opp. at 22.) Read in context, this language
16 addresses whether ANSI’s “Essential Requirements” mandate such an approach for all ANSI-
17 accredited SSOs. The ExSC concluded that it did not, and that participants should instead
18 “decide what licensing terms are appropriate in particular standards, subject to the terms of an
19 [SSO’s] patent policy.” 39
20 Interpreting the actual language of the ANSI policy, when adopted without modification
21 by an SSO, the ExSC stated that the phrase “purpose of implementing,” “serves to limit any
22 assurance to the field of use of the standard.” 40 ExSC’s interpretation is entirely consistent with
23 the FTC’s position: Qualcomm’s assurances to ATIS and TIA require it to make licenses
24 available for the manufacture and sale of modem chips for the purpose of implementing the
25
26 37
Opp. Ex. 1 (ExSC Decision, at 15).
27 38
Opp. Ex. 1 (ExSC Decision, at 2-3, aff’d, id. at 14).
39
Opp. Ex. 1 (ExSC Decision, at 14).
28 40
Opp. Ex. 1 (ExSC Decision, at 5-6 (emphasis added)).
14
REPLY IN SUPPORT OF FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893 Filed 10/04/18 Page 19 of 20
1 relevant ATIS and TIA standards, but not for other purposes (such as implementing other
2 standards). The ExSC expressly rejected “arguments that the ANSI Patent Policy cedes
3 unilaterally and unconditionally to patent holders the right to decide ‘where in the value chain’
4 they choose to license,” concluding that this “concept” is “not reflected in the current language
5 of the ANSI Patent Policy.” 41
6 b. The ETSI IPR Policy is Irrelevant.
7 Qualcomm’s reliance on the IPR Policy of ETSI, an SSO not at issue in this motion, is
8 also misplaced. The FTC’s decision not to seek summary judgment on the ETSI IPR
9 commitment, a contract governed by foreign law, is not a concession that the contract is
10 ambiguous or requires extrinsic evidence to interpret. 42 And it is certainly not a concession that
11 separate contractual commitments under different IPR Policies are ambiguous.
12 Moreover, the Court need not reach a conclusion about the ETSI policy to grant summary
13 judgment. There is no authority that says a contract should be deemed ambiguous because two
14 industry groups expressed the view that that contract and another were “compatible” in some
15 undefined sense. (Opp. at 23.) Qualcomm cannot contradict the express language of stand-alone
16 commitments it made to TIA and ATIS simply because it also made additional contractual
17 commitments under different terms.
18 III. CONCLUSION
19 For the reasons stated above, the FTC’s motion should be granted. 43
20
21
22
23 41
Opp. Ex. 1 (ExSC Decision, at 15).
42
24 In its motion, the FTC expressly reserved the argument that Qualcomm’s commitments under
the ETSI IPR Policy unambiguously require it to make licenses available to competing modem
25 chip suppliers. Mot. at 2 n. 5. See generally Reply Ex. 27 (Karl Heinz Rosenbrock, “Why the
ETSI IPR Policy Requires Licensing to All” (article by former ETSI Director General addressing
26 scope of licensing commitment)).
43
Nokia filed a motion for leave to file an amicus brief in support of Qualcomm’s opposition at
27 10:00 p.m. the night before this Reply was due. (ECF No. 888.) The FTC has not had a
reasonable opportunity to respond to specific arguments in Nokia’s amicus brief, but nothing in
28 the brief supports denying the FTC’s motion. The FTC may seek leave to file a separate response
to Nokia’s brief.
15
REPLY IN SUPPORT OF FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893 Filed 10/04/18 Page 20 of 20
1
2 Respectfully submitted,
3
/s/ Jennifer Milici
4 Dated: October 4, 2018 JENNIFER MILICI
J. ALEXANDER ANSALDO
5 JOSEPH R. BAKER
GEOFFREY M. GREEN
6 RAJESH S. JAMES
PHILIP J. KEHL
7 DANIEL MATHESON
KENNETH H. MERBER
8 AARON ROSS
MARK J. WOODWARD
9
Bureau of Competition
10
Attorneys for Plaintiff Federal Trade
11 Commission
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
16
REPLY IN SUPPORT OF FTC’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893-1 Filed 10/04/18 Page 1 of 4
1
2
3
4
5
6
7
8 UNITED STATES DISTRICT COURT
9 NORTHERN DISTRICT OF CALIFORNIA
10 SAN JOSE DIVISION
11
12 FEDERAL TRADE COMMISSION, Case No. 5:17-cv-00220-LHK-NMC
Plaintiff
13 DECLARATION OF JENNIFER MILICI
IN SUPPORT OF FEDERAL TRADE
14
v. COMMISSION’S REPLY IN SUPPORT
15 OF PARTIAL SUMMARY JUDGMENT
ON QUALCOMM’S STANDARD
16 ESSENTIAL PATENT LICENSING
QUALCOMM INCORPORATED, a Delaware
17 Corporation, COMMITMENTS
Defendant.
18
DATE: October 18, 2018
19 TIME: 1:30 p.m.
20 CTRM: 8, 4th Floor
JUDGE: Hon. Lucy H. Koh
21
22
23
24
25
26
27
28
1
DECLARATION OF JENNIFER MILICI
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893-1 Filed 10/04/18 Page 3 of 4
2
DECLARATION OF JENNIFER MILICI
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893-1 Filed 10/04/18 Page 4 of 4
3
DECLARATION OF JENNIFER MILICI
Case No. 17-cv-00220-LHK-NMC
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 1 of 162
REPLY EXHIBIT 1
Irwin Mark Jacobs
Case 5:17-cv-00220-LHK Volume
Document 893-2 I Filed
Highly Confidential
10/04/18 Page 2 of 162
March 02, 2018
·
· · · ·FEDERAL TRADE COMMISSION
· · · · · · · · · · · · · · · · · · · · · Case No.
· · · · · ·Plaintiff,· · · · · · · · · · ·5:17-cv-00220-LHK-
· · · · · · · · · · · · · · · · · · · · · NMC
· · · · · v.
·
· · · ·QUALCOMM INCORPORATED, a· · · · · ·Case No.
· · · ·Delaware corporation,· · · · · · · 5:17-md-02773-LHK
· · · · · ·Defendant.
· · · ·______________________________
· · · · · · · · · · · · · · · VOLUME I
· · · Reported by:
·1· · · · · · · · · · · · EXAMINATION
18· ·customers?
20· ·called "OmniTRACS."· And the first contract for that 09:04:16
·1· · · · · · · essential."
·4· ·time?
16· ·products"?
22· · · · A· · ·Yes.
24· · · · A· · ·Yes.
·1· · · · A· · ·Yes.
24· ·producing.
·2· ·standards?
·3· · · · A· · ·Yes.
·5· ·CX6799, which begins on line 12, you wrote, "Due in 13:30:19
·9· · · · A· · ·I do.
· · · · · v.
· · · · · · · · · · · · · · · · · · · · · Case No.
· · · ·QUALCOMM INCORPORATED, a· · · · · ·5:17-md-02773-LHK
· · · ·Delaware corporation,
·
· · · · · ·Defendant.
·
· · · ·______________________________
·
· · · ·IN RE: QUALCOMM ANTITRUST
· · · ·LITIGATION
· · · ·______________________________
· · · Reported by:
·6
12· · · · A· · ·I have.
14· ·paper.
15· · · · A· · ·8.
18· · · · A· · ·Correct.
23· · · · A· · ·Yes.
16· · · · A· · ·Right.
24· ·conclusion.
13· ·there?
19· · · · A· · ·Yes.
22· ·of?
24· · · · Q· · ·Okay.
10· · · · A· · ·Essentially --
18· ·device.
·8· ·how the very functions are divided because one gets
12· ·if that's what the modem is called.· And some are
13· ·more and more within.· But that line keeps changing.
19· ·chip?
21· ·stuck.
19· ·features.
·6· · · · A· · ·Yes.
11· ·them?
19· ·out to the RF and then back again.· But, again, I'm
·4· ·chip.
·7· · · · A· · ·Again --
·8· · · · Q· · ·Sorry.
23· · · · Q· · ·Okay.
·8· ·correct?
·9· · · · A· · ·Yes.
·2· ·item?
·3· · · · A· · ·3.
11· · · · A· · ·Yes.
15· · · · A· · ·Yes.
23· ·but --
·2· ·clarification.
·3· · · · A· · ·Yeah.
·8· · · · Q· · ·MSM?
14· ·this is, again, done in the MDM as well as the MSM.
17· · · · A· · ·Yes.
REPLY EXHIBIT 2
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Qualcomm Incorporated includes Qualcomm's licensing business, QTL, and the vast majority of its patent portfolio.
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Qualcomm Incorporated includes Qualcomm's licensing business, QTL, and the vast majority of its patent portfolio.
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subsidiaries, substantially all of Qualcomm's engineering, research and development functions, and substantially all
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Solutions or disclosures.
Qualcomm Incorporated includes Qualcomm's licensing business, QTL, and the vast majority of its patent portfolio. Qualcomm Technologies, Inc., a wholly-owned subsidiary of
Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of Qualcomm's engineering, research and development functions, and substantially all of its
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REPLY EXHIBIT 15
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 33 of 162
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
QUALCOMM Incorporated
(Exact name of registrant as specified in its charter)
Delaware 95-3685934
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
(858) 587-1121
(Registrant’s telephone number, including area code)
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
1
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 34 of 162
Operating Segments
We conduct business primarily through two reportable segments, QCT (Qualcomm CDMA Technologies) and QTL
(Qualcomm Technology Licensing), and our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic
investments. Revenues in fiscal 2016, 2015 and 2014 for our reportable segments were as follows (in millions, except
percentage data):
QCT Segment. QCT is a leading developer and supplier of integrated circuits and system software based on CDMA,
OFDMA and other technologies for use in wireless voice and data communications, networking, application processing,
multimedia and global positioning system products. QCT’s integrated circuit products are sold, and its system software is
licensed, to manufacturers that use our products in mobile phones, tablets, laptops, data modules, handheld wireless
computers and gaming devices, access points and routers, data cards and infrastructure equipment, broadband gateway
equipment and other consumer electronics. Our Mobile Station Modem (MSM) integrated circuits, which include the Mobile
Data Modem, Qualcomm Single Chip and Qualcomm Snapdragon processors and LTE modems, perform the core baseband
modem functionality in wireless devices providing voice and data communications, as well as multimedia applications and
global positioning functions. In addition, our Snapdragon processors provide advanced application and graphics processing
capabilities. Because of our experience in designing and developing CDMA- and OFDMA-based products, we design both
the baseband integrated circuit and the supporting system as well, including the RF (Radio Frequency), PM (Power
Management) and wireless connectivity integrated circuits. This approach enables us to optimize the performance of the
wireless device with improved product features and integration with the network system. Our portfolio of RF products
includes QFE (Qualcomm Front End) radio frequency front-end components that are designed to simplify the RF design for
LTE multimode, multiband mobile devices, reduce power consumption and improve radio performance. QCT’s system
software enables the other device components to interface with the integrated circuit products and is the foundation software
enabling manufacturers to develop devices utilizing the functionality within the integrated circuits. We also provide support,
including reference designs and tools, to assist our customers in reducing the time required to design their products and bring
their products to market. We plan to add additional features and capabilities to our integrated circuit products to help our
customers reduce the cost and size of their products, to simplify our customers’ design processes and to support more
wireless devices and services.
QCT offers a broad portfolio of products, including both wireless device and infrastructure integrated circuits, in support
of CDMA2000 1X and 1xEV-DO, as well as the EV-DO Revision A/B evolutions of CDMA 2000 technology. Leveraging
our expertise in CDMA, we also develop and offer integrated circuits supporting the WCDMA version of 3G for
manufacturers of wireless devices. More than 80 device manufacturers have selected our WCDMA products that support
GSM/GPRS, WCDMA, HSDPA (High-Speed Downlink Packet Access), HSUPA (High-Speed Uplink Packet Access) and
HSPA+ for their devices. QCT also sells multimode products for the LTE standard, which are designed to support seamless
backward compatibility to existing 3G technologies. Our integrated circuit products are included in a broad range of devices,
from low-tier, entry-level devices for emerging regions, which may use our Qualcomm Reference Design (QRD) products, to
premium-tier devices. In fiscal 2016, QCT shipped approximately 842 million MSM integrated circuits for wireless devices
worldwide, compared to approximately 932 million and 861 million in fiscal 2015 and 2014, respectively.
Our modems are built to work with increasingly complex networks. They support the latest communication technologies
and adapt to network conditions and user needs in real time to enable delivery of faster, smoother data and voice connections.
Our 3G/4G modem roadmap delivers the latest network technologies across multiple product tiers and devices. This roadmap
is the result of our years of research into emerging network standards and the development of chipsets that take advantage of
these new standards, while maintaining backward compatibility with existing standards.
Each Snapdragon processor is a highly integrated, mobile optimized system on a chip incorporating our advanced
technologies, including a Snapdragon modem for fast reliable mobile broadband connectivity, a high performance central
processing unit (CPU), digital signal processor (DSP), graphics processing unit (GPU), image signal processor, multimedia
subsystems, including high fidelity audio, high-definition video and advanced imaging capabilities, our hardware-based suite
10
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 35 of 162
of Qualcomm Haven Security Solutions, and accurate location positioning engines. Our CPU cores are designed to deliver
high levels of compute performance at low power, allowing manufacturers to design powerful, slim and power-efficient
devices. Our Qualcomm Adreno GPUs are also designed to deliver high quality graphics performance for visually rich 3D
gaming and user interfaces. The heterogeneous compute architecture of our Snapdragon processors is designed to help ensure
that the CPU, DSP and GPU work efficiently together, each being utilized only when needed, which enhances the processing
capacity, speed and efficiency of our Snapdragon processors and the battery life of devices using our processors.
Our wireless products also consist of integrated circuits and system software for WLAN, Bluetooth, Bluetooth Smart,
frequency modulation (FM) and near field communications as well as technologies that support location data and services,
including GPS, GLONASS and BeiDou. Our WLAN, Bluetooth and FM products have been integrated with the Snapdragon
processors to provide additional connectivity for mobile phones, tablets and consumer electronics. QCT also offers
standalone WLAN, Bluetooth, Bluetooth Smart, applications processor and Ethernet products for mobile devices, consumer
electronics, computers, automotive infotainment, IoT applications and other connected devices. Our networking products
include WLAN, Powerline and Ethernet chips, network processors and software. These products help enable home and
business networks to support the growing number of connected devices, digital media, data services and other smart home
applications.
QCT currently utilizes a fabless production model, which means that we do not own or operate foundries for the
production of silicon wafers from which our integrated circuits are made. Integrated circuits are die cut from silicon wafers
that have completed the package assembly and test manufacturing processes. The semiconductor package supports the
electrical contacts that connect the integrated circuit to a circuit board. Die cut from silicon wafers are the essential
components of all of our integrated circuits and a significant portion of the total integrated circuit cost. We employ both
turnkey and two-stage manufacturing models to purchase our integrated circuits. Under the turnkey model, our foundry
suppliers are responsible for delivering fully assembled and tested integrated circuits. Under the two-stage manufacturing
model, we purchase die in singular or wafer form from semiconductor manufacturing foundries and contract with separate
third-party suppliers for manufacturing services such as wafer bump, probe, assembly and final test.
We rely on independent third-party suppliers to perform the manufacturing and assembly, and most of the testing, of our
integrated circuits based primarily on our proprietary designs and test programs. Our suppliers also are responsible for the
procurement of most of the raw materials used in the production of our integrated circuits. The primary foundry suppliers for
our various digital, analog/mixed-signal, RF and PM integrated circuits are Global Foundries Inc., Samsung Electronics Co.
Ltd., Semiconductor Manufacturing International Corporation, Taiwan Semiconductor Manufacturing Company and United
Microelectronics Corporation. The primary semiconductor assembly and test suppliers are Advanced Semiconductor
Engineering, Amkor Technology, Siliconware Precision Industries and STATSChipPAC. The majority of our foundry and
semiconductor assembly and test suppliers are located in the Asia-Pacific region.
QCT’s sales are primarily made through standard purchase orders for delivery of products. QCT generally allows
customers to reschedule delivery dates within a defined time frame and to cancel orders prior to shipment with or without
payment of a penalty, depending on when the order is canceled. The industry in which QCT operates is intensely competitive.
QCT competes worldwide with a number of United States and international designers and manufacturers of semiconductors.
As a result of global expansion by foreign and domestic competitors, technological changes, device manufacturer
concentrations and the potential for further industry consolidation, we anticipate the industry to remain very competitive. We
believe that the principal competitive factors for our products include performance, level of integration, quality, compliance
with industry standards, price, time-to-market, system cost, design and engineering capabilities, new product innovation and
customer support. QCT also competes in both single- and multi-mode environments against alternative communications
technologies including, but not limited to, GSM/GPRS/EDGE and TDMA.
QCT’s current competitors include, but are not limited to, companies such as Broadcom Limited, Cirrus Logic, Ericsson,
HiSilicon Technologies, Intel, Marvell Technology, Maxim Integrated Products, MediaTek, Microchip Technology Inc.,
Nvidia, Realtek Semiconductor, Samsung Electronics, Skyworks Solutions Inc. and Spreadtrum Communications (which is
controlled by Tsinghua Unigroup). QCT also faces competition from products internally developed by our customers,
including some of our largest customers, and from some early-stage companies. Our competitors devote significant amounts
of their financial, technical and other resources to develop and market competitive products and, in some cases, to develop
and adopt competitive digital communication or signal processing technologies, and those efforts may materially and
adversely affect us. Although we have attained a significant position in the industry, many of our current and potential
competitors may have advantages over us that include, among others: motivation by our customers in certain circumstances
to utilize their own internally-developed integrated circuit products, to use our competitors’ integrated circuit products, or to
choose alternative technologies; lower cost structures and/or a willingness and ability to accept lower prices and lower or
negative margins for their products, particularly in China; foreign government support of other technologies or competitors;
11
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 36 of 162
better known brand names; ownership and control of manufacturing facilities and greater expertise in manufacturing
processes; more extensive relationships with local distribution companies and original equipment manufacturers in emerging
geographic regions (such as China); and/or a more established presence in certain regions.
QTL Segment. QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio,
which, among other rights, include certain patent rights essential to and/or useful in the manufacture and sale of certain
wireless products, including, without limitation, products implementing CDMA2000, WCDMA, CDMA TDD and/or LTE
standards and their derivatives. Our licensees manufacture wireless products including mobile devices (also known as
subscriber units, which include handsets), other consumer devices (e.g., tablets and laptops), machine-to-machine devices
(e.g., telematics devices, meter reading devices), plug-in end user data modem cards, certain embedded modules for
incorporation into end user products, infrastructure equipment required to establish and operate a network and equipment to
test networks and subscriber units. QTL licensing revenues include license fees and royalties based on sales by licensees of
products incorporating or using our intellectual property. License fees are fixed amounts paid in one or more installments.
Royalties are generally based upon a percentage of the wholesale (i.e., licensee’s) selling price of complete licensed products,
net of certain permissible deductions (including transportation, insurance, packing costs and other items). Revenues
generated from royalties are subject to quarterly and annual fluctuations. The vast majority of QTL revenues have been
generated through our licensees’ sales of CDMA2000- and WCDMA-based products, such as feature phones and
smartphones. We have invested and continue to invest in both the acquisition and development of OFDMA technology and
intellectual property and have generated the industry leading patent portfolio applicable to LTE and LTE Advanced.
Nevertheless, we face competition in the development of intellectual property for future generations of digital wireless
communications technologies and services.
In February 2015, we reached a resolution with the National Development and Reform Commission (NDRC) in China
regarding its investigation and agreed to implement a rectification plan that modifies certain of our business practices in
China. The rectification plan provides, among other things, that for licenses of only our 3G and 4G essential Chinese patents
for branded devices sold for use in China starting on January 1, 2015 (and reported to us in the third quarter of fiscal 2015),
we will charge running royalties at royalty rates of 5% for 3G CDMA or WCDMA devices (including multimode 3G/4G
devices) and 3.5% for 4G devices that do not implement CDMA or WCDMA (including 3-mode LTE-TDD devices), in each
case using a royalty base of 65% of the net selling price.
Separate and apart from licensing manufacturers of wireless devices and network equipment, we have entered into
certain arrangements with competitors of our QCT segment, such as Broadcom and MediaTek. A principal purpose of these
arrangements is to provide our QCT segment and the counterparties certain freedom of operation with respect to each party’s
integrated circuits business. In every case, these agreements expressly reserve the right for QTL to seek royalties from the
customers of such integrated circuit suppliers with respect to such suppliers’ customers’ sales of CDMA-, WCDMA- and
OFDMA-based wireless devices into which such suppliers’ integrated circuits are incorporated.
Upon the initial deployment of OFDMA-based networks, the products implementing such technologies generally have
been multimode and implement CDMA-based technologies. The licenses granted under our existing CDMA license
agreements generally cover multimode CDMA/OFDMA (3G/4G) devices, and our licensees are obligated to pay royalties
under their CDMA license agreements for such devices. Further, over 210 companies (including Huawei, LG, Microsoft,
Oppo, Samsung, Sony, vivo, Xiaomi and ZTE) have royalty-bearing licenses under our patent portfolio for use in LTE or
other OFDMA-based products that do not implement any CDMA-based standards.
Since our founding in 1985, we have focused heavily on technology development and innovation. These efforts have
resulted in a leading intellectual property portfolio related to, among other things, wireless technology. We have an extensive
portfolio of United States and foreign patents, and we continue to pursue patent applications around the world. Our patents
have broad coverage in many countries, including Brazil, China, India, Japan, South Korea, Taiwan and countries in Europe
and elsewhere. A substantial portion of our patents and patent applications relate to digital wireless communications
technologies, including patents that are essential or may be important to the commercial implementation of CDMA2000,
WCDMA (UMTS), TD-SCDMA, TD-CDMA (Time Division CDMA) and OFDMA/LTE products. Our patent portfolio is
the most widely and extensively licensed in the industry, with over 330 licensees. Additionally, we have a substantial patent
portfolio related to key technologies used in communications and other devices and/or related services, some of which were
developed in industry standards development bodies. These include certain video codec, audio codec, wireless LAN, memory
interfaces, wireless power, GPS and positioning, broadcast and streaming protocols, and short range communication
functionalities, including NFC and Bluetooth. Our patents cover a wide range of technologies across the entire wireless
system, including the device (handsets and tablets) and not just what is embodied in the chipsets. Over the years, a number of
companies have challenged our patent position, but at this time, companies in the mobile communications industry generally
12
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REPLY EXHIBIT 6
GCF I Certifiable Technologies Page 1 of 1
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 38 of 162
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Certifiable Technologies
GCF was originally established as a certification scheme for mobile phones based on GSM technology. GCF
Certification has continued to evolve in parallel with the mobile telecommunications industry. Today the scheme
covers the following mobile telecommunications technologies:
z GSM
z GPRS
z EDGE
z 3G UMTS
The adoption of LTE by many of the world's CDMA network operators was a driver in bringing CDMA
device certification into GCF.
GCF will extend certification to 5G as the new technical standards are defined.
Certification Process
Certifiable Technologies
4G/LTE
5G
CDMA2000
Certified Modules
Certified Platforms
z Register
z Website user agreement
z Data Protection
z Contact us
z Disclaimer
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REPLY EXHIBIT 7
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Certified Platforms
Platform Certification extends the principles of module certification to enabling manufacturers to design
innovative new wireless products around a wider variety of previously certified functionality.
The scheme has been developed to simplify and cut the cost of certification by permitting and encouragi
re-use of test results.
What is a platform?
A platform is any hardware or software subsystem that provides defined functionality within the scope of
certification scheme.
z Chipsets
z Protocol stacks
z Downloadable clients
z White label devices that are not marketed directly to end-users but are produced to be custom
operator- or retailer-branded products
z The platform supplier specifies the functionality the platform is intended to deliver
z The supplier certifies the platform's functionality against all applicable GCF Certification Crite
z The supplier identifies test results that will not be impacted by the platform's integration into a
product
z During the certification of the end-product, the manufacturer references and re-uses the platf
certification and undertakes the necessary testing to certify any other functionality
C ifi i
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z Promotes the supply of pre-certified functionality which can enhance the performance of new
connected products
z Makes device certification accessible to more manufacturers and for all types of mobile-conn
product
z Streamlines the testing and certification phase of product development, reducing time-to-mar
z Expands the size of the market that the manufacturer can target by demonstrating that its pro
work correctly on multiple networks in multiple territories
Any Manufacturer or Associate Manufacturer Member of GCF can reduce their certification testing by us
certified Platforms. Information on certified platforms is available in the members’ area of the GCF websi
Companies wishing to supply pre-certified platforms need to join GCF as a Manufacturer Member.
z Reduces risk of disruption from poorly performing devices - to operators’ networks and their o
customers
Encouraging the use of pre-certified mobile functionality will also increase the overall quality and reliabilit
mobile-connected products available to consumers and business users.
Email address
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REPLY EXHIBIT 8
Case: 13-1625
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On Appeal from the United States District Court for the Eastern
District of Texas, Case No. 10-CV-0473, Chief Judge Leonard Davis
________________
Roger G. Brooks
CRAVATH, SWAINE & MOORE LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
[email protected]
and appeal. As the supplier of chips used in some of the accused products,
to those issues. Qualcomm does not address those topics in this brief and
1
Plaintiffs-Appellees have consented to the filing of this brief.
Appellants have not. Accordingly, Qualcomm has filed a motion requesting
leave to file this brief. See Fed. R. App. P. 29(a); Fed. Cir. R. 29(c). No
party’s counsel authored this brief in whole or in part. No party, party’s
counsel, or other person (other than Qualcomm) contributed money that was
intended to fund preparing or submitting this brief. See Fed. R. App.
P. 29(c)(5).
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does not advocate any position concerning the jury’s specific award of
Court reaches with respect to RAND may have profound effects on related
legal and policy issues, and may support or undermine incentives to innovate
Qualcomm must address this set of issues, even if that means that its views
industry, an industry that has grown and prospered perhaps more than any
“3G” cellular standards. Through RAND licensing, Qualcomm has made its
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developers of the “4G” technology that forms the basis for the long term
for cellular at a time when industry experts scoffed at the idea. While
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lower, Qualcomm could not have made, nor continue to make, the risky
licensor and major licensee gives it an unusual and balanced view into the
industries.
numerous SSOs for many years, including the Institute of Electrical and
-4-
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extraordinary growth and success over the last two decades under existing
licensing practices. In that time, the cellular industry has transformed from
worldwide, with data speeds improved 100-fold since 2006, and devices that
have become both far more powerful and less expensive. Critical to this
industry has been open to all; competition among device makers is fierce
success of the standardized cellular industry at all levels of the value chain,
-5-
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SEPs and RAND licensing have, in recent years, become subjects of intense
prescriptions having little to do with the terms of any SSO policy or RAND
as a matter of contract law, but would cause significant harm and stifle
by various amici.
SUMMARY OF ARGUMENT
A RAND commitment is a voluntary, contractual obligation by an
policies of that SSO, the SEP holder agrees to make its SEPs available to
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CONCLUSION
Respectfully submitted,
- 32 -
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
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Page 53
IPR GUIDE, 19 September 2013
IPR GUIDE
Version adopted by Board#94
(19 September 2013)
Background
The ETSI IPR Policy was adopted by the 21st General Assembly on 23 November 1994 and
incorporated in the ETSI Directives as Annex 6 to the ETSI Rules of Procedure.
At a later stage a Technical Body Chairman's Guide on IPRs had been written to help Chairmen and
others involved in ETSI's standardization activities to understand and implement the Institute's IPR
Policy. That Chairman's Guide on IPR had not been endorsed by the General Assembly or the Board
and therefore did not have the same official status as the ETSI Statutes, the Rules of Procedure or the
Technical Working procedures. The Technical Body Chairman's Guide on IPRs is now replaced by the
present ETSI Guide on IPRs.
In 2002 the ETSI General Assembly #40 identified the need to review the ETSI IPR Policy with a view
to addressing and rectifying any uncertainties on the operation of this Policy and on any legal rules and
obligations on the membership in order to avoid an incorrect implementation of the ETSI IPR Policy and
in order to avoid anti-competitive actions. An ad-hoc IPR group, with a clear mandate to review the
implementation of the IPR Policy but not to change the Policy itself, was consequently created and 30
recommendations on the operation of the ETSI IPR Policy where approved by the ETSI General
Assembly #42. The present ETSI Guide on IPRs embodies most of these recommendations.
A revised version of the Clause 4.1 of the ETSI IPR Policy was adopted by the 46th General Assembly
in November 2005. This revision was induced by the EC DG COMPETITION in its concern to generate
a general awareness of the risk of "patent ambush" situation in the standard making process. The EC
DG COMPETITION rationale behind the changes is given in section 4.5 of the present Guide.
For the avoidance of any doubt, the changes to the ETSI IPR Policy with respect to software copyright
introduced and approved by General Assembly #58 are not intended, and shall not be interpreted, as a
shift in the ETSI IPR regime towards a preference for royalty-free licensing. The basic principle of the
ETSI IPR regime remains FRAND with no specific preference for any licensing model.
Foreword
Intellectual property plays an important role in standardization, especially in the telecommunications and
electronic communications sector. In that context, the likelihood of having Intellectual Property Rights
(IPRs) incorporated into ETSI Deliverables became critical after a few years of existence of ETSI. This
tension (proprietary nature of IPRs versus wide dissemination of standards) was minimized with the
adoption by the ETSI membership of the ETSI IPR Policy as found in Annex 6 to the ETSI Rules of
Procedure.
In the preparation of standards, IPR issues may arise. It is important for all parties involved in the ETSI
standards-making process to be aware of their responsibilities and that there is good co-operation
between all parties.
This guide is intended to help ETSI members and any other party involved in ETSI's standardization
activities (e.g. members, Technical Body Chairmen, Secretariat, etc.) to understand and implement the
Institute's IPR Policy.
This guide provides explanatory information on how to handle IPR matters in ETSI and does not replace
the ETSI IPR Policy which takes precedence in all cases.
This guide has been endorsed by the Board but does not have the same official status as the Statutes,
the Rules of Procedure or the Technical Working Procedures.
REPLY EXHIBIT 14
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 63 of 162
-~
'
CX6799-001
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 64 of 162
TABLE OF CONTENTS
l'AGE
l IDTR.ODl1CTION ........ .,... ...................,................... ,. ... ..., . .... .,. ..,. .... .,.. .... ............... . 1
II STATEMENT OF UNDISPUTED FACTS ... ....... . .... ............................... .. ... ,. .. ..... ., 3
A. The TIA Requires Participating Members To Agree To License Any
Patents That Are Required To Implement A Standard.... ., ....... ................ ........ ... ...... 3
B.. Ericsson Repeatedly Stated During The IS-95 Standard Setting J>rocess
That It Would Make Its Patents Available.... ... ...... ... .... .......... ......... ... .......... .......... 5
Ill LEGAL AR.GUivlENT .""'.........,..... ,. . ........... .. ., .,.., .... ., ....... ...... ...... ......................... -. .. ... ....... . ... ,. 10
A.. Summary Judgment Standard .., .....,... ... . ., ....... .. .................. ...... ... ......... ....... ................. 10
CX6799-002
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 65 of 162
partial summary judgment or, in the alternative, summary adjudication to limit the relief
1.
INTRODUCTION
qualification, promised Qualcomm and others that it would license "under reasonable terms and
conditions that are demonstrably free from any unfair discrimination" any patents it held that
were required to develop products compliant with the "Mobile Station-Base Station Standard for
Dual-Mode Wideband Spread Spectrum Cellular System" (the "IS-95 standard") . It made that
promise to the Telecommunications Industry Association (the "TIA") and its participants,
including Qualcomm, during the standards setting process that led to the issuance 9fIS-95 in
July 1993.. It made the same promise in separate letters to the TIA and Qualcomm more than
two years after the adoption oflS-95. Ericsson also repeated the promise publicly on a number
of additional occasions .
Furthermore, Ericsson actively participated in the TIA process that led to the adoption of
IS-95 fully aware of the fact that the TIA's internal policies prohibited the adoption of any
standard unless all participants in the standard setting process agreed to license whatever
QUALCOMM'S MOTION FOR PARTIAL SUMMARY
312760vl/PA
n!DG;MENT TO LIMIT ERICSSON"S REQUESTED RELIEF FO~
6PBSOl!.DOC
THEALLEOED INFRINOEMENTOf'THE PATENTS-IN-.SUlT
Civil Aclio~ No. :i, ..95,CV183 - P~gtt I 100598
CX6799-003
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 66 of 162
'"essential" patents they possessed under reasonable terms and conditions, In fact, ,a
senior ·
Ericsson official chaired the committee that drafted and proposed the TIA policy_
Remarkably, Ericsson now seeks in this lawsuit to prevent Qualcomm from developi
ng,
manufacturing or selling products which Ericsson alleges infiinge ten patents (the "Alleged
TIA
Patents") that it believes are essentiaJ to the IS-95 standard ..1 In short, Ericsson seeks
to
repudiate its repeated promises upon which Qualcomm and the entire telecommunication
s
industry relied . For three years, Qualcomm relied on Ericsson's many promises and
built a
multi~billion dollar business based on the JS--95 technology, secure in the knowledge
that it could
license any patents detennined to be necessary for those products . Now that Ericsson
perceives
that Qualcomm's business poses a threat to Ericsson's dominant position in the worldwi
de
marketplace, it seeks to renege on its promises and to secure a court order enjoining
Qualcomm's
operations.. As a matter of law, however, Ericsson is estopped from doing so,
Ericsson's patents that Ericsson claims are essential to IS-95 . However, Qualcomm's
assertions
of non-infringement and invalidity do not somehow excuse Ericsson of its obligation
to license
those patents determi~ed to be essential to IS-95 . Ericsson did not promise that it would
license
its patents only if industry participants accepted, Without challenge, Ericsson's represen
tations
that it possessed patents essential to the standard . Nor would such a position be consisten
t with
In its response to Interrogatory No, 1 of Qualcomm' s First Set of Interrogatories {Exh- IJ,
Ericsson identified the following
patents-in.suit as being essential lo the prncticc of the IS.95 standard: 5,088,108;
5,109,528; 5;327,577; 5,148,485;
5,239,557~ 5,2B2,250; 5,390,245; 5,430,761}, 5,551,073; nnd 5,193,140,. (Ericsson hns
recently infomJed QWllcomm Umt it
intends to dismiss with prejudice its claims rel11ting to the 5,239,557, the 5,430,760 and
tlie 5,148,485 patents, They remain
subj~cl lo !his motio!l pending !he dismissol) It is unclear whether Eri~on claims
that the eleventh pntent-in•-suit,
5,230,003, is essential to the IS-95 standard Although Ericsson did not identiry the ' 003
potent in response to Interrogatory
No., 1, Ericsson has stated, "Tilis cnse involves eleven patents owned by Ericsson, which
Ericsson believes nre cssentinl
patents wiU1 respect lo cerurln slllmiards for ccllulnr telephony - i.e, patents that must be
plllcticcd by llJIY person who sells
equipment Uwl will comply with these standards." Ericsson's Motion to Compel Response
to Ericsson's Third Sel of
Document Requests, August 3, 1998, p. 2. To the extent, Ericsson alleges U1e 5,230,003
patent is essential to IS--95, it
should be included ns nn "Alleged TIA Potent."
QUALCOMM'$ MOTION FOR PARTIAL SUMMARY
312.760vllP A
JUDOEMEN TTO UMIT ERICSSON' S REQUESTED RELIEF FOR
nm All.EOED JNFRJNOEMENT OF THE PATENTS-IN.SUH 6PBS0II ..DOC .
Civil Action No, Z-96,CV 183 - Pol)t :Z 100598
CX6799-004
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 67 of 162
TIA policy, Rather, by participating in the TIA process and by repeatedly promising Qualcomm
and others, Ericsson has lost its ability to enjoin Qualcomm and others from practicing patents
Accordingly, Qualcomm respectfully requests that this Court grant partial summary
judgment limiting Ericsson's relief in this action, if any, to that which is consistent with the TIA
policy and Ericsson's numerous representations. Specifically, Qualcomm requests that Ericsson
be estopped from seeking any injunctive relief as to its Alleged TIA Patents, that Ericsson be
estopped from seeking any lost profits or other damages as to its Alleged TIA Patents other than
.
license fees "under reasonable terms and conditions that are demonstrably free from any unfair
discrimination," and that Ericsson be required to license to Qualcomm any Alleged TIA Patents
A detennination that Ericsson's potential recovery is so limited will reduce the issues for
trial and aid the parties in properly evaluating this case and their respective exposures . The
result will be a significantly enhanced opportunity for a negotiated resolution of this litigation as
II.
A. The TIA Requires Participating Members To Agree To License Any :Patents That
Are Required To Implement A Standard.
Over the past three decades, industry standards groups have been a driving force in the
Russell T. Won$, et al, Legal Implications ofStandard Setting Activ.ity, paper presented at th~
Second Annual Advance Patent Law Institute, sponsored by the University of Texas School of
Law, Nov 6-7, 1997.] The goal of these groups is to develop and maintain voluntary industry
QUALCOMM'S MOTION FOR PARTIAL SUMMARY
312760vJ/P/\
JUDO EM ENI TO UM rT ERICSSON'S REQUESTED RELIEF FOR
6P8S0!!DOC
TiiE ALLEGED JNl'1UNGEM ENT OF TIJE PATENTS-IN-SUIT
100598
Civil Action No. 2-96-CVI l!J - PAgtt 3
CX6799-005
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 68 of 162
standards and specifications for implementing the particular technology in question. The results
selling products using those technologies and greater compatibility among those products.
primarily ofwireless equipment mimufacturers, is the primary standard-setting body for the
telecommunications industry in the United States. [Exh. 3, TIA Engineering Manual dated
December 6, 1991, ati.] Qualcomm and Ericsson are both members of the TIA.
Ljke most standards setting bodies, the TIA has declared that it will not approve a
proposed standard unless any participant holding a patent that would be required for compliance
with the standard agrees to license the patent without compensation or "under reasonable tenns
and conditions that are demonstrably ~·ee from any unfair discrimination." This basic policy
ensures that all industry participants wil1 be able to develop, manufacture and sell products
compliant with the relevant standard without incurring the risk that patent holders will be able to
shut down those operations. The TIA'"s Intellectual Property Rights Policy, as stated in TIA
or
QUALCOMM'S MOTION FOR PARTIAL SUMMARY
312760 vi/PA.
JUDGEMENT TO LIMIT ERICS~ON' S RE.QlJT!STED RELIEF FOR GPBS0l!.DOC
THE ALLEGED INFRINGEMENT OF THE PATENTS-m-SUlT
100598
Civil A.t.i0n N0. Z-96,CVl83 - Pag~ 4
CX6799-006
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 69 of 162
Interestingly, the policy was proposed and drafted in 1993 by TIA's Ad-Hoc Intellectual
Property Rights Committee, which was chaired by Barry Kratz, Ericsson's Director ofBusines
s
and Industry.
B. Ericsson Repeatedly Stated During Tlte 1s..95 Standard Setting Process That It
Would Make Its Patents Available.
In 1989, the TIA issued the IS-54 standard for digital cellular communications. The
standard was based on TDMA technology and included substantial contributions from Ericsson.
CDMA technology. In March 1992, the TIA established a oew subcommittee, identified as
TR45 .5, to work towards the adoption of a standard based on CDMA technology, [Exh. 5,
Proposed "Scope" and "Charter" for TR.45.5 dated March 30, 1992.] The standard, when
adopted in July 1993, become known as IS-95.3 The TIA's Intellectual Property llights Policy
CX6799-007
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 70 of 162
,Shortly after the adoption of the Intellectual Property Rights Policy, Ericsson infonned
the TIA that it believed it had patents essential to the proposal being considered by the TR 45.5
subcommittee and that it intended to comply with the TINs polides with regard to those patents:
[Exh 6, Letter from Barry Kratz to Gerald Flynn, Chairman ofTR.45 5 dated April 16, 1993
(emphasis added)] Ericsson's commitment to abide by the Intellectual Property Rights Policy
was confirmed by the TR45.5 chairman in the minutes of the April 19, 1993 subcommittee
By Jetter dated May 11, 1993, Ericsson identified Patent Nos . 5,088,108 and 5,109,528 as
being "required for compliance with [1S~95] " Again, Ericsson stated that it was "willing to
license these patents under reasonable terms and conditions that are demonstrably free of any
unfair competition» [Exh . 8, Letter from Barry Kratz to Gerald J. Flynn dated May 11, 1993 .]
Two months later, the TIA issued the "Mobile Station - Base Station Standard for Dual•Mode
additional pa~ents as being essential to IS-95 even though it had promised to do so in May of
1993, [Exh 8, Letter from Barry Kratz to Gerald Flynn dated May 1I, 1993.] In May of 1995,
the TIA wrote to Ericsson requesting Ericsson to ~isclose any additional patents it considered
CX6799-008
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 71 of 162
essential to the IS-95 bas~d standard for PCS communications.4 [_E~ibit 9, letter from Thanos
Kipreos to Barry Kratz dated May 16, 1995.] In this letter~ the TIA also reminded Ericsson that
lt would not adopt a proposed standard unless participating members holding patents essential to
the standard agreed to license the patents in accordance with the InteUectual Property Rights
Policy [Id.] When Ericsson failed to respond, the TIA sent another letter, again reminding
[Exh. 11, Letter from Thanos Kipreos to Barry Kratz dated August 3, 1995..) Although Ericsson
remained silent, five additional patents were issued to Ericsson during this period (the 5,239,557
patent in August 1993, the 5,282,250 patent in January 1994, the 5,327,577 patent in July 1994,
the 5,390,245 patent in February 1995, and the 5,430,760 patent in July 1995) that it claims in
During this same period, Qualcomm began to invest heavily in the development,
production and marketing of products based on the IS-95 standard . [Exh. 12, Declaration of Dr.
Irwin M. Jacobs ("Jacobs Declaration"), at ,i 6,] By the end of 199~, Qualcomm had invested
neatly $400 million in the research, development, production and marketing ofIS-95 compliant
products. [Id.] For the period from July 1993 (when the IS-95 standard was adopted) to
December 1995 (when Ericsson finally identified additional essential patents), the investment in
~ At lhis time, the American National Stnndards Institute ("ANSr'), in conjunction with the TIA, was considering J-STD--008,
a Personal Communicntions Services (''PCS'') slllndard bnsed on IS-95. {PCS communications us[;\ spectrum in the 1800
MHz to 2000 MHz band while cellular comrn\llllcatiom, use sp,:cb:um in the 800 MHz to 900 MHz band.) ANSI has a very
similar intellectual property rights policy os !he TIA I_Exh, 10, ANS!'s Procedures for Uie Development llild Coordirultion of
American Notional Standards ] Tlie "uplxmded'' IS-95 stand!lfd was adopted in July J!)!)6
~ All of the patents-in-suit lmd been applied for llJld nine of the eleven had been issued by May I 995.
QUAlCOMM'S MOTION FOR PARTIAL SUMMARY 312760'1I/PA
.JUDGEMENT 10 UMIT ERlCSSON'S REQUESTED REUEF FOR 6PBS0l! .DOC
THE ALLEGED JNFRJNGEMENT OFTIIE PATEN"IS-IN°Sll!T 100S98
Civil Action No. 2-96-.CVlSJ - P~gc 7
CX6799-009
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 72 of 162
IS-95 products amounted to roughly $300 million [Id] Quaicomth had also entered into roughly
30 licensing agreements with entities throughout the United States and the world in which it
licensed its essential IS-95 patents . [Id], And that investment was beginning to pay off: in the
summer of 1995, both PrimeCo and Sprint Telecommunications Venture, two major cellular
providers, announced their plans to install IS-9S systems, rather than systems based on
Ericsson's TDMA technology, in their service areas. [Exh 13, Sprint Telecommunications
Venture Press Release dated July 21, 1995; Exh. 12, Jacobs Declaration at 16.] Qualcomm and
its CDMA technology were becoming a competitive threat to Ericsson and its TDMA systems.
This threat apparently jolted Ericsson into qesperate action. Despite two years of silence,
Ericsson announced that it held IS-95 "blocking" patents less than one month after the Sprint
announcement On August 17, 1995, Ericsson's Chairman, Lars Ramqvist, stated in a public
[Exh 14, Ericsson Interim Report for Six Months Ending June '30, 1995 .] 6
Both Qualcomm and the TIA immediately wrote to Ericsson requesting that it identify its
"bloclcing" patents, [Exh 15, Letter from Louis Lupin to Lars Ramqvist dated August 21, 1995;
Exh . 16, Letter from Thanos Kipreos to Barry Kratz dated August 25, 1995.] On August 29,
Ericsson responded to Qualcomm by stating that it would disclose the n:levant patents "in the
i Qun.lcomm's stock declined by $4.63, or nenrly 9 percent, shortly after the publication of Mr, Ramqvist's nnnouncement
QUAl..COMM'S MOTION FOR PAR'TIAL SUMMARY 312760 vl/PA
JUDGEMENT TO LIMIT ERlCSSON'S REQUESTED REUEF FOR • 6PBS0II.Q9C
nm All..EGED INFRINGEMENT OF TifE PATENTS-IN.SUlT 100~9!1
Civil Adl on No, 2-96-CV183 -Pago 8
CX6799-010
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 73 of 162
Please be assured that we will honor our undertaking with the TIA
to license any patents whose use would be required for compliance
with IS-95 under reasonable terms and conditions that are
demonstrably free of any unfair discrimination
[Exl1. 17, Letter from Walo von Greyerz to Louis Lupin dated August 29, 1995 (emphasis
[Exh . 18, Letter from Barry Kratz to Thanos Kipreos dated September 19, 1995 (emphasis
added}.]
On November 14, 1995, Ericsson wrote to Qualcomm and several other companies
identifying 21 patents held by Ericsson that it stated were "relevant" to IS-95. [Exh. 19, Letter
from Mans Ekelof to Harvey White dated November 14, 1995.] The letter indicated that a
"substantial number" of those 21 patents were essential to the IS-95 standard. Ericsson still
refused, however, to identify specifically its allegedly essential patents (other than the two
identified in 1993). A similar letter identifying the 21 "relevant" patents was sent to the TIA on
November 27, 1995. [Exh. 20, Letter from Barry Kratz to Thanos Kipreos dated November 27,
1995).]
It was not until December 11, 1995, two and a half years after the adoption ofIS-95 and
'• "
four months after Mr. Ramqvist's "b1ocking" statement, that Ericsson identified any patents in
addition to the two identified in 1993 that it asserts are essential to IS-95. [Exh. 21, Letter from
Mans Eke1of to Louis Lupin dated December 11, 1995 J7 After disclosing these eight allegedly
7
In addition to the 5,088,108 and 5,109,528 patents disclosed in May 1993, Ericsson identified ot U1at
time the following
pnlcnts os olleg¢ly essential l.o JS-95; 5,148,485; 5,239,557; 5,282,250; 5,290,245; 5)..37,577;
5,430,760. Ericsson
recently informed Qualcomm that it intends to dismiss, with prejudice, all it9 clnims with regard
to three .of these patents.
See Nole I fill.ll!!!,
QUALCOMM'S MOTION FOR PARTIAL SUMMARY
JUDGEMENT TO UMIT ERlCSSON'S REQUESTED RJil,IEf FOR 312760 vi/PA
TIJE All EGED INFRINGEMENT OF TIIE PATENTS-n-1-SUIT 6PBSDlt.DOC
Civil Action No. 2-96-CVJSJ- Page 9 10059!1
CX6799-011
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 74 of 162
essential patents, Ericsson again confirmed to Qualcomm its commitment to license such patents
·
~n a fair and non-discriminatory basis. [Ex:h. 22, Letter from Mans Eke]ofto Louis Lupin dated
January 9, 1996.] On October 15, 1996, nearly one year later, Ericsson identified the 5,193,140
patent as essential to the IS-127 standard, which has been incorporated into IS-95-A It was not
until Ericsson responded to Qualcomm' s First Set oflnte1rogatories on July 28, 1997, that it
m.
LEGAL ARGUMENT
A. Summary Judgment Standard.
Summary judgment is appropriate when the moving party demonsirates that there is no
genuine issue of material fact and that it is entitled to judgment as a matter of law. FED. R. CIV
PROC . 56(c); Celotex: Corp. v. Catrett, 477 U.S. 317 (1986); Cyrix Corp. v. Intel Corp.., 879 F,
Supp . 666, 667-668 (E.D- Tex. 1995), qff'd, 77 F.3d 1381 (Fed Cir. 1996). The Court may
properly dispose of"any part" ofa case by summary judgment or summary adjudication.
FED.
K CN . PROC. 56(a) As the moving party, Qualcomm has the initial burden ofidentifying "the
materials on file that it believes demonstrate the absence of any genuine issues of material fact"
FED. R CIV. P. 56(e). Once Qualcomm satisfies this requirement, the burden shifts to Ericsson
to set fortli specific facts showing that there is a genuine issue of fact for trial. T W Elec. Serv.,
lnc. v. Pacific Elec. Contractors Association, 809 F.2d 626, 630 (9th Cir. 1987). If Ericsson
cannot meet that burden, Qualcomm's motion must be granted. Celotex Corp. v. Catrett, 477
Summa1y judgment is appropriate in this case as there is no genuine issue of material fact
relating to Qualcomm's equitable estoppel defens~- Furthennore, the resolution oftl1is issue by
CX6799-012
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 75 of 162
the Court at this time will permit the parties to better evaluate the case and perhaps lead to a
negotiated resolution.
While "equitable estoppel is not limited to a particular factual situation nor subject to
resolution by simple or hard and fast rules," A.C. Aukerman Co. v. R.C Chaides Construction
Co., 960F .2d 1020, 1041 (Fed . Cir. 1992) (en bane), the Federal Circuit has identified the
(I) The patentee, through misleading conduct, leads the alleged infringer to
reasonably infer that the patentee does not intend to enforce its patent
against the alleged infringer. "Conduct" may include specific statements,
action, inaction, or silence where there was an obligation to speak.
(3) Due to its reliance, the alleged infringer will be materially prejudiced if
the patentee is allowed to proceed with its claim.
Several courts have applied the principle in estopping participants in industry standard-
setting committees from fully enforcin~ their patent rights as a result of their conduct before
those committees. For example, in Stambler v. Diebold, Inc., 11 U.S.P.Q.2d (BNA) 1709
(E.D.N.Y. 1988), aff'd, 11 U.S.P. Q2d (BNA) 1715, 1716 (Fed .. Cir. 1989), the defendant sought
summary judgment to preclude plaintiff-patentee from seeking damages and equitable relief
based on, among other things, equitable·estoppel. Ten years before filing his infringement
action, the patentee participated in an American National Standards Institute ("ANSI") standards
committee that was in the process of adopting the very standard the patentee ultimately alleged
was covered by his patent . During the standards setting process the plainti~-patentee failed to
CX6799-013
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 76 of 162
disclose the existence of its essential patents, which the court noted "could reasonably be
interpreted as an indication that plaintiff had abandoned its patent claims." Id at 1715 . In
holding that the doctrine of equitable estoppel barred the patentee fro'm receiving any injunctive
relief, the court concluded that the patentee's conduct before the standards setting committee
limited his ability to enforce his patent rights: "Plaintiff could not remain silent while an entire
industry implemented the proposed standard and when the standards are adopted assert that its
In Potter Jnstn,ment Co., Inc. v. Storage Tech. Co,p., 207 U. S.P .Q. (BNA) 763, 766
(EJ). Va 1980), aff'd on other grounds, 641 F.2d 190 (4th Cir. 1981), a patentee sued for
infi:ingement based on the defendant's making and selling of products compliant with a standard
adopted by ANSI. The court dismissed the action holding that the patentee was equitably
estopped from enforcing its patent against the defendant Its holding was based on two critical
factors. First, the ANSI standards setting committee "had a written policy, of which all members
were aware, stating that when any one or more patents are to be included within a proposed
industry standard, the owner of such patent must bring to the attention oftl1e Subcommittee the
existence of such patents and agree to offer licenses to members of the affected industry on
standard." Id at 766, And second, representatives of the patentee had attended one of the ANSI
meetings but did not disclose its ownership of the patent Id The court concluded that "[e]quity
will rarely, if ever, permit one to waive by acquiescence its alleged patent rights for a Jong period
of time and attempt to assert them after they have been adopted as the industry standard!' Id at
769 .
CX6799-014
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 77 of 162
In a similar standards setting context, the Federal Circuit concluded that the patentee had
granted the defendant an irrevocable, royalty-free implied license under the patent as a result of
its conduct Wang Laboratories, Inc. v. Mitsubishi Electronics Co. of America, 103 F.Jd 1571
(Fed. Cir. 1997). Among other things, the patentee encouraged the relevant standard setting
body to adopt its technology as an industry standard without ever infomtlng that body or its
members of its ongoing pursuit of patents covering the technology. Id at 1575. In upholding the
jury's finding of an implied license, the Federal Circuit held that the Jicense was the legal result
of equitable estoppel and explained that uan implied license merely signifies a patentee's waiver
of the statutory right to exclude others from making, using or selling the patented invention." Id
at 1580.
In each of these cases, the patentees were equitably estopped from exercising fil!Y of their
patent rights due primarily to their silence about their patent portfolios before various standards
setting bodies. The defendants in each of those cases had developed, manufactured or sold
products compliant with the standards (and which potentially infringed the patents) based on the
belief that the standards setting process had secured their ability to do so without infringing any
patents. The courts concluded rightly that the conduct of the patentees, which enforced those
beliefs, estopped them from recovering any relief whatsoever from the defendants .
While the instant case is closely analogous to the cases cited above, it differs in two
important aspects, both of which weigh in favor of Qualcomm's equitable estoppel claim. First,
the TIA's Intellectual Property Rights Policy (rather than merely remaining silent). Second, the
relief sought by Qualcomm is much more limited than that granted by the courts in the cases
discussed above. Qualcomm strenuously denies that it is infringing any of the Alleged TIA
CX6799-015
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 78 of 162
Patents. However, ifit is found to have infringed those patents; Qualcomm does not seek in this
motion to deny Ericsson the right to exercise all of its patent rights as the courts did in the cases
cited.above .. RatJ1er, this motion merely seeks a limitation of the relief sought to the recovery of
license royalties, uunder reasonable terms and conditions that are demonstrably free of any unfair
discrimination," if Qualcomm is found to have infiinged those patents. That is, Qualcomm
merely seeks to hold Ericsson to the repeated promises it made to Qualcomm and others who
As set forth below, there is no material dispute with regard to any of the three elements of
an equitable estoppel defense: Ericsson's conduct and its many promises led Qualcomm to
reasonably infer that it could practice the IS-95 standard without fear that Ericsson would seek to
enjoin its activities; Qualcomn:i relied on Ericsson's conduct and promises; and, as a result of that
reliance, Qualcomm would be materially prejudiced if Ericsson were allowed to proceed with its
claims for injunctive relief and for lost profits Accordingly, Ericsson should be estopped from
seeking any relief other than royalties "under reasonable terms and conditions free from any
unfair discrimination."
patentee must have communicated to the alleged infringer that the patentee would somehow
refrain from enforcing some or all ofits rights as a patent holder. That is,
CX6799-016
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 79 of 162
In Stambier, Potter and Wang; the course of conduct involved,- ainong o·ther things,
silence before a standards setting committee. The inference drawn by each of the defendants was
that the plaintiffs held no patents essential to the standards and, therefore, the defendants were
free to practice the standard without fear of interference. In this case, the course of conduct
involves Ericsson's affirmative representations made repeatedly before the TIA and directly to
Qualcomm. The inference that Qualcomm reasonably infi;:rred from that conduct was that
Ericss?n would not seek to prevent Qualcomm from developing, manufacturing and marketing
IS-95 compliant products. [Exh 12, Jacobs Declaration at ,i 9.] That is, if it were determined
that Qualcomm (like the defendants in the cases cited above) was indeed infringing Ericsson's
patent, Ericsson would be required to Hcens!;\ those patent rights "under reasonable terms and
There is no genuine dispute that Ericsson repeatedly assured Qualcomm and others that it
would license its patents essential to the practice of the IS-95 standard Nor is there any question
that the TIA~s Intellectual Property Rights Policy, drafted by a subcommittee chaired by
Ericsson's own Barry Kratz, required Ericsson to honor its commitment to license any patents
that it might have, Ericsson now seeks to do the very thing it promised on so many occasions
that it would not do: stop Qualcomm from building and sel1ing IS-95 based products,
infringement claim is that the alleged infringer "have had a relationship or communication with
the plaintiff which luOs the infringer into a sense of security,.," Aukerman, at 1042-1043.
Qualcomm' s relationship with Ericsson as participating members of the TIA standard setting
process lulled Qualcomm into what turned out to be a false sense of security that it would be free
QUAl.COMM'S MOTION l'OR PARTIAL SUMMARY 312760 vi/PA
ruDOEMENTTO 1..JMlT ERJCSSON'S REQUES!ED RELIEF FOR GPBSOl!.DOC
THE Al.lEGED INFRINGEMENT Ol' TIIE l' ATENTS-lN-SlJIT 100598
Civil Action No, 2-96-CVI 83 .. , Page I 5
CX6799-017
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 80 of 162
to practice· the standard adopted by the TIA and that it could obtain a license from Ericsson for
Qualcomm relied on both Ericsson's participation in the TIA standards setting process
and on Ericsson's many representations that any patent rights held by Ericsson would be made
available "under reasonable tenns and conditions that are demonstrably free from any unfair
discrimination ,, [Exh. 12, .Jacobs Declaration, at ir 9..] Qualcomm also relied on the fact that
Ericsson never even approached Qualcomm seeking to license its patents for well over two years
after the IS-95 standard was adopted. It was reasonable for Qualcomm to invest huge sums of
money in its IS-95 programs secure in the knowledge that the IS-95 standard could be built to
without fear that Ericsson or others involved in 1he process that led to that standard would seek
If Ericsson is not estopped from seeking relief other than reasonable license fees,
Qualcomm wiU suffer severe prejudice. Qualcomm invested substantially in IS-95 compliant
products and technologies since the adoption of the standard in 1993 .8 From July 199.3 to
December 1995, Qualcomm invested roughly $300 million dollars in the research, development,
production and marketing ofIS-95 compliant products. [Id J In 1996, the sale ofIS-95 and
related products represented 73 percent of Qualcornm's total revenues. [Id. at '1111 ] That
some or all of the IS-95 standard would significantly impact those operations.
0
Prejudice may be cstnblished by a change in economic position in relirmcc on the patentee's conduct Aijc:kem1an, 960 F.2d
al 1043
QUALCOMM'S M01ION FOR PAR11AL SUMMARY 3l2760vl/PA.
JUDGE!YJENT TO UMIT ERICSSON'S REQUESTED RELIEF FOR 6PBS0ll,DOC
Tll.E ALLEGED INFRINGEMENT OF THE PATENTS·IN-SUJT 100598
Civil Action No. 2.96.CVJB3 - P•ee 16
CX6799-018
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 81 of 162
"In patent Jaw, an implied license merely signifies a patentee's waiver of the statutory
right from making, using, or selling the patented invention." Wang Laboratories, Inc. v..
Mitsubishi Electronics America, Inc., 103 F.3d 15 71, 15 80 (Fed. Cir, 1997), citing Spindelfrabrik
Aktiengesel!schqft, 829 F.2d 1075, 1081 (Fed. Cir. 1987.) As stated by the Supreme Court:
DeForest Radio Tel. Co. v. United States, 273 U.S. 236,241, 71 L Ed. 625, 47 S Ct., 366
(1927). An implied license may be the result of a finding of equitable estoppeL See Wang
In Wang, the court found that Wang's "entire course of conduct" toward defendant
Mitsubishi led the former to "infer consent to manufacture and sell the patented products."
Central to the court's finding was that Wang had proposed adoption of its patented invention (a
single inline memory module ("SIMM") used in personal computers) as an industry standard
without disclosing its patent. Id at 1582, The court found that the only remuneration sought by
Wang was the adoption of its design as an industry standard and the benefits that would flow to it
from a larger market. As summarized by the court, "Wang consented to Mitsubishi's use of the
invention, granted the right to make, use, or sell the patented SIMMs without interference from
Wang, and received consideration . Therefore, we agree with the district court's determination,
CX6799-019
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 82 of 162
reiterated in denying Wang's motion to amend the judgment, that Mitsubishi possesses an
Here, the TIA's Intellectual Property Rights Policy and Ericsson's course of conduct
during the standard setting process mandate that Qualcomm be granted an implied license to any
of the Alleged TIA Patents that are deemed necessary to the IS--95 standards "under reasonable
tenns and conditions that are demonstrably free from any unfair discrimination." In light of the
TIA Intellectual Property Rights Policy, such a license is the only remuneration Ericsson could
IV.
CONCLUSION
For the foregoing reasons, Qualcomm's motion for partial summary judgment to limit
Ericsson's requested reJief forthe alleged infringement ofits Alleged TIA Patents should be
granted. Ericsson should be estopped from seeking any injunctive relief or other damages as to
its Alleged TIA Patents other than licensing fees "under reasonable tenns and conditions that are
demonstrably free of any unfair discrimination," and Ericsson should be required to license to ,
Qualcomm, "under reasonable terms and conditions that are demonstrably free from any unfair
discrimination," those patents, if any, essential to IS-95 which the Court detennines have been
infringed by Qualcomm.
Respectfully submitted,
CX6799-020
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 83 of 162
By: p{/~~
CX6799-021
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 84 of 162
. CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Qualcomm's Motion for Partial
Summary Judgment to Limit Eric~~Ws Requested Relief for the Alleged Infringement of the Patents
in Suit has been served on this ~day of October, I 998, on plaintiffs' counsel as follows:
Travis Gordon White (UPS Next Day Air and Facsimile (w/o attachments))
Arnold, White & Durkee
750 Bering Drive
Houston, TX 77057
By:
CX6799-022
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 85 of 162
ATTACHMENTS
CX6799-023
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 86 of 162
JNDEX OF ATTACHMENTS
Exhibit 2: Russell T, Wong, et al, Legal Implications of Standard Setting Activity, paper
presented at the Second Annual Advance Patent Law Institute, sponsored
by the
University of Texas School of Law (Nov. 6-7, 1997)..
Exhibit 5: Proposed "Scope" and "Charte r' for TR 45 .5 dated March 30, 1992.
Exhibit 6: Letter from Barry Kratz (Exicsson) to Gerard I- Flynn (TIA) dated April 16,
1993
Exhibit 8: Letter from Barry Kratz (Ericsson) to Gerard J . Flynn (TIA) dated May 11,
1993
Exhibit 9: Letter from Thanos Kipreos (TIA) to Barry Kratz (Ericsson) dated May 16,
1995.
Exhibit IO: ANSI's Procedures for the Development and Coordination of American Nationa
l
Standards .
Exhibit 11 : Letter from Thanos Kipreos (TIA) to Barry Kratz (Ericsson) dated August 3,
1995.
Exhibit 12: Declaration of Dr. Irwin Jacobs (Qualcomm) dated October 2, 1998.
Exhibit 15: Letter from Louis M. Lupin (Qualcomm) to Dr Lars Ramqvist (Ericsson) dated
August 21, 1995.. ·· · · · ·
Exhibit 16: Letter from Thanos Kipreos (TIA) to Barry Kratz (Ericsson) dated August
25,
1995.
CX6799-024
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 87 of 162
Exhibit 17: Letter from Wa1o von Greyerz (Ericsson) to Louis M.. Lupin (Qualcomm) dated
August 29, 1995.
Exhibit 18: Letter from Barry Krantz (Ericsson) to Thanos Kipreos (TIA) dated September
19, 1995
Exhibit 19: Letter from Mans Ekelof(Ericsson) to Qualcomm, Inc. dated Novem~er 14, 1995.
Exhibit 20: Letter from Barry Krantz (Ericsson) to TIA dated November 27, 1995.
Exhibit 21 : Letter from Mans Ekelof (Ericsson) to Louis Lupin (Qualcomm) dated December
11 • 1995.
Exhibit 22: Letter from Mans Ekelof (Ericsson) to Louis M. Lupin (Qualcomm) dated
January 9, 1996.
CX6799-025
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 88 of 162
21 2. In 1985, Dr. Andrew Viterbi, Harvey White, Klein Gilhousen, three others and I
22 founded Qualcomm, Inc. in San Diego, California. Our goal was to create a company that would
23 help customers design and implement communications systems and deal with problems posed by
24
those customers in such areas as signal processing, communication modems, enci:yption systems,
25
data communications, satellite systems and ground terminal equipment. When we started the
26
company, we had a total of eight employees. I have served as the Chief Executive Officer an~
27
23 Chainnan of the Board of Qualcomm since its foW1ding.
COQl.tT GooWIJlD LLP DECLARATION OF IR.WJN M JACOBS IN SUPPORT OF
AlTOJ:tfr.Tl AT LA.-
QUALCOMM'S MOTION FOR PARTIAL SUMMARY JUDGMENT J2080lvlll'A
r",OPAI.TO
Civil Aelio~ No. 2-96-CVl83 - P~gc I
CX6799-075
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 89 of 162
17 The result for consumers would be a greater number of companies building products using the
18 CDMA technology and the lower prices that result from such increased competition. In July 1993,
19
the TIA.adopted a digital wireless standardl referred to as IS-95, which w~ largely based on our
20
CDMA technology. (This standard was subsequently revised l:>y the TIA and published as IS-95-A
21
in May of 1995. In this declaration, IS-95 and IS-95-A are collectively referred to as "IS-95.")
22
23 5. The TIA generally will not adopt an industry standard unless all participants
24 holding patents that-would be required tox:Ievelop-products compliant with ·the standard agree to
25 · license rights to such patents either without compensation or ''under reasonable terms and
26 conditions that are demonstrably free of any unfair discrimination." Accordingly, when Ericsson
27
informed the TIA and its participants during the standards setting process that it held two patents it
28
Coo1.Er()QoWAAD(LP DECLARA TlON OF IRWIN M-JACO!lS IN SUPPORT OF
ATIOlttl'U AT l.AV 320803VIIPA
PAtOAtll>
QUALCOMM'S MOTION FOR PARTIAL ~UMMARY .JUDGMENT
Civil Action No. 2•9ti-CVI 81 - Pose 2
CX6799-076
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 90 of 162
b~lieved to be ~ssential to the 1$-?5 standard, i~ accotnpaniep that stat~me11t with a commitment to ·
2 make licenses available for those patents as well as any other patents essential to IS-95 under
3
reasonabJe tenns and conditio11s that are demonstrably free from any w'lfair discrimination.
4
6. To the best ofmy knowledge, Ericsson did not seek to enter into any licensing
5
arrangements for its supposedly essential patents with Qualcomm for over two years after the
6
adoption of IS-95 in July 1993. During that two-year period, Qualcomm invested heavily in the
7
8 marketing and production of products and systems based on the IS-95 standard. By the time
9 Ericsson identified its additional patents allegedly essential to IS-95 in late 1995, Qualcomm had
10 invested approximately $400 million in the research> development, production and marketing of
11
18-95 compliant products, and was generally recognized as the world leader in CDMA technology.
12
In the period from July 1993 to December 1995, that investment amounted to roughly $300
13
million. Consistent with TIA policy, we had also entered into approximately 30 licensing
14
15 agreements in which We licensed our patents essential to the IS-95 standard to companies
16 interested in developing JS . ,95 compliant products. The result of these efforts was that the IS-95
17 technology was beginning to make significant inroads into the digital monopoly that TDMA
18 technology supported by Ericsson had enjoyed in the United States up to that point. In the summer
19
of 1995, both PrimeCo and Sprint Telecommunications Venture, two major PCS service providers,
20
announced that they planned t~ install CDMA rather than IDMA systems in their service areas.
- 21
7. Shortly after Sprint's announcement, Ericsson announced that it bad several
22
23 "blocking" patents required to practice the IS-95 standard. It was not until December 1995 that
24 Ericsson identified any of those patents. Throughout this period;however, Ericsson continued to
25 assure us that it would honor its promises to the TIA and Qualcomm to lice?Se any patents whose
26
use would be required for compliance with IS~95 under reasonable terms and conditions that are
27
demonstrably free from any unfair discrimination.
28
COOl.£Y CiODW AAD ill' DECLARATION OF lRW!N M.JACODS IN SUPl'ORT OF
hno•titYI It.' LAW 32080JVIIPA
F,\t.D ALTO
QUAf.COMM'S MOTION FOR PMTIAl SUMMA.RY JUDGMEl-U
Civil Ai:uon No. 2-96-CVl83 .. P~ce 3
CX6799-077
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 91 of 162
8. Ql).alcomm c(',>es not believe that it infringes any of the _patents that Ericsson has
,,1;
2 identifie4 as be~g essenti~ to 1he 1$-95 stan~. .
3
9. Neverthel~ Qualcomm relied on Ericsson's Sfa!ements both during the standards
4
setting process and afterwaqls that 1hey would license any pat~ that were determined to be .
5
essential to the IS~95 stun~ under reasona"ble tenns and conditions. During the standanls setting
6 'l
process, we relied on Erics&,p•s :many assurances as well as on the TIA l.o.tellectual Property
7
8 Right9 Policy,~lating to ho{~ of essential p ~ . Aithougli· we did not think products
9 compliant with IS-95 woulcf in.fi:iQge the two patents identified by Ericsson as essential during the
T
-- 10 TIA process, we believed~ a result of Ericsso,n's nweated representations and its participation in
! I \ '
11
the TIA ~ :that~~f Wl)uld not~ 1? prevent our production of prodUCI$ ifil were
12
eventually d e ~ that lbeir patents~ in~-~ssential. Due in part to that belief, we felt
13 I ••
secure in making t h e ~ inv~ent in JS..95 products descnoed in paragraph 6 above. H
14 .:
•
~'
, !' . ;, • . ,
15 Ericsson had ~ d ~laimqd in 1993 lbat it l'OfS:~ certain patents esscntiaUo IS-95 and that lt
; l l . '
16 -vrould not lice~e its rights -,w.der those patents> ~comm would have sought to resolve all issues
Qualcomm's tolal reyenues·in 1996 and 86% of its total revenues in 1997.
l
21 •
I
I
· ·;
l declare under~ of perjury Wid~ tpe laws of the United States of America that tlie
22 I , ,. .1
. ~ '/A{ J ~~.vd-z
26
27 .' .i lltWIN M. JACO
28
OlOU',r~.o)I)~ f>Ect/lU'llONOF mwm M.1AC011S JN :iVWO:lT 01'
A.'TJ'OU'111ATt.J.•
~ MOnOlf f(Jl'i, )'IUl'tt,\L SUl,11,WlY JIJOOf4ENr
r,AAJ/11.lO
CX6799-078
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 92 of 162
REPLY EXHIBIT 15
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 93 of 162
REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
Steve,
Attached please find the revised Vodafone presentation (Slides 2 & 4 were
revised, #25 an updated slide on SKT's ARPU added. Unfortunately, the
quarter ended September 2004 is the most recent information available)
Andres will drop off a hard copy of the presentation and a soft version on
a memory stick. Please let me know is you have any further questions.
Thanks,
Abbaseh
Presentation to Vodafone
September, 2005
CX5840-003
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 95 of 162
REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
CX5840-015
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 96 of 162
REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
QUALCOMM has proactively acquired licenses from its licensees and others
to manufacture and sell components
New technologies
CX5840-016
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 97 of 162
REPLY EXHIBIT 16
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
REPLY EXHIBIT 17
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
REPLY EXHIBIT 18
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
REPLY EXHIBIT 19
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
REPLY EXHIBIT 20
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
REPLY EXHIBIT 21
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REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
REPLY EXHIBIT 22
9/27/2018 QUALCOMM Technology
Case 5:17-cv-00220-LHK Document 893-2 and Solutions
Filed - LicensingPage 110 of 162
10/04/18
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20 captures 10 f 🐦
21 Feb 2006 - 23 Jun 2008 2006 2007 2008 ▾ About this capture
Chipsets With a licensing program that enables third parties to design, manufacture and sell
products based on QUALCOMM’s industry-leading wireless technology,
QUALCOMM helped the wireless value chain generate more than $200 billion* in
Licensing
revenue in 2005 alone.
Voice Communications Browse below to find the names of those companies that currently make up the
majority of QUALCOMM’s authorized suppliers list and have rights under some or
Mobile TV all of QUALCOMM’s patent portfolio.
To learn more about QUALCOMM’s licensing programs, contact us. Royalty Administration
Mobile Applications
Extranet access for licensees
Subscriber Related Products
Mobile Displays
4G Systems GmbH
Location Based Services Aiji Systems Co., Ltd.
AL Communications Co., Ltd.
Asset Management Equipment Testing and Deployment
Solutions ALBAHITH
Solutions
Alps Electric Co., Ltd.
Secure Wireless Solutions Amoi Mobile Co., Ltd. Network Enhancement with
Arasor International Group Holding Limited Company RepeaterOne
Satellite Communications Axesstel, Inc.
BREW Developer Directory
Axio Wireless, Inc.
Products A-Z
BenQ Corporation
Services and Support Cal-Comp Electronics (Thailand) Public Company Limited
Casio Computer Co., Ltd.
CEC Telecom Co., Ltd. Network Operators
Compal Communications, Inc.
Manufacturers
Continental AG
Creative Mobile Technology (CMOTECH) Co., Ltd. Consumers
Crest Glory Corporation
Dalian Daxian Group Co., Ltd. Application Developers
Dalian Huanyu Mobile Technological Co., Ltd.
Content Providers
Datang Telecom Technology Co., Ltd.
Denso Corporation Business / Enterprise
Digibee Microsystems Inc.
Eastern Communications Co., Ltd. Government
Egyptian Telephone Company
ERON Technologies Corporation
ETRONICS Corporation
Flextronics International Ltd.
Foxconn International Holdings Limited
Fujitsu Limited
Garmin Corporation
Giga-Byte Technology Co., Ltd.
Glenayre Electronics, Inc.
Guangzhou Jinpeng Group Co., Ltd.
Haier Group Company
High Tech Computer Corporation
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10/04/18
Hisense Group Co., Ltd.
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👤
20 captures
Hitachi, Ltd.
Huawei Technologies Co., Ltd.
10
21 Feb 2006 - 23 Jun 2008 2006 2007 2008 ▾ About this capture
Inventec Appliances Corp.
IQLinks Limited Liability Company
Kenwood Corporation
Koninklijke Philips Electronics N.V.
Konka Group Co., Ltd.
KTF Technologies Inc.
Kyocera Corporation
Langchao Group Co., Ltd.
LeadTek Research Inc.
Lenovo Mobile Communications Technology Ltd.
LG Electronics, Inc.
Longcheer Technology (BVI) Limited
Lucent Technologies Inc.
Maxon Telecom Co., Ltd.
Mitsubishi Electric Corporation
Mobile System Technologies, Inc.
Mobinnova Corp.
Motorola, Inc.
NEC Corporation
Ningbo Bird Co., Ltd.
NOKIA Corporation
Novatel Wireless Inc.
Option NV S.A.
Palm, Inc.
Panasonic Electronic Devices Co., Ltd.
Panasonic Mobile Communications Co., Ltd.
Pantech & Curitel Communications, Inc.
Pantech Co., Ltd.
Putian Capitel Group
QUANTA Computer Inc.
Research In Motion Limited
Rose Telecom Co., Ltd.
SAGEM Communication
Sanyo Electric Co., Ltd.
Seiko Instruments Inc.
Sendum Wireless Corporation
Shanghai Huntel Technologies Co., Ltd.
SHARP Corporation
Siemens Aktiengesellschaft
Sierra Wireless, Inc.
Sim Technology Group (BVI) Limited
SK Telecom Co., Ltd.
SOMA Networks, Inc.
Sony Corporation
Sungil Telecom Co., Ltd.
Synertek, Inc.
- Sewon Telecom Ltd.
- ZAKANG, Inc.
TCL Corporation
Techfaith Wireless Communication Technology Limited
Telefonaktiebolaget LM Ericsson
Teleion Wireless, Inc.
Telit Communications S.p.A.
Telit Wireless Solutions Co., Ltd.
Telular Corporation
Toshiba Corporation
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Case 5:17-cv-00220-LHK Document 893-2 and Solutions
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10/04/18
Ubiquam Co., Ltd
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Ubistar Co., Ltd.
Uniden Corporation
10
21 Feb 2006 - 23 Jun 2008 2006 2007 2008 ▾ About this capture
United Computer & Telecommunication, Inc. (AnyDATA)
UTStarcom, Inc.
Vitelcom Mobile Technology S.A.
VK Corporation
Wavecom S.A.
Westech Korea, Inc.
Wherify Wireless, Inc.
Yiso Wireless Co., Ltd.
Yulong Computer Telecommunication Scientific (Shenzhen) Co., Ltd.
ZTE Corporation
Airvana, Inc.
AirWalk Communications, Inc.
Alcatel SA
Alps Electric Co., Ltd.
Alvarion Mobile Inc
Andrew Corporation
Axio Wireless, Inc.
Cisco Systems, Inc.
Contela, Inc.
Dalian Huanyu Mobile Technological Co., Ltd.
Datang Telecom Technology Co., Ltd.
Eastern Communications Co., Ltd.
EC Telecom Inc. ^
EMS Technologies, Inc. ^
Fujitsu Limited
Great Dragon Information Technology Corporation Ltd.
Guangzhou Jinpeng Group Co., Ltd.
Hitachi, Ltd.
Huawei Technologies Co., Ltd.
LG Electronics, Inc.
Lucent Technologies Inc.
Mitsubishi Electric Corporation
Motorola, Inc.
NEC Corporation
Netgenetech Co., Ltd.
NOKIA Corporation
Nortel Networks Limited
Panasonic Mobile Communications Co., Ltd.
Putian Capitel Group
Samsung Electronics Co.
Siemens Aktiengesellschaft
SOMA Networks, Inc.
TECORE, Incorporated
Telefonaktiebolaget LM Ericsson
Tenosys, Inc.
United Computer & Telecommunication, Inc. (AnyDATA)^
Unity Wireless Corporation
UTStarcom, Inc.
Vanu, Inc.
ZTE Corporation
^ Repeaters Only
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Agere Systems Inc.
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20 captures
EoNex Technologies, Inc.
Fujitsu Limited
10
21 Feb 2006 - 23 Jun 2008 2006 2007 2008 ▾ About this capture
Icera Inc.
Infineon Technologies AG
Lucent Technologies Inc.
Motorola, Inc.
NEC Corporation
Newport Media, Inc.
NXP B.V.
Renesas Technology Corp.
Texas Instruments Incorporated
VIA Telecom, Inc.
Advantest Corporation
Aeroflex Cambridge Limited
Agilent Technologies, Inc.
Ando Electric Co., Ltd.
Anritsu Corporation
Comarco Wireless Technologies, Inc.
Contela, Inc.
Dyaptive Systems, Inc.
Hewlett-Packard Company
IFR Systems, Inc.
Japan Radio Co., Ltd.
Motorola, Inc.
Panasonic Mobile Communications Co., Ltd.
Racal Instruments Wireless Solutions Limited.
Rohde & Schwarz GmbH & Co. KG
Rotadata Limited
Spirent Communications, Inc.
Tektronix, Inc.
Telefonaktiebolaget LM Ericsson
Willtek Communications GmbH
* Combined handset, infrastructure and service revenue for 2005 based on Strategy
Analytics and Gartner Group forecasts and published CDMA/WCDMA average
selling price and shipment data supplied by QUALCOMM.
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REPLY EXHIBIT 23
Ericsson Drops Three "Essential" Patents from Lawsuit Against Qualcomm and Surrende... Page 1 of 6
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 115 of 162
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References to "Qualcomm"; may mean Qualcomm Incorporated, or subsidiaries or business units within the
Qualcomm corporate structure, as applicable.
More Materials that are as of a specific date, including but not limited to press releases, presentations, blog posts and
webcasts, may have been superseded by subsequent events or disclosures.
l d l d l l b d h f f l
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REPLY EXHIBIT 24
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 122 of 162
Plaintiffs,
Civil Action No. 2-96CV183
V. JURY
QUALCOMM INCORPORATED,
Defendant.
PARTIES
1. Plaintiff Ericsson Inc. is a corporation organized and existing under the laws
existing under the laws of Sweden with a principal place of business in Stockholm, Sweden.
('QUALCOMM') is a corporation organized and existing under the laws of the State of
4. This action arises under the patent laws of the United States, Title 35, United
5. Upon information and belief, QUALCOMM has sufficient contacts with this
District to subject it to the personal jurisdiction of this Court for this patent infringement
action. QUALCOMM conducts business on a regular basis within the State of Texas and
this District. QUALCOMM has purposefully placed numerous of its products into the
stream of commerce with the expectation that they will be purchased by consumers in Texas,
including this District. Specifically, QUALCOMM's distribution net-work has placed its
products that infringe Plaintiffs' patents within the stream of commerce, which stream is
directed at Texas and this District, and QUALCOMM has committed the tort of patent
6. Venue is proper in this Court under 28 U.S.C. §§ 1400(b) and 1391(c). The
PATENT NFRNGEMENT
cellular telephones.
8. The following United States patents are referred to and identified as the
5,109,528 Handover Method for Mobile Jan-Erik Uddenfeldt, Vallingby, April 28,
Radio System Sweden 1992
5,148.485 Encrypton System for Digital Paul Dent, Stehag, Sweden September
Cellular Communications 15, 1992
5,230.003 Decoding System for Paul W. Dent. Stehags; Alex K. July 20,
Distinguishing Different Types Raith, Kista, both of Sweden 1993
of Convolutionally-Encoded
Signals
5.282.250 Method of Carrying Out an Paul W. Dent. Stehag: Alex K. January 25.
Authentication Check between a Raith. Kista: Jan E. S. Dahlin. 1994
Base Station and a Mobile Jarfalla, all of Sweden
Station in a Mobile Radio
System
9. Each and every one of the Ericsson Patents in Suit were duly and legally
issued by the United States Patent and Trademark Office after full and fair examination, and
each and every one of them were duly and legally assigned to Plaintiffs. Plaintiffs are now
(and at all relevant times have been) the owners and possessors of all rights pertaining to
10. QUALCOMM is infringing each and every one of the Ericsson Patents in Suit
by making, using, selling, anclior offering for sale products, without authority, that are
1 1. QUALCOMM's infringing products include (but are not limited to) the
Subsystem; Intelligent Base Station Controller; QCS-800 network for cellular applications;
deliberate.
Plaintiffs.
15. QUALCOMM will continue to infringe the Ericsson Patents in Suit unless
RELIEF'
C. That the Court award damages to Plaintiffs to which they are entitled;
F. That the Court award Plaintiffs' costs and attorney's fees incurred in this
action; and
G. That the Court award such other relief as the Court deems just and proper.
Respectfully submitted,
SAMUEL F. B TER
State Bar No. 01938000
CERTIFICATE OF SERVICE
I hereby certify that the foregoing has been forwarded to Kenneth R. Glaser,
David R. McMee and Karen C CoraDo, Akin, Gump, Strauss, Hauer & Feld, L.L P., 1700
Pacific Avenue, Suite 4100, Dallas, Texas 75201-4618 and Damon Young, Young, Kesterson &
Pickett, P 0 Box 1897, AR-TX 75504 by Certified Mail, Return Receipt Requested, on this
REPLY EXHIBIT 25
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 130 of 162
CONFIDENTIAL
CONTAINS BUSINESS SECRETS
CLEARY:GOTTLIEB...STEEN:Si: :MitTONILP
COMPLAINT
against
QUALCOMM INCORPORATED
submitted by
NOKIA OYJ
February 13,2006
THIS VERSION IS A CONFIDENTIAL VERSION FOR QUALCOMM. ITS DISCLOSURE TO THIRD PARTIES OR
EVEN DISCUSSION OF FACTS REVIEWED IN THIS DOCUMENT COULD CAUSE SIGNIFICANT DAMAGE.
NOKIA THEREFORE RESPECTFULLY REQUESTS IHECOMMISSION'10ENSURE THAT(1)IT AND
QUALCOIVIM TREAT THIS DOCUMENT AND ITS CONTENT AS BUSINESS CONFIDENTIAL AND ACCESSIBLE
ONLY TO QUALCOMM, UNLESS AVAILABLEFROM A PUBLIC SOURCE NOT COVERED BY
CONFIDENTIALITY, AND(2)QUALCOMM USES THIS DOCUMENT AND CONFIDENTIAL INFORMATION
DERIVED FROM THISDOCUMENT ONLY FOR PURPOSES OF QUALCOM'SDEFENSEIN THESE
PROCEEDINGS, AND NOT FOR ANY OTHER PURPOSE INCLUDING MARKETINCi INVESTOR RELATIONS, OR
PUBLICITY,
CONFIDENTIAL
CONTAINS BUSINESS SECRETS
THEPARTIES
Nokia Oyj
Keilalandentie 2-4
P.O. Box 226
F1N-00045 Nokia Group
Finland
QUALCOMM Incorporated
5775 Morehouse Drive
San Diego, CA 92121
USA
Tel.: +1 858 587 1121
TARI El OF CONTENTS
Page
TABLE OF CONTENTS
(continued)
Page
11
TABLE OF CONTENTS
(continued)
Page
ill
(170) To avoid doubt, there is no objection to charging a royalty based on the price of the
handset, provided that the rate is modified to take into account the fact that Qualcomm's
patents cover functionalities that represent a small and decreasing proportion of that price.
(5) Abusive Attempts To Terminate TI'S License To Essential Patents
(171) Qualcomm has also used litigation in an attempt to force TI out of the markets for
CDMA and W-CDMA chipsets. Soon after TI announced its plans to compete with
Qualcomm, Nokia understands that Qualcomm approached TI over an alleged breach of the
confidentiality provision of the Patent Portfolio Agreement(IVA) and thereafter sued TI in
an attempt to establish its right to terminate the contract.79 After those allegations were
found to be without any merit and dismissed on summary judgment, Qualcomm continued to
litigate. A second claim, too, was rejected, but Qualcomm did not give up. On October 22,
2004, it appealed the decisions of the Delaware court. On May 25, 2005, the Delaware
Supreme Court in a unanimous decision confirmed the rulings of the Court of Chancery that
Qualcomm did not have any basis to terminate the PPA (publicly available, redacted versions
ofthese court rulings are attached as Exhibits C — E).
(172) These attempts were exclusionary, for several reasons:
• First, termination of the license would breach Qualcomm's duty to license on
FRAND terms, after having induced SSOs to base the CDMA and UMTS/W-
CDMA standards on Qualcomm's technology. Qualcomm actively led the ITU and
ETSI, through its unequivocal IPR commitments, to develop a standard based on its
patents. This also induced third parties to invest in the implementation of that
standard in good faith reliance upon Qualcoin m's commitments,
• Second, termination of an existing contractual relationship, reducing existing
competition, is an abusive practice under the Commercial Solvents" and
Telemarketing81 principles stated by the ECJ. Cutting off essential upstream
supplies to an existing customer to remove it as an existing competitor from a
downstream market is an abuse82;
• Third, termination reduces innovation to the detriment of consumers, since TI would
be prevented from offering new products or services;
• Fourth, Qualcomm's attempt to terminate the Agreement would be a grossly
disproportionate reaction to the alleged breach of contract, even if there had been
79
Dave Mock, The Qualcomm Equation: How a Fledgling Telecom Company Forged a New Path
to Big Profits and Market, Amacom,New York,NY,2005, p. 180. See the published judgments
attached as Exhibits C — E.
80
Joined Cases 6-7/73, Istituto Chemioterapico Italian° S.p.A. and Commercial Solvents
Corporation v Commission, 1974 ECR 223.
81
Case 311/84 CBEM V. CLT and IPB ("Telemarketing") 1985 ECR 3261, para. 27 ("an abuse
within the meaning of Article 86 is committed where, without any objective necessity, an
undertaking holding a dominant position on a particular market reserves to itself or to an
undertaking belonging to the same group an ancillary activity which might be carried out by
another undertaking as part ofits activities on a neighbouring but separate market, with the
possibility ofeliminating all competitionfrom such undertaking.).
82
Commercial Solvents, ibid., para. 25.
46
83
Case 27/76, United Brands, 1978 ECR 207, paras. 189-191; Case T-65/89,BPB Industries and
British Gypsum, 1993 ECR 11-389 at p. 418; Case T-83/91, Tetra Pak 1994 ECR 11-755, para.
147; Joined Cases T-24-26, 28/93, Compagnie Maritime Beige, 19% ECR 11-1201 at p. 1243
and 1252; Case T-133/95,International Express Carriers Conference, 1998 ECR 11-3645; Case
T-111/96, /TT Promedia, 1998 ECR 11-2937, par& 60; see also Case T-228/97, Irish Sugar,
1999 ECR 11-2969, para. 112; see also Case T-30/89, Hun, 1991 ECR 11-1439, paras. 95-119;
see also BBI/Boosey & Hawkes: Interim measures, Commission Decision IV/32.279 of 29 July
1987, 1987 OJ L286/36, para. 19("[a]dominant undertaking may always take reasonable steps
to protect its commercial interests, but such measures must be fair and proportional to the
threat.")
84
These criteria are established in EU as well as most national laws. For EU case-law, see, for
example, Case G126/91, Schutzverband gegen Unwesen in der Wirtschaft e.V v. Yves Rocher
GmbH, 1993 ECR 1-2361, para. 15 ("Since the protection ofconsumers against misleading
advertising is a legitimate objectivefrom the point ofview of Community law, the Court must
examine, in accordance with the settled case-law. whether the national provisions are suitable
for attaining the aim pursued and do not go beyond what is necessaryfor that purpose."); and
Case 66/82, Fromancais SA v Fonds d'orientation et de regularisation des marches agricoles,
1983 ECR 395, para. 8. See also Craig & De Bill-ea, EU Law,(Oxford, Td edition), 350, and
Hartley, The Foundations ofEuropean Community Law,(Oxford, 4h edition), 148. For similar
principles in national law, see, for instance, Schwarze, European Administrative Law(Sweet &
Maxwell, 1992),685.
85
See Case T111/96 IT7' Promedia NV v. Commission 1998 ECR 11-2937, where the CFI
established that litigation is abusive where (i) the action cannot be intended to assert what the
Company could, at the moment of bringing the action, reasonably consider to be its rights; and
(ii) the action is part of a plan to eliminate competition. Cf Case T-5/97,Industrie desPoudres
Spheriques v. Commission, 2000 ECR 11-3755. The test is very similar to the one applied in the
United States. In Professional Real Estate Investors, INC v. Columbia Pictures Industries, a
two-part cumulative test was adopted, examining objectively whether the action is baseless, and
subjectively whether an objectively baseless action is intended to interfere with a competitor's
business (508 U.S. 49(1993)).
47
to be able to force TI out of that market, is of serious concern to Nokia. In this sense Nokia
is one of the principal and most direct targets for Qualcomm's practices, aimed at creating
fear, uncertainty, and doubt in the minds of chipset purchasers as to TI's reliability as a
chipset supplier. 86
(174) Nokia requests the Commission to prohibit Qualcomm from terminating is Agreement
with TI. Nokia should be able to rely on TI as a supplier of W-CDMA chipsets in the future.
In the absence of such an order, TI's attempts to enter the W-CD1VIA chipsets market will be
hampered because of Qualcomm's ability to create uncertainty among TI's potential
customers, including Nokia, as to TI's right to use W-CDMA essential patents and, as a
result, as to TI's viability as a producer of W-CDMA chipsets. Also, there is a clear risk that,
if Qualcomm's conduct is not prohibited, Nokia could be the next victim of a refusal to
license or an attempt to terminate existing license agreements.
(175) It should be clearly accepted that when a company such as Qualcomm has given FRAND
commitments, it is under a contractual obligation to grant licenses to its essential patents and
has normally no right to terminate the licenses which it is obliged to give, after the royalty
rate is agreed. A company which is bound by a FRAND commitment given to have its
patents included in a standard no longer has the same rights to rely on its patents as it had
previously.
86
An analyst report prepared by Deutsche Bank AG on July 28, 2003 concluded: "Potential
customers, however, may preclude purchases until the litigation is resolved—timing uncertain"
and—"we fear that mobile phone manufacturers and CDMA operators will be reluctant to
introduce a product that uses technology that is under legal dispute"("Next on Judge Judy -
Qualcomm Involved in Texas-style Shootout," July 28, 20003, analyst report prepared by
Deutsche Bank AG). Another analyst was quoted saying: 'This[lawsuit]could put a serious
damper on 11's ability to enter the CDMA chipset market'("Qualcomm sues TI over patents,"
AFX UK Focus, July 26,2004, citing analyst Peter Friedland with W.R. Hambrecht).
48
REPLY EXHIBIT 26
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 139 of 162
REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED
1 Non-confidential version
1.1 INTRODUCTION
"From the time of its inception [in 1985]until today, Qualcomm has gone the full route
from a completely unknown company in San Diego to a global kingpin in the wireless
industry.'1
"Outside of companies like Microsoft in the area of computer operating systems, few
had so effectively cornered the market on a technology...".2
"Over the next decade, all the leading players in communications and electronics will
have to come to terms with this new colossus from Southern California.'8
"The scale, breadth, and depth of the impact that Qualcomm has had on the global
wireless industry is almost without comparison.'4
1.1.3 The market position of Qualcomm can only be understood in the context of the leading
wireless technologies and standards that have been adopted in the last 10 — 15 years.
A "standard" in this context is a technical specification relating to specific mobile
telecommunications technology. The organisations responsible for setting the relevant
standards typically bring together a wide number of industry participants to enable them
to develop a standard set of technical interface specifications to ensure that the wireless
handsets, network infrastructure and systems they manufacture are fully compatible and
able to interact.
1 D. Mock, The Qualcomm Equation: How a Fledgling Telecom Company forged a new Path to Big Profits and Market
Dominance,(Amacom; 2005). p.2.
52 Non-confidential version
worldwide sales of single- and dual-mode CDMAOne and CDMA2000 handsets would
pay a lower royalty fee on handset sales in China than a licensee who does not commit
to using Qualcomm's chipsets around the rest of the world.
5.3.6 Ericsson understands that Qualcomm has taken a number of steps either to deter or
prevent TI from entering into the CDMA2000 (and WCDMA) chipsets markets.
Qualcomm has clearly abused its dominant position in doing so. First, in 1997 when TI
sought a licence from Qualcomm for Qualcomm's essential patents to manufacture
CDMA2000 chipsets Qualcomm
Ericsson understands that on
22 December 1997, Qualcomm sent a letter to TI stating:
5.3.7 Having given FRAND commitments to the standard setting organisations, it is not for
Qualcomm to refuse to license its essential patents on FRAND terms. Moreover, given
Qualcomm's undoubted dominance in CDMAOne and CDMA2000 chipsets, the refusal
to licence for three years was clearly contrary to its obligations as a dominant company
not to undermine the structure of the CDMAOne and CDMA2000 chipsets market by
stifling new entry. It is abusive conduct for Qualcomm to seek to control the number of
chipsets producers at any one time. This refusal to supply amounted to a blatant
attempt to control output of CDMA2000 chipsets.
5.3.8 Second, Ericsson understands that Qualcomm has sought to undermine TI's new entry
into the CDMA2000 chipset market by starting legal proceedings against TI to
undermine TI's ability to compete in CDMA2000 chipset supply. This action is also
aimed at preventing TI from competing in the WCDMA chipset market
5.3.9 In May 2003, TI and STMicroelectronics announced that they would be competing with
Qualcomm by offering standard CDMA2000 chipsets based on technology developed
jointly with Nokia. The chipsets were to be marketed by TI and STMicroelectronics to
handset manufacturers for CDMA2000 1X and 1xEV-DV handsets.124 In reaction to TI
and STMicroelectronics' entry and very quickly after their announcement, Qualcomm
providing a different level ofservice to BA could earn the same commission rate, that is be paid the same price by BA
for their air travel agency services, if their sales of BA tickets have increased by the same percentage over the
previous year (at para. 109).
124 See the TI Press Release oil5 May 2003, Texas Instruments and STMicroelectronics Enter CDMA20000 Market,
Leverage Joint Development with Nokia: Open CDMA Chipsel Offers Unprecedented Choices For CDMA2000
Handsel Manufacturers' at http://www.ti.comi.
53 Non-confidential version
started legal proceedings against TI in July 2003, alleging that TI had committed a
material breach of the confidentiality provisions of the cross-licensing agreement
between TI and Qualcomm and claiming as a result that it was entitled to terminate TI's
rights to Qualcomm's patents under the agreement.125 Although Qualcomm lost its
case, these proceedings are on-going as a result of Qualcomm's decision to appeal the
first instance decision.126
5.3.11 The Commission has previously stated that vexatious litigation is an abuse of a
dominant position where the dominant undertaking brings an action which (i) cannot
reasonably be considered as an attempt to establish its rights and serves only to harass
the opposite party, and (ii) is conceived in the framework of a plan whose goal is to
eliminate competition.128 The timing of Qualcomm's litigation, the fact that it has been
unsuccessful and the fact that it is on-going provides strong evidence that Qualcomm
has had as its objective the elimination of TI as a competitor.
125 See the TI Press Release of 1 July 2004, Delaware Court Indicates TI Did Not Materially Breach Crcss-License
Agreement, Qualcomm Not Entitled to Terminate TI's Rights: TI Retains Rights to Qualcomm Patents, at
http://www.ti.comicorp/docsipresslcompanyi2004ic04032.shtml.
126 Qualcomm SEC Form 10-K for the Year to 26 September 2004, at p. 35: 'On October 22, 2004 we filed a notice of
appeal-.
127 See the AFX UK Focus Article. Qua/comm sues TI over Patents, citing analysts Peter Friedland and
W R Hambrecht,
128 See the Judgment of the CFI in ITT Promedia v. Commission(Case 1-111196) where the Commission was of the
view that in order to be able to determine the cases in which [bringing legal proceedings against a competitor)are an
abuse ... it is necessary that the action (i) cannot reasonably be considered as an attempt to establish the rights of
the undertaking concerned and can therefore only serve to harass the opposite party and (ii) ills conceived in the
framework of a plan whose goal is to eliminate competition (at para. 55). ITT Prom edia did not challenge this view,
only its application; the CFI did not consider the appropriateness of the cumulative tests but did examine the two
requirements at paras. 72 and 73.
REPLY EXHIBIT 27
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 143 of 162
In 1990, I was elected Director of ETSI. The post of Director was renamed “Director-General” in
1995. My activity as Director-General in ETSI ended with my retirement on 30 June 2006.
ETSI was created in 1988 by the telecommunication administrations of the member states of
what is now the European Union (“EU”). In contrast to its predecessor, the CEPT, ETSI’s
membership is not only composed of Telecommunications Administrations – now including
Administrative Bodies and National Standards organizations - but also Network Operators
(public and recognized private ones), Manufacturers, Users, Service Providers, Research Bodies,
Consultancy Companies / Partnerships, and others. The European Union and the European Free
Trade Association recognized ETSI as the European standard setting body (European Standards
Organization or “ESO”) for telecommunications. ETSI’s role – in accordance with Article 3 of its
Statutes – is as follows:
S. 1
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ETSI is governed by its Members, and has a defined set of rules, the ETSI Directives, which have
been approved by the ETSI General Assembly. These Directives include the ETSI IPR Policy,
which was added in 1994 as Annex 6 to the Rules of Procedure. The IPR Policy governs,
amongst other things, the disclosure and licensing of essential patents. ETSI Members are fully
aware of these rules, and are repeatedly reminded of their obligations under the IPR Policy.
According to Article 3 of the ETSI IPR Policy, ETSI standards should be based on solutions that
best meet technical objectives of the European telecommunications sector. ETSI’s Technical
Committees (“TCs”) focus solely on technical assessment and the development of
specifications, irrespective of intellectual property rights. Having to deal with IPRs in TC
meetings would block or delay the process, taking into account the uncertainties inherent in
determining whether a patent is valid, would be infringed and essential, which is even more
difficult when specifications are still in development. One of the reasons to develop the ETSI
IPR Policy was to enable the technical work of standard development in Technical Committees
(“TCs”) to move forward without delay or blocking caused by IPR owners.
Since my start as ETSI Director (and later Director-General), I closely followed the development
of this ETSI IPR Policy. The process took more than five years of intensive discussions. The
process involved around 50 legal experts representing (amongst others) technology owners and
manufacturers from Europe and overseas. Manufacturers (including from the USA)
participated in these discussions within ETSI (and even in its predecessor CEPT since around
1986). The development of the ETSI IPR policy also profited from guidance from, and intensive
negotiations with, the European Commission who attended most of the relevant meetings.
This participation was to ensure, amongst other things, compliance with European Union law in
general and EU competition law in particular.
1
See http://www.etsi.org/about.
2
See ETSI, Welcome to the World of Standards (emphasis added), available at
http://www.etsi.org/images/files/ETSIGenericPresentation.pdf.
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 145 of 162
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In November 1994, the ETSI General Assembly approved an “Interim ETSI IPR Policy”. Three
years later, in 1997, the “Interim ETSI IPR Policy” was made permanent. This was well before
the adoption of the UMTS and LTE standards.
In November 2002, an ETSI ad hoc group on IPR was created and charged with analyzing how
the ETSI IPR Policy was working in practice. The work was undertaken in 2003. This group
submitted a series of recommendations to the ETSI General Assembly in November 2003 which
were later used as a basis for the ETSI Guide on IPRs which was published in December 2004
(the “IPR Guide”). The ETSI IPR Policy and the related IPR Guide have remained stable, although
there have been a few clarifications.
Article 3 of the ETSI IPR Policy indicates, amongst other things, that
the ETSI IPR POLICY seeks a balance between the needs of standardization for
public use in the field of telecommunications and the rights of the owners of IPRs.
The ETSI IPR Policy maintains this balance by requiring every ETSI member to use reasonable
endeavours to inform ETSI of ESSENTIAL IPRs in a timely fashion. Once an Essential IPR is
identified, the IPR owner is asked to make an irrevocable undertaking in writing that it is
prepared to grant irrevocable licences on fair, reasonable and non-discriminatory (FRAND)
terms and conditions under the IPR. In order to facilitate the process of notification of
Standards Essential Patents (“SEPs”), members can use General Declarations by which they
make an irrevocable undertaking that they are prepared to grant licenses under FRAND terms
and conditions for all their SEPs within a given standardization area.
An Essential IPR owner may refuse to give such an undertaking. If it does so in a timely manner,
the TC is required to select another viable solution “which is not blocked by that IPR and
satisfies ETSI’s requirements.”3 If no viable solution exists, the work on the standard shall
cease.4
In practice, many Essential IPR owners issue General Declarations to license their Essential IPRs
on FRAND terms.
According to the ETSI IPR Policy, if a FRAND undertaking or promise is issued, third parties are
entitled to receive licenses under FRAND terms and conditions provided they agree to pay
FRAND royalties. See Sections 3.1 and 3.3 of the ETSI IPR Policy, which make it clear that every
“potential user” is entitled to obtain a license on FRAND terms and conditions. This includes
both ETSI members and third parties who did not participate in the standard setting process.
3
See Section 8.1.1 ETSI IPR Policy.
4
See Section 8.1.2 ETSI IPR Policy.
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The wording of the ETSI IPR Policy and the IPR Guide allows us to identify basic principles on the
definition of “FRAND” and to draw conclusions about the permissibility of certain practices and
license terms, apart from the application of competition law.
1. The ETSI IPR Policy allows every company that requests a license to obtain one, regardless
of where the prospective licensee is in the chain of production and regardless of whether
the prospective licensee is active upstream or downstream.
Manufacturers of components such as chipsets are therefore entitled to a license, if they seek
one. There are various bases for this conclusion in the ETSI IPR Policy and the IPR Guide.
First, Article 6 of the IPR Policy contains a general reference to an undertaking to grant a
license: the reference in no way limits the beneficiaries of that license and does not allow the
IPR owner to refuse a license to particular interested parties such as component manufacturers,
so long as they are willing to agree to FRAND terms and conditions.
“the ETSI IPR POLICY seeks to reduce the risk to ETSI, MEMBERS, and others applying ETSI
STANDARDS and TECHNICAL SPECIFICATIONS, that investment in the preparation,
adoption and application of STANDARDS could be wasted as a result of an ESSENTIAL IPR
for a STANDARD or TECHNICAL SPECIFICATION being unavailable.”
If a license was unavailable to all interested parties who want to apply the ETSI standard, this
goal could not be met. This is a fundamental objective of the ETSI IPR Policy.
Third, the IPR Licensing Declaration Form makes no exception for certain categories of
licensees. It explicitly allows the IPR owner to impose conditions, specifically, reciprocity, but
does not allow the IPR owner to exclude specific categories of standards implementers. The
absence of an explicit option to exclude certain categories of licensees confirms that a license
must be available to all interested parties, and is consistent with the fundamental objective
described above.
Fourth, a declaration under Article 6 of the IPR Policy requires the IPR Owner to “grant
irrevocable licences on fair, reasonable and non-discriminatory terms and conditions.”
Accordingly, the IPR owner must not discriminate in the imposition of terms between different
categories of licensees. If the IPR owner cannot discriminate in that way, it certainly cannot go
even further and entirely exclude specific categories of licensees from the right to seek a
license.
Fifth, paragraph 1.4 of the IPR Guide refers to “users of standards”, without limitation, and
specifies that both members of ETSI and third parties who are “users of ETSI standards or
documentation” have a “right” to a license “at least to manufacture, sell, lease, repair, use and
operate.” Paragraph 1.4 does not limit this right to certain categories of members or users.
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Sixth, while I am not a specialist in competition law, I am aware that various policy papers and
competition law principles helped to shape the ETSI IPR Rules, including the following:
o confirm that “In order to ensure effective access to the standard, the IPR policy
would need to require participants wishing to have their IPR included in the
standard to provide an irrevocable commitment in writing to offer to license their
essential IPR to all third parties on fair, reasonable and non-discriminatory terms
(‘FRAND commitment’);6
o reiterate that “FRAND commitments are designed to ensure that essential IPR
protected technology incorporated in a standard is accessible to the users of that
standard on fair, reasonable and non-discriminatory terms and conditions.”;7
o explain that “If a company is either completely prevented from obtaining access
to the result of the standard, or is only granted access on prohibitive or
discriminatory terms, there is a risk of an anti-competitive effect.”;8
The text quoted above from para. 285 clearly indicate that by “access”, the European
Commission means “access through license” to “all third parties.” This principle goes
back decades. The European Commission’s 1992 Green Paper on IPR and
Standardization10 already required that standards must be available to “the widest
5
Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to
horizontal co-operation agreements, OJ 2011/C 11/01, 14.1.2011 (Guidelines on Horizontal Agreements).
6
Guidelines on Horizontal Agreements, paragraph 285, emphasis added.
7
Guidelines on Horizontal Agreements , paragraph 287; see also paragraph 294.
8
Guidelines on Horizontal Agreements , paragraph 268; see also paragraph 264.
9
Guidelines on Horizontal Agreements , paragraph 269.
10
Communication from the Commission on Intellectual Property Rights and Standardization, COM(92) 445
final, Brussels, 27 October 1992 (1992 Communication), available at http://aei.pitt.edu/1222/1/1222.pdf.
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 148 of 162
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possible number of interested parties on fair and reasonable terms”11 and to “all
interested parties”; 12
The European Commission provided a comfort letter13 with respect to the ETSI IPR
Policy under Article 19(3) of Regulation 17/62 on the understanding that essential
patents reading on ETSI standards would be licensed on FRAND terms to “third parties
wishing to manufacture products complying with the standard” and to “potential users”.
It is my opinion that for these reasons, all third parties who want to implement the standard,
including manufacturers of components such as chipsets, are therefore entitled to a license, if
they seek one.
2. The obligation to license under the ETSI IPR Policy, once a FRAND undertaking is given, is
not limited to end-products like handsets, but includes also components like chipsets.
As noted above, it is a basic principle that a FRAND undertaking means that all interested
parties and potential licensees must be licensed on FRAND terms and conditions. This follows
clearly from the wording of Article 6 of the IPR Policy and the relevant definitions.
Article 6 of the IPR Policy is broadly crafted. It requires that a license must be available “to at
least the following extent:”
The words “to at least the following extent” mean that the license may not encompass less than
what is stated in Article 6.
Moreover, the reference to “MANUFACTURE, including the right to make or have made
customized components and sub-systems to the licensee’s own design for use in
MANUFACTURE” cannot be read to exclude non-customized components. The word
“including” in that sentence means that the license must include a license to make or have
made “customized components,” but the requirement is not limited to that. Simply put,
11
1992 Communication, paragraph 2.1.12.
12
1992 Communication, paragraph 2.3.3 and 6.3.2.
13
Notice pursuant to Article 19 (3) of Council Regulation No 17 concerning case No IV/35.006 — ETSI interim
IPR policy OJ 95 /C 76/05, 28.3.1995.
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consistent with the FRAND policy described above, the word “including” signifies an example,
but not an exhaustive list.
Indeed, the words of Article 6 indicate that the license must cover “MANUFACTURE” as defined
in the ETSI IPR Policy. That term is defined as the “production of EQUIPMENT” (Article 15.8),
with “EQUIPMENT” being defined as “any system, or device fully conforming to a STANDARD”
(Art 15.4). The words “system” and “device” are not defined in the ETSI IPR Policy. They should
therefore be defined by normal parlance and plain meaning.
“An object or machine that has been invented to fulfill a particular purpose”;15
‘A device that contains one active element, such as a transistor or diode, although
a hybrid might contain more than one active element. In comparison, an
integrated circuit could contain billions of active elements on a single chip.”19
“[…] the generic name for discrete devices and integrated circuits …”.
14
Oxford: http://www.oxforddictionaries.com/us/definition/american_english/device.
15
Cambridge: http://dictionary.cambridge.org/us/dictionary/english/device.
16
Webster: http://www.merriam-webster.com/dictionary/device.
17
Collins: http://www.collinsdictionary.com/dictionary/english/device.
18
http://whatis.techtarget.com/definition/solid-state.
19
https://www.semiconductors.org/faq/glossary.
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The American National Standards Institute, IEC 60747 Series - Semiconductor Devices
states that:
Similarly, the term “system” means “A set of connected things or parts forming a
complex whole … A group of related hardware units or programs or both, especially
20
Amongst the many technical examples, see for instance, the definition of “discrete device”: “A
semiconductor device that is specified to perform an elementary electronic function and is not divisible into
separate components functional in themselves… Diodes, transistors, rectifiers, thyristors, and multiple
versions of these devices are examples” see JEDEC, “discrete (semiconductor) device”; “..requirements for
the next generation of semiconductor device package components.. ” See JEDEC, JEDEC Publishes Revision
of International Standard for Semiconductor Device Package Components (JESD30G), February 11, 2016;
“…discrete semiconductor devices and integrated circuits (hereinafter generically called semiconductor
devices) used in electronic equipment…” See JEITA, Environmental and endurance test methods for
semiconductor devices, 2001; JEITA, Jeita Standards: Discrete Semiconductor Devices; JEITA, Jeita
Standards: Semiconductor Device Packages; JSIA, “Semiconductor Product Technology Committee of
Japan”, “Activities”.
21
I give two examples: a 2016 document, mm-Wave Semiconductor Industry Technology – Status and
Evolution, available at
http://www.etsi.org/images/files/ETSIWhitePapers/etsi_wp15_mwt_semiconductor_technology.pdf, has
an in-depth discussion of semiconductor devices and technologies. A 2000 document, ETSI TR 101 21 728
V1.1.1 (2000-12), available at
http://www.etsi.org/deliver/etsi_tr/101700_101799/101728/01.01.01_60/tr_101728v010101p.pdf
references “semiconductor device” on page 20.
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when dedicated to a single application”,22 but this term can be and is often used for a
component, like a “system on a chip”.23
Accordingly, the words “system” and “device” in the ETSI IPR Policy cannot be interpreted in a
limiting fashion but rather should be accorded their plain meaning. This means that a license
under Article 6 of the IPR Policy includes a license to make, sell and use chipsets, and not only
handsets or end-user equipment. Nothing in Article 6 can therefore be interpreted as allowing
an SEP owner who has given a FRAND undertaking/promise to withhold a license to competing
semiconductor manufacturers.
Finally, the already mentioned definition of “EQUIPMENT” (“any system, or device fully
conforming to a STANDARD”) includes chipsets that normally fully conform to the 2G, 3G and
4G standards adopted by ETSI. The definition does not say that the device or system in itself
must “implement” or “encompass” all the specifications and elements of a standard, so long as
the device is designed to be used with other devices or elements in such a way that the
combination fully conforms to the standard. The words “fully conform” mean that the device
must be entirely consistent with and compatible with the standard so that the use of the device
or system in equipment does not break compatibility. The ETSI IPR Policy is applicable
regardless of the licensee’s business model, whether as a vertically integrated supplier or a
component supplier.24 If ETSI had wanted to carve out certain types of licensees in the chain of
distribution who were not eligible for a FRAND license, it could have done so in its texts and
rules, but it did not.
Never during the more than five years of work on the ETSI IPR Policy – and even later – do I
recall a distinction being made with regard to the category of potential licensees (of the SEPs).
As already noted, ETSI adopted the clear and unambiguous policy of requiring that FRAND
licenses be offered to all interested comers/potential licensees who provide products or
services designed to be compatible with the chosen standard, irrespective of their position in
the industry or a chain of distribution.
22
Oxford: http://www.oxforddictionaries.com/us/definition/american_english/system; See also “A set of
connected things or devices that operate together” (Cambridge:
http://dictionary.cambridge.org/dictionary/english/system); “a group or combination of interrelated,
interdependent, or interacting elements forming a collective entity; a methodical or coordinated
assemblage of parts, facts, concepts… any assembly of electronic, electrical, or mechanical components
with interdependent functions, usually forming a self-contained unit” (Collins:
http://www.collinsdictionary.com/dictionary/english/system).
23
https://en.wikipedia.org/wiki/System_on_a_chip.
24
One of ETSI’s missions, like in all standard setting organizations, is to allow industries to reap network
effects that come from the interoperability of technology. One of the primary ways this is done, is by
establishing frameworks (such as the FRAND commitment for SEPs) that prevent IP issues from slowing
down technological progress in standardization work. To interpret “EQUIPMENT” to refer to end-user
equipment only, excluding components, is contrary to this goal. It would restrict FRAND protections to
only the completed handset level, allowing the very issues ETSI seeks to prevent to deter competition and
innovation at the component level.
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For these reasons, I am of the opinion that the obligation to license under the ETSI IPR Policy,
once a FRAND undertaking is given, is not limited to end products like handsets but includes
also components like chipsets and others when a component manufacturer seeks a license.
It follows clearly from the wording of Article 6 of the ETSI IPR Policy that a manufacturer who
requests an exhaustive license to “make, sell and use” the licensed product is entitled to such
an exhaustive license.
Article 6 or the IPR Policy requires that a license must be available “to at least the following
extent:
MANUFACTURE…;
sell, lease, or otherwise dispose of EQUIPMENT so MANUFACTURED;
repair, use, or operate EQUIPMENT; and
use METHODS.
The conjunctive word “and” before “use METHODS”, rather than a disjunctive “or”, means that
the IPR Owner may not without the agreement of the licensee limit the license to only one or a
subset of the permitted uses. If a manufacturer wishes to have a “sell” license (which under
patent law leads to exhaustion of the patent rights), or a “use” license to an essential patent
subject to a FRAND declaration, so as to be able to pass that right on to its customers, Article 6
entitles it to such a license.
4. A “forbearance policy” is not consistent with, and does not satisfy, obligations to license
on FRAND terms and conditions, once a FRAND undertaking is given.
Article 6 of the IPR Policy entitles all interested parties explicitly to a “license,” that is, an
explicit authorization or permission to do certain acts (Article 6 of the IPR Policy) that the IPR
owner could otherwise prohibit by invoking its IPRs.
Approaches that fall short of licensing, such as (a) a unilateral, unwritten policy of not
enforcing patents in court (“forbearance”); (b) a promise to delay litigation (“standstill”); and
(c) a promise not to sue unless the equipment manufacturer does not pay and the SEP owner
has exhausted its legal remedies against that equipment manufacturer (“covenant to exhaust
remedies”), or an agreement not to sue a specific party (while reserving the right to sue others
based on products made by that party), are not adequate under Article 6 of the IPR Policy, since
they are not an explicit authorization on which the beneficiary can rely and because, most
fundamentally, they are not a license.
This conclusion also follows from the requirement that the license must be “irrevocable” and
“on fair, reasonable and non-discriminatory terms and conditions.” Approaches that fall short
of licensing impose commercial uncertainty on the entity that seeks or would have wanted a
Case 5:17-cv-00220-LHK Document 893-2 Filed 10/04/18 Page 153 of 162
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license but cannot get one. In addition, it also creates uncertainty for businesses who do not
ask for a license because they know that the answer will be negative. Simply put, a mere policy,
which can be revoked, and certainly a mere policy of which the “terms and conditions” are not
spelled out in a way that is stable and certain enough to determine whether its terms and
conditions are “fair, reasonable, and non-discriminatory” does not comply with the
requirement of Article 6 of the IPR Policy. The very point of FRAND is to add clarity and
predictability to the commercial realities of a marketplace.
“the authority to bind the Declarant and/or its AFFILIATES to the representations and
commitments provided in this form.”25
In addition, Section 6.1bis of the ETSI IPR Policy expressly stipulates that:
FRAND Declarations are subject to French law.26 While I am neither a lawyer nor an expert in
French law, I am aware from discussions within ETSI that experts in French law have confirmed
that a FRAND undertaking is binding. I refer to an opinion of Professor Laurent Aynès, who
concludes that the contractual commitment to ETSI resembles what is called in French law a
“stipulation pour autrui” or a stipulation for the benefit of a third party (also called a “third-
party beneficiary clause”), that is specifically authorized under Article 1121 of the French Civil
Code.27 Such a stipulation is formed via an exchange of consent between a promisor (the SEP
owner) and a Stipulator (ETSI) where the promisor irrevocably grants a right to one or more
beneficiaries.28 Under French law, Professor Aynès states, those who wish to implement the
standard are entitled to enforce the SEP owner’s promise made in its declarations submitted to
25
ETSI IPR Licensing Decl. Form, available at pages 42-43 of the ETSI Directives,
https://portal.etsi.org/directives/36_directives_jun_2016.pdf (emphasis added)
26
ETSI IPR Policy, section 12; ETSI Directives, v.36, June 2016, ETSI IPR Licensing Declarations forms, at 42-
43, available at https://portal.etsi.org/directives/36_directives_jun_2016.pdf (“The construction, validity
and performance of this ... licensing declaration shall be governed by the laws of France”).
27
Declaration of Prof. Laurent Aynès, in InterDigital v Huawei and ZTE C.A. Delaware No. 1:13-cv-00008-RGA
document 41, ¶¶ 19-22.
28
Id. ¶ 21.
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ETSI pursuant to Article 6.1.29 I also refer to the judgment of the High Court of Justice of
England and Wales in Unwired Planet v Huawei.30
Article 6 of the IPR Policy moreover requires that the undertaking must itself be “irrevocable”
and “in writing.” An unwritten “policy” that is not binding and is revocable is inadequate and
does not comply with Article 6 of the IPR Policy. Similarly, neither a standstill arrangement nor
a covenant to exhaust remedies are irrevocable licenses.
5. The cross-grant provisions in a license should be on FRAND terms and conditions for both
licensor and licensee.
Article 6 of the IPR Policy provides that “the above undertaking may be made subject to the
condition that those who seek licences agree to reciprocate.” ETSI’s Special Committee on IPRs
continues discussions on the precise limits and scope of the “reciprocity” condition, but based
on this discussion and the general principles and existing rules, including in particular the
requirement of FRAND terms and conditions, we can say at least the following:
The use of the word “reciprocate” denotes a balance, in the sense that the IP owner (licensor)
may, as a condition for a license, require the licensee to give the same rights to the licensor,
with the same scope, and on the same terms, as the rights the licensee receives from the IP
owner. The parties may, of course, deviate from that symmetry by consensus, but the IP owner
inherently cannot against the licensee’s will require more burdensome terms than it is willing to
assume itself, or extract more extensive rights than it is willing itself to grant.
This conclusion not only follows from the very concept of “reciprocity”, but is also inherent in
the FRAND requirement. A license under Article 6 of the IPR Policy should be FRAND for both
licensee and licensor. For example, demanding a royalty-free cross-grant of rights, without
paying a royalty and without proportionally adjusting the royalty received to reflect the value
derived from the cross-grant, would be both “unfair” and “discriminatory” and thus in breach of
the FRAND provision of Article 6 of the IPR Policy.
Such demands are unfair in breach of the “FR” component of FRAND, if the licensee against its
will has to pay for a license, but does not get paid for giving a cross-license regardless of the
value conveyed, or gets paid a below-FRAND compensation. FRAND terms and conditions
should be fair and reasonable for both licensor and licensee. Of course, it is possible that the
licensor’s patents are more valuable than those cross-licensed by the licensee, but the reverse
is possible too. Either way, the difference in value can and should be reflected in the
compensation that flows back and forth between the parties. That is the very point of good
faith negotiations in accordance with FRAND principles.
29
Id. ¶¶ 21-22.
30
[2017] EWHC 711 (Pat), ¶¶ 98-146; https://www.judiciary.gov.uk/wp-content/uploads/2017/04/unwired-
planet-v-huawei-20170405.pdf.
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Article 3.2 of the IPR Policy confirms this by stating that IPR holders – and that includes the
licensee who cross-licenses SEPs – should be adequately and fairly rewarded for the use of their
IPRs in the implementation of standards. To my recollection, this objective was essential in the
development of the ETSI IPR Policy and was always regarded by ETSI as a very important policy
objective. This was a constant factor throughout the discussions in which I participated and of
which I was aware in my role as ETSI Director-General. It should also apply to IPR owners who
are licensees and are requested to cross-license their SEPs.
For these reasons, I am of the opinion that a licensor of SEPs cannot against the will of the
licensee refuse to compensate the licensee for the cross-license on FRAND terms and
conditions, with difference in compensation proportionate to the difference in value derived
from the licensed and cross-licensed patents.
6. Unless both parties agree otherwise, the license must not bundle SEPs and non-SEPs
The terms and conditions of a SEP license must be fair, reasonable and non-discriminatory
(FRAND). A declaration of a single SEP to ETSI is an irrevocable commitment for the IP holder to
be ready to grant a license for this Essential patent (to a given standard) under FRAND terms
and conditions.
The ETSI IPR Policy does not address licensing conditions for non-SEPs. Owing to this silence in
the policy, there are no rules available in the IPR Policy allowing a SEP owner to impose an extra
cost on a licensee by bundling licenses for SEPs and non-SEPs, unless both parties voluntarily
agree otherwise. This means that the SEP owner cannot force a licensee to pay for non-SEPs, or
for SEPs reading on other standards, that the licensee does not need or does not want, or for
which there are better or less expensive alternatives.
Holders of greater IP-portfolios tend to provide general declarations for their SEPs to ETSI in
which they commit themselves to grant FRAND licenses for all SEPs for a specific
standardization area or standard generation (like UMTS, or LTE). For each such standardization
area or generation, SEPs can be bundled. An SEP owner cannot, however, force the licensee to
take and pay for standards or generations that the licensee does not need or does not want.
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ERICSSON and Qualcomm Reach Global CDMA Resolution | Qualcomm https://www.qualcomm.com/news/releases/1999/03/25/ericsson-and-qua...
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