RAND REVISITED: CURRENT DEVELOPMENTS IN THE LAW OF

STANDARDS-ESSENTIAL PATENTS

What Is F/RAND AndWhat Patents Are Subject To It?

Mark FlanaganLiv Herriot

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Meaning of F/RAND

Fair, Reasonable and Non-Discriminatory royalty rate

SSOs invite members to commit to licensing any essential

IPRs on these terms

Commitment is typically made in connection with the

disclosure of essential IPRs

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FRAND Commitment

4 Disclosure of IPRs

4.1 Subject to Clause 4.2 below, each MEMBER shall use its reasonable

endeavours, in particular during the development of a STANDARD or

TECHNICAL SPECIFICATION where it participates, to inform ETSI of

ESSENTIAL IPRs in a timely fashion. In particular, a MEMBER

submitting a technical proposal for a STANDARD or TECHNICAL

SPECIFICATION shall, on a bona fide basis, draw the attention of ETSI

to any of that MEMBER's IPR which might be ESSENTIAL if that

proposal is adopted.

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FRAND Commitment

6 Availability of Licences

6.1 When an ESSENTIAL IPR relating to a particular STANDARD or

TECHNICAL SPECIFICATION is brought to the attention of ETSI, the

Director-General of ETSI shall immediately request owner to give

within three months an irrevocable undertaking in writing that it is

prepared to the grant irrevocable licences on fair, reasonable and

non-discriminatory terms and conditions under such IPR ….

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IPRs Subject to FRAND Commitment

“Essential IPRs”

– Generally – cannot practice the standard without infringing the IPR

Each SSO has its own definition of an Essential IPR

– “IPR” typically includes issued patents and applications

– “Essential” • typically means not technically possible to practice the standard

without infringing

• Multiple IPRs may be essential to the same portion of the standard

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ETSI Definitions

“IPR” shall mean any intellectual property right conferred by statute

law including applications therefor other than trademarks. For the

avoidance of doubt rights relating to get-up, confidential information,

trade secrets or the like are excluded from the definition of IPR.

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ETSI Definitions

“ESSENTIAL” as applied to IPR means that it is not possible on

technical (but not commercial) grounds, taking into account normal

technical practice and the state of the art generally available at the

time of standardization, to make, sell, lease, otherwise dispose of,

repair, use or operate EQUIPMENT or METHODS which comply with

a STANDARD without infringing that IPR. For the avoidance of doubt

in exceptional cases where a STANDARD can only be implemented

by technical solutions, all of which are infringements of IPRs, all such

IPRs shall be considered ESSENTIAL.

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IEEE Definitions

“PATENT CLAIM(S)” shall mean one or more claims in issued

patent(s) or pending patent application(s).

“ESSENTIAL PATENT CLAIM” shall mean any Patent Claim the

use of which was necessary to create a compliant implementation of

either mandatory or optional portions of the normative clauses of the

[Proposed] IEEE Standard when, at the time of the [Proposed] IEEE

Standard’s approval, there was no commercially and technically

feasible non-infringing alternative. An Essential Patent Claim does

not include any Patent Claim that was essential only for Enabling

Technology or any claim other than that set forth above even if

contained in the same patent as the Essential Patent Claim.

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Essential IPRs – Proof of Infringement in Litigation Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321 (Fed. Cir. 2010)

– “[A] district may rely on an industry standard in analyzing infringement.”

– “[I]f an accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product.”

– “An accused infringer is free to either prove that the claims do not cover all the implementations of the standard or to prove that it does not practice the standard.”

– “Only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.”

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Essential IPRs – Proof of Infringement in Litigation WiAV Networks LLC v. 3Com Corp., 2010 U.S. LEXIS 110957

(N.D. Cal. Oct. 1, 2010)

– “In Fujitsu, the Federal Circuit recognized that mere compliance with an industry protocol does not necessarily establish that all compliant devices implement the protocol in the same way.”

– “As emphasized by the Federal Circuit in Fujitsu, only in situations where a properly construed patent covers all required elements of an industry standard will it be enough to prove infringement by showing compliance with the standard.”

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Essential IPRs – Proof of Infringement in Litigation Medsquire LLC v. Quest Diagnostics, Inc., 2011 U.S. Dist.

LEXIS 154917 (C.D. Cal. Dec. 1, 2011)

– Follows WiAV in applying Fujitsu

– “Here, Plaintiff has not established that the [asserted patent] covers every possible implementation of the federal standard. Consequently, as in WiAV Networks, LLC, ‘Plaintiff must prove that each accused product infringes, and each such endeavor will be worthy of its own trial.’”

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Essential IPRs – Proof of Infringement in Litigation Standards contain optional features and mandatory features

– Fujitsu: Where “the relevant section of the standard is optional … standards compliance alone would not establish that the accused infringer chooses to implement the optional section.”

“Mandatory” features may not actually be implemented

– Example: Carriers do not test for all features

SSOs do not evaluate if a patent is actually essential

– And there is no requirement to update declarations

In short: divergence in some cases between an “essential” patent

under SSO rules versus “essential” in the sense that compliance

with the standard means infringement of a particular patent

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Do FRAND Obligations Follow the Patent When It Is Transferred? In re Negotiated Data Solutions, No. C-4234 (FTC 2008)

– Transferree held to promises of transferor

Vizio Inc. v. Funai Electric Co., 2010 U.S. Dist. LEXIS 30850

(C.D. Cal. Feb. 3, 2010)

– “Although the allegations might suffice to state an antitrust claim against [transferor] under the holding in Broadcom, they do not against [transferee]” because only the transferor had participated in the standards process.

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Do FRAND Obligations Follow the Patent When It Is Transferred? Barnes & Noble Inc. v. LSI Corp., 849 F. Supp. 2d 925 (N.D.

Cal. 2012)

– Distinguishes Vizio, which involved liability for anti-trust violations.

– Outlines cases showing transferor conduct may be imputed “for at least some theories of unenforceability of patent rights, including laches, estoppel and inequitable conduct.”

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Mark Flanagan

Mark is an Intellectual Property Litigation partner, a member of the

Management Committee and is the hiring partner for the Palo Alto

office. He represents clients principally in the semiconductor,

computer, telecommunications and clean tech industries in a variety of matters, including

patent and copyright infringement, trade secret misappropriation and licensing disputes.

Recent highlights of Mark’s work include:

Representation of a Chinese semiconductor foundry in a dispute before the Hong Kong

International Arbitration Centre concerning a technology transfer agreement with a major U.S.

technology company

Represented a Chinese semiconductor manufacturer in an investigation before the ITC in

which all claims asserted against his client were invalid

Representation of a major wireless technology company in patent license disputes against

cellular handset manufacturers resulting in awards valued at $253 million and $134 million in

favor of the client

Representation of a major cellular handset manufacturer in multiple patent infringement

lawsuits