More than three years after naming and shaming Ericsson's privateering deal with Optis Wireless (among a long list of similar partnerships), I became aware of the recent verdict against Huawei in the Eastern District of Texas, which serves to show how Huawei is torn between its strategic interests as a leading Android device maker on the one hand and an aggressive patent licensor on the other hand.
A corporation of that size is party to many disputes at any given point in time, and obviously the shoe will regularly be on the other foot. Parties don't make or change laws, so litigants can merely try to undermine (to a limited and often negligible extent) their adversaries' credibility by pointing to contradictions. However, in two respects such contradictions can be very significant:
FRAND licensing negotiations and disputes involve bona fide questions, making inconsistencies more problematic than in such a context as patent infringement.
We're all among the potentially billions of judges sitting on the court of public opinion, and some companies spend huge amounts of money on PR agencies and departments--or even on advertising campaigns like Qualcomm's big-time self-promotion in San Diego--to make us believe that they're the good guys. In that respect, it's a serious issue if they blatantly and brazenly apply double standards.
For an example, while Apple's positions on standard-essential patent (SEP) licensing have been perfectly consistent over the years, I really took issue and even got emotional when Apple's lawyers in the second California case against Samsung argued that a few narrow software patents entitled the iPhone maker to a "reasonable royalty"-type of damage award of $40 per device. Those weren't standard-essential, and if that claim had simply been based on lost profits, it would have been a different story. But they said "reasonable", and that's the R--the single most important letter--in "FRAND."
Samsung used to seek remedies over SEPs that I consistently disagreed with. I viewed their litigation tactics far more favorably when they dropped the related claims against Apple and even joined pro-FRAND organizations. Same with Google, by the way, but since it divested Motorola Mobility and contributed to an LTE patent pool, it's probably not going to be active again as a SEP enforcer in the foreseeable future.
If Huawei were a person, the diagnosis would be schizophrenia. Sorry to say so about one of my two favorite Android brands. According to Wall Street rumors, Huawei is (thankfully) part of the rebellion against Qualcomm. Just a couple of days ago, the FTC pointed to a 20-year-old Qualcomm filing that took the very opposite position on the FRAND licensing of rival chipset makers as Qualcomm is taking now. In Huawei's case, we're not talking about two decades in between. What we're seeing unfold here are parallel cases (Huawei's litigation with Samsung in the U.S. and China, and in parallel, PanOptis' litigation against Huawei in the U.S. and Germany, which provoked a Huawei countersuit in China for the purpose of a FRAND determination). It's like Huawei has to wear a different hat every 20 days, and at times every 20 hours, than change positions over the course of 20 years.
In the (Pan)Optis v. Huawei case in the Eastern District of Texas, the parties filed their proposed findings of fact and conclusions of law (after the recent jury trial and with a view to an upcoming bench trial) late last month--(Pan)Optis on the left side, Huawei on the right side. And some of what Huawei says is really interesting (this post continues below the document):
18-09-28 PanOptis v. Huawei Proposed Findings of Fact by Florian Mueller on Scribd
(Pan)Optis claims to have "acquired" (though it may actually be more of a service provider to Ericsson in economic terms) 63 SEP families. I haven't seen a comparable public claim by Huawei, but this Chinese study (in English, though) concluded that Huawei had declared slightly more than 600 patent families to be essential to 4G/LTE.
According to Huawei's own proposed finding of fact #58, "Huawei sent a letter to PanOptis indicating that it was willing to enter into a license to PanOptis’ U.S. declared essential patents for a rate of 0.09%, its EU declared essential patents for 0.056%, and its China and Rest of the World declared essential patents for 0.04%."
When I see a Huawei FRAND position that has a zero to the right of the decimal point, it immediately brings back to memory the FRAND rate that a Chinese court set, at Huawei's request, for InterDigital's SEPs: 0.019%.
Samsung claims that Huawei never substantially lowered its 1.5% royalty demand. Huawei denies that allegation, but without specificity (at least in the public redacted version of the relevant filing).
The recent Texas verdict related to five patents, four of which were standard-essential (and the jury awarded a far lower per-patent rate on each of those SEPs than on the non-SEP). While Huawei can--and according to a couple of more recent filings will--seek a judgment as a matter of law on the merits and on the damages award, for the time being (Pan)Optis has established the actual infringement of four presumed-valid SEPs, while Huawei has yet to prove anything in the United States. It has prevailed on a couple of patents in China, though.
The proposed findings of fact and conclusions of law in the Texas case also deviate from Huawei's positions in the Samsung despite with respect to whether one court should set a worldwide royalty rate:
"[DCL24] As discussed above, PanOptis has never given Huawei a U.S.-only offer. But, in view of PanOptis' decision to sue Huawei on its U.S. patents in a U.S. court, and in view of the very minor share of Huawei's sales in the U.S., and that Huawei has clearly stated its willingness to agree to and desire for a FRAND license covering its US sales, FRAND requires that PanOptis offer Huawei a U.S.-only license, rather than requiring that, in order to get a U.S. license to cover its minimal U.S. sales, Huawei also take a license in other countries where its sales are much greater (e.g., more than 60% in China) under foreign patents not at issue in this litigation. Despite Huawei repeatedly seeking a U.S.-only license and offering to settle the U.S. case, PanOptis has refused to discuss such options with Huawei."
"[DCL26] Like Motorola, PanOptis violates its FRAND obligations by suing Huawei on U.S. patents and insisting on a global license, despite Huawei's comparatively low sales in the U.S. and Huawei’s offer to enter into a U.S.-only license. Admittedly, Motorola sought an injunction against Apple in Germany, and PanOptis is seeking only damages against Huawei in U.S."
In the aforementioned bench trial opening brief, Huawei discourages the Texas court from setting a global FRAND rate:
"Further, as the Court recognized in limiting PanOptis' Count IX to U.S. patents [...], the Court should refrain from exercising its discretion to adjudicate FRAND issues as to foreign patents since doing so would necessitate determinations concerning the scope, infringement, and validity of non-U.S. patents governed by non-U.S. laws."
I agree--but why did Huawei ask the United States District Court for the Northern District of California to make a global FRAND determination in its dispute with Samsung? And why shouldn't Samsung firstly get the chance that Huawei actually had--even if only with respect to a handful of patents--in the Eastern of District (though it now has to get the verdict overturned, either by the district court or on appeal) to litigate its non-infringement and invalidity defenses?
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