It’s been a long, hot summer in Texas for Big Tech. Lone Star State jurors valued Apple with $ 1.3 billion in damages and royalties in three cases. Tim Cook’s company has settled with the Japanese Maxell Holdings rather than risk doing four for four.
Intel and Cisco have also seen stiff penalties as seven cases totaled more than $ 3.7 billion to aggrieved patent holders. Observers said Big Tech’s tarnished brilliance, combined with pent-up frustration during the coronavirus, may have pushed jurors in courthouses in cities like Waco, Marshall and Sherman to fines the size of Texas.
There’s also the fact that jurors get used to granting heavier penalties, with one commentator calling billions the new millions. This is one of the reasons patent holders increasingly prefer to test their fortunes in Texas courts.
But the momentum may be turning.
The summer of our patent dissatisfaction
Justice Rodney Gilstrap, Chief Justice of the Eastern District of Texas, didn’t quite say ‘hang in there, cowboy,’ but questioned a $ 506.2 million award nonetheless against Apple. What he said was that Cupertino should have another day in court to argue that Optis Wireless Technology was unfairly demanding royalties from Apple for using its inventions to connect smartphones, watches and tablets to devices. networks using the LTE standard.
What’s up for grabs here is whether Optis’s license applications were “fair, reasonable and non-discriminatory” or, in a somewhat odd acronym, FRAND. This happens when patent holders voluntarily let standards organizations use their inventions in the standard. They don’t need to, but if they do, their license requests have to be, well, FRAND.
As a gift to intellectual property lawyers, no one has ever really defined what this standard means.
Gilstrap J., however, did not rule out the finding of liability. However, he said the jury should have been allowed to consider whether the royalty claim meets the FRAND criterion.
You are not our FRAND
Perhaps FRAND is comparable to Supreme Court Justice Potter Stewart’s 1964 obscenity test, “I know it when I see it.” In presenting the case, Optis argued that “the negotiations of the two companies have failed because Apple refuses to pay a FRAND royalty”.
But Apple said the patents were invalid, and somewhat bitterly added “lawsuits like this by companies that accumulate patents just to harass the industry only serve to stifle innovation and harm consumers. ” The fact that Apple products are compatible with the LTE standard, the company said, does not constitute proof of infringement. “Optis Wireless Technology has a strong portfolio of patent families around the world,” says the Optis website. He “acquired his portfolio from Unwired Planet, the inventor of the mobile Internet,” he adds.
It is in particular a method for improving transfers between mobile communications systems. Apple lost a similar lawsuit in October in the Chancery Court of England and Wales, before High Court judge Judge Birss.
My FRANDS and I
The larger problem is unlikely to go away. Apple filed an amicus brief in February in support of Continental Automotive Systems, when it fought patent pool operator Avanci in the Fifth Circuit Court of Appeals. Continental sued Avanci in May 2019, claiming it violated antitrust laws by negotiating licensing deals with automakers rather than component manufacturers.
It’s a weird old world when Big Tech decides they like antitrust law enforcement.
But Apple argued that companies like Continental should be able to file antitrust claims against patent holders for “patent hold-ups.” This is when a patentee promises to license their technology on FRAND terms, so they don’t. According to Continental, the patent holders agree to offer licenses at the level of the automakers, in order to obtain “high royalties which far exceed any measure of FRAND”. Technology company licensing battles with patent holders will rage in US and UK courts.
But by noon in east Texas, the momentum may well have changed.
Pdraig Belton, special contributor to Light Reading