{"id":1882,"date":"2020-02-07T15:55:51","date_gmt":"2020-02-07T15:55:51","guid":{"rendered":"https:\/\/www.tantraanalyst.com\/insights\/?p=1882"},"modified":"2023-01-27T06:30:43","modified_gmt":"2023-01-27T06:30:43","slug":"ftc-vs-qualcomm-the-meaning-and-relevance-of-frand-commitment","status":"publish","type":"post","link":"https:\/\/www.tantraanalyst.com\/ta\/ftc-vs-qualcomm-the-meaning-and-relevance-of-frand-commitment\/","title":{"rendered":"FTC vs. Qualcomm \u2013 The meaning and relevance of FRAND commitment"},"content":{"rendered":"
\"Qualcomm\"<\/a>
RCR Wireless News, February 7, 2020<\/figcaption><\/figure>\n
As promised in my\u00a0previous article<\/a><\/span>, here is a detailed discussion on FTC\u2019s FRAND (Fair Reasonable And Non-Discriminatory) argument in its antitrust case against Qualcomm. FTC\u00a0argues<\/a><\/span>\u00a0that Qualcomm agreeing to the FRAND (Fair and Reasonable Anti Discriminatory) requirements of Standards Setting Organizations (SSO) binds them to license patents to all applicants; Qualcomm declining to license its Standard Essential Patents (SEPs) to rival chipset vendors amounts to an antitrust violation. The FRAND requirements are more nuanced than what they appear to an untrained eye. I will dig deeper and try to decipher the arguments as well as examine the industry\u2019s practices for more than two decades.<\/span><\/h6>\n
<<Side Note: If you would like to know the full history of this case, please refer to my\u00a0article series<\/a><\/span>. >><\/span><\/h6>\n
What does FRAND commitment to SSOs mean?<\/b><\/span><\/h6>\n
The SSOs in question here are\u00a0TIA<\/a><\/span>\u00a0(Telecommunications Industry Association), which developed CDMA standards, and\u00a0ATI<\/a><\/span>S (The Alliance for Telecommunications Industry Solutions), which developed LTE standards. Both organizations require their members to mandatorily sign the IPR policy document, which includes the FRAND requirements.\u00a0<\/span><\/h6>\n
\u00a0TIA has a 24-page\u00a0IPR Policy document<\/a><\/span>. The most relevant portions to this case are on pages 8 and 9:<\/span><\/h6>\n
(2) (b) A license under any Essential Patent(s), the license rights which are held by the undersigned Patent Holder, will be made available to all applicants under terms and conditions that are reasonable and non-discriminatory, which may include monetary compensation, and only to the\u00a0<\/i>extent\u00a0<\/i>necessary for the practice of any or all of the Normative portions for the field of use of practice<\/i><\/b>\u00a0of the Standard<\/i><\/span><\/h6>\n
The first part of this section is pretty straight forward. But the part marked in red is what is at issue here. In layman\u2019s terms, this means the patent holder agrees to give a license for the practice of the standard. In other words, licenses to the applicants whose products practice the standard. Qualcomm argues that devices\u2014and not chipsets\u2014practice the standards. They point to the actual language\/text of the standards as evidence. It is customary for the patents to state, \u201cUE (User Equipment, aka device) shall do this,\u201d or \u201cBase station shall do that,\u201d etc. And the standards never state, \u201cChipset shall do this or that.\u201d Considering that, Qualcomm argues, they are not required to license SEPs to chipset vendors, but only to device vendors. To that effect, they also point out that they have never sued any chipset vendors for patent infringement.<\/span><\/h6>\n
Now, let\u2019s look at the ATIS IPR policy<\/a><\/span>, which is governed by the \u201cPatent Policy as adopted by ATIS and as set forth in the \u201cOperating Procedures for ATIS Forums and Committees<\/a><\/span>,\u201d<\/em> a 26-page document. The most relevant portions are on page 10 and 11:<\/span><\/h6>\n
\u201c\u2026Statement from patent holder<\/span><\/h6>\n
Prior to approval of such a proposed ANS, ATIS shall receive from the identified party or a party authorized to make assurances on its behalf, in written or electronic form (b) assurance that a license to such essential patent claim(s)will be made available to applicants desiring to utilize the license for the purpose of implementing the standard. (i) under reasonable terms and conditions that are demonstrably free of any unfair discrimination\u2026\u201d<\/span><\/h6>\n
Again, looking at the highlighted part, Qualcomm argues, as stated in the standard, chipsets don\u2019t implement the standard, but the devices do. So, there is no need for them to license to chipset vendors!<\/span><\/h6>\n
Is a violation of SSO commitment violation of US antitrust law?<\/strong><\/span><\/h6>\n
Even if you consider that SSO IPR policies are violated, then the question becomes, \u201cdoes that amount to a violation of US antitrust law?\u201d One argument is that the alleged FRAND violation is a commercial matter and can easily be dealt with through contract and patent law, instead of policy tools such as antitrust law. In his Amicus Brief<\/a><\/span> in support of Qualcomm, Hon Judge Paul R. Michel (Ret.) of US circuit court gave a compelling simile: \u201cas a general proposition, the hammer of antitrust law is not needed to resolve FRAND disputes when more precise scalpels of contract and patent law are effective.\u201d<\/span><\/h6>\n
Even the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) panel, while granting Qualcomm\u2019s request for a stay, ridiculed the lower court\u2019s ruling as \u201c\u2026 a trailblazing application of the antitrust laws or \u2026an improper excursion beyond the outer limits of the Sherman Act..\u201d<\/span><\/h6>\n
Precedence and other considerations<\/b><\/span><\/h6>\n
3GPP<\/a><\/span>\u00a0(3rd\u00a0Generation Partnership Project), the cellular specifications group, prefers all the SSOs across the world to have consistent IPR policies.\u00a0ETSI<\/a><\/span>\u00a0(European Telecommunications Standards Institute) is one of the major players among the eight SSOs that are the organizational partners of 3GPP. There has been much discussion at ETSI regarding the issue of component-level licensing, such as licensing to chipset vendors. But ETSI has never stated that it supports or requires its members to offer component-level licensing. So, the lower court decision creates inconsistency between ATIS, ETSI, and other SSOs, whose impacts go far beyond this case.<\/span><\/h6>\n
<<Side Note: If you would like to learn more about 3GPP\u2019s organizational structure and operational procedures, please refer to this\u00a0article series<\/a><\/span>.>><\/span><\/h6>\n
More than two decades of cellular patent licensing history proves that the device-level licensing works smoothly and efficiently. Although the discussions related to this case are mostly about modem chipsets, typical devices have hundreds of different components. If licensing is brought to the component-level, it would be a logistical and legal nightmare for OEMs to understand, and negotiate separate licenses with all those vendors, as I explained in\u00a0this article<\/a><\/span>. Also, probably every existing cellular IPR contract will have to be rewritten.\u00a0\u00a0<\/span><\/h6>\n
Final thoughts<\/b><\/span><\/h6>\n
So far, there have been only a few minor cases in the telecom industry regarding the violation of FRAND commitments. FTC\u2019s case against Qualcomm is the first major case where its relevance to antitrust law is being tested. The decision of this trial will be a defining moment in the \u201ccomponent vs. device-level\u201d licensing debate. Qualcomm seems to have strong arguments, and the earlier Ninth Circuit panel agreed with most of them. But now the appeals hearing has a new panel of judges, which brings a new set of uncertainties to the case. As promised before, I will be there in person to witness the appeals hearing of this historic case. Be sure to follow my Twitter feed\u00a0@MyTechMusings<\/a>\u00a0for the latest.\u00a0<\/span><\/h6>\n
Meanwhile, If you want to read more articles like this and get an up-to-date analysis of the latest mobile and tech industry news, sign-up for our monthly newsletter at\u00a0TantraAnalyst.com\/Newsletter<\/a><\/span>, or listen to our\u00a0Tantra\u2019s Mantra podcast<\/a>.<\/span><\/span><\/h6>\n","protected":false},"excerpt":{"rendered":"

As promised in my\u00a0previous article, here is a detailed discussion on FTC\u2019s FRAND (Fair Reasonable And Non-Discriminatory) argument in its antitrust case against Qualcomm. FTC\u00a0argues\u00a0that Qualcomm agreeing to the FRAND (Fair and Reasonable Anti Discriminatory) requirements of Standards Setting Organizations (SSO) binds them to license patents to all applicants; Qualcomm declining to license its Standard […]<\/p>\n","protected":false},"author":2,"featured_media":1631,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"image","meta":{"mc4wp_mailchimp_campaign":[],"footnotes":""},"categories":[7],"tags":[],"class_list":["post-1882","post","type-post","status-publish","format-image","has-post-thumbnail","hentry","category-ipr","post_format-post-format-image"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/posts\/1882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/comments?post=1882"}],"version-history":[{"count":0,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/posts\/1882\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/media\/1631"}],"wp:attachment":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/media?parent=1882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/categories?post=1882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/tags?post=1882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}