Beijing (14 January): In response to Apple Inc.'s action, Ericsson filed a complaint against Apple Inc. (hereinafter referred to as "Apple") in the US District Court for the Eastern District of Texas, requesting the court to clear its name in a fair ruling.

    Every Apple smartphone and tablet with cellular capability uses patented technology from Ericsson, but the licence agreement previously entered into between the two companies has expired and no new agreement has been reached despite nearly two years of negotiations.

    On Monday (US time) this week, Apple filed a lawsuit in the United States District Court for the Northern District of California, accusing Ericsson of charging excessive royalties for its LTE patents, along with the argument that the relevant Ericsson patents aren't essential to the high-speed networking technology used in Apple's mobile devices.

    But should the court decide that these patents are in fact standard-essential patents and that Apple has committed infringement, Apply also says that it wishes the court to determine a fair royalty price.

    In its submissions to the court, Ericsson says it wishes the court to decide whether its licensing of the relevant patents is based on "fair, reasonable and non-discriminatory" (FRAND) terms.

    Patents in FRAND terms are standard-essential patents (SEPs), meaning that these patents are standard and essential to a particular product. As patent holder, Ericsson is obligated to license such patents to any other company at a reasonable price.

    Ericsson is reported to spend USD5 billion in research and development every year and currently holds the most extensive range of patents within the industry, i.e. 35,000 patents globally. In 2013, Ericsson had a revenue from intellectual property rights of 10.6 billion kroner (USD1.31 billion).

    Kasim Alfalahi, Chief Intellectual Property Officer at Ericsson, said: "Our goal is to reach a mutually beneficial resolution with Apple. They have been a valued partner for years and we hope to continue that partnership. Global sharing of technology has created the success of the mobile industry and allowed new entrants to quickly build successful businesses. We believe that it is reasonable to get fair compensation from companies benefiting from the development we have made over the course of the last 30 years."

    Kasim Alfalahi also said; "We have been trying to negotiate a new agreement. We came to the conclusion that we needed the help of a third party."

(Source: www.tech.sina.com.cn)

【Comments】

Wang Huizhong: In the field of information and telecommunication technology, there are a lot of so-called standard-essential patents ("SEPs"). The suit and countersuit between Ericsson and Apple centred on the problem of whether the relevant patents constituted SEPs and the subsequent royalties for their licensing - basically the two common issues that are at the core of the lawsuits involving SEPs. For the licensing of SEPs, the fair, reasonable and non-discriminatory ("FRAND") principle is an important principle used to guide the determination of reasonable royalties and balance the interests between patent holders and patent users. The FRAND principle helps protect the intellectual property rights of patent holders on the one hand and promote the benign development of industries on the other. But the FRAND principle itself doesn't have a clear definition and moreover, there is a lack of effective criteria for its determination, which has come to mainly depend on the specific negotiations between the holder and user of a specific patent. Due to the importance of SEPs, patent holders are at an advantage and can explicitly or implicitly impose unfair, unreasonable and discriminatory licensing terms, such as excessive royalty prices, leading to, at least, the situation that in practice, the FRAND principle plays little role in the stage of negotiation or licensing and provides only limited constraints on monopolistic behaviour. Apart from excessive royalty prices, there are other forms of monopolistic behaviour that can occur in licensing SEPs, including implicit monopolistic acts such as bundled licensing of SEPs with non-SEPs and bundling of product sales with patent licensing. Recently in its investigation into Qualcomm Inc., the National Development and Reform Commission has shown us all the forms that a monopoly can take relying on a SEP if without restrictions.

    The lesson to learn from the suit and countersuit between Ericsson and Apple is that SEPs are of high importance. SEPs are very important patents and like pioneering inventions they form obstacles difficult for competitors to bypass. Owning a SEP means absolute dominance and sufficient say in the relevant field. Meanwhile, it's difficult for one SEP user to contend against the holder of the SEP but such user may join hands with other users and make full use of the anti-monopoly law to request the authority to stop any monopolistic behaviour. The regulator of the relevant industry should in turn act positively and conduct anti-monopoly investigations. Only when there is a balance of powers, can the idea of fairness and reasonableness be achieved.