In detail explains its French law theory of how it gets a country by country, patent by patent FRAND licensing
This "theory" is not too much of a stretch, IMO (but then, I am hardly a student of French Law)...
Numbers in parenthesis refer to the original complaint. It is quite long, but a great read.
The IPR Policy of ETSI is governed under the laws of France (19). Furthermore, in order to avoid the "holdup" problem (described 21-37), ETSI IPR policy requires that Qualcomm must make a voluntary undertaking (an "undertaking" being a legal term synonymous with "unbreakable promise") for each patent declared to be Essential IPR.
"When an [note the singular] ESSENTIAL IPR... is brought to the attention of ETSI, the Director General of ETSI shall immediately request the owner to give within three months an undertaking in writing that it is prepared to grant irrevocable licenses on fair, reasonable and non-discriminatory terms and conditions under such IPR to at least the following extent:... " (42)
So by the time we get here, Qualcomm must have given an undertaking to grant a license to every member of ETSI.
Up to this point the facts are pretty cut and dry.
Then we get into "French Contract Law 101".
(43) through (45) develop the position that a contract exists between a first party and a second party when (a) the first party promises a third party (stipulator) to contract with the second party, and the second party accepts that promise. Acceptance can be implicit or explicit, but it can not be implicit if it has been rejected.
(46) and (47) develop the theory that a patent license exists once the essential terms are known.
(48) draws the conclusion that a patent license contract does not require agreement on price, but that it is enough that the parties have agreed that there will be a price.
Together these develop a reasonable conclusion that there is a contract between QCOM and NOK that QCOM will grant NOK an irrevocable license to each of its declared Essential IPRs, and that NOK must pay a price, and that the parties are obliged to determine what this price is.
Clause (49) is EXTREMELY interesting. "In the case where a contract is formed with an obligation to pay compensation, but without an agreement to the amount of compensation, the party with the right to receive the compensation may set the price, but only within the limits provided in the contract, and subject to rules and remedies limiting price abuse. At any time after formation of the contract, the party with the obligation to compensate can request that the other party provide the price term consistent with the limitations described above, in which case the party with the right to receive the compensation has an obligation to provide the price."
Clause (50) deals with acceptance of contracts. Unless a contract specifies a certain method of acceptance, an acceptance can be either implicit or explicit. However, there can not be implicit acceptance if the beneficiary has otherwise explicitly rejected the contract or stated that it will not be bound by its terms.
Clause (51) states that under French law, a contract can only have a single subject matter.
Then we get to the application of this interpretation.
Clauses (52) through (53) develop the thesis that an ETSI IPR Owner is contractually obliged to grant a license.
(54) explains quite reasonably that an individual ETSI member is not obliged to implement any or all of the Essential IPR that an owner declares, and moreover, because even though an Owner might believe that an IPR is essential, the owner might be wrong (e.g. Qualcomm might have their essential GSM patents tossed as invalid). Therefore, while owners are obliged to grant licenses, implementors are not compelled to take them. Furthermore, "the determination whether the implementor actually uses a declared essential patent, and whether such patent is valid, is a necessary step in determining compensation under ETSI FRAND rules".
Consequently, it is entirely reasonable that ongoing negotiations must continue in order to fix a price, and that nevertheless there exists a license.
Paragraph (55) through (57) draw the conclusion that "an individual ETSI FRAND undertaking confers the right to use that IPR in implementing an ETSI standard, subject to compensation limited to FRAND terms, which may be determined and paid at a later time provided that the value for that particular IPR is sought from the implementor and that the patent holder is entitled to such compensation"
This sets up the "one at a time" argument.
Paragraphs (57) and (58) deal with acceptance of the contract, and claim that if a manufacturer does not practice a patent that is subject to a FRAND undertaking, that the manufacture can not be considered to have accepted the undertaking.
This also sets up the "one at a time" argument, by refuting the possibility that all offered licenses have been accepted.
Paragraph (59) hammers the nail into the one-patent-at-a-time argument, on the basis that each contract can only have a single subject matter (the patent declared essential) under French law: one license for each undertaking.
Para (61) sums it up: "As a result, the implementor is granted a right to implement the standard and use the relevant patents for that purpose without the patent holder, except for possible special circumstances, being able to prevent such use. The contract is executed without any new consent being needed from the IPR holder because the declaration under Clause 6.1 stands irrevocably as its consent to the future licensees."
In other words, even while a fair price is not known and is being negotiated, QCOM can not seek an injunction because that would be withdrawing the license, which, under French law, it can not do.
The second very interesting thread is the damage to the "one price all patents" model. Ostensibly, each undertaking is a contract, and governs those patents described in that undertaking. Ostensibly therefore, proposing a price for "all patents" does not meet Qualcomm's contractual obligations to Nokia. If this is indeed true, Qualcomm will have to unbundle for Nokia... they will not want to do that... no way! |
