Yes, to me this tussle between NOK and Q is extremely interesting, and i have broken a long and profitable lurk to post on it.
I'm curious how you square Nokia's current position on FRAND with the following quotes from a case they brought against Vitelcom that covered essential GSM/GPRS patents
The positions are consistent.
Firstly, as background, my perception, and I may be wrong, is that Nokia is trying to show Qualcomm that the alternative to a failed negotiation is an *EXTREMELY* costly impact to their core licensing business, with a bounded and manageable cost to Nokia's business model.
Normally, if an implementor fails to negotiate with Qualcomm, then Qualcomm can just shut them out of the CDMA business and cram them back to making gum-boots, as Mq put it. Oops... Therefore implementors must negotiate with Qualcomm if they want to be in that business. This gives Qualcomm incredible bargaining power, because with that hammer in their back pocket, they can always threaten to walk away from the table and use it. With this power, Qualcomm can extract very high margin licensing fees, which dramatically improves the capital efficiency of their business model, which is very good for shareholders.
However, Nokia is attempting to establish a hurdle that Qualcomm must overcome prior to being able use that hammer on Nokia.
Which brings us to the "squaring of positions".
In the Vitelcom case Nokia did, in the end, assert a value to a handful of patents (although not to its whole portfolio), which Qualcomm has yet to do. Also, I didn't find VITELCOM in the list of ETSI members, and a central pillar of Nokia's Delaware complaint is the intra-ETSI license contract that was formed.
Together, these make comparison of Nokia's positions in the the Vitelcom/Qualcom issues somewhat apples/oranges in nature. But you only snipped a few quotes, so I can address them specifically.
“It is truly difficult to determine the separate value of either of the individual patents.
Bingo. 100% alignment. Very difficult, but "difficult" is not impossible.
In practice, the relationship between the number of patents and the total amount of royalties is not linear. For example, a license for a single essential patent may be 2.5%, a license for two essential patents can be 3.5% and a license for three essential patents can be 4%, while a license for ten or more essential patents rarely exceeds 5%
Means: "It is not an easy task at all to determine the precise royalty rate for each of the patents you wish to collect Royalties on, individually. Dividing, say 5% by 5,000 patents isn't going to cut it. What you really need to do is declare the dozen or so that are worth 80% of the royalties you request".
When you couple these assertions to Qualcomm's threat of injunction, you can see Nokia's strategy outlined in stark resolution. It is very clever, and, like a chess game, being played several moves ahead.
As I said before, this is not about whether or not an SULA will issue. It is about framing the magnitude of concessions that each party must make in the course of reaching agreement on an overarching SULA.
Without a SULA each party can fall back to their otherwise existing obligations, rights and remedies. Normally, in the absence of any license agreement, the fallback would be that the IPR owner (Qualcomm) can seek and obtain an injunction or otherwise bar infringement from the implementor for any of its patents, and the IPR implementor (Nokia) must either exit the banned business or create alternative implementations.
Normally, the business implications would be that Qualcomm would suffer some loss of royalty revenue, and Nokia would be forced to exit the wireless business and go back to making gum boots, or whatever. Normally, Nokia would be the party who is hurt the worst by not having the deal, so Nokia would be wise to give up more than Qualcomm. And that has, pretty much, been the prevailing perspective on the thread for the past few months.
This is not Nokia's perception. The Delaware filing reveals that Nokia is asserting that in absence of a SULA, they do have a license!!! They contend, through legal logic that may be as difficult to follow as a French taxi driver in Paris, but logic nevertheless, that Qualcomm has contractual obligations to Nokia, which Qualcomm has not met and is refusing to meet - to wit, offering them at least a patent-by-patent license for all of the Essential IPR that Qualcomm belives Nokia is using.
Whether or not these obligations are *difficult*, *desirable*, *wise* or otherwise unthinkable is merely a measure of Qualcomm's voluntarily imposed burden. At least this is Nokia's position.
This works against Qualcomm in two ways.
Firstly, Nokia is asserting that Qualcomm has voluntarily given up their right to *not* grant a license (e.g. seek injunction), by virtue of having voluntarily given an undertaking to grant a royalty bearing license. Nokia claims that they have accepted each of Qualcomm's offers, at least all of those the ETSI Essential IPR which Nokia is actually using. For these patents, there is no question that Nokia owes Qualcomm a FRANDly fee, nor any question that Nokia is willing to pay a FRANDLY fee. The only questions are
(a) which patents are these (by contract that's up to Qualcomm to assert, Nokia retains rights to all available defenses), and
(b) what Qualcomm believes the FRANDLY fee is for these patents (which is Qualcomm's responsibility to determine and assert).
In other words, Qualcomm is obliged to propose "FRAND" terms, patent by patent and make such an offer to Nokia. Then, if and only if Nokia refuses to accept these terms, Nokia will have refused the license and be without a license, and *then* Qualcomm can then seek equitable relief.
It is unthinkable that Qualcomm starts down this path.
Nevertheless, until it takes this path, Nokia has a license to every patent declared Essential IPR. As long as Nokia holds such a license, Qualcomm can only expect revenue. Even if they can't tell their shareholders how much revenue they expect to get.
Purgatory. Stalemate. At least with respect to any of Nokia's core business with respect to ETSI standards.
Secondly, injunction is an equitable remedy. It is a long standing principle that those who seek a remedy in the court of equity must come with clean hands. Therefore, prior to attempting to assert an injunction against Nokia, Qualcomm must first have met, or at least attempted to meet, any reasonably related contractual obligations to Nokia. Nokia is asserting that by operation of ETSI, French Law, and patent-by-patent undertakings, Qualcomm has agreed to fixing a price, patent-by-patent for each patent that is declared Essential IPR. If they have agreed to do this, then they must at least attempt do so, even though it might be difficult or onerous or unthinkable. Nokia has asked, and, obviously, Qualcomm has refused. Nokia is not in breach of any agreements, but Qualcomm is. Dirty hands.
This second thrust is technical, but not without merit.
Together these two strategies act to prevent Qualcomm from seeking injunctions against Nokia, at least for the IPR which has been declared Essential IPR, which in turn limits any damage Qualcomm can inflict on Nokia. As we have seen from Qualcomm's less than successful attempt to assert GSM IPR, just because Qualcomm holds patents does not mean that they will be able to successfully prosecute these patents. From a BUSINESS perspective, where it matters in the end, Qualcomm's management may legitimately contemplate that fighting a war patent-by-patent may be more costly in legal fees than conceding a deep discount to Nokia in return for a confidential SULA. The USA is finding out that winning a war over an oil-patch can cost more oil than is buried in that oil patch. Phyrric victories are not desirable.
THIS is Nokia's strategy, and it is COMPLETELY consistent with Nokia's prior positions.
By the way, observing that I am most definately not in the "Nokia is clueless, wrong and about to suffer a crushing legal defeat" camp, and some recent personal attacks & counter-attacks on this thread, I'd like to avoid that if possible.
I've been wrongfully attacked in the past, and my responses, righteous or otherwise, have not been productive and led to escalations. Not good.
So, I would like to make it clear that I have no affilliation, employment, or position (long or short) in or with Nokia or any of Qualcomm's competitors. I do have, indirectly, a long position in Qualcomm. I also have an ongoing personal, professional and economic interest in the field of technology licensing. My comments here are made to shed light on something that is both fascinating and important to me, and to solicit alternative or supportive view points.
Nothing personal. |
