NOK claims that by participating in the ETSI standard for UMTS, QCOM has conceded an automatic license to NOK... we must conclude that NOK is arguing that any participant to any ETSI standard automatically surrenders a license to all other participants.
Pretty close. By incorporation of patented technology into an ETSI standard, every implementor of the standard is REQUIRED to infringe. Otherwise they can't implement the standard. The normal alternative of workaround breaks the standard.
This tips the balance of negotiating power to the hand of the patent holder.
In order to balance this, in ETSI standards, every holder of a patent that is embedded into the standard is REQUIRED to offfer an irrevocable license to all implementors of the standard. Which must be FAIR and REASONABLE and NON DISCRIMINATORY.
In other words, a patent holder can not use their patents to hold a power that would, in practice, determine who can, and who can not, practice the standard. They can not require one party pay more than another. They can not require that any party pay an unreasonable amount. They can not prevent the standard from being implemented. However, insofar as their patents are essential and are not found to be invalid, they can be assured of a constant royalty stream by virtue of incorporation of their patent into the standard.
In my opinion, such an interpretation of the ETSI agreement would give rise to bad faith royalty negotiations.
How did you form this opinion? The terms of the offered license are required to be FRAND. Therefore any license that ensues is, by definition, Fair, Reasonable and Non-discriminatory. How is that bad faith?
The only thing up for debate is what is "Fair" and what is "Reasonable" and what is "Non Discriminatory". Which would be up for debate anyway. Disagreement and bad faith are two different things.
If NOK believed they had an automatic ETSI license then they should have raised this issue in the negotiations.
Why? It's not like Nokia was in exclusive possession of the information and withheld it from Qualcomm. Qualcomm, being party to all of the ETSI agreements like Nokia had all of the same information that Nokia had. If Qualcomm's legal beagles didn't inform them of the operation of French law with respect to the FRAND undertakings they made, well that's their problem. Nokia is not required to act as proxy for Qualcomm's counsel.
When you negotiate a deal, are you required to inform them of all their pre-existing rights and responsibilities? That's their lawyer's job, not yours.
That's from a moral and legal perspective.
But there's good reason from a purely pragmatic perspective.
Over and above any ETSI license it holds (or might hold, or doesn't hold... whatever), Nokia also needed a license to the OTHER patents to which it did not hold a license. Nokia had NO WAY to obtain that license without also getting a license to all of Qualcomm's patents, because the only thing Qualcomm was offering at the time, and has ever offered, was "all or none".
"All patents" presumably includes those patents for which Nokia has a license, just like it includes those patents Nokia doesn't even use.
The board loves this "all or none" license. So does Qualcomm. Qualcomm refuses to discuss anything else. So what's the point saying, um, we already have a license for some, we'd like a license for some more, please tell us the price for some and the extra price for some more? Qualcomm is fighting hard not to go down that path. Pretty crazy to ague that it should have been given the opportunity!
Would Qualcomm have given Nokia a discount under the SULA for its payments under the ETSI licenses? Maybe so, but then of course Qualcomm would then have turned around and demanded payment under the ETSI license. No savings there.
In actual fact, Qualcomm's subsequent resolute stand (same price even though some of the non-ETSI patents are fully paid up) indicates that it would have been pointless to even open up that can of worms. One price for all is one price for all: licensed, unlicensed, valid, invalid, unused.. all.
If Nokia failed to disclose a pre-existing irrevocable license Qualcomm should have known about... well, that's about as much its fault as failing to disclose an invalid or unused patent of Qualcomm's that Qualcomm should have known about... all or none is what Qualcomm asked for, and all or none is what they got.
If the amount for the ETSI license was indeed Fair, Reasonable and Non Discriminatory (as it must be), and Qualcomm's price for "all" is also Fair, Reasonable and Non Discriminatory, there is a rational argument that Qualcomm ended up being paid just the right price... it priced "all", it got the price for "all", presumably being the price for "some" plus "some others", with "even others" thrown in for free, plus whatever discount it might be giving for those who take all instead of "some" or "some others".
No harm to Qualcomm, over and above self inflicted injury.
So if NOK has their way, they can continue offering token payments, continue using QCOM IP under their "automatic ETSI license", all the while QCOM is barred from seeking an injunction. I don't see this holding water... even under French law<g>
Assuming you were only joking about the "not even under french law part".
Perhaps it is intentional, or perhaps not obvious, but in not seeing the obvious you appear to overlook something.
While ETSI prevents Qualcomm from issuing an injunction and barring any participant from practicing its standards, ETSI also requires that all participants are obliged to pay a Fair and Reasonable and Non Discriminatory price for Qualcomm's IP that they use.
It is not up to Nokia to set this price too low. Nor is it up to Qualcomm to set it too high. Although both parties, in seeking their own interests, are likely biased in this direction, either they come to an agreement or they can follow due process and arrive at "the" fair price. However long this takes.
It is exactly because this process can take a long time that the license is automatic and irrevocable. Meanwhile, the standard can be implemented and public interest is served, even if various manufacturers are squabbling in the courts about whether a pound of flesh is meant to be measured by weight or price (in England).
If the two parties can't agree on what the price is, then they can take it to arbitration or the courts or somewhere competent... however in the end, Nokia must pay a fair and reasonable and non-discriminatory price for Qualcomm's IPR, and Qualcomm will receive a fair and reasonable and non-discriminatory price. Whatever it is.
In the end, Qualcomm won't get any less than they are due. And they won't get anything more either.
It might be less than they want, and the process of getting it might force them down paths they would rather not go (like being forced to value a part of their patent portfolio), but due process can get them what is theirs.
This is why, in my opinion, I think we will see a settlement before due process runs its course. |
