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Comments of Qualcomm: July 9, 2012

Comments of Qualcomm: July 9, 2012

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Published by: PatentlyTrue on Aug 08, 2012
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5775 Morehouse Drive, San Diego, California 92121-2779
Submission of Qualcomm Incorporated in Response to the Commission’s Request forWritten Submissions in
Certain Wireless Communication Devices, Portable Music and Data Processing Devices, Computers and Components Thereof 
,Inv. No. 337-TA-745.
Dear Secretary Barton:Qualcomm Incorporated respectfully submits these comments in response to theNotice of Commission Decision to Review in Part a Final Initial Determination Finding aViolation of Section 337; Request for Written Submissions issued by the United StatesInternational Trade Commission in the matter of 
Certain Wireless Communication Devices,Portable Music and Data Processing Devices, Computers and Components Thereof 
, Inv. No.337-TA-745, on June 25, 2012 (the “Commission Request”).I.
STATEMENT OF INTEREST.Qualcomm is one of the world’s leading technology development and licensingcompanies whose foremost commitment is to innovation. Understanding that research anddevelopment is the lifeblood of innovation, Qualcomm invests enormous amounts in developingnew technologies, in particular cellular communications technologies: $3 billion in 2011, risingfrom $2.5 billion the year before. Qualcomm holds a significant patent portfolio licensedworldwide to more than 200 licensees for 3G cellular devices. Qualcomm is also a leadingsupplier of chipsets for, among other things, cellular devices, for which it licenses technologyfrom other patent holders. Because industry standards are prevalent for cellular devices andinfrastructure equipment as well as other communications products, Qualcomm is a very activeand longstanding participant in numerous Standard Setting Organizations (“SSOs”).Qualcomm’s dual technology licensing and chipset supply business modelsituates it at the intersection of the licensor/implementer tension. As a technology licensor
asupplier of chipsets for incorporation into equipment that implements standardized technologies,Qualcomm’s business success depends on access to others’ patents for such equipment and theability to monetize (and if necessary enforce) its own patents—including standards-essentialpatents
(“SEPs”) and other non-standards-essential patents. Over the years, Qualcomm hasparticipated in ITC investigations as both a petitioner and a respondent and has developed asignificant understanding and appreciation of the Commission’s role in the adjudication of intellectual property rights. Qualcomm is therefore well placed to answer the Commission’squestions about whether a patent holder’s undertaking that it is prepared to grant licenses on
While this submission refers to SEPs, we note that the FRAND undertaking requested in the ETSI IPR Policyrelates to “ESSENTIAL IPRs”—
, IPR(s) “to the extent that the IPR(s) are or become, and remain ESSENTIALto practice” the standard.
ETSI Rules of Procedure, 30 November 2011 [hereinafter ETSI IPR Policy],available athttp://www.etsi.org/website/aboutetsi/iprsinetsi/iprsinetsi.aspxAnnex 6 - Appendix A: IPR LicensingDeclaration forms.
Fair, Reasonable and Non-Discriminatory (FRAND)
terms engages the public interest exceptionto the availability of an exclusion order under Section 337 of the Tariff Act.
A FRAND Commitment Is a Contractual Obligation.Fundamentally, all of the Commission Request’s questions 7-13 concern how theexistence of a FRAND commitment interacts with the Commission’s statutory mandate to issuean exclusion order against infringing, unlicensed, products subject to the Section 337 publicinterest considerations.
The starting point is to recognize a FRAND commitment for what it is:an enforceable contract, rather than a creation of statute, economic theory, or abstract publicpolicy. No law defines, requires, or imposes a FRAND undertaking on a patentee. Instead,when a patentee voluntarily makes a FRAND commitment, it is entering into an agreement withthe SSO to which implementers of the standard are third-party beneficiaries.
Courts across thiscountry have recognized the contractual nature of a FRAND commitment,
and have rightlyindicated that they will enforce a patentee’s voluntary FRAND undertaking.B.
The Meaning of a FRAND Commitment Is Found in the Intent of the Parties.Because a FRAND commitment is a creature of contract, its content—like that of any contract—must be found in the intention and understanding of the parties who formed thecontract at the time such contract was formed. Thus, in any analysis of the meaning of aFRAND commitment, one must look at the written agreements, policies, and procedures of therelevant SSO at the time the particular FRAND commitment was made.
Many SSO licensing
Because the ETSI IPR policy uses the term “fair, reasonable, and non-discriminatory”, we use the termFRAND undertaking or FRAND commitment in this submission with reference to the ETSI policy and undertakingsmade to ETSI. Other IPR Policies such as those of the ITU and IEEE call for undertakings on RAND terms, andFRAND/RAND are commonly used interchangeably.
19 U.S.C. § 1337(d)(1).
See id 
See Microsoft Corp. v. Motorola, Inc.
, No. C10-1823JLR, 2012 WL 2030098, at *6 (W.D. Wash. June 6,2012) (“Additionally, the court reaffirms its prior decision that Microsoft, as a potential user of the 802.11 Standardand the H.264 Standard, is a third-party beneficiary to the agreements between Motorola and the IEEE andMotorola and the ITU.”).
 Research in Motion
 Ltd. v. Motorola, Inc.
, 644 F. Supp. 2d 788, 797 (N.D. Tex. 2008);
 Ericsson Inc. v. Samsung Elecs. Co.
, No. 2:06-CV-63, 2007 WL 1202728, at *3 (E.D. Tex. Apr. 20, 2007).
Similarly, in the context of interpreting the meaning of SSO disclosure obligations,
Administrative LawJudge Pender was precisely correct when he wrote that “the
sine qua non
for . . . any analysis for unclean hands, asit would pertain to this case, are the written ETSI agreements, directives, policies, procedures, etc., establishingMotorola’s duty or obligation of disclosure . . .”.
Certain Wireless Communication Devices, Portable Music and  Data Processing Devices, Computers and Components Thereof 
, Inv. No. 337-TA-745, Initial Determination on
policies provide a FRAND licensing framework. While many SSOs have developed comparableFRAND-based IPR policies,
FRAND commitments do vary between different SSOs—and overtime within an individual SSO
—as the IPR policies of SSOs evolve.As a result, to the extent the Commission’s questions could be read as suggestingthat there is necessarily
universal answer to whether a FRAND commitment does or does notpreclude an exclusion order—regardless of to which SSO and under which policies thatcommitment was given—we assume that this suggestion was not intended, as it would beinconsistent with the purely contractual nature of FRAND commitments.
Thus, the startingpoint of the Commission’s inquiry should be the text of the applicable SSO IPR Policy and, if necessary, its negotiation history and evolution, to determine what the patent holder understoodit was agreeing to when making its FRAND commitment. In the case presently before theCommission, that means carefully analyzing the IPR Policy of ETSI at the time the relevantFRAND commitment was made.
 Interpreting the FRAND commitment on a case-by-case basis to give effect to theparties’ intent in making and accepting the FRAND commitment ensures that the consequencesof participating in standardization, and entering into contractual agreements with respect tovaluable intellectual property rights, remain stable and afford fundamental fairness tocontributors of technology. Such stability encourages participation in standardization by all
Violation of Section 337 and Recommended Determination on Remedy and Bond at 148 (Apr. 24, 2012)[hereinafter “Initial Determination”].
For instance, we are not aware of any SSO IPR policy that includes a blanket exclusion of injunctive orsimilar relief for patents subject to a FRAND commitment.
For example, § 6.1 of the ETSI IPR Policy provides:“When an ESSENTIAL IPR relating to a particular STANDARD or TECHNICAL SPECIFICATION isbrought to the attention of ETSI, the Director-General of ETSI shall immediately request the owner to givewithin three months an irrevocable undertaking in writing that it is prepared to grant irrevocable licences onfair, reasonable and non-discriminatory terms and conditions under such IPR . . .”The word “irrevocable” preceding “undertaking” was added by consensus in 2008 to clarify that the FRANDundertaking is irrevocable once made. To be clear, such amendments to an SSO policy cannot retroactively impactexisting FRAND commitments, which continue to be governed by the policy in place at the time of the undertaking.
Roger G. Brooks and Damien Geradin,
Taking Contracts Seriously: The Meaning of the VoluntaryCommitment to License Essential Patents on ‘Fair and Reasonable’ Terms
in I
392-394 (Steven Anderman and Ariel Ezrachi eds., Oxford University Press, 2011)[hereinafter Brooks & Geradin OUP], also available athttp://ssrn.com/abstract=1569498.
The Initial Determination also concluded that Apple infringes U.S. Patent No. 5,636,223 (the “’223 Patent”)(
at 68), which is essential to the Institute of Electrical and Electronic Engineers (“IEEE”) 802.11 (“WLAN”)standard promulgated by the IEEE and subject to a RAND commitment made to that SSO.
See Microsoft Corp. v. Motorola, Inc.
, No. 10-CV-1823, 2012 WL 2030098, at *2 (W.D. Wash. June 6, 2012). The meaning of thatRAND commitment and whether it alters the Commission’s authority to issue an exclusion order should beanalyzed by reference to the text and negotiating history of the applicable IEEE IPR Policy. In this submission,however, Qualcomm focuses on the meaning of a FRAND commitment to ETSI, under the current ETSI IPR policy.

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