Things You Need to Know About the Patent War between PAE and Sony

View: 2049     Date: 2016-11-28 09:44

Recently, the well-known PAE (Patent Assertion Entity), Canada-based Wi-LAN Inc. announced with a high profile that its subsidiary Wireless Future Technologies Inc. sued Japanese company Sony Corp. for infringement of its invention patent ZL200880022707.5 in the Intermediate People's Court of Nanjing, seeking an injunction and 8 million RMB in damages, which is widely spread in social media. At first glance, it is inconceivable that such a common patent infringement lawsuit could go as far as to deeply touching the nerves of domestic manufacturers of mobile communications equipment and patent practitioners, although the two keywords—SEP (Standard Essential Patent, standard essential patent) and PAE just tell everything. Here we look at some key concerns of this case in view of its backgrounds.

PAEs’ play: to get everything from nothing

The patent involved in this lawsuit is one of those patents for communications system that Wi-LAN acquired from Nokia. The technology thereof is the design for the 3GPP LTE Physical Downlink Shared Control Channel (PDSCCH) structure, with the configuration of at least one control channel element for the control channel, wherein the control channel element carries information for detecting the corresponding identifier of the control channel, thereby decreasing the complexity of decoding for the control channel.

The history of PAE operations carried out by Wi-LAN can be traced back to 2007. The company devotes itself to the fields of technological innovation and patent granting, and has litigated on patents and made high-profile acquisitions of patents for several times. In 2011, Wi-LAN launched patent litigations against Apple, Dell, HP, Sony, Intel, HTC, LG, Texas Instruments, Acer, Motorola and Alcatel and other large companies in the United States. In July, 2012, Wi-LAN acquired Siemens' more than 40 patents covering telecommunications network management and mobile multimedia. In June, 2015, Wi-LAN spent USD 33 million for the acquisition of Qimonda’s patent portfolio from Infineon, involving 7,000 patents and patent applications, covering the technical fields of dynamic random access memory, FLASH memory and the process, manufacture, lithography as well as packaging of semiconductor, and the like. In November, 2015, Wi-LAN acquired Freescale's more than 3,300 patents covering processor, memory, semiconductor packaging, wireless technology and Internet of Things technology. By patent acquisitions and patent licensing, up to June 2016 the Wi-LAN’s market value has reached 300 million US dollars, making itself the Top 6 in the NPE ranking list.

Why choose China? The litigation cost is low!

On the one hand, the base and growth of China's wireless communications market are large, where the market potential is amazing. As to the smart phones, for example, the global smart phone shipments in 2015 are 1,293 million, of which China’s mobile phone brands totally contribute to as many as 539 million, accounting for more than 40 percent of the global share. On the other hand, except for Huawei, ZTE and a few other companies in China, the vast majority of China's telecommunications enterprises do not have the SEPs in the communications nor have a large number of core intellectual property rights. Meanwhile, potential licensees have also continuously challenged the validity of the patent rights held by PAEs, thus the conflicts between PAEs and potential licensees are increasingly heating up.

Another advantage for PAEs to choose China as the legal venue is the low cost of legal services. Compared to the millions of U.S. dollars of the patent litigation attorney fees in the USA, the patent infringement litigation filed in China only costs about one million RMB of attorney fees.

Why in Nanjing? The first-tier cities are too busy!

The backlogs of cases in the three special intellectual property courts of Beijing, Shanghai and Guangzhou occur from time to time, and there is a risk of delay in the trial process. In this context, Wi-LAN selected the Intermediate People's Court of Nanjing as a court of jurisdiction, which is sufficient to demonstrate that the international PAE giants are well familiar with China's judicial practices and thereby related strategies are appropriately selected. In fact, the Intermediate People's Court of Nanjing has accumulated sufficient experience in the SEP (Standard Essential Patent) lawsuits. In addition, given the historical complex of Nanjing in the Sino-Japanese relations, it is quite cunning for Wi-LAN to make such choice.

How to deal with PAEs

PAEs have not only strong patent weapons, but also good understanding of local laws, policies, culture, and even the mind of the potential licensees as well. Then how to deal with the infringement warnings and even the litigation cases that come from PAEs? 

The information makes winners. It is recommended, as far as possible, to always pay close attention to the trend of these PAEs. And it should be recorded each time they buy a patent and initiate patent infringement litigation. If you decide to make concessions to avoid troubles after the trade-offs, and to sign a patent license agreement, you need to know at least all the associated companies owned by the licensor accurately in case that someone unexpected should jump out and claim rights.

Timely challenge patent validity. Filing a patent invalidation procedure is one of the effective ways to deal with patent infringement litigation and patent licensing negotiation. If an accurate prior art document can be retrieved and thereby one or more patents in the patent portfolio are declared invalid, then the litigation or negotiation may proceed in a favorable direction. In most cases PAEs' patents focus on highly standardized areas such as wireless communications and semiconductor packaging, while patent documents, papers, and proposals by standardization organizations are effective sources of prior art literature. If the relevant domestic and foreign manufacturers join up, do not easily compromise to the PAEs, and file the patent invalidation procedures timely, the PAE attacks can be effectively blocked.

Join the LOT or OIN protocol. The main purpose of the LOT (License On Transfer Agreement) or OIN (Open Invention Network) protocol is to limit the patent right transferred from the patent implementing entity to the PAEs to be used against the patent implementing entity, thereby enabling the patent implementing entity joining the protocol to obtain a natural “immunity” against the PAEs. It is reported that there has been 95 patent implementing entities worldwide that joined the LOT protocol.