Re: [PP-DIALOG] Email from Qualcomm, Nokia, NSN and Blackberry to the

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Below please find a response to Mr. Gonnell’s second e-mail to the Standards Board, which I sent to the Standards Board. Any questions would be welcome.

Best regards,

Gil Ohana

--------------------------------------------

Dear Mr. Gonnell,

Thank you for your reply. I have noted areas of disagreement in red within the text of your e-mail.

Best regards,

Gil

From: Gonell, Fabian [mailto:fgonell@xxxxxxxxxxxx]
Sent: Friday, June 06, 2014 2:03 PM
To: Gil Ohana (gilohana); john.kulick@xxxxxxxxxxx; jrosdahl@xxxxxxxx; constantin@xxxxxxxx; peter.balma@xxxxxxxx; clint.chaplin@xxxxxxxxx; stephendukes@xxxxxxxx; jean-philippe.faure@xxxxxxxxxxxx; jskatz@xxxxxxxxxx; dlaw@xxxxxx; hling@xxxxxxxxxx; oleg.logvinov@xxxxxx; ted.olsen@xxxxxxxxxxx; glenn.parsons@xxxxxxxxxxxx; r.c.petersen@xxxxxxxx; adrian.p.stephens@xxxxxxxxx; peter.sutherland@xxxxxxxx; Yatin.Trivedi1@xxxxxxxxxxxx; f.wright@xxxxxxxx; y.yuan@xxxxxxxx; Dick.DeBlasio@xxxxxxxx; janezic@xxxxxxxxxxxxxxxx; r.h.hulett@xxxxxxxx; farooq.bari@xxxxxxx; tburse@xxxxxxxx; grhoffman@xxxxxxxxxxxxxxxx; michael.janezic@xxxxxxxx; pbwinsto@xxxxxxxxxxxxxx; joseph_I_koepfinderl@xxxxxxx; don@xxxxxxxxxxxxxxxxxxxxxxxx
Cc: Eileen Lach; d.ringle@xxxxxxxx; jari.vaario@xxxxxxxxx; kerry.miller@xxxxxxx
Subject: RE: Letter to IEEE SASB Members Regarding PatCom Activity

Dear SASB Members,

I write regarding the email I transmitted to you on behalf of Qualcomm Incorporated, Nokia Solutions and Networks Oy, Nokia Oy, and Blackberry Ltd. (collectively, the “Four Companies” and the email, the “Four Company Letter”) to reply to Gil Ohana’s response (the “Response”). Please note that this email is over my own signature, in my capacity as an employee of Qualcomm, and not on behalf of the Four Companies.

The gravamen of the Four Company Letter is that the process followed by PatCom to draft changes to the IEEE patent policy has been wholly inconsistent with the principles of “consensus, due process, openness, and balance” that the SASB is tasked with upholding. The Four Company Letter discusses each of these principles, and demonstrates by reference to specific facts how the process adopted by PatCom has fallen short.

The Response states that each of the facts asserted in the Four Company Letter (which the Response mistakenly calls “Mr. Gonell’s allegations”) “is false.” If that were true – which it is not – one would expect that the Response would be replete with references to contrary facts. But it is not. Indeed, most of the facts cited in the Four Company Letter stand unrebutted, and the Response’s attempts to rebut the remainder miss the mark.

[Gil Ohana response: I did not respond to your specific comment about Don Wright because I do not know the underlying facts. I’m not a mathematician, but I do believe that the word “most” is usually used to refer to a majority, and I responded to the majority of Mr. Gonnell’s other allegations. I also responded to what he (accurately) described as the “gravamen” (I think that means something like “focus” or “thrust”), which is the allegation by Mr. Gonnell and the other companies (Blackberry and Nokia) that co-signed the initial contribution regarding the unfounded belief that there have been procedural improprieties in the process the Patent Committee has undertaken to identify suggested revisions to the IEEE Patent Policy.]

Composition of the PatCom Ad Hoc and Lack of Balance

The Response attempts to elide the issue of the closed nature of the PatCom Ad Hoc and its lack of balance by claiming that PatCom itself “has prepared proposed text.” That is incorrect. As the PatCom minutes reflect, work on the IEEE patent policy has been carried out by an Ad Hoc led by Phil Wennblom, and not by PatCom itself. See, e.g., http://standards.ieee.org/about/sasb/patcom/0314patmins.pdf.

The Response does not dispute the following facts about the composition of the Ad Hoc and its lack of balance:

· The Ad Hoc group is restricted to persons selected by Chairman Law.

· Previous ad hocs to PatCom were open to all interested parties (see, e.g., http://grouper.ieee.org/groups/pp-dialog/email/msg00229.html).

· Past ad hoc committees considering revisions to the IEEE patent policy have included much broader and balanced participation (see, e.g., PatCom Meeting Minutes June 2006).

· When the Ad Hoc was first constituted, Chairman Law named Don Wright, who was not at that time a member of PatCom, as a member of the Ad Hoc, while excluding all other non-PatCom members.

· There has never been any explanation as to why Don Wright, who is a consultant to a company supporting the changes, merited such special treatment.

· From the outset the Ad Hoc has been dominated by employees or consultants of companies that for the past two years have been seeking to change the patent policies of other standards organizations around the world to devalue the essential patents of others.

[Gil Ohana response: The concern Mr. Gonnell expresses about a lack of balance within the Ad Hoc Committee is silly. The Ad Hoc was tasked with identifying a set of proposed revisions to the Patent Policy. Every step that the Ad Hoc took following its formation was informed by the views of participants in a series of Patent Committee meetings that we both attended (along with many others) and in a series of requests for comments (in which I believe Mr. Gonnell’s Qualcomm colleague Dan Hermele was the single most active commenter). The output of the process will be subject to a vote of the Patent Committee, and to subsequent votes at the Standards Board and the Board of Governors.

Perhaps before Mr. Gonnell criticizes the process that was used, he should identify an alternative process that he believes would have been more effective. An open call for participants would have resulted in the creation of a large, unwieldy group that would have been unable to decide a path forward in a reasonable amount of time. If members of the Standards Board want to evaluate the merit of that prediction, they may wish to reflect on the processes at ETSI and ITU-T, which, despite over ten multi-day meetings over the past few years, have been unable to reach consensus on text. Maybe the IEEE Standards Association, cognizant by June of 2013 of the progress (or lack thereof) in those two processes, and mindful of the views expressed by competition enforcers regarding the risks of patent holdup, self-consciously chose a different path, one that would be less susceptible to the tactics of delay that some companies have used (and used, and used) at other bodies. Qualcomm, Blackberry, Nokia, and other companies (including Cisco) have had ample opportunities to express their views at the meetings and in the commenting process. Those who (like Qualcomm, Blackberry, and Nokia) disagree with the changes proposed in the latest draft circulated by the Ad Hoc can also take comfort in the multiple levels of review to which the output of the Ad Hoc will be subjected.

To get back to a point I made in my response to Dina Kallay of Ericsson, Mr. Gonnell seems to regard the IEEE Standards Association’s choice of a process that is different from the processes used at ETSI and ITU-T as in some sense inherently suspect. There may be essential patents, but there are no “essential” processes that a standards development organization must use to evaluate potential changes to its own IPR policy. The IEEE Standards Association has chosen its own path, including what must have been very time consuming comment-by-comment reviews and responses to voluminous comments submitted by participants and several open meetings of the Patent Committee, at each of which Qualcomm actively participated (as did Cisco).]

Lack of Openness

The Response seems to suggest that sending proposed changes to a public reflector and soliciting input by itself satisfies the IEEE’s openness requirements. We disagree. In the IEEE, “Openness is defined as the quality of being not restricted to a particular type or category of participants. All meetings involving standards development shall be open to all interested parties.” IEEE-SA Standards Board Bylaws section 5.2.1.4.

[Gil Ohana response: As I pointed out to Dina Kallay in my response to her contribution, I’m unsure what Mr. Gonnell feels he and Qualcomm were excluded from.

As an initial matter, I will leave it to IEEE counsel to advise as to whether the Bylaws section you quote applies to the development of revisions to the Bylaws themselves. I am curious whether in the past, participation in meetings to discuss changes to the Bylaws (of which the Patent Policy forms a part) have been conducted in open meetings open to the entire membership of the Standards Association, which is what you apparently are proposing should be the rule.

Now looking at the first sentence of the Bylaws text Mr. Gonnell quotes, given Qualcomm’s extensive participation in the Patent Committee meetings and the commenting process, I will admit to be struggling to understand how Qualcomm can credibly argue that the revision process was “restricted to a particular type or quality of participants.” Unlike, Qualcomm’s patent licensing program, the discussion at the Patent Committee and the ability to make comments to the Ad Hoc was open to both chipset vendors (going from memory, Broadcom, Intel, and Qualcomm itself all participated) and device vendors (Apple, Cisco, Ericsson, Hewlett-Packard, Huawei, and Nokia all participated). It was open both to companies that have significant licensing programs for standards essential patents (Ericsson, Nokia, and Qualcomm, to name some) and those that do not (Apple, Cisco, Broadcom, and Intel).]

The Response does not dispute the following facts about the lack of openness in the Ad Hoc:

· None of the proposed changes to the IEEE-SA patent policy has been openly attributed to any particular member of the Ad Hoc, nor has there been any requirement that the proponent of a change publicly justify it or provide any rationale or evidence for any supposed problem with the current patent policy that might merit such change.

· None of the deliberations of the Ad Hoc have been open to non-members, and there has been no public announcement of any vote taken by the Ad Hoc.

[Gil Ohana response: Mr. Gonnell should explain why it important that each change be “openly attributed to any particular member of the Ad Hoc”. The Ad Hoc received numerous comments, and responded to them. I have no idea how the Ad Hoc’s members decided how to respond to particular comments or who played what role in the discussions. But I know something far more important: the disposition of each comment, including reasons. I believe that the justification for the Ad Hoc was identified at the initiation of the Ad Hoc as a response to statements from competition enforcers, including Assistant Attorney General Renata Hesse’s Six Small Proposals speech (for the benefit of members of the Standards Board, I am taking the liberty of attaching that speech to this e-mail).

I suspect that Qualcomm, which has a large and lucrative licensing program, disagrees with many of those proposals. For that matter, Qualcomm may well disagree that there is such a thing as opportunistic behavior by owners of standards essential patents. Proving to Mr. Gonnell’s satisfaction that there are, indeed, “problem[s] with the current patent policy that might merit” revisions would, therefore, have been difficult. Fortunately, no single Standards Association member or company has a veto over decisions the Patent Committee makes regarding whether to form an Ad Hoc group. Equally fortunately, the process that this Ad Hoc group followed was entirely transparent to those of us (you and me both) that were not selected for participation in the Ad Hoc, and the output of the Ad Hoc is subject to multiple levels of review. One is left to wonder whether the underlying problem is that Qualcomm is unhappy with the result of the Ad Hoc, and are using any argument it can find to try to delay a vote on the work of the Ad Hoc.]

Lack of Consensus

The Response does not even mention the word “consensus.” It is indisputable that the changes currently being proposed by PatCom do not enjoy consensus. Moreover, the Response does not dispute that even within the Ad Hoc the proceedings are by bare majority vote and not by consensus.

[Gil Ohana response: I believe that IEEE Standards Association counsel discussed the significance of consensus to the process at one of the Patent Committee meetings, and I will let IEEE counsel respond on this point if she chooses to do so.]

Lack of Due Process

The Response does not dispute that the sole method by which interested parties may submit comments on the draft changes to the IEEE-SA patent policy to the Ad Hoc is by using a spreadsheet formula used in technical standards development in the 802.3 Working Group. Nor does the letter dispute that redlines and other markups of the proposed document were expressly prohibited, and that commenters have no procedural recourse (for example, by maintaining a “no” vote and thereby ensuring that their comments get escalated to the next stage of the process, as is usually the case in standards development) if their concerns are ignored or brushed aside.

[Gil Ohana response: I believe that Mr. Gonnell is arguing that Qualcomm was denied due process because it and other participants in the comment process were unable to submit a markup of the entire policy. If that’s right, Mr. Gonnell may wish to say so. I will point out that commenters (including Qualcomm) were able to propose specific text changes, sometimes numerous text changes. If Mr. Gonnell thinks the IEEE Standards Association violated his or Qualcomm’s due process rights because they sought comments in a particular format, then he has a unique view of what constitutes due process.]

Instead, the Response argues that the SASB should disregard the lack of the procedural safeguards normally present in standards development because it can review for itself the comment dispositions. Such optional review, however, is not a substitute for a process in which a continuing objection is formally recorded and the objector’s concerns are automatically escalated to the next level.

[Gil Ohana response: Perhaps Mr. Gonnell misunderstood what I said. I did not justify the Standards Board overlooking “the lack of the procedural safeguards normally present in standards development”. I wrote that there was no lack of procedural safeguards. The commenting process was open, and your company used it extensively. Each of the comments submitted received a response, in some cases a very detailed response. Qualcomm’s objections, like the comments submitted by every other company, are available for every member of the Standards Board to see as he or she decides how to vote if the proposed revisions to the Bylaws are presented to the Standards Board for approval. On behalf of Qualcomm, Mr. Gonnell has also summarized his objections in a series of communications to the Standards Board (to which I have responded).

It appears that Mr. Gonnell is trying his best to magnify the fact that Qualcomm (like Cisco) was not invited to have a representative in the Ad Hoc in the hope of casting doubt on the integrity of the process that the Standards Association has followed. That is Qualcomm’s right. For that matter, Mr. Gonnell is also free to rent a billboard on the side of Hoes Lane or hire a skywriter to express Qualcomm’s positions in the heavens above Piscataway this week. In light of the range of ways companies have to make their objections to the work of the Ad Hoc known, arguing that particular objections will not reach the Standards Board seems unconvincing.]

With respect to the lopsided record of comment rejections cited in the Four Company Letter, the Response argues that disparate treatment of the Four Companies’ comments was justified because the Four Companies raised procedural objections in addition to substantive objections. While we disagree with that argument, it is non-responsive to the point made in the Four Company Letter. The Four Company Letter compared the acceptance rate of comments from companies with representatives on the Ad Hoc with the acceptance rates of comments from IBM and GTW Associates. The Response provides no justification for the disparate treatment of those companies’ comments.

[Gil Ohana response: I made a different point, which is that the process of seeking to determine bias by looking at relative rejection rates is a fool’s errand. Some companies chose to submit numerous, in many cases repetitive, comments. Others took a more rifle shot approach. I suspect that the latter approach led to fewer rejections. Is that a concern? In any case, what is special about the process the Ad Hoc chose to use (compared to the parallel processes at ETSI and ITU-T) is that the entire record of comments and responses is available, as noted earlier, to each member of the Standards Board to see. They can make their decision based on the information before them, including the multiple rounds of comments submitted to the Ad Hoc and the Ad Hoc’s responses.]

* * *

The fundamental disagreement between the Four Company Letter and the Response is over whether the Ad Hoc’s process is one that “is familiar to developers of IEEE standards.” In that regard, we urge you to consider the following:

· IEEE standards meeting are open for people to attend. The Ad Hoc meetings are closed private meetings.

· At IEEE comment resolution meetings the person who submitted the comment is permitted to speak to his comment. In the Ad Hoc the submitter is not permitted to attend the meeting.

· At an IEEE comment resolution meeting votes on comment resolutions are recorded in the minutes and those minutes are made public for anyone to read. In the Ad Hoc, it is unclear if detailed voting minutes are kept since there are no public minutes made available.

· In IEEE standards development unresolved comments are forwarded to RevCom and the process is scrutinized to ensure that the comment was considered by a broad group of people voting on the draft. If the Ad Hoc rejects a comment the commenter has no recourse.

[Gil Ohana response:

IEEE standards meeting are open for people to attend. The Ad Hoc meetings are closed private meetings. [The results of the Ad Hoc meetings, notably the detailed review of and response to comments, is available for anyone to see. Patent Committee meetings at which the work of the Ad Hoc was discussed during the course of that work were also available for anyone to attend. The recommendations of the Ad Hoc are subject to multiple levels of review.]
At IEEE comment resolution meetings the person who submitted the comment is permitted to speak to his comment. In the Ad Hoc the submitter is not permitted to attend the meeting. [Companies submitted extended comments to the Ad Hoc, each of which was reviewed and each of which received a response. Qualcomm should identify what additional value of procedural fairness would have been served by letting participants “speak to” their comments.]
At an IEEE comment resolution meeting votes on comment resolutions are recorded in the minutes and those minutes are made public for anyone to read. In the Ad Hoc, it is unclear if detailed voting minutes are kept since there are no public minutes made available. [The revisions proposed by the Ad Hoc will be voted on by the Patent Committee in a vote that will be recorded and reflected in public minutes. If the test of procedural fairness is that decisions made are publicly accessible, then it is especially difficult to understand Qualcomm’s objections to the work of the Ad Hoc, whose decisions are entirely accessible through the comment disposition reports.]
In IEEE standards development unresolved comments are forwarded to RevCom and the process is scrutinized to ensure that the comment was considered by a broad group of people voting on the draft. If the Ad Hoc rejects a comment the commenter has no recourse. [The proponent of a rejected comment has the opportunity to note any rejected comment to the Standards Board to be included as part of the Standards Board’s consideration of whether to approve the revisions proposed by the Ad Hoc, following a vote by the Patent Committee.]

We respectfully submit that the SASB would be obliged to reject a proposed standard that was developed by a group (a) that is closed and unbalanced; (b) that met in secret; (c) that did not operate by consensus; and (d) that provided non-members of the group with no procedural recourse to ensure that their concerns were addressed in a fair and impartial manner. So, too, should the SASB reject revisions to the IEEE patent policy developed in such a manner. We urge the SASB to grant the Four Companies’ request to direct PatCom to (1) open up the Ad Hoc to all interested participants, and reflect the principle of balance; (2) require that the Ad Hoc conduct itself consistent with the principle of openness; (3) require that the Ad Hoc make decisions by consensus, with particular attention to making a “concerted effort” to resolve all objections; and (4) require that the Ad Hoc adopt procedures that will ensure due process.

[Gil Ohana response: Members of the Standards Board may choose to reflect on the motives of Qualcomm and other companies that seek to attack the Ad Hoc. Those companies are seeking to delay action by the Standards Board. They do so because the proposed revisions under discussion will restore balance to the standards development process, by, among other things:

· Specifying the limited circumstances when the owner of a patent that is essential to implement an IEEE standard can gain leverage in licensing negotiations by threatening or seeking to exclude from the marketplace products made by the implementer of an IEEE standard

· Clarifying that the phrase “to an unrestricted number of applicants” in the IEEE Letter of Assurance form means what it says: a patent owner that commits to license a patent to an implementer of an IEEE standard cannot “pick and choose” among potential licensees, by, for example, refusing to license at the chipset level in favor of licensing to device vendors only

· Providing a set of principles as to what licensing terms are compliant with the requirement to grant licenses on “reasonable and nondiscriminatory” terms and conditions, which will facilitate the resolution of licensing disputes outside of litigation and assist judges called upon to decide those disputes that do wind up in court.

The modest set of changes proposed will increase the appeal of the IEEE as a place where innovative new standards should be developed, which is one reason the changes enjoy the support of innovative companies like Broadcom, Cisco and Intel. But they threaten the licensing businesses of Qualcomm, Nokia, and other companies that have opposed the changes, and who now benefit from the unlimited ability to threaten prospective licensees with injunctions, from licensing programs under which they discriminate between companies at different levels of the value chain, and from the lack of guidance as to what RAND means.

Those companies could have approached the Standards Board with reasoned arguments as to why the changes the Ad Hoc may choose are unnecessary or unwise. Apparently, they prefer to create procedural FUD. Members of the Standards Board can reflect for themselves as to what this choice of tactics says about the strength of the arguments that Qualcomm and others would be able to muster regarding the merits of what the Ad Hoc may propose.

I would be happy to answer questions from members of the Standards Board regarding this response.

Best regards,

Gil Ohana]

Respectfully,

Fabian D. Gonell

VP, Division Counsel

QUALCOMM Incorporated

5775 Morehouse Drive

San Diego CA 92121

From: Gonell, Fabian [mailto:fgonell@xxxxxxxxxxxx]
Sent: Friday, June 06, 2014 3:02 PM
To: PP-DIALOG@xxxxxxxxxxxxxxxxx
Subject: Re: [PP-DIALOG] Email from Qualcomm, Nokia, NSN and Blackberry to the Members of the SASB

Dear Colleagues,

Below is a second email that I transmitted to the members of the SASB today.

Best regards,

--Fabian

Dear SASB Members,

Composition of the PatCom Ad Hoc and Lack of Balance

The Response does not dispute the following facts about the composition of the Ad Hoc and its lack of balance:

• The Ad Hoc group is restricted to persons selected by Chairman Law.

• Previous ad hocs to PatCom were open to all interested parties (see, e.g., http://grouper.ieee.org/groups/pp-dialog/email/msg00229.html).

• Past ad hoc committees considering revisions to the IEEE patent policy have included much broader and balanced participation (see, e.g., PatCom Meeting Minutes June 2006).

• When the Ad Hoc was first constituted, Chairman Law named Don Wright, who was not at that time a member of PatCom, as a member of the Ad Hoc, while excluding all other non-PatCom members.

• There has never been any explanation as to why Don Wright, who is a consultant to a company supporting the changes, merited such special treatment.

• From the outset the Ad Hoc has been dominated by employees or consultants of companies that for the past two years have been seeking to change the patent policies of other standards organizations around the world to devalue the essential patents of others.

Lack of Openness

The Response does not dispute the following facts about the lack of openness in the Ad Hoc:

• None of the proposed changes to the IEEE-SA patent policy has been openly attributed to any particular member of the Ad Hoc, nor has there been any requirement that the proponent of a change publicly justify it or provide any rationale or evidence for any supposed problem with the current patent policy that might merit such change.

• None of the deliberations of the Ad Hoc have been open to non-members, and there has been no public announcement of any vote taken by the Ad Hoc.

Lack of Consensus

Lack of Due Process

* * *

• IEEE standards meeting are open for people to attend. The Ad Hoc meetings are closed private meetings.

• At IEEE comment resolution meetings the person who submitted the comment is permitted to speak to his comment. In the Ad Hoc the submitter is not permitted to attend the meeting.

• At an IEEE comment resolution meeting votes on comment resolutions are recorded in the minutes and those minutes are made public for anyone to read. In the Ad Hoc, it is unclear if detailed voting minutes are kept since there are no public minutes made available.

• In IEEE standards development unresolved comments are forwarded to RevCom and the process is scrutinized to ensure that the comment was considered by a broad group of people voting on the draft. If the Ad Hoc rejects a comment the commenter has no recourse.

Respectfully,

Fabian D. Gonell

VP, Division Counsel

QUALCOMM Incorporated

5775 Morehouse Drive

San Diego CA 92121

From: Gil Ohana (gilohana) [mailto:gilohana@xxxxxxxxx]
Sent: Friday, June 06, 2014 2:35 PM
To: PP-DIALOG@xxxxxxxxxxxxxxxxx
Subject: Re: [PP-DIALOG] Email from Qualcomm, Nokia, NSN and Blackberry to the Members of the SASB

Thanks Dina. While the “closed doors” metaphor is a powerful one, it may be helpful if you could be more specific as to what “doors” were “closed” to Ericsson. Specifically:

1. The door to four (as of next Tuesday, five) meetings of the Patent Committee were open to Ericsson, as it was open to many other companies. Indeed, I believe Ericsson attended each of those meetings, with multiple representatives, who actively participated in the discussion. So the door to live participation at public Patent Committee meetings was, as far as I can tell, wide open.

2. The door to submission of comments was open to Ericsson, again, just as it was open to many other companies. To reassure myself of the validity of that statement, I went back and reviewed the series of responses to comments released by the Patent Committee to count the number of comments submitted by Ericsson, many of which list you as the author. Here is what I learned:

a. Comment Disposition Report issued by the Patent Committee on November 14, 2013: Ericsson submitted comments 123-137 (14 comments)

b. Comment Disposition Report issued by the Patent Committee on March 4, 2014: Ericsson submitted comments 36-51 (15 comments)

c. Comment Disposition Report issued by the Patent Committee on May 10, 2014: Ericsson submitted comments 48-60 (12 comments)

d. Comment Disposition Report issued by the Patent Committee on May 26, 2014: Ericsson submitted comments 110-125 (15 comments)

In total, Ericsson submitted 56 comments over four comment periods. So you can hardly claim to have been deprived of the right to submit comments. That door, too, was open wide.

3. I think the focus of your complaint is that you were not able to participate in the meetings of the Patent Committee at which decisions were made as to how to respond to the comments that you and other participants submitted. I was similarly disadvantaged. I take comfort in the fact that I received a substantive response to each of the comments I submitted that included a proposed disposition and the reasons for that disposition. The various comment dispositions are available to any interested party on a website, so that they can decide whether the comments I submitted (and the comments you and others submitted) were resolved fairly. I would also note that at some of those meetings, an Ericsson employee (Glenn Parsons, in the latest example of an illustrious career of service to the Institute and the Standards Association) participated as member of the Patent Committee. Since in their comments others (Qualcomm, Blackberry, and the Nokias) have made much of the participation on the Patent Committee of company representatives from companies whose views they disagree with, I hope you won’t mind me noting the participation of an employee of the same company you work for. The door to the meetings of the Patent Committee was open to Ericsson, if not to you personally.

4. Which brings me to my last point: when I distill the concern I have heard you express, and the concern in the earlier comment from Qualcomm, Blackberry, and the Nokias, what I come up with is that the IEEE Standards Association has chosen to conduct its review of its IPR policy in a different way than the ITU or ETSI have chosen to structure theirs. The process at those organizations has consisted of frequent, multi-day meetings at which little actual drafting has been accomplished, but we have both heard lots of long expositions of the positions different companies take. The IEEE process has been structured differently. Meetings have been less frequent and (mercifully, not that I don’t enjoy my time in Piscataway) shorter. The process has emphasized written contributions, each of which has been followed by a detailed response. The record of comments and responses is, as noted previously, available for anyone to see in documents posted to the Patent Committee website. Some companies have chosen to use their responses to make statements of their positions akin to informational contributions at ETSI and ITU (I am pasting a copy of one of your comments at the end of this e-mail so that people can see what I mean). Others have chosen to focus on specific textual suggestions, and some (including Ericsson) have done both.

You seem to view this process as inherently suspect, but you need to go beyond stressing the differences between how the IEEE Standards Association has chosen to structure its process and the processes at ETSI and ITU to explaining how, precisely, Ericsson and other companies that (like Cisco) have not participated in the meetings of the Patent Committee have been prejudiced. Has the response to your comments been insufficiently detailed? Have you been denied the opportunity to be heard at meetings? You speak of doors that have been closed to you, but I’m struggling to understand what doors you mean. The door is open to you to explain.

5. I’m not really sure how to respond to your comment regarding the effect of the language on future IEEE standards. All I can say is that quite a few large, innovative companies that both contribute patented technology to and implement IEEE standards (including my company, which is the largest implementer of both 802.3 and 802.11 in the world) believe strongly that the interests of standards development would be well served by the adoption of rules that limit reduce the risk that we will (again) be held up by patentees (often, at least in Cisco’s experience, patent trolls) that own patents that they claim are essential to implement IEEE standards. If hope that what Ericsson is saying is not “if denied the opportunity to engage in hold up involving IEEE standards we will avoid the IEEE.” That attitude would be unworthy of your company’s proud history in the forefront of many innovations in telecommunications.

Best regards,

Gil Ohana

----------------------------------------

Attempting to define “Reasonable Rate” [Comment 116 from May 26, 2014 Comment Disposition Report]

Any determination of what constitutes a “reasonable rate” is highly fact-specific and

depends on all the facts and circumstances of the particular case. Not all circumstances

can be predicted in advance.

For that reason, Ericsson objects to the narrow definition proposed in rows 46-56

The Georgia Pacific factors set out 15 evidentiary rules aimed at assisting in calculating

adequate royalties/damages. It is unclear why the Ad-Hoc has chosen to focus on two of

specific evidentiary rules, and thus render them more important than other. In addition the

second proposed rules, in lines 54-56 is divorced from market reality, because in practice it

is the added value to the *end user* that dictates how much more a consumer would be

willing to pay for a product that implements proprietary technology.

Furthermore, the policy should reflect the existing industry practice by relating to end-user

products, rather than components or the “smallest saleable Compliant Implementation”.

There is also no way to define a “smallest saleable” implementation in standard setting

contexts. Therefore the reference to “smallest saleable Compliant Implementation” is also

impractical, and therefor fails to improve the clarity that the proposed amendments allegedly

aim to achieve. Another reason for the importance of deleting the term “smallest saleable

Compliant Implementation” is the fact that the value discussed here should be the value to

the end user. The value of the patented technology to a component is not measured on the

component level, but rather on the end user’s experience level. Consideration of the

Essential Patents’ contribution to the end-user implementation of the applicable standard is

a well-accepted factor in RAND licensing and has been used as a baseline metric in

numerous completed arms-length license agreements between willing parties per the

Georgia-Pacific standard. This concept, however, is essentially absent from the proposed

“Reasonable Rate” definition and the ad-hoc Committee has previously rejected Ericsson’s

proposal for consideration of comparable license agreements as part of the determination of

value.

By contrast, the proposed “Reasonable Rate” definition makes exclusive reference linking

considerations of “value” to the functionality of the “smallest saleable Complaint

Implementation.” Ericsson believes this is merely another means to try and impose a

change in industry practice and understanding from end-use device licensing to compulsory

component level licensing. Ericsson believes that the intent and effect of the ad-hoc

Committee’s proposed amendment is to drive down licensing rates to sub-RAND levels.

This intent was made clear, inter alia, through the rejection of Ericsson’s comment #128 in

the December 2013 CD Document that requested that comparable licenses be added as a

primary “reasonable rate” factor. As you may be aware, comparable licenses i.e. royalty

rates already paid by existing licensees, are repeatedly recognized by U.S. case law as the

most useful Georgia Pacific factor element for evaluating the reasonableness of royalties.

Therefore ongoing rejection of Ericsson’s comment previous proposal to add this factor, by

a drafting committee that comprises of individuals working for Intel, Apple, and Hewlett

Packard suggests a collective intention to drive royalties down from where they are under

current applicable law.

Ericsson repeats and reiterates the principles expressed in Comment #38 of the December

2013 CD Document, especially the fact that the U.S. Department of Justice business review

letter to IEEE does not authorize collective rate bargaining by licensees.

Furthermore, the ad-hoc’s response to Comment # 52 in the May CD Document referred

loosely to “regulators” who may have “suggested that standard setting organizations explore

setting guidelines on what constitutes a FRAND rate”

Although antitrust enforcement is different from regulation, to the extent that the drafting

committee meant to suggest that such a supposed “suggestion to explore” originated from

antitrust enforcers and justifies the proposed changes in any way, it is important to set the

record straight in this regard.

The joint 2007 DOJ-FTC “Antitrust Enforcement and Intellectual Property Rights: Promoting

Innovation and Competition” Report, that is available online at

http://www.ftc.gov/reports/antitrust-enforcement-intellectual-property-rights-promotinginnovation-

competition-report

includes a chapter (Chapter 2) titled: “Competition Concerns when patents are Incorporated

into Collaboratively set Standards”. That chapter, that summarizes the FTC And DOJ policy

in this area states that:

“Neither Agency advocates that SSOs adopt any specific disclosure or licensing policy, and

the Agencies do not suggest that any specific disclosure or licensing policy is required”

To the extent that the term “regulators” referred to “antitrust agencies”, the ad-hoc’s

response in this regard is, at best, unconvincing.

SuggestedRemedy

Proposed new text in lines 46-56 should be deleted.

In the alternative, should the the ad-hoc group insist on inserting a new “Reasonable Rate”

term definition into the patent policy, Ericsson proposes the following textinstead of the new

text currently proposed in lines 46-56:

“Reasonable Rate” shall mean compensation that is based on all relevant factors for

determining reasonable patent compensation under applicable law.

From: Dina Kallay [mailto:dina.kallay@xxxxxxxxxxxx]
Sent: Friday, June 06, 2014 11:48 AM
To: PP-DIALOG@xxxxxxxxxxxxxxxxx
Subject: Re: [PP-DIALOG] Email from Qualcomm, Nokia, NSN and Blackberry to the Members of the SASB

As reflected, repeatedly, in multiple comments submitted to PatCom, Ericsson is similarly troubled by the process through which the PatCom group formed the closed ad-hoc Committee that meets in closed doors to consider far-reaching changes to the IEEE-SA Bylaws’ patent chapter.

Furthermore, we believe that, if adopted as such, the proposed new language may compromise future IEEE-SA standards.

Sincerely,

Dina

DINA KALLAY, SJD
Director, Intellectual Property & Competition

ERICSSON, INC.
1776 Eye Street, NW, Suite 240
Washington, DC 20006, USA

Tel +1-202-824-0115
Mobile +1-202-758-7601
Dina.Kallay@xxxxxxxxxxxx
www.ericsson.com

Ericsson

This communication is confidential. Communication from and to Ericsson is sent and received under the terms set out at www.ericsson.com/email_disclaimer

From: Gonell, Fabian [mailto:fgonell@xxxxxxxxxxxx]
Sent: Friday, June 06, 2014 4:18 AM
To: PP-DIALOG@xxxxxxxxxxxxxxxxx
Subject: [PP-DIALOG] Email from Qualcomm, Nokia, NSN and Blackberry to the Members of the SASB

Dear Colleagues,

Below please find an email I transmitted on behalf of the signatory companies (Qualcomm, Nokia, NSN, and Blackberry) to the members of the SASB yesterday morning.

Best regards,

--Fabian

From: Gonell, Fabian
Sent: Thursday, June 05, 2014 9:15 AM
To: 'john.kulick@xxxxxxxxxxx'; 'jrosdahl@xxxxxxxx'; 'constantin@xxxxxxxx'; 'peter.balma@xxxxxxxx'; 'clint.chaplin@xxxxxxxxx'; 'stephendukes@xxxxxxxx'; 'jean-philippe.faure@xxxxxxxxxxxx'; 'jskatz@xxxxxxxxxx'; 'dlaw@xxxxxx'; 'hling@xxxxxxxxxx'; 'oleg.logvinov@xxxxxx'; 'ted.olsen@xxxxxxxxxxx'; 'glenn.parsons@xxxxxxxxxxxx'; 'r.c.petersen@xxxxxxxx'; 'Adrian.P.Stephens@xxxxxxxxx'; 'peter.sutherland@xxxxxxxx'; 'Yatin.Trivedi1@xxxxxxxxxxxx'; 'f.wright@xxxxxxxx'; 'y.yuan@xxxxxxxx'; 'Dick.DeBlasio@xxxxxxxx'; 'janezic@xxxxxxxxxxxxxxxx'; 'r.h.hulett@xxxxxxxx'; 'farooq.bari@xxxxxxx'; 'tburse@xxxxxxxx'; 'grhoffman@xxxxxxxxxxxxxxxx'; 'michael.janezic@xxxxxxxx'; 'pbwinsto@xxxxxxxxxxxxxx'; 'joseph_I_koepfinderl@xxxxxxx'; 'don@xxxxxxxxxxxxxxxxxxxxxxxx'
Cc: kerry.miller@xxxxxxx; Jari.Vaario@xxxxxxxxx; 'Michael Froehlich'
Subject: Letter to IEEE SASM Members Regarding PatCom Activity

Dear SASB Members,

The undersigned companies write regarding proposed revisions to the IEEE-SA patent policy, which we understand may be presented to SASB for a final vote on June 12, 2014, to document our continuing objection to the process followed by PatCom, and to request the intervention of the SASB. The process has been wholly inconsistent with the principles of “consensus, due process, openness, and balance” that the SASB is tasked with upholding. See http://standards.ieee.org/about/sasb/.

PatCom has been developing revisions to the IEEE-SA Standards Board Bylaws which, if adopted, would fundamentally and radically change the IEEE-SA patent policy. These revisions are substantially similar to revisions proposed to the patent policies of other standards organizations such as ETSI and ITU-T which have been discussed at great length over the last 2 years but are highly controversial and have not met with majority let alone consensus support in those organizations. These proposed revisions have not been adopted in any standards organization in the world. Adopting these revisions in IEEE-SA would have a profound impact upon IEEE standards and the IEEE standards process. In our view, the proposed revisions are fundamentally unbalanced and represent the commercial interests of only a subset of IEEE-SA members to the detriment of others. Some members may decide to reduce participation or withdraw from IEEE-SA altogether, no longer submit contributions, or not file LoAs. This could result in a reduction in the quality of IEEE standards, put more of a patent focus rather than technical focus in the technical groups, and increase the uncertainty surrounding the patents relating to a standard. Due to this profound impact, it is extremely important that IEEE-SA and its subgroups fully understand all the implications of this level of change in the patent policy and fully adhere to “consensus, due process, openness, and balance” in developing and deciding on whether to adopt these revisions.

We have at least the following specific concerns regarding the processes followed by PatCom:

Composition of the PatCom Ad Hoc and Lack of Balance

The Ad Hoc group - the only avenue through which PatCom is currently accepting proposed revisions to the IEEE patent policy - is restricted to persons selected by Chairman Law. This contrasts with previous practice, in which ad hocs to PatCom were open to all interested parties (see, e.g., http://grouper.ieee.org/groups/pp-dialog/email/msg00229.html). Indeed, past ad hoc committees considering revisions to the IEEE patent policy have included much broader and balanced participation (see, e.g., PatCom Meeting Minutes June 2006).

Moreover, Chairman Law has not selected members of the Ad Hoc by a fair and open process. When the Ad Hoc was first constituted, Chairman Law named Don Wright, who was not at that time a member of PatCom, as a member of the Ad Hoc, while excluding all other non-PatCom members. There has never been any explanation as to why Don Wright, who is a consultant to a company supporting the changes, merited such special treatment, and such special treatment is all the more troubling as we understand that Mr. Wright is the primary author of the far-reaching changes in the draft revisions.

Indeed, from the outset the Ad Hoc has been unbalanced in that it has been dominated by employees or consultants of companies that for the past two years have been seeking to change the patent policies of other standards organizations around the world to devalue the essential patents of others. Such dominance would be impermissible in an IEEE-SA technical body and should not have been artificially created by Chairman Law.

Lack of Openness

Section 5.2.1.4 of the IEEE-SA Standards Board Bylaws provides that “Openness is defined as the quality of being not restricted to a particular type or category of participants. All meetings involving standards development shall be open to all interested parties.” Similarly, section 5.3.3 of the IEEE-SA Standards Board Operations Manual states that “Standards development meetings are to be conducted consistent with the principle of openness.”

These principles have been sadly lacking in the work of the Ad Hoc. Instead, the Ad Hoc has shrouded its work in secrecy. None of the proposed changes to the IEEE-SA patent policy has been openly attributed to any particular member of the Ad Hoc, nor has there been any requirement that the proponent of a change publicly justify it or provide any rationale or evidence for any supposed problem with the current patent policy that might merit such change. None of the deliberations of the Ad Hoc have been open to non-members, and there has been no public announcement of any vote taken by the Ad Hoc. This secrecy stands in stark contrast to not only the IEEE’s stated principles, but also the practices of every major standards organization that is considering similar issues. Moreover, this secrecy is particularly troubling in the context of the IEEE where committee members have fiduciary duties and are required to avoid conflicts of interest (see http://standards.ieee.org/about/sasb/nmo_ct.pdf).

Lack of Consensus

The foundation of standards development in the IEEE is a consensus-based approach. The IEEE-SA Bylaws define consensus as follows: “Consensus is established when, in the judgment of the IEEE-SA Standards Board, substantial agreement has been reached by directly and materially affected interest categories. Substantial agreement means much more than a simple majority, but not necessarily unanimity. Consensus requires that all views and objections be considered, and that a concerted effort be made toward their resolution.”

This principle, too, has been absent from the Ad Hoc. The drafters of the proposed changes to the IEEE-SA patent policy have not made a “concerted effort” to resolve objections raised by the undersigned companies. Indeed, in certain respects the proposed changes have become more objectionable, not less. Moreover, we understand that since at last the beginning of 2014 the Ad Hoc has been proceeding by a bare majority vote, and not the “much more than a simple majority” that consensus requires.

Lack of Due Process

Chairman Law decreed that the sole method by which interested parties may submit comments on the draft changes to the IEEE-SA patent policy to the Ad Hoc is by using a spreadsheet formula used in technical standards development in the 802.3 Working Group. See, e.g., http://grouper.ieee.org/groups/pp-dialog/email/msg00242.html. Redlines or other markups of the proposed document were expressly prohibited. See, e.g., http://grouper.ieee.org/groups/pp-dialog/email/msg00249.html. A limited time for verbal input has been allowed at PatCom meetings, but Chairman Law has announced each time that for comments to be considered they must be submitted using the tool.

It is strange that part of the process used by 802.3 was adopted, yet the core aspects of comment resolution which ensure fair treatment for all were not adopted. In any IEEE group, draft standards must be adopted by consensus. Commenters whose objections are ignored or brushed aside have the option to maintain their objections, which, even if the chair declares consensus, must be forwarded to the next level in the standards approval process. Here, PatCom is not working by consensus even in the Ad Hoc, and it is not even trying to determine whether there is a consensus amongst all interested parties. Thus, there is no due process check against arbitrary treatment of comments as commenters have no recourse if their comments have been rejected by the Ad Hoc, or if they believe they have been treated unfairly.

This lack of due process has resulted in a stark difference between how the Ad Hoc treats comments submitted by companies that for the past two years have been seeking to change the patent policies of other standards organizations around the world to devalue standards essential patents and comments submitted by others. For example, in the first set of comment dispositions, the Ad Hoc accepted 100% of Intel’s comments (see comments 207-212) and 66% of Apple’s comments (see comments 149-157), but only 25% of IBM’s comments (see comments 234-253) and 19% of GTW Associates’ comments (see comments 284-299). The Ad Hoc has rejected comments by Qualcomm and Ericsson at even greater rates.

* * *

The undersigned companies have repeatedly urged PatCom and Chairman Law to open the Ad Hoc to all interested participants and to adopt a consensus-based approach but have been repeatedly rebuffed. By this email, we ask the SASB to intervene. Specifically, we request that the SASB direct PatCom to (1) open up the Ad Hoc to all interested participants, and reflect the principle of balance; (2) require that the Ad Hoc conduct itself consistent with the principle of openness; (3) require that the Ad Hoc make decisions by consensus, with particular attention to making a “concerted effort” to resolve all objections; and (4) require that the Ad Hoc adopt procedures that will ensure due process.

Respectfully submitted,

Qualcomm Incorporated

Nokia Solutions and Networks Oy

Nokia Oy

Blackberry Ltd