Firm sues Google, Huawei and Samsung claiming patent right
Who invented the Mobile Internet? That is the knotty question answering it which could potentially disrupt the mobile internet as we know it today. And, if you’re one of those who literally do your work and live your life on the mobile internet – and there are several millions who do globally – this is not the sort of news you want to read about.
Unfortunately, you just have to; because, the battle field has been designed and those to do duel are already identified.
Bloomberg Business captured it perhaps very succinctly, when it opened the story thus:
“Across the river from Reno’s casino district, above an Italian restaurant, you can find the little-known company that says it “invented the mobile Internet.””
As the story goes, Unwired Planet Inc. has 16 employees and no products. What it does have is a portfolio of more than 2,000 patents, mostly acquired from Ericsson AB, which it says on its website are “considered foundational to mobile communications.” The Nevada-based firm wants more than just recognition.
Now, here’s the part that will get you worrying whether your mobile internet could be disrupted soon, if the fight goes sour:
Starting next week Unwired Planet Inc. is taking on three of the world’s biggest technology companies –Samsung Electronics Co., Huawei Technologies Co. and Google Inc. — in a London courtroom for six sprawling patent trials that will last more than a year.
For the phone-makers, the cases are little more than a nuisance. They say in court documents that Unwired Planet is seeking excessive licensing fees for patents that aren’t even valid. If approved, the intellectual property could be worth hundreds of millions of dollars in royalties to Unwired Planet, which is currently valued at about $85 million.
As smartphones became ubiquitous, so did legal disputes about who invented the roughly quarter of a million proprietary gadgets in every handset. The emergence of firms that exist solely to acquire patents and wring money out of them by threatening lawsuits has led to calls in the U.S. for legislation to combat so-called patent trolls.
Hackneyed Term
“It’s become a hackneyed term that’s used in a derogatory way,” Unwired Planet general counsel Noah Mesel said. He prefers the description “patent-licensing company.”
“You can call us anything you like,” he said. “We happen to be at the point in our business cycle where what’s left is a patent portfolio.”
Patent troll is “a loaded term,” said Stephen Haber, a political science professor at Stanford University. “It might best be understood as ‘a patent licensing company that the speaker wants the listener to dislike.’”
Huawei said it would “vigorously defend its legitimate rights.” Spokesmen for Samsung and Google, which isn’t involved in the first trial, didn’t respond to an e-mail and phone call seeking comment.
How did a company most people have never heard of come to lay claim to elements found in virtually every smartphone?
“Unwired Planet at one point had 2,200 employees,” Mesel said in a phone interview. “We were in the innovation business.”
Openwave Systems
The company was once known as Openwave Systems Inc. which developed mobile software before losing ground to rivals Nokia Oyj and Ericsson and selling its products business in 2012 to focus on intellectual property.
In 2013, Ericsson agreed to transfer 2,185 patents to Unwired Planet in return for a share of whatever the company could earn licensing them: 20 percent of anything over $100 million and as much as 70 percent for income above $500 million.
Unwired Planet says Samsung, Huawei and Google used Ericsson technology: esoteric but essential components that allow a mobile phone to connect to networks. “Things that only engineers talk about,” Mesel said.
The first five trials will decide whether the patents are valid. A final trial will deal with whether Unwired Planet made a reasonable attempt to negotiate licenses for the technology.
Unwired Planet hasn’t said how much it might win if the U.K. cases are successful. A complicating factor is that the judge can only rule on British patent rights. If Unwired Planet wins, it can use the ruling as leverage for a global settlement.
“Every data point would be part of the negotiation,” Mesel said.
The company’s only previous licensing deal with Lenovo Group Ltd. in 2014 yielded $100 million. Asked whether the global rights to the patents in the U.K. cases were worth hundreds of millions of dollars, Mesel said: “I’m not going to disagree.”
Previous legal rulings have impacted its shares. An adverse preliminary decision in a U.S. case against Google in December sent the stock down nearly 40 percent.
Mark Argento, an analyst at Lake Street Capital Markets, gave Unwired Planet a ’buy’ rating on Sept. 13 and set a price target of $4.95. The company is currently trading at less than a dollar. While intellectual property is “very hard to value,” Unwired Planet’s lawsuits in the U.K. and Germany are “progressing nicely,” Argento said in an e-mail.
Efforts by Silicon Valley to push legislation in Congress to curb abusive lawsuits have been hampered by criticisms lobbed by drugmakers and even some tech companies that say provisions would weaken all patent rights.
“The losers from a world without patent litigation would, in the end, be consumers,” said Haber. Inventors won’t innovate unless they can ensure they are paid for their invention, he argued.
Still, the changing attitudes in the U.S. have made British and German courts more appealing venues for companies with patent claims and Mesel says Unwired Planet has targeted Europe.
He is undaunted by hostility towards his firm. Mesel says he once worked at the same firm as Peter Detkin, one of the attorneys who helped coin the phrase patent troll while working at Intel Corp. in the ’90s. Detkin went on to found Intellectual Ventures Management LLC, “probably one of the most widely known patent trolls on the planet,” according to Mesel.
Mesel recently had dinner with Detkin who joked that “every time someone used the term they owed him a quarter.”
The case is Unwired Planet International Ltd. v. Huawei Technologies Co. Ltd & Ors, High Court of Justice, Chancery Division, HP-2014-000005
Courtesy: BloombergBusiness