Unreasonably-Low Royalties in Top-Down FRAND-Rate Determinations for TCL V. Ericsson
25 Pages Posted: 1 May 2018
Date Written: April 30, 2018
While Ericsson is a leading contributor to mobile communications standards, a US District Court in California has significantly undervalued Ericsson’s standard-essential patents (SEPs) by relying heavily on flawed “top-down” valuation analysis that prorates royalties by company for 2G, 3G and 4G based on SEP counting. This analysis applies a series of inaccurate assumptions which whittle down royalty rates from an understated notional maximum in a succession of unreliable steps. The resulting rates derived are a lot lower than those found in a European court’s FRAND determination for the same company in the same year (2017) and for the same 2G, 3G, and 4G patent portfolios. The differences between these US and European determinations are irreconcilable.
This paper identifies inherent problems in top-down analysis with patent counting. It also identifies various additional mistakes and inaccuracies in the application of this methodology to the royalty rate determinations in TCL v. Ericsson, as compared with the use of a similar methodology in Huawei v. Unwired Planet.
Keywords: FRAND, SEP, royalty rates, top-down, Ericsson, TCL, Huawei, Unwired Planet, Selna, Birss
Suggested Citation: Suggested Citation