Avanci Broadcast patent pool adds ETRI, KPN, NEC, NERC-DTV, thereby increasing coverage of ATSC 3.0 standard-essential patent families to 80%

In March, Avanci announced its first non-automotive standard-essential patent (SEP) pool: Avanci Broadcast, a pool for the ATSC 3.0 (also known as NextGenTV) broadcasting standard that is particularly popular in the United States and in South Korea.

At the time of its launch, the pool contained more than 70% of the ATSC 3.0-essential SEP families, and the vast majority of TV sets supporting ATSC 3.0 were licensed from the beginning (though it's important to consider that TV sets are not only the device category to implement ATSC 3.0; there are also set-top boxes, for instance). Some of the licensor are also major implementers, but not all initial licensees were also licensors (Sony is only a licensee).

The ATSC 3.0 pool was the first Avanci pool to announce Samsung as a licensor. Shortly thereafter, Samsung also joined Avanci's automotive SEP pool.

Today Avanci announced the Avanci Broadcast pool's expansion to "over 80% of essential patent families for the ATSC 3.0 broadcasting standard" through the addition of four licensors:

• South Korean research institute ETRI,

• Dutch telecommunications carrier KPN,

• Japanese electronics giant NEC, and

• China's Shanghai National Engineering Research Center of Digital Television (NERC-DTV).

Existing licensees (LG, Samsung, Sharp, Sony) are now automatically licensed to the new licensors' ATSC 3.0 SEPs as well, at no additional cost. That is a feature of the Avanci pools, but also of many other patent pools. In my opinion, the European Commission's recently somewhat negative take on patent pools does not give sufficient consideration to that (and not only to that) fact.

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Avanci announces patent pool for ATSC 3.0 (aka NextGenTV) broadcasting standard that is ubiquitous in U.S. and South Korea: initial licensors hold more than 70% of SEPs

From the position of strength of its standard-essential patent (SEP) pool for connected vehicles--though Charles River Associates may not acknowledge the full extent of it--the Avanci brand is expanding into new segments of the patent licensing business. The Avanci Aftermarket pool launched last month and covers connected devices that are not pre-installed in cars. That is obviously an adjacent business area. The new patent pool announced today is named Avanci Broadcast and defined as "a patent licensing platform for the ATSC 3.0 broadcasting standard".

Standard: The Advanced Television Systems Committee (ATSC) standards were developed in the U.S., but have also been adopted in its neighbor countries (Mexico, Canada), and in South Korea. In other parts of the world, such competing standards as DVB and ISDB are more popular, though ATSC 3.0 may be adopted in several additional countries. In 2009, the U.S. made a complete switchover from analog (NTSC) to digital (ATSC) broadcasting of terrestrial TV programming. The latest version, ATSC 3.0, is also referred to as NextGen TV, but not mandatory, though it is technologically superior.

Avanci's press release describes the benefits of ATSC 3.0 over its predecessor version as follows:

"... ATSC 3.0 enables 4K / UHD broadcast with higher frame rates, better color and sound, and other technical improvements over the previous standard. It also works hand-in-hand with content delivered over the internet for services such as customized advertising, on-demand and premium content, and interactivity."

Licensors: The initial group of Avanci Broadcast licensors includes

• South Korean consumer electronics powerhouses Samsung and LG Electronics;

• Japanese consumer electronics icons Sharp and Panasonic;

• ONE Media, a subsidiary of Sinclair Broadcast Group, which according to a recent press release "owns, operates and/or provides services to 185 television stations in 86 markets, owns multiple national networks including Tennis Channel and Stadium; has TV stations affiliated with all the major broadcast networks and owns and/or operates 21 regional sports network brands"; and

• South Korean research firm ETRI and U.S. licensing firm Sun Patent Trust.

Avanci estimates that those patent holders "represent more than 70% of all patent families containing ATSC 3.0 declared essential patents," with "the addition of several more licensors in the coming months" apparently being in sight.

It is unusual for a licensor to issue its own press release on the creation of a patent pool, but that is what ONE Media did today. ONE Media's press release touts the technical benefits of ATSC 3.0 in detail and quotes its Executive Vice President Jerald Fritz:

"The ability to offer this remarkable technology to consumer equipment manufacturers in a simple, all-encompassing license, should ease the process of deploying new receiver products to consumers worldwide. We congratulate Avanci for helping shepherd several leading international organizations toward this common goal."

Licensees: Not only does the pool start with broad coverage of the relevant patent landscape but also with an impressive group of initial licensees. Three of those licenses--Samsung, LG, and Sharp--are also licensors, while Sony is mentioned only in its role as a licensee. According to the press release, those companies are "collectively responsible for the vast majority of ATSC 3.0 televisions sold to date." To be clear, the vast majority of TV sets doesn't mean that most of the licensing work is already done. It could be that some lower-cost TV makers will be harder to convince, and TV sets are not the only type of device to implement the ATSC 3.0 standard. Think of set-top boxes, for instance.

Pricing: The base per-unit royalty rates per TV or set-top box are stated on the Avanci Broadcast webpage. The price matrix there incentivizes signing up early, with the lowest rates applying to license agreements signed by May 31, 2023 ($2.10 per unit for 2022-2025, $2.40 for 2026-2028). Those who sign up after May 31, 2023, but still within six months of shipping their first ATSC 3.0 product, get a rate of $2.75 through 2028, which is less than the $3.00 per unit (through 2028) that all those who sign up after May 31, 2023 and more than 6 months after shipping their first ATSC 3.0 product.

Management: Besides Avanci founder, the press release also quotes the executive in charge of Avanci Broadcast, who is none other than Ilkka Rahnasto of Nokia fame.

Two pools: MPEG LA, which has been a top-notch patent pool administrator for a long time, was first to launch an ATSC 3.0 patent pool. There's limited overlap with respect to licensors (ONE Media, Panasonic, Sun Patent Trust). Pool administrators operating in good faith can always find solutions to avoid duplicative royalties (be they due to previously existing pools or to bilateral licenses). Whether that is much of a practical issue here is unclear: MPEG LA's list of ATSC 3.0 patent licensees is "To Be Supplied" according to the firm's website.

In general, a single pool for a given standard is in the best position to reach a high market penetration (such as Avanci's connected vehicle pool). Fragmentation can lead to frictional losses and reduced transactional efficiencies. But this is a case-by-case question. When a new pool launches with the momentum that Avanci Broadcast apparently has, then there must have been an opportunity that some market actors thought was best addressed by means of a new pool that has the potential to bring everyone together.

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MPEG LA seeks dismissal of ETRI, SK Telecom complaint threatening 'the utility, benefit, and public trust underlying [patent] pool licenses': Supreme Court of the State of New York

If litigants try a long shot, it may every once in a while contribute to the evolution of the caselaw. At times, the term "long shot" is a euphemism, especially when a complaint goes against a crystal clear contract. Deutsche Telekom's "antitrust" action against patent licensing firm IPCom was thrown out by the Mannheim Regional Court six months ago as I had predicted. At least Deutsche Telekom didn't deny that the contract said what it said (they waived their right to bring antitrust claims over how other implementers would be treated later): Deutsche Telekom "only" argued that an unambiguous written commitment, made when no injunction was in force or imminent, should be held unenforceable anyway.

Worse than that, the Electronics and Telecommunications Research Institute (ETRI) and SK Telecom brought a suit in September that comes down to claiming that the relevant contract--an agreement among patent pool contributors--doesn't say what it says. The two are suing MPEG LA--a patent pool administrator in good standing that has been around for more than a quarter century (Wikipedia article)--in the Supreme Court of the State of New York (County of New York, case no. 653232/2022, Electronics and Telecommunications Research Institute (ETRI) and SK Telecom Co., Ltd. v. MPEG LA, LLC (PDF)). ETRI and SK Telecom accuse MPEG LA of "falsely claiming to license to others hundreds of valuable patents owned by ETRI and [SK Telecom] when MPEG LA has no right or authority to do so"--but as I'll show further below, that's preposterous. If they won against all odds and common sense, a large number of MPEG LA licensees--from numerous small companies to the likes of Xiaomi--would subsequently face duplicative royalty demands and potentially infringement litigation over patents they are lawfully using (and paying for) under an existing pool license.

It's an attack on a bedrock principle of the patent pool system: that licensees can rely on being licensed to all patents that are essential to the relevant standard and belong to any of the licensors of a pool from which they take a license. I don't understand why two companies who contribute to various pools (with SK Telecom presumably also having taken many pool licenses) decided to bring that complaint, apart from being virtually certain to waste money on legal fees. They are making themselves ridiculous because of the absurdity of their theory and at the same time untrusthworthy:

• How can other pool managers trust ETRI and SK Telecom that they won't challenge unambiguous clauses in other patent pool agreements?

• How can licensees trust that if they license ETRI and SK Telecom patents from a pool, they won't later be sued over those patents (unless they pay again, and possibly a lot more than they paid the first time)?

Case overview

Patent licensing is a complex business, so there could be a legitimate question of contract interpretation here, right? Actually...no. One does have to read the Agreement Among Licensors Regarding the HEVC Standard that ETRI and SK Telecom attached to their complaint as Exhibit 3 (PDF). Then it's pretty clear that the issue the complaint attempts to make up simply doesn't exist.

ETRI and SK Telecom left the MPEG LA HEVC pool about three years ago (and instead joined Access Advance's HEVC Advance Pool, as did some other Korean companies, most notably Samsung). The complaint says: "For ETRI, termination became effective on January 2, 2020. For [SK Telecom], termination became effective on January 27, 2020."

What does such termination mean for licensees? One distinction is really key:

• timely licensees (those who signed up before termination taking effect)

  vs.

• tardy licensees (those who signed up after termination became effective)

"Timely licensees" and "tardy licensees" is just how I call them here.

The problem is that ETRI and SK Telecom emphasize another distinction, which one can make for academic purposes but which ultimately changes nothing about the contractual situation:

• pre-termination patents (HEVC-essential patents of which ETRI and SK Telecom became owners before termination taking effect)

  vs.

• post-termination patents (HEVC-essential patents of which ETRI and SK Telecom became owners after termination became effective)

A two-by-two matrix shows what the dispute is about, i.e., whether a given MPEG LA licensee is licensed to certain ETRI and SK Telecom patents:

	Timely Licensees	Tardy Licensees
Pre-Termination Patents	licensed (undisputed)	not licensed (undisputed)
Post-Termination Patents	MPEG LA says: licensed ETRI/SK say: not licensed	not licensed (undisputed)

In other words, tardy licensees get no benefit with respect to any of ETRI's and SK Telecom's patents; timely licensees remain licensed under pre-termination patents; and the question is now whether a timely licensee remains licensed to ETRI's and SK Telecom's HEVC portfolios including post-termination patents.

On November 7, MPEG LA brought a motion to dismiss (PDF). Contract interpretation is a matter of law, and if the contract is clear, the case must go away, based on documentary evidence alone.

The first contract clause to look at here is § 2.3 of the Agreement Among Licensors:

"Non-Exclusive Licenses or Sublicenses. Each [Licensor] shall hereby grant to [MPEG LA and any successor] a worldwide, nonexclusive, non-transferable license or sbulicense under all HEVC Essential Patents, which the [Licensor] and its Affiliates presently or in the future [emphasis added] has the right to license or sublicense (without payment to any third party which is not an Affiliate), with a right of [MPEG LA] to grant sublicenses which are identical in form to the sublicense in Attachment 1 hereto [i.e., the pool license agreement]. ..."

What does the termination clause (§ 7.2) say?

"Voluntary Termination. At any time after January 1, 2020 each [Licensor] shall have the right, effective upon thirty (30 days' written notice [...], to terminate with respect to itself all but not less than all of the following: (1) this Agreement [Among Licensors]; (2) the right of [MPEG LA] to grant additional sublicenses [i.e., pool licenses] (excluding renewals of sublicenses existing at such time) under its license or sublicense granted by such terminating [Licensor] pursuant to Section 2.3 herein; and (3) the Licensing Administrator Agreement entered into pursuant to Section 2.2 herein. [...] For the avoidance of doubt, such termination shall not affect the grant of the license, including renewals, or sublicenses contemplated pursuant to Section 2.3."

MPEG LA's motion to dismiss notes that ETRI and SK Telecom's complaint doesn't even quote the key passages, such as the "For the avoidance of doubt" part ("shall not affect the grant of the license, including renewals. Instead, the complaint makes it sound like "additional sublicenses"--which just means that MPEG LA can't give subsequent licensees any license to patents owned by licensors who have left--also included cases in which a timely licensee becomes licensed to post-termination patents.

Xiaomi is a great example here. Their license agreement with MPEG LA was announced (PDF) on January 9, 2020. Let's assume that the announcement wasn't delayed too much after the signing of the agreement, then they presumably became an MPEG LA HEVC licensee after ETRI's effective termination date, but undoubtedly prior to SK Telecom's. If Xiaomi or MPEG LA claimed that Xiaomi was licensed by MPEG LA to SK Telecom's HEVC patents, that would presumably be wrong, and I could see a case for declaratory judgment. But Xiaomi clearly got a license to all of SK Telecom's HEVC patents, including the ones SK Telecom obtained after termination ("in the future" as Section 2.3 as said). If SK Telecom was granted an HEVC-essential patent in, say, February 2020, Xiaomi is licensed, and the "For the avoidance of doubt" part applies--including that Xiaomi can perpetually renew its MPEG LA license agreement without losing those benefits.

Policy considerations

Implementers understandably expect legal certainty--peace of mind--with respect to the standard-essential patent (SEP) portfolios of the licensors they see on the list when they take a license. Why take a pool license at all if you may still face royalty demands and infringement litigation over patents from a party with which you thought you already had a deal in place?

Pools provide transactional efficiencies, but they can only do so with reasonable legal certainty.

ETRI and SK Telecom have a problem: anyone who negotiates an HEVC Advance license (a pool they joined because they thought they'd get a better deal than from MPEG LA) but already has a (timely) MPEG LA license will argue that certain parts of the Advance pool must not be paid for again. Access Advance--through its licensors that were asserting patents against Vestel--lost a case in Dusseldorf about a year ago because of the duplicative-royalties issues.

They're now trying a Hail Mary in a New York state court.

Another South Korean company, Samsung, also filed a lawsuit against MPEG LA there: a complaint (PDF) over royalty redistribution. Various cases by MPEG LA licensors against Samsung are pending in Dusseldorf. I don't want to disgree into the Samsung situation here. The cases aren't identical, but the root cause is the same and the issues are at least adjacent--and the complaints similarly meritless, though ETRI and SK Telecom's complaint has set a new absurdity record.

What Samsung has in common with ETRI and SK Telecom is the root cause of their grievances: they thought it was a smart move to join the Access Advance pool and leave the MPEG&nbspM;LA pool, and it's not going well. There are potential signs of piecemeal resolution by licensees such as Xiaomi, taking bilateral licenses rather than a pool license.

Those companies wish they could have left MPEG LA without existing licensees retaining any kind of license. But that's not what the contract says, nor would it be good policy. MPEG LA notes that what is at stake here is "'the utility, benefit, and public trust underlying [patent] pool licenses'."

The issues even go slightly beyond patent pools. Capture clauses in bilateral license agreements frequently include patents to be granted or acquired after certain key dates. Many bilateral license agreements resulting from individual negotiations as opposed to a standard agreement being signed by many parties. That is an important difference, but it is always unacceptable when licensors try to get out of their commitments in hopes of being able to charge more.

Federal courts deal with patent license agreements all the time because of license-based defenses to patent infringement complaints. State courts do have jurisdiction over contract law, including patent-related agreements, but don't see the practical implications in infringement cases. I suspect that ETRI and SK Telecom just hope that a state court can be fooled by them, but the contract language appears too clear--and the Supreme Court of the State of New York (County of New York) does adjudicate interesting commercial disputes on a daily basis. So my prediction is that the complaint will be dismissed.

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Fourth Avanci licensor sues Ford Motor Company: Sol IP asserting five LTE standard-essential patents from Korean research institute ETRI in Eastern District of Texas

Pressure is mounting on the Ford Motor Company to do its standard-essential patent (SEP) licensing homework. The legendary U.S. car maker is now defending against patent infringement actions brought by (at least) four Avanci licensors:

• In Munich, Japan's IP Bridge is likely to prevail on the merits of at least one SEP. In three weeks from today, the trial will continue and it appears to be all about FRAND.

• L2 Mobile Technologies, a Longhorn IP subsidiary, is suing Ford in the District of Delaware.

• Sisvel--whose president I quoted yesterday on Xiaomi's approach to patent licensing--is enforcing 4G patents against Ford in the District of Delaware as well as in the Munich I Regional Court.

A few days ago, Ford also got sued in the Western District of Missouri by a company named Neo Wireless, which unlike the aforementioned three companies is not an Avanci licensor (thus likely to demand far higher royalties on a per-patent basis).

The latest enforcement action by an Avanci licensor--the fourth to date to assert patents against Ford--was filed yesterday in the Eastern District of Texas. Sol IP, which has an exclusive license to various patents belonging to Korean research institute ETRI, is suing Ford over five 4G SEPs (this post continues below the document):

22-03-31 Sol IP v. Ford Mot... by Florian Mueller

With a view to TC Heartland (case law on patent venue transfers), Sol IP argues that Ford as a Central Market Area Office in Plano, TX, which is in the Eastern District. In a case before a Texas state court in 2015, Ford said the Plano office was "the principal office of Ford in the State of Texas." The General Manager of that office resides in Frisco, TX, which is equally in the Eastern District. He is responsible for "750 Ford and Lincoln Dealers".

Sol IP's complaint points to the fact that Ford could take an Avanci pool license anytime (though the complaint also notes that any licensing through Avanci is "nonexclusive" and mentions a bilateral licensing offer that came with the infringement notice):

"Other automakers have taken licenses from Avanci on the same terms per connected vehicle that has been offered to Ford, including but not limited to Volkswagen, Seat, Skoda, BMW, Audi, Porsche, Volvo, Jaguar Land Rover, Mercedes Benz, Daimler Truck, Aston Martin, Scania, MAN, and Volvo Group. In all, more than thirty automotive brands are Avanci licensees."

Sol IP is not pursuing an injunction, but it is seeking damages including willfulness enhancements.

Sol has previously sued Qualcomm over 28 ETRI patents as well as carriers AT&T Mobility, Verizon, and Sprint.

These are the asserted patents, each of which was declared essential to the 4G/LTE standard and belongs to South Korea's Electronics and Telecommunications Research Institute (ETRI):

• U.S. Patent No. 10,938,534 on "carrier aggregation in wireless communication systems"

• U.S. Patent No. 10,231,211 on a "method for paging information in cellular system

• U.S. Patent No. 10,932,298 on a "method for transmitting uplink control siginal in mobile communication system"

• U.S. Patent No. 8,320,571 on a "method for generating downlink frame, and method for searching cell"

• U.S. Patent No. 10,148,477 on a "method and apparatus for transmitting ACK/NACK" (ACK = acknowledgement; NACK = negative acknowledgment)

With all that is going on, the question is now whether Ford is the next Daimler (which defended itself against SEP infringement cases by Avanci licensors for more than two years, only to take a pool license anyway) or the next Volkswagen (which settled its dispute over an upgrade of its Avanci license to 4G rather quickly). I can't give the answer to that question. Only Ford itself can.

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