Qualcomm Amicus Brief

Case: 14-35393, 09/22/2014, ID: 9248444, DktEntry: 32, Page 1 of 39
NO. 14-35393
IN THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICROSOFT CORP.,
Plaintiff-Appellee,
v.
MOTOROLA, INC., MOTOROLA MOBILITY, INC., and GENERAL
INSTRUMENT CORPORATION
Defendants-Appellants.
On Appeal from the United States District Court

For the Western District of Washington, No. 2:10-cv-01823,
Hon. James L. Robart
BRIEF OF AMICUS CURIAE QUALCOMM INCORPORATED

IN SUPPORT OF NEITHER PARTY
Richard S. Taffet
[email protected]
Bingham McCutchen LLP
399 Park Avenue
New York, NY 10022
Patrick Strawbridge
[email protected]
One Federal Street
Boston, MA 02110
Stephanie Schuster
[email protected]
2020 K Street NW
Washington, DC 20006
Attorneys for Amicus Curiae
Qualcomm Incorporated
-i-
TABLE OF CONTENTS
TABLE OF AUTHORITIES.....ii
CORPORATE DISCLOSURE STATEMENT.v
STATEMENT REQUIRED BY RULE 29(c)(5)..v
INTEREST OF AMICUS CURIAE...1
SUMMARY OF THE ARGUMENT5
ARGUMENT.....9
I. A RAND Commitment Is A Contract, The Meaning And Scope Of Which
Must Be Determined Consistent With Established Contract Law..9
A. Fundamental Rules Of Contract Construction Should Guide The
Interpretation Of RAND Commitments.9
B. RAND Contracts Must Be Interpreted Based On The Terms Of The IPR
Policies Under Which They Arise, And Not Based On Theoretical Or
Policy Preferences....11
II. The Flaws Of The District Courts Approach To Interpreting The RAND
Contracts At Issue....17
A. The District Court Ignored The Objective Of Ensuring Adequate
Compensation For Innovators..18
B. The District Courts Concerns About Royalty Stacking And Hold-Up
Lacked Any Basis In Contract Or Evidence19
1. Purely theoretical concerns about royalty stacking do not properly
inform the interpretation of RAND terms...19
2. Using theoretical concerns about hold-up to inform the
interpretation of RAND terms was likewise misdirected...24
C. The Deviation From Established Principles Of Contract Interpretation
Led The District Court To Apply Additional Unsound Valuation
Limitations...27
1. The RAND contract provides no basis for the use of an ex ante
incremental value analysis for SEPs..27
2. The RAND contract does not support an arbitrary evaluation of a
patents value to a standard, in addition to the consideration of a
patents use in the infringing product29
CONCLUSION..30
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TABLE OF AUTHORITIES
Page(s)
CASES
Apple Inc. v. Motorola, Inc.,
757 F.3d 1286 (Fed. Cir. 2014).16
Apple, Inc. v. Motorola Mobility, Inc.,
886 F. Supp. 2d 1061 (W.D. Wis. 2012).9
Baldwin v. Trailer Inns, Inc.,
266 F.3d 1104 (9th Cir. 2001).....9
Blue Mountain Meml Gardens v. Dept of Licensing Cemetery Bd.,
971 P.2d 75 (Wash. Ct. App. 1999)..10
Bort v. Parker,
42 P.3d 980 (Wash. Ct. App. 2002) ...9
Brogan & Anensen LLC v. Lamphiaer,
202 P.3d 960 (Wash. 2009)...11
Commonw. Sci. & Indus. Res. Org. v. Cisco Sys.,
No. 6:11-cv-343, 2014 WL 3805817 (E.D. Tex. July 23, 2014)7
Ericsson Inc. v. D-Link Sys., Inc.,
No. 6:10-cv-473, 2013 WL 4046225 (E.D. Tex. Aug. 6, 2013)...7, 22
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.,
535 U.S. 722 (2002)..17
Georgia-Pacific Corp. v. U.S. Plywood Corp.,
318 F. Supp. 1116 (S.D.N.Y. 1970)....15, 23
Hearst Commcns v. Seattle Times Co.,
115 P.3d 262 (Wash. 2005)...11
Hollis v. Garwall,
974 P.2d 836 (Wash. 1999)...21
- ii -
LaserDynamics, Inc. v. Quanta Computer, Inc.,

694 F.3d 51 (Fed. Cir. 2012)...22, 19
Lillywhite v. Piha,
134 Wash. App. 1009 (2006)..11, 19
Mars, Inc. v. Coin Acceptors, Inc.,
527 F.3d 1359 (Fed. Cir. 2008).29
McCormick v. Dunne & Black, P.S.,
167 P.3d 610 (Wash. Ct. App. 2007)....10
McKeever v. United States,
14 Ct. Cl. 396 (1878).15
Medtronic, Inc. v. White,
526 F.3d 487 (9th Cir. 2008).....14
Microsoft Corp. v. Motorola, Inc.,
864 F. Supp. 2d 1023 (W.D. Wash. 2012)..9
Newport Yacht Basin Assn v. Supreme Nw., Inc.,
285 P.3d 70 (Wash. Ct. App. 2012)..10
Orange Belt Dist. Council of Painters v. W. E. Stubblefield & Sons,
437 F.2d 754 (9th Cir. 1971).11
Paltex Corp. v. Mossinghoff,
758 F.2d 594 (Fed. Cir. 1985)...14
Potts v. Coe,
145 F.2d 27 (D.C. Cir. 1944)28
Pub. Emps. Mut. Ins. v. Sellen Constr.,
740 P.2d 913 (Wash. Ct. App. 1987)10
Scribner v. Worldcom, Inc.,
249 F.3d 902, 908 (9th Cir. 2001).10
- iii -
Synopsis, Inc. v. Magma Design Automation, Inc.,

No. C-04-3923, 2007 WL 322353 (N.D. Cal. Jan. 31, 2007)...14
Uniloc USA, Inc. v. Microsoft Corp.,
632 F.3d 1292 (Fed. Cir. 2011).15
Wordtech Sys. Inc v. Integrated Networks Solutions, Inc.,
609 F.3d 1308 (Fed. Cir. 2010)...16, 22
W. Plaza, LLC v. Tison,
322 P.3d 1 (Wash. Ct. App. 2014)..9, 21
STATUTE & TREATISES
35 U.S.C. 284...14
RESTATEMENT (SECOND) OF CONTRACTS 202(1) (1981)..10
11 WILLISTON ON CONTRACTS 32:2 (4th ed.)...10
OTHER AUTHORITIES
Balancing Innovation & Intellectual Property Rights In a Standards-Setting
Context, ITU NEWS No. 9 (2012)13
In re Certain Wireless Devices with 3G and/or 4G Capabilities & Components
Thereof, Inv. No. 337-TA-868 (I.T.C. June 13, 2014)..25, 26
Maureen K. Ohlhausen, Antitrust Enforcement In China What Next? (Sept. 16,
2014)......................................................................................................7
Roger G. Brooks, Patent Hold-Up, Standards-Setting Organizations & the
FTCs Campaign Against Innovators, 39 AIPLA Q.J. 435 (Fall 2011)..26
Roger G. Brooks & Damien Geradin, Interpreting & Enforcing the Voluntary
FRAND Commitment, 9 INTL J. OF IT STANDARDS & STANDARDIZATION RES. 1
(2011)...21
- iv -
CORPORATE DISCLOSURE STATEMENT

Qualcomm Incorporated does not have any parent corporations, and no
publicly held corporation owns 10% or more of its stock.
STATEMENT REQUIRED BY RULE 29(c)(5)

OF THE FEDERAL RULES OF APPELLATE PROCEDURE
No partys counsel authored this brief in whole or in part. No party, a
partys counsel, or other person (other than amicus curiae Qualcomm Incorporated)
contributed money that was intended to fund preparation or submission of this
brief.
-v-
INTEREST OF AMICUS CURIAE

Qualcomm Incorporated submits this amicus curiae brief because of its
critical interest in the development of the law for the valuation of standardsessential
patents
(SEPs)
subject
to
nondiscriminatory) licensing commitments.
RAND
(reasonable
and
Qualcomm owns a substantial
portfolio of SEPs that it licenses extensively to third parties, and it is alarmed by

the adoption of legal rules that ignore accepted principles of contract construction
in favor of newly-minted theories designed to devalue SEPs. These theories seek
to achieve short-term gains for implementers, at the expense of longer-term gains
that depend upon appropriate incentives to spur investment in risky research and
development necessary to drive innovation.1
Qualcomm is a leading innovator in the cellular communications industry,
which has prospered in reliance on the voluntary RAND commitments made by
innovators to SSOs. Qualcomm pioneered the use of code division multiple access
(CDMA) technology for the transmission of cellular communications. CDMA
came to be the basis of all 3G cellular standards. Through RAND licensing,
Qualcomm has made its 3G innovations widely available in return for royalties and
other consideration from its licensees. Qualcomm has in turn reinvested billions of
dollars of this licensing revenue to research and invent better technologies. As a
All parties consent to Qualcomms filing of this brief.

-1-
result, Qualcomm has also been a principal developer of the 4G technology that
forms the basis for the long term evolution (LTE) standards now being deployed
worldwide.
As the pioneer of CDMA and an extensive contributor to LTE, Qualcomm
has developed an industry-leading portfolio of technologies that are protected by
both SEPs and non-essential patents, consisting of approximately 36,000 patents
worldwide, with some 50,000 patent applications pending.
This portfolio
represents decades of R&D, and Qualcomm invests roughly 20 percent of its

annual revenues in R&D (amounting last year to approximately $5 billion).
While investing billions of dollars in developing technology that contributed
to the success of 2G, 3G, and 4G cellular systems worldwide, Qualcomm
contributed its intellectual property (IP) to standards through RAND
commitments, relying heavily on the stability of the mutual contractual promises
associated with voluntary RAND licensing. Qualcomm has licensed its portfolio
to essentially all major handset manufacturers worldwide; it now has more than
260 3G licensees and more than 90 4G licensees.
Throughout these endeavors, Qualcomm was a risk-taker. Qualcomm risked
its future on the superiority of CDMA when industry experts scoffed at the idea.
Qualcomm ventured early into 4G research. And today, Qualcomm is researching
next-generation cellular technologies. Licensing fees and royalties account for
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approximately 30 percent of Qualcomms revenues.
Without those revenues,
Qualcomm could not have made, or continue to make, the risky investments in
R&D at the levels needed to develop next-generation cellular technologies.
Qualcomm is not only a research and licensing company. It is also the
worlds leading supplier of the wireless communications chips that are the heart of
a mobile phone. As a large technology product company, Qualcomm obtains
licenses from others in the industry. Qualcomms dual position as a major licensor
and major licensee gives it an unusual and balanced view into the operation of
RAND commitments and licensing within standards-dependent industries.
In addition, Qualcomm has been an active participant in numerous SSOs,
including the Institute of Electrical and Electronics Engineers (IEEE) and the
International Telecommunications Union (ITU), which are relevant to this case.
Qualcomm regularly participates in SSO deliberations regarding RAND licensing
commitments. Based on the promise of adequate compensation, Qualcomm has
made hundreds of voluntary commitments to various SSOs to subject its patented
inventions to RAND obligationsincluding SEPs covering immensely valuable
inventions that make possible faster wireless data-transfer, greater networkcapacity, lower power-consumption in mobile devices, better cellular coverage,
and more.
Qualcommalong with the cellular industry worldwidehas experienced
-3-
extraordinary growth over the last two decades under existing SSO policies and
their balanced approach to RAND licensing. As both a driver and a beneficiary of
the investment, innovation, and rapid uptake of technology by consumers,
Qualcomm has an acute interest in ensuring the continuation of such growth based
on the accurate understanding and enforcement of RAND licensing obligations.
For this reason, Qualcomm is very concerned that, despite the remarkable success
of the standardized cellular industry at all levels of the value chain, SEPs and
RAND licensing have recently become subjects of intense controversy. Partisan
advocates mix alarmist warnings with favored policy prescriptions unmoored from
the terms of any SSO policy, RAND commitment, or the intent of the innovator
who made such a commitment. The chorus is focused on lowering returns to
innovators while decreasing costs for implementers. Qualcomm is concerned that
courts, like the District Court here, can unwisely lose sight of the need to
rigorously balance the interests of both innovator and implementer. This would
radically change a wildly successful standardization regime and stifle incentives
for innovation.
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SUMMARY OF THE ARGUMENT

This case involves the valuation of two portfolios of SEPs subject to RAND
commitments. Accepted principles of contract construction require the valuation
of SEPs to be no different from other patents. There is no dispute that RAND
commitments made by SEP owners (such as Motorola) to SSOs (such as IEEE or
ITU) are contracts. Like any contract, the RAND commitment must be interpreted
using established principles of contract construction. Courts may not rewrite the
RAND contract, but instead must seek and apply the parties expectations at the
time the contract was made, guided foremost by the documents comprising the
RAND commitments and the relevant IPR policies. The District Court, however,
ignored these well-established principles in interpreting the RAND commitments
in this case, and thus developed an improper SEP valuation methodology.
The IPR policies in this case require RAND terms to advance two equally
important goals: (i) allowing SEP owners to receive adequate compensation for
their SEPs; and (ii) providing implementers access to SEPs included in standards.
Implementing both goals is paramount to maintaining a successful RAND
licensing regime. The first goal incentivizes innovators to engage in risky R&D
and then contribute any resulting inventions to the standards process; the second
goal ensures that implementers gain access to essential patents.
The District Courts analysis did not accurately describe or properly balance
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these two objectives. Instead, it focused almost exclusively on the single goal of
what it described as facilitating widespread adoption of standards. This not only
misstates one of the IPR policies goalsproviding standard implementers with
access to SEPsbut also ignores the equally important adequate compensation
goal altogether. Driven by this one-sided view, the District Court improperly
modified the Georgia-Pacific analysisoften used in patent cases to determine
reasonable royalties under 35 U.S.C. 284to disconnect its determination of a
RAND royalty from the specific contracts at issue and the patent law principles
they incorporate.
Further skewing its analysis, the Court gave near dispositive weight in
interpreting the RAND commitments to theoretical risks of royalty stacking and
patent hold-up. This approach, however, was consistent with neither the RAND
commitments nor the evidence presented below, and instead unfairly placed a
thumb on the scale in favor of the implementer (and against the innovator). This is
inconsistent with decisions by other courts that have adopted a more neutral
analytical framework. Notably, another court has twice taken the proper approach
(consistent with accepted contract and patent principles) to resolving RAND
disputes, rejecting proposals to modify the Georgia-Pacific factors based on
speculative risks of royalty stacking and hold-up, where there was no evidence that
-6-
these risks had materialized.2

Qualcomm does not challenge the District Courts findings on the
contributions of the patents and products at issue, and thus the actual rates and
ranges it established. Those findings may suggest that the patents at issue had little
or no value under any measure. But the manifest errors of the District Court in
interpreting RAND commitments and devising its methodology, if applied in other
cases involving different SEPs and different products, will cause incalculable
damage to innovation incentives and standards going forward.
It would
necessarily devalue all SEPs, regardless of the actual value each contributes to the
success of standardized products, and could form the basis for industrial policies
that inhibit incentives to innovate and develop successful standards activities. 3
See, e.g., Ericsson Inc. v. D-Link Sys., Inc., No. 6:10-cv-473, 2013 WL
4046225, at *18 (E.D. Tex. Aug. 6, 2013) (declining to instruct jury on alleged
effects of royalty stacking in calculating royalty) (appeal pending); Commonw. Sci.
& Indus. Res. Org. v. Cisco Sys., No. 6:11-cv-343, 2014 WL 3805817, at *12 (E.D.
Tex. July 23, 2014) (noting that specific adjustments to the [Georgia-Pacific]
framework are not necessary here).
3
Indeed, these proceedings are being closely watched in countries such as

China, which has industrial policies designed to undermine the value of patented
technology. See, e.g., Maureen K. Ohlhausen, Antitrust Enforcement In China
What Next?, at 23 (Sept. 16, 2014) (describing how China appears to be
rebalancing the value of intellectual property to favor short term efficiency gains
over longer term dynamic efficiency gains that come from strong protection of
those rights), available at http://www.ftc.gov/public-statements/2014/09/antitrustenforcement-china-what-next-second-annual-gcr-live-conference.
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Such a result would be unwarranted. The standards at issue in this case have
been wildly successful, and this particular dispute should not overshadow the
hundreds, if not thousands, of existing bilateral RAND licenses, which have
allowed the standards to flourish. Indeed, products incorporating these standards
are ubiquitous (routers, smartphones, printers, gaming devices, etc.), proving that
the existing, balanced RAND licensing regime works well.
That is why it is imperative that the Court identify those errors and either
reverse the District Court or, should it affirm the decision, state expressly that it is
limited strictly to its facts. Doing so is vital to ensure faithful interpretation of the
contractual RAND commitments of SEP owners, and maintain a RAND
environment that has allowed both innovation and adoption to flourish.
-8-
ARGUMENT
I.
A RAND COMMITMENT IS A CONTRACT, THE MEANING AND

SCOPE OF WHICH MUST BE DETERMINED CONSISTENT WITH
ESTABLISHED CONTRACT LAW.
A RAND commitment is a contract formed through any essential
patent holders[] commitment to the [SSO] to license patents on RAND terms.

Microsoft Corp. v. Motorola, Inc., 864 F. Supp. 2d 1023, 1031 (W.D. Wash. 2012).
Potential licensees may enforce the RAND commitment as intended third-party
beneficiaries. E.g., Apple, Inc. v. Motorola Mobility, Inc., 886 F. Supp. 2d 1061,
1085 (W.D. Wis. 2012).
Because a RAND commitment is a contract, its terms must be interpreted
under traditional principles of contract law. These familiar principles are the
starting point for any analysis of the District Courts ruling.
A.
Fundamental Rules Of Contract Construction Should Guide The

Interpretation Of RAND Commitments.
The touchstone of contract interpretation is the parties intent. Bort v.

Parker, 42 P.3d 980, 987 (Wash. Ct. App. 2002).
Thus, interpreting what
constitutes RAND royalties for a particular SEP must give effect to the mutual
intent of the parties at the time they formed their agreement. Baldwin v. Trailer
Inns, Inc., 266 F.3d 1104, 1118 (9th Cir. 2001) (applying Washington law).
The best evidence of the parties intent is the language of the agreement.
See W. Plaza, LLC v. Tison, 322 P.3d 1, 3 (Wash. Ct. App. 2014) (In construing a
-9-
contract, we give the parties intent as expressed in the instruments plain language
controlling weight .). Terms generally bear their ordinary meaning unless
otherwise defined by the parties or by the dictates of the context. Scribner v.
Worldcom, Inc., 249 F.3d 902, 908 (9th Cir. 2001). [A] term of art in a given
field is given its technical meaning when used in an agreement within that field.
Blue Mountain Meml Gardens v. Dept of Licensing Cemetery Bd., 971 P.2d 75,
77 (Wash. Ct. App. 1999). A court cannot ignore the language agreed upon by
the parties . Pub. Emps. Mut. Ins. v. Sellen Constr., 740 P.2d 913, 915 (Wash.
Ct. App. 1987). [C]ourts do not have the power, under the guise of interpretation,
to rewrite contracts the parties have deliberately made for themselves.
McCormick v. Dunne & Black, P.S., 167 P.3d 610, 619 (Wash. Ct. App. 2007);
see 11 WILLISTON ON CONTRACTS 32:2 (4th ed.) ([Courts] can only enforce the
contract to which the parties themselves have agreed.).
Moreover, a fundamental rule[] of contract interpretation is that the
meaning afforded the provision and the whole contract must be reasonable and
consistent with the purpose of the overall undertaking. Newport Yacht Basin
Assn v. Supreme Nw., Inc., 285 P.3d 70, 79 (Wash. Ct. App. 2012). In other
words, if the principal purpose of the parties is ascertainable it is given great
weight. RESTATEMENT (SECOND) OF CONTRACTS 202(1) (1981).
While a court may consider extrinsic evidence to help interpret a contract
- 10 -
term and determine the contracting parties intent, only objective manifestations
of the parties intenti.e. evidencemay inform contract interpretation. Brogan
& Anensen LLC v. Lamphiaer, 202 P.3d 960, 96162 (Wash. 2009). Unproven
theories and speculation must be disregarded. See Lillywhite v. Piha, 134 Wash.
App. 1009, 1009 (2006). And in all instances, generalized public policy concerns
cannot be used to rewrite a clear and lawful contract. Hearst Commcns v. Seattle
Times Co., 115 P.3d 262, 271 (Wash. 2005); accord Orange Belt Dist. Council of
Painters v. W. E. Stubblefield & Sons, 437 F.2d 754, 756 (9th Cir. 1971).
B.
RAND Contracts Must Be Interpreted Based On The Terms Of

The IPR Policies Under Which They Arise, And Not Based On
Theoretical Concerns Or Policy Preferences.
Consistent with the foregoing, the meaning of the RAND contracts at issue
must be ascertained by first examining their sourcesthe IEEE and ITU IPR
policiesand then by considering available evidence regarding their underlying
purposes and the expectations of the parties. Any other approach would frustrate,
rather than implement, the contracting parties intent.
The IEEE and ITU IPR policies set forth the relevant RAND commitments:
[A] license for compliant implementation of the standard will be made
available under reasonable rates, with reasonable terms and conditions
that are demonstrably free of any unfair discrimination.
Standards Bd. Bylaws (IEEE IPR Policy) 6.2.
- 11 -
IEEE-SA
The patent holder is willing to negotiate licenses on a nondiscriminatory basis on reasonable terms and conditions.
Common
Patent Policy for ITU-T/ITU-R/ISO/IEC (ITU IPR Policy) 2.2.

The IPR policies intentionally do not define specific RAND rates or terms
for a particular license. IEEE IPR Policy 6.2 (IEEE is not responsible for
determining whether any licensing terms or conditions are reasonable or nondiscriminatory). Instead, RAND terms are left to the parties concerned, ITU
IPR Policy 2.2, unconstrained by any particular methodology.
The IEEE and ITU also have emphasized that RAND commitments are
intended to accommodate the interests of both innovators and implementers by
advancing two equally important goals: (1) providing SEP owners with continuing
incentives to undertake the substantial risks and expense required for the discovery
and development of technologies, and to contribute such technologies to the
standardization process; and (2) ensuring that implementers of a standard have
access to essential patents. Specifically, the ITU has stated that its IPR policy is
intended to strike a working balance between the interests of SEP owners and
implementers by ensuring that owners of intellectual property will be motivated
to contribute their patented technologies to the standards-development process and
that the standards incorporating these technologies will remain widely available to
- 12 -
implementers.4 Similarly, IEEE amended its IPR policy in 2007 to [e]nsure a

fair and balanced environment for all participants. Presentation, IEEE Standards
Assn Patent Policy (July 2008).5
Implementing this balance is essential for developing successful standards.
Standard-setting is a voluntary, consensus-driven process that seeks to develop
superior technical specifications. To generate maximum benefits to industry and
consumers, standards often require use of patented technologies. Therefore, there
must be incentives not only for the discovery and development of such
technologies, but for their voluntary contribution to standard-setting efforts.
Absent these incentives, innovators may choose to sit on the sidelines rather than
invest in risky R&D.
Or they may withhold their (potentially superior)
technologies from the standards process altogetherbecause of inadequate

compensationputting the standard-setting process at risk of delivering standards
that offer inferior technical performance, higher rates of obsolescence, and greater
4
Balancing Innovation & Intellectual Property Rights In a StandardsSetting Context, ITU NEWS No. 9 (2012), available at https://itunews.itu.int/en;
see also ITU IPR Policy ([A] patent embodied fully or partly in a [standard] must
be accessible to everybody without undue constraints.); IEEE IPR Policy 6.2(b)
(providing process making SEPs available to an unrestricted number of applicants
on a worldwide basis).
5
Available at http://www.itu.int/dms_pub/itu-t/oth/06/14/T06140000030002
PDFE.pdf. Other IPR policies likewise emphasize this balance. E.g., ETSI IPR
Policy 3.1 ([T]he ETSI IPR POLICY seeks a balance between the needs of
standardization for public use in the field of telecommunications and the rights of
the owners of IPRs.).
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costs of implementation.
Moreover, a proper construction of a RAND contract that respects the
parties expectations must be informed by applicable patent law. When contracts
(like those at issue here) employ terms that reflect well settled principles of
patent lawsuch as reasonable royalties6the pertinent language of the
contract[s] indicates convincingly that the parties intended for patent law to apply
in interpreting the Agreement[s]. Medtronic, Inc. v. White, 526 F.3d 487, 496
97 (9th Cir. 2008); see Synopsis, Inc. v. Magma Design Automation, Inc., No. C04-3923, 2007 WL 322353, at *24 (N.D. Cal. Jan. 31, 2007) ([T]erms common to
patent law and used in the [contract], such as invention, were to be understood
in accordance with their meaning under patent law.). That is especially so where,
as here, there is no evidence in the record that the parties to the RAND contract
intended otherwise.
Accordingly, in determining the reasonableness of RAND royalties, courts
should look to well-established patent damages principles for determining a
reasonable royalty. This includes the patentees fundamental expectation that
the investments and risks essential to invention will be rewarded. See Paltex Corp.
v. Mossinghoff, 758 F.2d 594, 600 (Fed. Cir. 1985) ([T]he encouragement of
Upon a finding of infringement, courts must award a patentee no less than

a reasonable royalty to compensate for the use made of the invention by the
infringer. 35 U.S.C. 284.
- 14 -
investment-based risk is the fundamental purpose of the patent grant .).

Nothing in the IEEE or ITU IPR policies reflects any intention to depart from such
principles, which for at least 135 years have provided an unbiased approach that
does not tip the analysis toward either infringer or innovator.7 And, to determine
RAND royalties differently by imposing implementer concerns that are not found
in the relevant IPR policies, would improperly rewrite the RAND commitment and
inject bias in favor of one side of the negotiation.
To determine reasonable royalties in patent disputes, courts have looked to
the factors set forth in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp.
1116, 1120 (S.D.N.Y. 1970). The Georgia-Pacific factors tie the reasonable
royalty calculation to the facts of the hypothetical negotiation at issue, Uniloc
USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011), and they
canwithout substantial alterationaccommodate the non-biased RAND analysis
necessary to safeguard the interests of both innovators and implementers, including
by hypothesizing the flexible bilateral negotiations envisioned by the RAND
See, e.g., McKeever v. United States, 14 Ct. Cl. 396, 425 (1878) (setting
patent damages as the fair and reasonable value of a license based upon such a
royalty as it may reasonably be presumed the defendants would have been willing
to pay and the claimant to accept if the matter at the outset had gone to an express
agreement).
- 15 -
contract.8 Proper application of the Georgia-Pacific factors ensures that each party
is put to its respective proof, and that the analysis does not bake in a bias that
favors one party over the other. This approach is consistent with the Federal
Circuits recent decision rejecting arguments that RAND-committed patents should
be treated differently when evaluating the other major patent remedyinjunctions.
See Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 133132 (Fed. Cir. 2014)
(rejecting the departure from established legal principles because of the existence
of a RAND commitment).
This non-biased, flexible approach has allowed for the enormous success of
RAND licensing to date. While much has been written about this case and similar
litigation in the smartphone wars, licensing disputes over SEPs are rare. The
phenomenal success of the WiFi standard at issue here, and the 3G and 4G cellular
technology developed and deployed by Qualcomm, under the current regime
refutes any claim that RAND agreements need to be radically altered. For every
litigation involving an SEP-licensing issue, hundreds (if not thousands) of licenses
have been successfully negotiateda fact too often forgotten in RAND debates.
Although the Georgia-Pacific analysis is useful when determining a

reasonable royalty in this context, it is not the only method for doing so. See
Wordtech Sys., Inc v. Integrated Networks Solutions, Inc., 609 F.3d 1308, 1319
(Fed. Cir. 2010) (A reasonable royalty can be calculated from an established
royalty, the infringer's profit projections for infringing sales, or a hypothetical
negotiation between the patentee and infringer based on the factors in GeorgiaPacific .).
- 16 -
This success counsels caution, lest activism fundamentally disrupts a system that
has functioned well beyond any objective expectations to deliver ever-better
technologies and products to consumers.
Indeed, the Supreme Court has
emphasized the need for great caution before adopting changes that disrupt the
settled expectations of the inventing community.
Festo Corp. v. Shoketsu
Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 739 (2002).

II.
THE FLAWS OF THE DISTRICT COURTS APPROACH TO

INTERPRETING THE RAND CONTRACTS AT ISSUE.
The District Courts failure to properly construe Motorolas RAND
commitments resulted in modifications of the Georgia-Pacific factors that

departed from the balanced approach that is required by the RAND contract and
patent law. The resulting methodology, if applied more broadly to all RANDcommitted patents, will run a great risk of substantially undervaluing SEPs,
radically realigning the proper royalty analysis, and disregarding the incentives for
innovation that motivate patentees to discover and develop patented technology
and contribute it to the standards processall in violation of RAND commitments
and the intent of the parties thereto. Specifically, the District Court (a) failed to
explain how its interpretation of RAND commitments satisfied the objective of
adequate compensation and preserved the incentive for investment in costly
R&D of technologies most useful in standards; (b) improperly relied upon
theoretical and speculative concerns, nowhere mentioned in the relevant RAND
- 17 -
policies and commitments, of potential royalty stacking and hold-up to justify

the subordination of adequate compensation and the incentives they are designed to
preserve; and (c) imposed arbitrary limitations on the value of SEPs that have no
basis in the RAND contracts and further depart from the accepted, balanced
approach for determining the reasonable value of patents.
A.
The District Court Ignored The Objective Of Ensuring Adequate

Compensation For Innovators.
Throughout its analysis, the District Court wrongly emphasized that the
central principle of a RAND commitment is the widespread adoption of a
standard.
E.g., Microsoft Corp. v. Motorola, Inc., No. C10-1823, 2013 WL
2111217, at 456. The District Court used this to justify numerous limitations and
downward revisions during its RAND royalty analysis. See id. 55, 70, 110,
45960, 50910, 526 n.23, 558 (invoking widespread adoption as the purpose of
the RAND commitment). But the RAND policies at issue in this case are designed
to balance two principles, adequate compensation for SEP owners and access
to SEPs. See supra, pp. 1213. Neither principal is made any more central or
important than the other. By ignoring one of these goals (adequate compensation),
and misstating the other (widespread adoption of the standard rather than
access to SEPs), the District Court rewrote the balanced RAND commitment
from a right to access on reasonable terms into a one-sided directive that advances
only implementers interests in obtaining licenses at the lowest possible cost. This
- 18 -
substitution of policy preferences of a court or economists for the intent of the

parties is impermissible. See Lillywhite, 134 Wash. App. at 1009. Indeed, the
pursuit of widespread adoption at the expense of any other interest will
necessarily drive licensing costs toward zero, as any licensing cost will represent a
hurdle to the uptake of a standard.
But zero return equals zero incentive to
innovate, and there is no basis in contract or patent law for placing the success of a
standard on the backs of patentees alone.
To the contrary, the SSOs sought
balance in crafting their IPR policies. The District Courts fixation on widespread
adoption fundamentally misstated the bargain struck by the RAND commitment,
and this error permeated the remainder of its analysis.
B.
The District Courts Concerns About Royalty Stacking And

Hold-Up Lacked Any Basis In Contract Or Evidence.
The District Court also grounded its unbalanced modification of the

Georgia-Pacific factors in a misplaced reliance about purely theoretical risks of
royalty stacking and hold-up. The overarching weight given to these concerns by
the District Court cannot be squared with the IEEE or ITU IPR policies or proper
application of patent law principles.
1.
Purely theoretical concerns about royalty stacking do not

properly inform the interpretation of RAND terms.
Concerned about the theoretical possibility of payment of excessive

royalties to many different holders of SEPs, the District Court concluded that a
- 19 -
proper methodology for determining a RAND royalty should address the risk of
royalty stacking by considering the aggregate royalties that would apply if other
SEP holders made royalty demands of the implementer. Microsoft, 2013 WL
2111217, at 6566 (emphases added). Elevating this hypothetical concern to
fact, the District Court adjusted certain Georgia-Pacific factors to cap the potential
royalty based on a mathematical comparison of the patents declared by that patent
owner as potentially essential, to the aggregate of all other potentially essential
patents for which a royalty could be charged, even if no royalties were being
charged or the asserted patents were in fact not essential.9 Id. 53946. The
District Court did this despite uncontroverted trial testimony that there was no
factual evidence supporting the existence of any actual stacking in this case. 10
Relying instead on the general opinions of litigation experts, the District Court
asserted that any royalty rate that implicates such clear stacking concerns does
not stand up to the central principle of the RAND commitmentwidespread
adoption of the standard. Id. 456.
9
The District Court adjusted factor 15 (the amount the licensee and licensor
would have agreed upon at the time infringement began), and cited RANDs antistacking principle to limit the upper bound of the RAND ranges for the patents in
question. Microsoft, 2013 WL 2111217, at 53839, 586, 605, 622.
10
See Nov. 13, 2012 Tr. 178:2124 (Murphy) (admitting that the evidence
[he] ha[s] seen shows that no stacking with the 802.11 standard); Nov. 16, 2012
Tr. 140:1519 (Lynde) (same); Nov. 13, 2012 Tr. 179:914 (Murphy) (admitting
that there is no evidence of stacking for the H.264 standard); Nov. 16, 2012 Tr.
140:23141:2 (Lynde) (same).
- 20 -
This approach cannot be squared with a proper construction of a RAND

commitment under contract law, and improperly elevates speculation above actual
proof.
First, neither the RAND commitments nor the underlying IPR policies refer
to any royalty-stacking principle, much less require it to be central to the analysis.
If the SSOs and their membersSEP owners and implementershad intended
that royalties for all SEPs be contractually limited by the potential aggregate
royalties demanded of implementers, they could have said so. See W. Plaza, 322
P.3d at 3 ([T]he parties intent as expressed in the instruments plain language [is]
controlling .) (emphasis added). While the District Court relied in part on
comments Motorola submitted to an unrelated standards body (ETSI), Microsoft,
2013 WL 2111217, at 6769, this was wholly unjustified and does not
demonstrate the mutual, objective intent of the parties arising under IEEE and ITU
IPR policies at issue. See Hollis v. Garwall, 974 P.2d 836, 843 (Wash. 1999)
(holding [e]vidence of a partys unilateral or subjective intent is irrelevant to the
parties objective mutual intent). Moreover, ETSI specifically rejected efforts to
add royalty-stacking language into its IPR policy precisely because it would
overturn the required balance of interests. Roger G. Brooks & Damien Geradin,
Interpreting & Enforcing the Voluntary FRAND Commitment, 9 INTL J.
OF
IT
STANDARDS & STANDARDIZATION RES. 1, 2021 (2011) (recounting unsuccessful

- 21 -
attempt to amend ETSIs IPR Policy to account for stacking).

Second, the District Courts modification of the royalty analysis to account
for the mere possibility of royalty stacking departed from the parties expectation
that a negotiated RAND royalty would be based upon evidence, not speculation or
guesswork. Wordtech, 609 F.3d at 1322 (quoting Del Monte Dunes v. City of
Monterey, 95 F.3d 1422, 1435 (9th Cir.1996)); accord LaserDynamics, Inc. v.
Quanta Computer, Inc., 694 F.3d 51, 67 (Fed. Cir. 2012) (noting that royalty
calculations must be based on sound economic and factual predicates).
Third, the treatment below of royalty stacking stands in marked contrast to
the sound approach taken in Ericsson, which involved patents essential to the
802.11 standard. Unlike the District Court below, the Ericsson court rejected
arguments that theoretical royalty stacking must drive the determination of RAND
royalties in every case as a matter of law. Because the accused infringer in
Ericsson provided no evidence of actual royalty stacking, the court refused to
adjust its methodology for calculating a reasonable royalty to account for unproven
stacking concerns. 2013 WL 4046225, at *18 (The best word to describe the
royalty stacking argument is theoretical.). By requiring factual evidence, rather
than theory and speculation, the Ericsson court properly implemented the
expectations of the parties to the RAND contract and their objective understanding
of patent laws refusal to consider speculative evidence in calculating a
- 22 -
reasonable royalty. And if actual evidence of royalty stacking materialized in a

given case (unlike this one), the existing, unmodified Georgia-Pacific analysis
already permits courts to account for the established profitability of the product
made under the patent (factor 8) and the portion of the profit or of the selling
price that may be customary in the particular business or in a comparable business
to allow for the use of the invention or analogous inventions (factor
12). Georgia-Pacific, 318 F. Supp. at 1120. Modification was thus unnecessary;
any actual facts showing royalty stacking already would be considered.
Finally, attempting to rewrite a RAND commitment to include a royaltystacking calculation is economically illogical. The proposed analysis presupposes
that there is some fixed share of the product price that can properly be charged for
necessary IPR, and thus that the more patents a product practices, the less each
patent should be valued, regardless of the varied importance of the patented
technologies. But patented technology is no different from any other product;
adding a second feature does not lessen the value contributed by the first. Adding
leather upholstery to a car does not reduce the value (or the cost) of the engine.
Similarly, one patent cannot, nor should not, reduce the value contribution of
another.
An approach that necessarily minimizes the value of the specific
contribution cannot be correct, much less be superimposed on an SEP owners

commitment to offer a reasonable royalty.
- 23 -
2.
Using theoretical concerns about hold-up to inform the

interpretation of RAND terms was likewise misdirected.
The District Court also expressed great concern about the potential for patent
hold-up, which it characterized as the ability of a holder of an SEP to demand
more than the value of the patented technology and to attempt to capture the value
of the standard itself . Microsoft, 2013 WL 2111217, at 55. The District
Court stated that hold-up can threaten the diffusion of valuable standards and
undermine the standard-setting process, id. 57, and it ultimately modified
Georgia-Pacific factors 6, 8, 10, and 13 to account for the potential of hold-up, id.
103, 107, 109.
This approach again ignored the evidentiary record and raises several
interrelated questions about the value of a patent and the meaning of hold-up. As a
preliminary matter, there is no mention of hold-up in the RAND policies, including
those at issue here. The issue in any RAND case is whether the terms under
consideration are reasonable.11 More fundamentally, references to concerns about
hold-up cannot supply what is lacking from the language and purposes of the
RAND policies before the Court: evidence that the parties to RAND commitments
understood or should reasonably have understood that fees above those derived by
11
This is unsurprising given the language of the RAND commitment and the
established patent law governing the determination of a reasonable royalty (which
informs those commitments). In contrast, the various theories that implementers
have urged (i.e. patentees must be denied hold-up value or value that results
from standardization) lack any basis in the text of the IPR policies or in patent law.
- 24 -
the District Courts value-eviscerating methodology are unreasonable. And the

concern in those policies about the adequacy of compensation to the patent holder
disproves affirmatively that proposition.
Moreover, the District Court again ignored the lack of any factual evidence
that hold-up was, in this case, denying access to the patents necessary to implement
the 802.11 and H.264 standards. To the contrary, the parties expert witnesses
could not say that hold-up had ever occurred, much less that it affected access to
the patents and standards at issue. 12 Consideration of hold-up thus improperly
relied upon speculation and conjecture, and should not have been considered. See
In re Certain Wireless Devices with 3G and/or 4G Capabilities & Components
Thereof, Inv. No. 337-TA-868, at 12324 (I.T.C. June 13, 2014) (Essex, A.L.J.)
(rejecting consideration of the mere potential threat of hold-up to interpret RAND
obligations where there is evidence that it is not a threat in this case, or in this
industry). 13
Finally, hold-up cannot exist where, as here, an implementer is not put to the
12
See Nov. 13, 2012 Tr. 180:79 (Murphy) (admitting that whether hold-up
exists is an open question); Nov. 16, 2012 Tr. 67:410 (Simcoe) (admitting he
cant nail down any particular license from any company as an example of holdup); id. at 135:25136:1 (Lynde) (admitting he has no basis from economic
evidence to conclude whether or not patent hold-up is a real problem).
13
Absent such evidence, generic policy statements about the potential

harmful effects of hold-up cannot be given any weight. See In re Wireless Devices,
at 124 (rejecting statements by the Department of Justice and U.S. Patent and
Trademark Office that would favor a speculative and unproven position).
- 25 -
choice of accepting unreasonable terms demanded by the licensor or no longer

manufacturing standard-compliant products, but rather can challenge those
demands in court. 14 Fees and terms that are set by the court are necessarily
unencumbered by any potential for hold-up.
Thus, claims about hold-up are
simply a pretext for shifting rents from innovators to implementers.

There are additional reasons to question the existence of hold-up in the SEP
context. 15 SEP owners have every incentive to avoid opportunistic hold-up,
because [i]f they should refuse to license their portfolio, or license it at a rate that
puts their licensee(s) at a competitive disadvantage, the threat to their business
would be both immediate and real. Id. at 117. Conversely, implementers have
incentives to hold out from accepting RAND license terms and forcing the
innovator into serial patent litigation, with a worst-case scenario of having to pay a
court determined RAND royalty after years of infringing conduct. Id. at 11718,
12223.
Such conduct not only undermines the balance of the RAND approach
by permitting extended infringement of a patentees rights, but also creates a

competitive distortion among licensees by providing the infringing-implementer
14
This case is a prime example; the prospective licensee sought relief from
the court almost immediately upon receiving the first offer. See Appellants Br., at
78.
15
See Roger G. Brooks, Patent Hold-Up, Standards-Setting

Organizations & the FTCs Campaign Against Innovators, 39 AIPLA Q.J. 435,
44649 (Fall 2011) (collecting comments from SSOs and others questioning the
existence of hold-up).
- 26 -
with a cost advantage over licensed-implementers.

C.
The Deviation From Established Principles Of Contract

Interpretation Led The District Court To Apply Additional
Unsound Valuation Limitations.
The District Courts erroneous interpretation of RAND commitments based

on a singular emphasis on the misstated objective of widespread adoption of
standards, and the subordination of the objective of preserving adequate
compensation of SEP owners, is further evidenced by its adoption of additional
unsound modifications to the Georgia-Pacific factors that necessarily undervalue
all SEPs.
The District Courts acceptance of an ex ante incremental value
approach for valuing SEPs and a novel two-step approach for determining the
contribution of a patent to the value of an infringing product are examples.
Imposing either constraint on SEPs values cannot be supported under contract or
patent law.16
1.
The RAND contract provides no basis for the use of an ex

ante incremental value analysis for SEPs.
In determining RAND royalties the District Court incorporated an ex ante

incremental value approach for determining a reasonable royalty rate. Microsoft,
16
Qualcomm also agrees with Motorola that, generally, reliance on patent

pools as a benchmark for RAND commitments is inappropriate. See Appellants
Br., at 2832.
As the District Court recognized, patent pools involve
fundamentally different contractual licensing arrangements than those resulting
from bilateral RAND negotiations. Microsoft, 2013 WL 2111217, at 49899.
There is no basis for imposing pool licensing rates on patentees who declined to
participate in those arrangements.
- 27 -
2013 WL 2111217, at 106. It did so notwithstanding its initial acknowledgment

that the approach lacked a contractual basis, id. 77, and the difficulty of linking
the value of a patent to its incremental contribution to a standard, id. 79. More
fundamentally, the District Court failed to explain why a rational patentee could
reasonably be understood to have agreed to accept only a return on the incremental
value of its risky investment,17 foregoing opportunities to invest in other endeavors
that are both less risky and more remunerative. Adopting an ex ante incremental
value approach thus undermines the very incentives for innovators that the RAND
contract seeks to preserve: an adequate return that parallels patent laws rewards to
those who win the race to discovery. Potts v. Coe, 145 F.2d 27, 31 (D.C. Cir.
1944). Preserving this incentive is crucial in the standards context because the
inclusion of technology in standards is usually a winner-take-all proposition,
magnifying the risks of investing in R&D.
These incentives should not be
diminished regardless of any contractual or factual basis, in the name of unwritten

RAND policy concerns.
17
The necessary devaluing of SEPs caused by an ex ante incremental value

test is self-evident, because the test would allow an SEP owner only the value that
reflects the incremental difference of the SEPs value as compared to the value of a
next best alternative. And if two competing technologies were essentially
equivalent, the ex ante incremental value approach would suggest that the
developer of the selected technology was entitled to no royalty at all, regardless of
the cost of developing that technology. But nobody would bother to invest capital
and resources to develop a new technology if there is no prospect for a reward if it
is included in the standard. No other product is subject to this kind of price cap.
- 28 -
The use of an ex ante incremental value test in calculating a reasonable

royalty is also at odds with expectations rooted in patent law. The Federal Circuit
has rejected this approach to measure reasonable royalty damages. See Mars, Inc.
v. Coin Acceptors, Inc., 527 F.3d 1359, 1373 (Fed. Cir. 2008) (holding it wrong
as a matter of law to cap reasonable royalty damages at the cost of
implementing the cheapest available, acceptable, non-infringing alternative),
amended on other grounds, 557 F.3d 1337 (Fed. Cir. 2009). There is no reason to
assume that the parties to the RAND commitments at issue here intended to reject
that precedent.
2.
The RAND contract does not support an arbitrary

evaluation of a patents value to a standard, in addition to
the consideration of a patents use in the infringing product.
Motivated again by concerns about the unproven possibility of hold-up,

the District Court analyzed each [patent] portfolios importance to its respective
standard before turning to the patents importance to Microsofts products.
Microsoft, 2013 WL 2111217, at *20. But the first step in this inquiry necessarily
diminishes the value of any particular patent by equating and comparing it with all
other patents in the standard, divorced from its end-use and any contribution the
patent may make to the product that is unrelated to the standard. This is simply
another method that ignores differences among patents and avoids analyzing the
value that a particular patent contributes to the accused product.
- 29 -
Nothing in the RAND contract, IPR policies, or patent law supports this
approach. The devaluation inherent in the District Courts approach is yet another
step that frustrates innovators ability to obtain the adequate compensation
necessary for them to contribute to standards. Moreover, it is well-accepted that a
reasonable royalty should be based on the use made of the invention by the
infringer, LaserDynamics, 694 F.3d at 6667, not also weighed in the abstract
against the entirety of the standard.
CONCLUSION
The District Courts methodology for interpreting Motorolas RAND
commitments contravened the terms and purposes of the relevant contracts,
ignored the evidence in this case, and wrongly treated RAND-committed patents as
different from other patents.
This Court should disavow the District Courts
methodology and expressly limit any endorsement of its specific findings of

RAND royalties to the specific facts of this case, including the contributions made
by the patents at issue to products involved. Otherwise, this case will detrimentally
impact the incentives driving technology development, and wrongly alter the
balance between innovators and implementers that has served our economy well.
- 30 -
Dated:
September 22, 2014
Respectfully submitted,
BINGHAM McCUTCHEN LLP
By: s/ Richard S. Taffet

Richard S. Taffet
[email protected]
399 Park Avenue
New York, NY 10022
Telephone: (212) 705-7000
Facsimile: (212) 752-5378
Patrick Strawbridge
[email protected]
One Federal Street
Boston, MA 02110
Telephone: (617) 951-8000
Facsimile: (617) 951-8736
Stephanie Schuster
[email protected]
2020 K Street NW
Washington, DC 20006
Telephone: (202) 373-6000
Facsimile: (202) 373-6001
Attorneys for Amicus Curiae
Qualcomm Incorporated
- 31 -
CERTIFICATE OF SERVICE
I hereby certify that on September 22, 2014, a copy of the Brief of Amicus
Curiae Qualcomm Incorporated was filed with the Clerk of the Court using the
Courts CM/ECF system, which will automatically send email notification of such
filing to all counsel of record.

Richard S. Taffet
- 32 -
CERTIFICATE OF COMPLIANCE
Pursuant to Federal Rules of Appellate Procedure 29(c)(7) and 32(a)(7)(C), I
hereby certify:
1. this brief complies with the type-volume limitation set forth in Rule
32(a)(7)(B) of the Federal Rules of Appellate procedure in that this
brief contains 6,998 words, excluding those parts of the brief
exempted from the type-volume calculation by Federal Rule
32(a)(7)(B)(iii) and Circuit Rule 32(b); and
2. this brief complies with the typeface and type-style requirements of
Rules 32(a)(5) and 32(a)(6) of the Federal Rules of Appellate
Procedure in that this brief is formatted in Microsoft Word 2010 using
a proportionally spaced typeface in 14-point Times New Roman font.
Dated: September 22, 2014

Richard S. Taffet
- 33 -

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Case: 14-35393, 09/22/2014, ID: 9248444, DktEntry: 32, Page 1 of 39

On Appeal from the United States District Court

BRIEF OF AMICUS CURIAE QUALCOMM INCORPORATED

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LaserDynamics, Inc. v. Quanta Computer, Inc.,

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Synopsis, Inc. v. Magma Design Automation, Inc.,

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CORPORATE DISCLOSURE STATEMENT

STATEMENT REQUIRED BY RULE 29(c)(5)

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INTEREST OF AMICUS CURIAE

nondiscriminatory) licensing commitments.

Qualcomm owns a substantial

portfolio of SEPs that it licenses extensively to third parties, and it is alarmed by

All parties consent to Qualcomms filing of this brief.

Case: 14-35393, 09/22/2014, ID: 9248444, DktEntry: 32, Page 8 of 39

represents decades of R&D, and Qualcomm invests roughly 20 percent of its

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approximately 30 percent of Qualcomms revenues.

Without those revenues,

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SUMMARY OF THE ARGUMENT

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these risks had materialized.2

Indeed, these proceedings are being closely watched in countries such as

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A RAND COMMITMENT IS A CONTRACT, THE MEANING AND

patent holders[] commitment to the [SSO] to license patents on RAND terms.

Fundamental Rules Of Contract Construction Should Guide The

The touchstone of contract interpretation is the parties intent. Bort v.

Thus, interpreting what

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RAND Contracts Must Be Interpreted Based On The Terms Of

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Patent Policy for ITU-T/ITU-R/ISO/IEC (ITU IPR Policy) 2.2.

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implementers.4 Similarly, IEEE amended its IPR policy in 2007 to [e]nsure a

Or they may withhold their (potentially superior)

technologies from the standards process altogetherbecause of inadequate

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Upon a finding of infringement, courts must award a patentee no less than

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investment-based risk is the fundamental purpose of the patent grant .).

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Although the Georgia-Pacific analysis is useful when determining a

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Indeed, the Supreme Court has

Festo Corp. v. Shoketsu

Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 739 (2002).

THE FLAWS OF THE DISTRICT COURTS APPROACH TO

commitments resulted in modifications of the Georgia-Pacific factors that

Case: 14-35393, 09/22/2014, ID: 9248444, DktEntry: 32, Page 24 of 39

policies and commitments, of potential royalty stacking and hold-up to justify