Today we are providing an update on activity taking place at Unwired Planet. This post incorporates our past blog entries and we recommend that you review all of them in chronological order. As before, we have divided our activities into four categories: Licensing, Technology, Portfolio/Prosecution & Enforcement. Following is an update on each area.
We continue to interact with dozens of companies across our 3 core markets (Mobile Devices, Mobile Cloud & Services and Network Infrastructure).
In the mobile device and infrastructure markets, as previously stated, we are seeking to close licensing deals in accordance with our standard license proposal, which we published here (FRAND License Proposal) following completion of our Lenovo transaction in April.
In many of our ongoing negotiations with mobile device manufacturers the technical phase is either completed or near completion. The primary elements of disagreement revolve around pricing and deal structure. While revenue-generating licensing deals are available to us, each such potential deal would seriously undercut and devalue Unwired Planet’s portfolio, leading to depressed long term results for our shareholders. We are therefore resisting short term considerations and continuing to push for fair value licensing. We feel we are in a good position to do so, although it may require us to make considerable progress in (and perhaps augment) our enforcement efforts.
We continue to pursue deals in the cloud and service market, which stands apart for several reasons: First, there are no declared standard essential patents related to cloud. Second, each company’s cloud strategy is unique and the licensing discussions are therefore highly customized. Last, and perhaps most significant to Unwired Planet, Google is so dominant in mobile cloud and services given the enormous market share of Android. As a result, many companies (and in some cases Unwired Planet itself) are taking a “wait and see” approach with respect to our ongoing Google litigation.
Rapid growth of the LTE market has continued strongly during the previous quarter. LG Electronics was particularly successful in the period. LG shipped a record-high 14.5 million smartphones in the second quarter, a 20 percent increase year-over-year with LTE products accounting for more than one-third of all LG smartphones sold this year. (Business Recorder article)
Amazon launched their first smartphone, Fire, in June (Amazon press release). The LTE-enabled phone is closely integrated with Amazon’s cloud services and we are very interested to see if it will gain serious market traction.
The long-awaited Microsoft and Nokia transaction was completed in April (Microsoft News Center article). Since then rumors abound regarding Microsoft’s plans. In July, Microsoft announced that they will end Nokia’s short adventure as an Android manufacturer (re/code article) of Asha feature phones. This news, together with massive layoffs of 12,500 former Nokia employees (BGR article), led some media to predict that Microsoft would cut down the low end device business. However, recent news about new products, such as Nokia 130, indicates that Microsoft will, at least for the time being, invest in the future of all market segments (re/code article).
Another interesting new development is that TCL Communications has started volume production of their new Alcatel branded POP S7 smartphone. This is, to our knowledge, the first LTE device from TCL and also the first smartphone to feature the new MediaTek LTE chipset, the MT6290 (The Wall Street Journal article). MediaTek is clearly intent on bringing LTE technology to cheaper price categories and it may well be that in a few-years’ time LTE will be in every smartphone, no matter if the smartphone is low-end or the latest flagship model.
Another new LTE entrant was Asustek, who introduced an LTE-enabled version of its ZenFone line. (Focus Taiwan article)
In the baseband industry, much has happened during the past few months. MediaTek has been growing rapidly -- their sales were up 20% in July compared to June and they raised their forecast for smartphone chip shipments for 2014 to 350 million units from an earlier estimate of 300 million units. (The China Post article)
According to Strategy Analytics’ July report, Qualcomm remained the dominant player in the cellular baseband market in the first quarter of 2014, but Intel was knocked out of the top three rankings for the first time in three years. Qualcomm retains its dominant position, especially in LTE, even though their LTE revenue share fell to 91% in the first quarter from 95% in the first quarter last year. (EE|Times article)
Intel is seeing a decline in its feature phone and 2G/3G business as the industry transitions to integrated LTE solutions, according to Intel CFO Stacy Smith. Intel's mobile group lost $1.12 billion in the second quarter, wider than the $761 million it lost in the prior year period. Intel is working to get its next-generation LTE chipset, the XMM 7260, which supports Cat 6 300 Mbps speeds and carrier aggregation, qualified for use in devices, but it could take until late this year or early next year before they will be able to ramp off with the solution. (Fierce Wireless article)
Intel has shown how difficult it is to successfully enter the smartphone processer market and Broadcom can surely agree. Broadcom announced on July 22 that they are winding down their baseband unit (Reuters article). Broadcomm’s decision is naturally disappointing not only for its stakeholders but also for those who hope for market diversity in the LTE business.
We hope that the OEM’s own LTE projects we reported in our April blog are successful or that there are some new entrants able to overcome the many obstacles that others have faced. One potential success story may come from China where a new chip giant was created when Unigroup acquired RDA Microelectronics. What makes this acquisition particularly interesting is the fact that Unigroup acquired Speadrum in July 2013. RDA was the third largest fabless semiconductor company in China while Speadrum was the second largest. (Forbes article)
In summary, we continue to believe that the recent developments support LTE market expansion predictions. Platform and processor diversity will ensure options and supply for all interested OEMs and facilitate growth into all price segments.
Below represents our current portfolio status (patents transferred to Lenovo excluded)
Overall Portfolio Prosecution Statistics -- 1 April 2014 to 30 June 2014
Number of Office Actions Received – 22
Number of Office Actions Responded – 21
Number of Search Reports received – 2
Number of Search Opinions Responded – 4
Number of Foreign Acceptances (not yet issued) – 0
Number of US Acceptances (not yet issued) – 13
Number of EP allowances (not yet issued) – 0
US Issued – 9
EP Issued – (not including EPs in their opposition period, but including validated EP countries) – 3
EP issued in opposition period – 5
Number of Foreign Issued – 3
TOTAL Granted – 20
Newly filed apps – 8
Abandoned – 4
Patents expired – 13
Total Issued Patents = 2268
Total Pending Applications = 235
Total Portfolio Count: 2503br>
US Post Grant Proceedings Summary
Pending Inter Partes Reexams – 1
Pending Broadening Reissues – 5 (1 is currently in “Allowance” state)
Recently Issued Broadening Reissues – 1
Pending Self-Initiated Reexams – 1
Inter Partes Review – 3 cases instituted, 2 cases petitioned for
Covered Business Method – 3 cases instituted, 1 case petitioned for
We have filed responses in the three Inter Partes Review (“IPR”) and the three Covered Business Method (“CBM”) proceedings with Google, and are actively pursuing the validation of those patents. Square recently filed one CBM petition and two IPR petitions against the three patents from the Nevada litigation. We are currently evaluating these petitions, and plan to aggressively defend these valid patents.
Below is a brief summary of each of our pending enforcement actions, all of which had significant developments over the past several months:
UK (Samsung, Huawei, Google)
- A Case Management Conference was held July 9th in London -- the next will be October 9th.
At the conference, the Judge set five successive single patent trials, each spaced two months apart. The first three trial dates were set as follows:
- October 5, 2015 (LTE patent #1)
- November 30, 2015 (LTE patent #2)
- February 1, 2016 (2G/3G patent)
- We expect the remaining two trials to be around April 2016 (3G patent) and June 2016 (Android push patent).
Germany (Samsung, Huawei, Google, HTC, LG)
- The first oral hearing occurred May 22nd in Dusseldorf.
- The German Court set a series of trial dates, beginning June 30, 2015, with trials to follow each 90 days until all material is covered.
- As a formality, the Court split the case into 30 separate matters (6 patents multiplied by 5 defendants). However, many of these matters will be heard at the same time.
- The Court also staggered the substantive response pleading due dates throughout the Fall (beginning in September, ending in December)
- HTC and Huawei are grouped together and Samsung and Google are grouped together
- LG has not yet been determined but we expect them to join Samsung’s group.
- The German court recently denied a motion brought by the Defendants that would have required Unwired Planet to post a large six-figure bond securing potential attorney fees and costs for all parties. The decision was based, among other things, upon the legitimate establishment of offices in Dublin for Unwired Planet International Limited, the subsidiary that owns the European patents at issue.
Apple – District Court of Nevada / Northern District of California
- Had been assigned to Judge Yvonne Rogers in Oakland, CA. Scheduling Hearing took place on January 6th.
- To expedite matters, Judge Rogers ruled that we must move forward to claim construction with 10 patent claims (from our 70 pending claims) for the time being, but we would maintain our rights on other patents and claims. We selected 10 claims from 5 patents for this first action and the claim construction (“Markman”) hearing (for these first 10 claims) was set for May 14th.
- However, on April 17th we were reassigned to San Francisco-based Judge Vince Chhabria, whom then moved the Markman hearing to August 11th.
- At the claim construction hearing this week, considerable progress was made and we anticipate a Markman order will issue shortly (though, of course, there are no guarantees on timing). Judge Chhabria stated that he would hold a Case Management Conference promptly following his Markman order.
- We are currently scheduled to go to trial in February 2015, but we expect this date to slip several months in view of the Markman delay.
Google – District Court of Nevada
- Google’s motion to transfer to Northern District of California was denied in August. Google sought reconsideration of the transfer decision and that was also denied.
- Google filed 3 re-examinations (of 3 out of the 10 patents in the case) and sought a partial stay of the case (with respect to these same 3 patents). The partial stay was granted (See Prosecution section for more info).
- We have dropped 3 patents from the case (1 in reexamination and 2 in the typical course of litigation). As a result we have 5 patents presently moving forward and 2 patents stayed pending reexamination.
- The Markman hearing on these 5 patents is set for August 20th with a technology tutorial taking place on August 15th.
- Judge Du has appointed an independent technical advisor to the Court.
- Discovery is closed.
- Trial date still unclear, although Feb 2015 is targeted.
Apple/RIM – District Court of Delaware
- This case corresponds to the ITC case from 2012.
- The case is now moving forward under Judge Andrews in Delaware.
- Single claim term Markman hearing took place November 2013.
- We received a negative but still ambiguous Markman ruling.
- A trial date is set for February 2016.
- The defendants have filed a motion for summary judgment of non-infringement based upon their interpretation of the claim construction. We have opposed based on our interpretation of that construction. If granted, this case would then proceed to the Appellate level.
Square – District Court of Nevada
- Judge Jones has been assigned to this matter.
- Square filed a transfer motion in December and we responded. Judge Jones denied Square’s motion, thereby keeping this case in Reno, NV.
- The Markman hearing is set for September 22nd. Briefing is now complete.
- Square has filed 2 IPR reexaminations and 1 CBM reexamination (see Prosecution section for more detail) and requested a stay in the case. We oppose the stay.
Microsoft – District Court of Delaware
- Judge Sue Robinson has been assigned to this matter.
- This is a breach of contract claim to recover an additional license payment that Microsoft owes to Unwired Planet.
- The parties dispute elements of contract interpretation.
- We expect this matter to progress relatively quickly (these matters are generally simpler than a patent infringement lawsuit).