1. Arbitration – Telecoms Industry
Adrian Howes, Senior Litigation Counsel
04 March 2016
Privileged & Confidential

2. Introduction The mobile phone system Standards and IPR
Licensing disputes
Resolution – litigation and arbitration
Nokia’s experience
Lessons learned

3. The mobile phone system
Mobile phones need to be able to talk to one another (i.e. interoperate)
To do so requires common technology and protocols
These are developed by various companies joining forces to develop common standards
Usually via an intermediary called a Standards Setting Organisation (“SSO”)
Examples of SSOs include ETSI and ITU

4. Standards and Intellectual Property Rights
Standards avoid customers deciding between competing products that do not interoperate
However, using a Standard may mean using technology developed and protected by Intellectual Property Rights (“IPR”) of multiple companies
Therefore SSOs typically require members who contribute technology to a Standard to disclose their IPR and to agree to offer licences for using it on Fair, Reasonable and Non-discriminatory terms (“FRAND”)

5. Licensing Disputes
Some companies own 100s or 1000s of patents “essential” to a Standard (e.g. GSM, UMTS or LTE) – so-called Standard Essential Patents (“SEPs”)
Many companies simply implement Standards in their products and do not contribute to Standards
Others have a few SEPs and implement Standards
And a few simply own some SEPs but do not implement a Standard
These differences can lead to disputes over the value of SEPs and what is a FRAND licence

6. Smartphone wars

7. Resolution – Litigation
Until recently all licensing disputes involved at least one party bringing patent infringement proceedings against the other; often in various jurisdictions at the same time
Yet very few ever get to the real issue of determining a FRAND licence or royalty rate
The parties typically settle a licence after huge expenditure in costs and resources to both of them. And in the end to the industry as a whole
The alternatives – mediation or arbitration?

8. Resolution – Arbitration
Realistically while mediation may form part of a process it is unlikely to resolve all matters between parties due to their divergent views
Arbitration is an effective means of resolving these disputes – provided that the parties can agree to it!
In most cases, there is no pre-existing agreement to arbitrate. Therefore one needs to be agreed. If not, then litigation may remain the only alternative to ensure an un-licensed implementer comes to the table

9. Nokia’s experience Several patent licence arbitrations:
Samsung – pre-existing licence governed arbitration of new royalty rates
LG – arbitration agreement agreed to between parties to resolve royalty rates
Sierra Wireless – dispute over construction of a licence agreement

10. “Arbitration can be arbitrary”
Lessons learned
Arbitration can be as expensive as litigation. However, time, experience and better costs management should reduce this
Get the agreement right – avoid one arbitrator, except for small disputes – no appeal!
Choose your counsel, experts and arbitrator(s) with care – experienced in high value disputes, with gravitas, commercial/technical? And, of course, the human element
Consider the best seat – i.e. the procedural laws that will suit you and nature of the dispute (e.g. scope of disclosure, possible challenges to the Award)
Manage expectations – both internally and externally
“Arbitration can be arbitrary”