Proven Networks proven to be PAE in public interest statements

On January 27, 2022, Unified Patents filed a public interest statement in the ITC on the Proven Networks v. NetApp (inter alia) investigation. Unified focused on Proven Networks' status as a litigation funded, investment-driven NPE run and controlled by the Russ, August, and Kabat firm. Read the public statement below and also find comments from a member of Congress, NetApp, and others.

Unified’s statement was written by Christine Lehman of Reichman Jorgensen LLP and by in-house counsel, Jonathan Stroud and Jung Hahm.

2027-01-27 Unified Patents Public Interest Statement by Jennifer M Gallagher on Scribd

Letter From Rep Connolly by Jennifer M Gallagher on Scribd

NetApp Public Interest Statement by Jennifer M Gallagher on Scribd

NetApp 100 Day on 101 by Jennifer M Gallagher on Scribd

Technet Public Interest Statement by Jennifer M Gallagher on Scribd

Checking Essentiality within Access Advance - An HEVC Case Study

Some patent holders and pools designate their patents as relevant or essential to a standard without proper scrutiny or analysis. As part of an ongoing series examining this dubious practice, we highlight U.S. Patent 10,575,014. The ‘014 patent is owned by the Electronics and Telecommunications Research Institute (ETRI) and Korea’s Kyung Hee University. The ‘014 patent is purportedly essential to the H.265 (HEVC) standard as part of the Access Advance Patent Pool and it is part of a family of at least 30 applications globally. It should not be considered essential. 

The ‘014 patent is directed to the encoding/decoding and partitioning/reconstruction phases of video coding. Generally, instead of transmitting every frame (i.e., image) of every video, including its corresponding data, the encoder and decoder will each generate a prediction of the image and only transmit the difference between the prediction and the original image (i.e., the residual). The decoder will then use its prediction (and the residual, if one was sent) to reconstruct the image. 

The ‘014 patent requires that when residual information is sent from the encoder to the decoder, then the decoder will add it to the predicted pixel values it generated in order to reconstruct the image. See, e.g., claim 1 (“generating the target block based on an intra prediction value and the residual block information”). However, when the encoder decides not to send residual information for a given pixel, the decoder then must look to a neighboring pixel in order to generate the reconstructed image. See, e.g., claim 1 (“generating the target block based on intra prediction direction information decoded from the bitstream”). Stated differently, the ‘014 patent creates a dependency between the prediction mode and the residual flag designating whether or not residual information was transmitted. 

HEVC, in contrast, does not have the same dependency that the ‘014 patent requires. In HEVC, when the decoder decides not to send residual information, the reconstructed image is generated based on the predicted pixel value (not the value of a neighboring block). See HEVC, §§ 7.4.9.5, 7.3.8.8, 7.4.9.8, 9.3.3, 9.3.3.8.  Indeed, in the HEVC syntax tree, the predicted value and the flag that designates whether residual information is sent are separate and distinct elements. See HEVC, § 7.3.8.5. They are, simply, not dependent on one another. In modern coding, predictions are accurate and a necessary first step in the order of operations. Thus, there is little reason to complete a prediction, then ignore it in favor of using the neighboring block’s value when reconstructing an image.     

Thus, the ‘014 patent does not appear to be essential to the HEVC standard even though it has been declared essential and actively licensed as being so. The public would benefit from appropriate scrutiny of such large patent pools that allegedly cover critical technical standards. 

FTC Highlights SEP Antitrust Abuses

The recent remarks of FTC Commissioner Rebecca Kelly Slaughter on standards essential patents (“SEPs”) are commendable, as is her emphasis on the role antitrust law plays in curtailing anticompetitive abuses of them. The abuses Slaughter highlights mostly impact small- and medium-sized businesses, “the ‘little engines that could’ of our economy,” who lack the resources to navigate complex legal issues and are “more likely to cave to supra-FRAND rates out of fear of exclusion.” Patents do not grant companies a free pass to abuse their dominant market positions through anticompetitive means.

Commissioner Slaughter emphasized that patents are not—and cannot become—an absolute shield for anti-competitive conduct by SEP holders: “When patent holders obtain market power by virtue of being included in standards, the way they exercise that market power is not immunized from the antitrust laws merely because patents are involved.” Specifically, owners of SEPs are obligated to license their patents to willing licensees on fair, reasonable, and non-discriminatory (“FRAND”) terms, and U.S. antitrust policy plays an important role in policing those matters.

Clear antitrust policies are imperative to ensure sincere FRAND licensing practices. Without definite antitrust policies, SEPs can skirt FRAND requirements, leading to “holdup,” or the practice of prohibiting businesses from implementing technologies that implement standards unless they agree to higher royalties and more unfavorable licensing terms than the SEP owner could have obtained before the standard was set, when alternative technologies were available.

Commissioner Slaughter identified three examples of holdup evincing anticompetitive conduct: (1) refusing to license a SEP to any willing licensee in violation of a FRAND  commitment, (2) conditioning an SEP license on taking or giving a cross-license to non-essential patents or that are SEPs of unrelated standards (i.e., bundling), and (3) requiring a license to a portfolio where some or all of the patents are not even identified, let alone provided with the relevant information needed by a potential licensee to assess whether the patents under negotiation are valid, enforceable, and essential to the standard’s implementation, or offered on non-discriminatory terms.

This disproportionately affects small businesses, who lack the bargaining power to negotiate with SEP owners and the resources to defend against SEP assertions. Theoretically, federal judges occasionally enforce FRAND terms in patent cases, but as Commissioner Slaughter pointed out, that case needs to first get to court and continue on to a point to reach such a decision, and “if small and medium entities are agreeing to supra-FRAND terms because they are afraid of the threat of exclusion after litigation, there necessarily will not be a high volume of cases challenging licensing demands.”

Commissioner Slaughter also underscored the role that standards-developing organizations, or SDOs, have in setting policies that would facilitate licensing and prevent inefficient litigation. SDOs can institute policies that mitigate the harms of holdup by mandating commitments from participants to disclose and/or license standard-essential patents on FRAND terms. SDO policies can also clarify how a reasonable rate may be determined. For example, SDOs may specify a narrow set of circumstances in which injunctive or other exclusionary relief may be an appropriate remedy for “holdout,” i.e., when a potential licensee unilaterally refuses to take a license or unreasonably delays in  doing so.[1]

Commissioner Slaughter’s message that “antitrust laws have an important role to play in the standard-setting context, including conduct related to the use or abuse of SEPs” is laudable. The application of antitrust law in congruence with sound SDO policies to promote “widespread and efficient licensing” at “actual FRAND rates” can reward genuine innovation while also preventing abuses by SEP holders, including assertion of poor-quality, SEP-questionable patents.

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[1] As Commissioner Slaughter pointed out, absent collusion, holdout does not pose the same concerns from an antitrust standpoint as holdup, which has the potential to exclude firms from implementing a standard and hurting customer choice among competitors. While competition and consumers are harmed indefinitely when market power is exploited to engage in holdup, there are remedies for holdout.

Fintiv challenged in SCOTUS Amicus by Unified

On January 14, 2022, Unified Patents filed an amicus brief with the Supreme Court in support of the petition for certiorari in Intel Corp. v. VLSI Tech. LLC, challenging the USPTO's reliance on their own NHK-Fintiv ruling, as well as the reviewability of such a de facto rule on appeal.

Unified Patents is represented by Bill Jenks of Jenks IP and by in-house counsel, Jung Hahm and Jonathan Stroud. Read the amicus brief below:

Amicus Brief Jan2022 by Jennifer M Gallagher on Scribd

Access Advance, Who is Checking Essentiality? -- An HEVC Case Study

Some patent holders and pools designate their patents as relevant or essential to a standard without proper scrutiny or analysis. As part of an ongoing series examining this dubious practice, we highlight U.S. Patent 9,838,714. The ‘714 patent is owned by the Electronics and Telecommunications Research Institute (ETRI), is purportedly essential to the H.265 (HEVC) standard as part of the Access Advance Patent Pool, and is part of a family of at least 29 applications globally. It should not be considered essential.   

The ‘714 patent is directed to the prediction phase of video coding, specifically, how to scan the decoded signals during intra-prediction. In this process, there is a specific order in which the values of a block (e.g., a 4x4 or 8x8 transform block) are processed. The ‘714 patent requires that the first row or column is scanned first, before any other column or row. See, e.g., claim 1 (“scanning entropy-decoded signals of a first row with priority so that all of the entropy-decoded signals of the first row are scanned prior to scanning entropy-decoded signals of any other row”). 

In contrast, the HEVC standard does the opposite. As illustrated below, the HEVC standard requires scanning in “reverse order,” meaning that the last row is scanned first (from right to left) or the last column is scanned first (from bottom to top). See HEVC, § 7.3.8.11. 

See T.Nguyen, “Transform coding techniques in HEVC,” IEEE Journal of Selected Topics in Signal Processing, vol. 7, no. 6, 978-989, Dec. 2013. The HEVC standard can scan in the diagonal (§ 6.5.3), horizontal (§ 6.5.4), or vertical (§ 6.5.5) directions for intra-mode prediction, but again, it does so in the “reverse order” direction, not the direction claimed by the ’714 patent.  

​​Thus, the ‘714 patent does not appear to be essential to the HEVC standard even though it has been declared essential and actively licensed as being so. The public would benefit from appropriate scrutiny of such large patent pools that allegedly cover critical technical standards.