Across the river from the casino district in Reno above an Italian restaurant, you can find the little-known company that says it "invented the mobile Internet". Unwired Planet has 16 employees and no products. What it does have is a portfolio of more than 2,000 patents, mostly acquired from Ericsson, which it says on its website are "considered foundational to mobile communications".
The Nevada-based firm wants more than just recognition. Starting next week it takes on three of the world's biggest technology companies – Samsung Electronics, Huawei Technologies and Google – in a London courtroom for six sprawling patent trials that will last more than a year.
For the phone-makers, the cases are little more than a nuisance. They say in court documents that Unwired Planet is seeking excessive licensing fees for patents that aren’t even valid.
If approved, the intellectual property could be worth hundreds of millions of euros in royalties to Unwired Planet, which is currently valued at about $85 million (€76 million). As smartphones became ubiquitous, so did legal disputes about who invented the roughly quarter of a million proprietary gadgets in every handset.
The emergence of firms that exist solely to acquire patents and wring money out of them by threatening lawsuits has led to calls in the US for legislation to combat so-called patent trolls.
Hackneyed term "It's become a hackneyed term that's used in a derogatory way," Unwired Planet general counsel Noah Mesel said. He prefers the description "patent-licensing company". "You can call us anything you like," he said. "We happen to be at the point in our business cycle where what's left is a patent portfolio."
Patent troll is "a loaded term," said Stephen Haber, a political science professor at Stanford University. "It might best be understood as 'a patent licensing company that the speaker wants the listener to dislike'."
Huawei said it would “vigorously defend its legitimate rights”. Spokesmen for Samsung and Google, which isn’t involved in the first trial, didn’t respond to an e-mail and phone call seeking comment.
How did a company most people have never heard of come to lay claim to elements found in virtually every smartphone? “Unwired Planet at one point had 2,200 employees,” Mesel said. “We were in the innovation business.”
Openwave systems The company was once known as Openwave Systems, which developed mobile software before losing ground to rivals Nokia and Ericsson and selling its products business in 2012 to focus on intellectual property. In 2013, Ericsson agreed to transfer 2,185 patents to Unwired Planet in return for a share of whatever the company could earn licensing them: 20 per cent of anything over $100 million and as much as 70 per cent for income above $500 million.
Unwired Planet says Samsung, Huawei and Google used Ericsson technology: esoteric but essential components that allow a mobile phone to connect to networks. “Things that only engineers talk about,” Mesel said. The first five trials will decide whether the patents are valid.
A final trial will deal with whether Unwired Planet made a reasonable attempt to negotiate licenses for the technology. Unwired Planet hasn’t said how much it might win if the UK cases are successful.
A complicating factor is that the judge can only rule on British patent rights. If Unwired Planet wins, it can use the ruling as leverage for a global settlement.
"Every data point would be part of the negotiation," Mesel said. The company's only previous licensing deal with Lenovo Group in 2014 yielded $100 million. Asked whether the global rights to the patents in the UK cases were worth hundreds of millions of dollars, Mesel said: "I'm not going to disagree."
Previous legal rulings have affected its shares. An adverse preliminary decision in a US case against Google in December sent the stock down nearly 40 per cent. Mark Argento, an analyst at Lake Street Capital Markets, gave Unwired Planet a 'buy' rating on September 13th and set a price target of $4.95. The company is currently trading at less than a dollar.
While intellectual property is "very hard to value," Unwired Planet's lawsuits in the UK and Germany are "progressing nicely", Argento said.
Efforts by Silicon Valley to push legislation in Congress to curb abusive laws suits have been hampered by criticisms lobbed by drugmakers and even some tech companies that say provisions would weaken all patent rights.
“The losers from a world without patent litigation would, in the end, be consumers,” said Haber. Inventors won’t innovate unless they can ensure they are paid for their invention, he argued.
Still, the changing attitudes in the US have made British and German courts more appealing venues for companies with patent claims and Mesel says Unwired Planet has targeted Europe. He is undaunted by hostility towards his firm.
Mesel says he once worked at the same firm as Peter Detkin, one of the attorneys who helped coin the phrase patent troll while working at Intel Corp in the 1990s. Detkin went on to found Intellectual Ventures Management, "probably one of the most widely known patent trolls on the planet," according to Mesel. Mesel recently had dinner with Detkin who joked that "every time someone used the term they owed him a quarter".
– (Bloomberg)
