2G-Amp-3G-Mobile-Communication

2G & 3G Mobile Communication

Contents

1 Executive Summary ...... 3

2 Introduction ...... 4 2.1 Overview of 2G & 3G Technology ...... 4 2.2 Technical Highlights of 2G & 3G ...... 4 2.3 Comparative Study of 2G, 3G & 4G-LTE ...... 5

3 Analysis of the 2G & 3G Patent Landscape ...... 7 3.1 Patent Categories & Distribution ...... 7 3.2 Top Patent Holders ...... 7 3.3 Analysis of Seminal Patents ...... 9 3.4 Analysis of Standard-Essential Patents ...... 12 3.5 Patent Filing and Grant Trends ...... 14

4 Key Players in the 2G & 3G Patent Landscape ...... 15 4.1 Ericsson ...... 15 4.2 Nokia ...... 16 4.3 Qualcomm ...... 17 4.4 Alcatel-Lucent ...... 18 4.5 Samsung ...... 19

5 Monetization of 2G & 3G Patents ...... 20 5.1 Potential Licensing & Litigation of 2G & 3G Patents ...... 21

6 Glossary of Terms ...... 24

2G & 3G Mobile Communication

1 Executive Summary

Emerging technologies such as 4G-LTE attract the lion‟s share of industry and media attention. However, 2G and 3G wireless networks remain highly relevant, currently supporting over 80% of all mobile phone activity. Trends suggest the use of 2G and 3G technologies will expand dramatically during the next three to five years as the world‟s two largest markets, India and China, open their doors wide to mobile phone usage.

Ericsson, Nokia, Qualcomm and Alcatel-Lucent are among those who developed the building blocks of today‟s wireless world. They collectively control the majority of all patents in this space. Nokia, LG Electronics and Qualcomm alone own more than 43 percent of all “seminal” patents (i.e., determined to be strong based on a set of parameters). The playing field has evolved dramatically in recent years, causing these brands to slowly fade from the minds of consumers. However, they will continue to exert an influence on current market leaders such as Apple, Google and Samsung, who control today‟s mobile device ecosystem.

2G and 3G technology patents have been at the center of ongoing patent wars and they can be expected to fuel a significant escalation in activity during the next five years as top patent holders seek to monetize their portfolios. Leading patent holders have already launched initiatives against major competitors, with some having sold patent rights to various companies. It is highly likely, given the increasing pressure on these companies to generate revenue, that many will become more aggressive by entering into new agreements with “patent privateers” to monetize their assets. The result will likely be an increase in litigation and licensing.

So, who stands to benefit in this evolving marketplace? Which companies control the largest number of patents and the largest number of seminal patents in the world of 2G and 3G technologies? Which companies are best positioned to leverage monetization efforts? These are some of the questions addressed in this report.

We explore key 2G and 3G patent holders, providing details on the number and category of overall, standard-essential and seminal patents. The report delves into companies that control a large percentage of seminal and standard-essential patents. Nearly nine percent of seminal 2G and 3G patents are currently held by certain companies, and approximately five percent of all standard-essential patents are held by two companies - Innovative Sonic Ltd. and Vringo Infrastructure Inc. This report also reveals that these companies that hold key 2G and 3G patents have remarkably high patent monetization potential.

2G & 3G Mobile Communication

2 Introduction

2.1 Overview of 2G & 3G Technology

2G was commercially launched in 1991. It introduced digital signaling via packet data in telecommunications, and provided reduced power consumption and noise levels. It also proposed better security methods with digital encryption techniques coupled with lower power usage. SMS, MMS and e-mail were a few packet-based services introduced by 2G. Although highly advanced markets have reached a stage where 2G networks are now being switched off, 2G technologies still account for over 80 percent of connections in China and 90 percent in India - the two largest mobile markets in the world.

With successive technologies such as 2.5G, 2.75G and 3G, the era of ever-increasing data rate demands skyrocketed across the globe. While packet data was introduced in 2G, higher data rates and better data services were brought by 3G. Attractive services such as Mobile TV, Video on Demand, Video Conferencing, Location-Based Services and Global Positioning System (GPS) gradually grew into a necessity for a majority of mobile users. Statistics1 suggest that, as of 2012, more than 500 operators across 185 countries have deployed 3G networks, pointing to the fact that mobile users in more than three-quarters of the world‟s markets have access to 3G services.

2.2 Technical Highlights of 2G & 3G

The 2G Advantage

Lower power consumption, better security and better bandwidth usage are the key advantages of 2G over its precedent technologies. 2G introduced digital encoding in telecommunications, resulting in better compression and multiplexing of voice data than its preceding analog encoding. The advantage: 2G supported a larger number of calls in the same radio bandwidth and ensured lower power consumption that improved battery life in mobile phones.

Digital encryption methods introduced in 2G provided better security and privacy to mobile users. Short Message Service (SMS) and Multimedia Message Service (MMS) became the first form of packet-based services introduced in 2G, marking the beginning of data services on mobile phones.

1 https://gsmaintelligence.com/analysis/2012/11/half-of-all-mobile-connections-running-on-3g-4g-networks-by- 2017/359/

2G & 3G Mobile Communication

The 3G Advantage

3G entered the market with the advantage of increased data rates available to mobile users for services such as Mobile TV, Location-Based Services, video calls and internet browsing on the move. It also provides variable data transfer speeds ranging from 128 kbps to 3 mbps depending on the speed with which the mobile device is moving within the network. Beyond mobile telephony, the higher speeds allowed 3G connections in PCs, gaming consoles, tablets and any other portable device that could benefit from a faster and higher- quality internet connection. 3G also provides users with better security through user authentication capabilities when communicating with other wireless devices.

3G boasts of better power control methods for both uplink and downlink, with the network using a target Signal-to-Interference Ratio (SIR) to adjust its output power. It also improves spectrum utilization through shared channels in the radio interface, thus making it more effective than 2G networks.

2.3 Comparative Study of 2G, 3G & 4G-LTE

2G 3G 4G-LTE Term „mobile Data services such as broadband‟ introduced text messaging because of its speed & Services (SMS), multimedia High definition capability. Introduced messaging (MMS), streaming & IPV6 support. Universal access & internet access & SIM portability across cards. different device types. Throughput/ 3.1 Mbps (peak)/ 100-300 Mbps (peak)/ 9.6/14.4 Kbps. Speed 500-700 Kbps. 3-5 Mbps. E-UTRA (Evolved UMTS GSM - Global System Terrestrial Radio Access) for Mobile as the air interface for UMTS as its core Communication with LTE. Additionally, uses a Technology network architecture technological technology with HSPA protocol. backbone of TDMA called MIMO where the (similar to FDMA). modem uses two separate antennas simultaneously

2G & 3G Mobile Communication

to deliver super-fast speed. Multiple radio standards GSM, GPRS (2.5G) & UMTS & CDMA-2000 Standards unified into a single IP EDGE (2.75G). standards. network. Voice & data could Simultaneous voice & data Voice & Data Simultaneous voice & not be simultaneously support at higher data Support data support. supported. rates. Uses a combination of Uses only packet-switched Consists of only Switching both circuit-switched & networks, thus lowering circuit-switched Techniques packet-switched latency and enhancing call networks. networks. quality. Initially 900MHz spectrum was used, Frequency but later GSM was 1.8 – 2.5 GHz. 2 – 8 GHz. Band introduced on an 1800MHz band.

2G & 3G Mobile Communication

3 Analysis of the 2G & 3G Patent Landscape

3.1 Patent Categories & Distribution

Around 17,268 U.S. patents have been granted in the 2G and 3G domain. The following technology categories were identified based on our analysis of the patent landscape:

Number of U.S. Level 1 Categories Level 2 Categories Patents Backhaul Network 2886 Communication Quality (3840) Congestion Control 577 Handover 377 Error Control 437 Link Adaptation 304 Data Transfer Rate (3871) Shared Traffic Channels 1758 Spreading Codes 942 Transmit Diversity 430 Network Based 292 Positioning (1576) User Equipment Assisted 1102 User Equipment Based 182 Continuous Packet Connectivity 1197 Power Management (1829) Power Control 632 Access Control 1648 Security (4714) Encryption 3066 Location-Based Services 139 Services (1438) Value-Added Services 1299

Table 1: Level 1 & Level 2 technology categories with number of granted U.S. patents

3.2 Top Patent Holders

The top companies in the 2G and 3G landscape with respect to their portfolio size are shown in Figure 1.

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1600 1504 1363

1200 915 793 800 653 638 598 584 488 462 353 346

400 No. of Patents of No.

Figure 1: 2G & 3G Patent Distribution of Top Companies (Source: iRunway analysis based on patent data from USPTO)

* The patent portfolio previously owned by Nortel Networks was acquired by Rockstar Consortium, a patent licensing company that owns and manages a portfolio of more than 4,000 patents.

Table 2 shows the distribution of patents for the top companies across categories:

Patent Distribution across Level 1 Categories Company Comm. Data Power Positioning Security Services Total Quality Transfer Rate Management Ericsson 274 415 94 241 269 211 1504 Nokia 213 272 163 196 381 138 1363 Qualcomm 135 230 108 211 203 28 915 Alcatel-Lucent 229 195 25 83 161 100 793 Samsung 162 299 27 37 84 44 653 AT&T 182 30 33 31 267 95 638 Research in Motion 14 72 12 24 464 12 598 LG 26 387 55 30 57 29 584 Cisco 158 2 7 14 300 7 488 InterDigital 31 300 8 88 29 6 462 Motorola Solutions 58 57 37 74 87 40 353 Nortel Networks* 114 56 32 36 73 35 346 Total 1596 2315 601 1065 2375 745 8697

Table 2: Patent distribution of top companies across Level 1 categories

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Figure 2 below displays the technology evolution tree for the Level 1 categories, with each circle representing the number of patents filed in the corresponding year in each individual category.

Figure 2: Technology Evolution Tree of 2G & 3G U.S. Patent Filings (Source: iRunway analysis based on patent data from USPTO)

3.3 Analysis of Seminal Patents

The entire 2G and 3G portfolio was analyzed and ranked using iRunway‟s portfolio analysis solution – COMPASSSM. A list of seminal 2G and 3G patents was generated based on a combination of manual research and a proprietary algorithm for strength calculation. The seminal patent set constituted the top 5% of ranked patents. The strength of the patents was determined based on multiple parameters such as infringement detection, number of independent and dependent claims, technology activity rate, backward and forward references, age of the patent, etc.

Table 3 illustrates the patent distribution for top seminal patent holders, their share of seminal patents and their share of all 2G and 3G patents:

2G & 3G Mobile Communication

Count of Share of Count of All Share of All Company Name Seminal Seminal 2G & 3G 2G & 3G patents patents patents patents Nokia 143 16.55% 1363 7.89% LG 118 13.66% 584 3.38% Qualcomm 113 13.08% 915 5.30% Ericsson 51 5.90% 1504 8.71% InterDigital 48 5.56% 462 2.68% Alcatel-Lucent 45 5.21% 793 4.59% Samsung 21 2.43% 653 3.78% Siemens 17 1.97% 144 0.83% Nokia Siemens Networks 15 1.74% 173 1.00% Research in Motion 14 1.62% 598 3.46% Broadcom 13 1.50% 309 1.79% Sony Corp 12 1.39% 121 0.70% Cisco 12 1.39% 488 2.83% France Telecom 11 1.27% 45 0.26% Vringo Infrastructure Inc. 10 1.16% 74 0.43% Nortel Networks* 10 1.16% 346 2.00% General Dynamics 10 1.16% 34 0.20% Philips Electronics 7 0.81% 47 0.27%

Table 3: Top Seminal Patent Holders (Source: iRunway analysis based on patent data from USPTO)

Nokia, LG and Qualcomm hold very strong patents in the 2G and 3G domain. While the top six companies listed in the table above collectively hold 60% of all seminal patents, these three companies alone own a combined share of 43%.

In order to better understand the strength and quality of the portfolios that companies hold, iRunway analyzed the ratio of the number of seminal patents to their respective portfolio sizes. Figure 3 shows this metric for the top seminal patent holders:

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30% 29% 24% 25% 20% 20% 14% 15% 15% 12% 12% 10% 10% 9% 10% 10% 6% 4% 5% 3% 3% 2% 2% 3% 0%

Figure 3: Percentage of Seminal Patents in the Portfolio of Each Company (Source: iRunway analysis based on patent data from USPTO)

Analysis of this metric revealed certain interesting insights. Beyond the top patent holders (by portfolio size), certain smaller companies hold key patents in the 2G and 3G domain. In fact, companies having a smaller portfolio but with a higher percentage of seminal patents could be viewed as having higher patent monetization potential. Also:  LG holds a significantly stronger portfolio compared to other large players in the industry.  With a relatively high number of seminal patents, companies such as Vringo and General Dynamics could be viewed as having a small, yet strong, patent portfolio.

Table 4 shows the distribution of seminal patents for top companies across categories:

Distribution of Seminal Patents across Categories Company Comm. Data Power Positioning Security Services Total Quality Transfer Rate Management Nokia 16 25 3 13 59 27 143 LG 0 109 0 3 5 1 118 Qualcomm 17 24 1 21 41 9 113 Ericsson 12 12 0 6 18 3 51 InterDigital 5 29 2 3 7 2 48 Alcatel-Lucent 10 13 1 3 13 5 45 Samsung 1 16 0 1 1 2 21 Siemens 3 6 0 0 6 2 17

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Nokia Siemens Networks 1 3 0 1 6 4 15 Research in Motion 0 2 0 1 11 0 14 Broadcom 6 2 1 0 4 0 13 Sony 1 4 1 0 4 2 12 Cisco 3 0 0 0 9 0 12 France Telecom 1 0 0 0 8 2 11 Vringo Infrastructure Inc. 2 0 0 2 3 3 10 Nortel Networks* 2 1 0 0 7 0 10 General Dynamics 1 7 0 0 2 0 10 Philips Electronics 2 1 0 3 1 0 7 Total 83 254 9 57 205 62 670

Table 4: Distribution of Seminal Patents across Categories (Source: iRunway analysis based on patent data from USPTO)

3.4 Analysis of Standard-Essential Patents

A standard-essential patent in this study is one for which it has been declared (by the patent holder or the standards organization) that practicing one or more of the inventions set forth therein is required in order to comply with a technical standard published by a standards organization in the telecommunications industry. The European Telecommunications Standards Institute (ETSI) is one such standards organization that extensively covers telecom patents.

In our research, we analyzed 854 patents (out of the total portfolio count of 17,268) that have been declared standard-essential by ETSI. These 854 patents are hereinafter referred to as „standard-essential patents‟. Table 5 illustrates the top standard-essential patent holders in the 2G and 3G landscape across categories.

Standard-Essential Patent Distribution across Categories Company Comm. Data Power Positioning Security Services Total Quality Transfer Rate Management Nokia 39 73 10 32 54 19 227 Qualcomm 19 50 20 24 33 0 146 Ericsson 12 34 5 19 11 4 85 Samsung 3 47 0 6 0 1 57 LG 0 35 0 0 3 0 38 InterDigital 0 19 0 15 1 0 35 Nokia Siemens Networks 5 10 2 3 11 2 33

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Nortel Networks* 1 11 2 3 5 0 22 Vringo Infrastructure Inc. 6 1 3 3 3 3 19 Innovative Sonic Limited 0 16 0 1 2 0 19 NTT 0 15 0 3 0 0 18 Motorola Solutions Inc. 1 6 0 9 0 0 16 Huawei 2 3 0 1 7 2 15 Research in Motion 0 0 0 2 12 0 14 Total 88 320 42 121 142 31 744

Table 5: Distribution of Top Standard-Essential Patent Holders across Categories (Source: iRunway analysis based on patent data from ETSI & USPTO)

 80% of all standard-essential patents are owned by the top ten companies on the list.  Nokia leads the list and owns 26% of all standard-essential patents. It has 55% more standard-essential patents than Qualcomm, which stands second on the list.  Qualcomm and Ericsson together own 27% of all standard-essential patents.

An analysis of the percentage of standard-essential patents in the portfolio of each company was done to understand the quality of the portfolio. Figure 4 shows this percentage for top companies that hold standard-essential patents:

60% 53% 50% 40% 30% 26% 19% 20% 17% 16% 6% 9% 7% 8% 6% 7% 8% 10% 5% 2% 0%

Figure 4: Percentage of Standard-Essential Patents in the Portfolio of Each Company (Source: iRunway analysis based on patent data from ETSI & USPTO)

 Innovative Sonic with 53% and Vringo with 26% have the highest proportion of standard-essential patents in their portfolios. Note that Vringo also had a high percentage of seminal patents in its portfolio.

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3.5 Patent Filing and Grant Trends

Figure 5 shows the 2G and 3G patent filing trends of the top 5 companies from 1993-2009:

250

200

150

100

Number ofPatents Number 50

0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Filing Year Alcatel-Lucent Ericsson Nokia Qualcomm Samsung

Figure 5: Patent filing trend of the top 5 companies

Figure 6 shows the 2G and 3G patent grant trend of the top 5 companies from 1995-2012:

300

250

200

150

100

Number ofPatents Number 50

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year of Issuance

Alcatel-Lucent Ericsson Nokia Qualcomm Samsung

Figure 6: Patent grant trend of the top 5 companies

 Ericsson started investing in 2G and 3G technology early, and filed a large number of patent applications as early as 1994.  Nokia accelerated and substantially increased its 2G and 3G IP investments between 1997 and 2005. In the last few years, Ericsson and LG have shown an increase in the number of patent filings, in comparison to the others on the list.

2G & 3G Mobile Communication

4 Key Players in the 2G & 3G Patent Landscape

4.1 Ericsson

 Ericsson focused its 2G and 3G patent investments in the domain of Security, Power Management and Data Transfer Rate, and has over 1,500 U.S. patents. It has a strong presence in the Communication Quality and Services domains.  Ericsson started its research and IP investments on 2G and 3G ahead of all other companies and owns the largest portfolio in this field. The company also has a good number of seminal and standard-essential patents.  Ericsson and Samsung entered into a license agreement on mobile technology in 2002, wherein Ericsson granted Samsung a non-exclusive worldwide license to its patent portfolio for GSM, TDMA, GPRS, EDGE and WCDMA mobile standards2.

Figure 7: Technology Evolution Tree of Ericsson’s 2G & 3G U.S. Patent Filings (Source: iRunway analysis based on patent data from USPTO)

2 www.edn.com/Pdf/ViewPdf?contentItemId=4347452

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4.2 Nokia

 Nokia holds the most number of seminal patents (roughly 17%) and owns patents in all key technologies related to 2G and 3G, especially in Communication Quality, Data Transfer and Security. It also owns the most number of standard-essential patents (227), and has strength in the Data Transfer Rate and Security domains.  The company has been actively involved in monetization through patent sales. . Recently, Nokia sold around 500 of its global patents to Vringo, which includes 109 U.S. patents covering 2G, 3G and 4G technology3.  In September, 2011, MOSAID Technologies Inc. acquired Core Wireless Licensing, which had a portfolio of roughly 2,000 global wireless patents and applications, including 2G and 3G patents originally filed by Nokia4.  Nokia and Qualcomm, market leaders in this domain, entered into a 15-year patent licensing agreement in 2008, which gave Nokia access to all of Qualcomm‟s patents5.

Figure 8: Technology Evolution Tree of Nokia’s 2G & 3G U.S. Patent Filings (Source: iRunway analysis based on patent data from USPTO)

3 http://www.phonearena.com/news/Nokia-sells-500-patents-to-Vringo-for-22-million_id33162 4 http://www.mosaid.com/corporate/news-events/releases-2011/110901.php 5 http://www.qualcomm.com/media/releases/2008/07/23/nokia-and-qualcomm-enter-new-agreement

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4.3 Qualcomm

 Qualcomm has a significant number of patents and patent applications worldwide in CDMA, OFDMA and other technologies. It also owns a nearly 13% share of all seminal patents in the 2G and 3G space, standing third to Nokia and LG.  Qualcomm has the second highest number of standard-essential patents (146). It is the leading patent holder of core patents in advanced 3G mobile technologies, as well as in CDMA and WCDMA standards6.  CDMA2000 1X EV-DO and later revisions use Qualcomm‟s High Data Rate (HDR) system to support packet data rates of up to 2.4 Mbps. Rapid expansion and adoption of CDMA and OFDMA worldwide has ensured uniform growth of license and royalty revenues for the company since the mid-1990s7.

Figure 9: Technology Evolution Tree of Qualcomm’s 2G & 3G U.S. Patent Filings (Source: iRunway analysis based on patent data from USPTO)

6 http://www.qualcomm.com/about/businesses/qtl, http://www.aqsacom.com/resources/pdf/LI-3G-4G- AQSA_WP_2012_01.pdf 7 http://www.qualcomm.com/about/businesses/qtl

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4.4 Alcatel-Lucent

 Alcatel has been a popular name in the telecommunications industry from the early 1990s, long before its merger with Lucent Technologies.  It has focused its patenting efforts in the Communication Quality, Data Transfer Rate and Security domains, owning strong patents in these domains.  It is one of the top five companies owning the most number of 2G and 3G patents, and figures among the top six companies holding the most number of seminal patents.  The company plans to continue to raise funds by licensing its patent portfolio, and has joined hands with RPX Corporation8.

Figure 10: Technology Evolution Tree of Alcatel-Lucent’s 2G & 3G U.S. Patent Filings (Source: iRunway analysis based on patent data from USPTO)

8 http://www.theregister.co.uk/2012/02/14/alcalu_sells_patents/

2G & 3G Mobile Communication

4.5 Samsung

 Samsung has been a key player in the overall telecommunications market for a long time, and owns a significant number of patents relating to Communication Quality and Data Transfer Rate.  9% of the total number of its 2G and 3G patents is declared standard-essential.  Samsung was relatively late in entering the 2G and 3G market and only accelerated its research in the late 1990s. However, the filing and grant trends reveal that, since then, the company‟s research in this space is steadily increasing.

Figure 11: Technology Evolution Tree of Samsung’s 2G & 3G U.S. Patent Filings (Source: iRunway analysis based on patent data from USPTO)

2G & 3G Mobile Communication

5 Monetization of 2G & 3G Patents

The last decade has witnessed an increase in patent infringement lawsuits in the telecommunications industry. Often referred to as “Patent Wars”, these legal battles are predicted to continue at a more active pace in the near future.

It all started in the mid-2000s when the 2G market was growing at a steady pace and all companies holding significant IP in this field started looking at monetization options. The major market players sued each other over various technologies, often with the aim to remove a competitor‟s product from the market. These cases, interestingly, worked both ways, and a majority of them resulted in cross-licensing deals between the litigants. Companies also entered the market through acquisition of strong patents, attracting attention from several industry players who were prepared to shell out millions to own such IP. Here are some examples:

 One important case involving multinational companies was the lawsuit between Ericsson and Samsung. In early 20139, Samsung answered Ericsson‟s claims of patent infringement by countersuing the Swedish multinational, alleging infringement of 20 of Samsung‟s patents, including those related to 2G and 3G wireless standards and device functions. In the same year, Ericsson entered into a licensing deal relating to 2G, 3G and LTE technologies with Unwired Planet.  In 2007, Qualcomm filed patent infringement lawsuits against Nokia in GSM technology. Following this, Nokia paid licensing fees to access all of Qualcomm‟s patents10.  Brandywine Labs has sued over 39 service providers to date, including AT&T, Verizon and Century Link, over DSL patents11.  In 2012, a group of eight telecom service providers, including Alcatel-Lucent and EarthLink, entered into separate patent agreements with visual voicemail provider Klausner Technologies for its consumer and enterprise visual voicemail technologies12.  Fractus, a company that designs and manufactures antennas for mobile handsets and wireless devices, filed lawsuits in 2009 against ten mobile phone companies, claiming

9 http://online.wsj.com/article/SB10001424127887324103504578371902710149908.html 10 http://www.pcworld.com/article/148850/article.html 11 http://www.fiercetelecom.com/story/att-verizon-and-centurylink-embroiled-adsl-patent-fight-brandywine/2013- 01-03 12 http://www.fiercetelecom.com/story/earthlink-alcatel-lucent-among-providers-settle-voicemail-patent-suits- klau/2012-05-18

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infringement of its patents covering internal multiband antennas common to all cell phones, tablets, laptops, navigation devices and other wireless portable devices13.  In 2013, InterDigital filed lawsuits against Samsung, Nokia, Huawei and ZTE claiming infringement of patents applicable to wireless devices with 3G and 4G capabilities14.  In 2013, Ericsson has sued Micromax, an Indian tablet and Smartphone maker, alleging infringement of patents that cover wireless technologies15.

5.1 Potential Licensing & Litigation of 2G & 3G Patents

It is interesting to note that almost 9% of seminal 2G and 3G patents are held by few companies. About 5% of all standard-essential patents are owned by Innovative Sonic Ltd. and Vringo Infrastructure Inc. Table 6 shows the total count of issued U.S. patents of some of the active companies in this sector, including their ownership of seminal and standard- essential patents, and the percentage of seminal and standard-essential patents in their respective portfolios:

% of % of Count of Count of Standard Total Seminal Standard Company Seminal Essential Count Patents in Essential Patents Patents in Portfolio Patents Portfolio Vringo Infrastructure Inc. 74 10 13.5% 19 25.7% Core Wireless Licensing 12 6 50.0% 1 8.3% Pendrell Corporation 39 5 12.8% 0 0% Gemalto 15 4 26.7% 0 0% Intellectual Ventures 13 3 23.1% 0 0%

Table 6: U.S. Patent distribution of Few Companies (Source: iRunway analysis based on patent data from ETSI & USPTO)

Vringo Infrastructure Inc. Vringo works on development and monetization of mobile technologies and intellectual property. The company‟s portfolio includes a combination of patents for technology developed internally and the 500 global patents and applications that it acquired from

13 http://www.reuters.com/article/2012/07/31/idUS154268+31-Jul-2012+BW20120731 14 http://files.shareholder.com/downloads/IDCC/2251043075x0x625722/37ac125c-337c-4cd6-8390- b2afea490fa5/IDCC_News_2013_1_2_General_Releases.pdf 15 http://in.reuters.com/article/2013/03/26/ericsson-micromax-telecom-idINDEE92P0C320130326

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Nokia16 in 2012. The company has also filed some recent patent infringement lawsuits against ZTE Corp in the U.K., France, Australia and Germany17.

 74 of Vringo‟s U.S. patents are relevant to 2G and 3G technology. These patents are spread across all the Level 1 categories, with the most number of patents belonging to Communications Quality (28) and Services (17).  19 of these 74 patents are standard-essential.  10 of its patents are featured in the top seminal patents ranking.

Core Wireless Licensing S.A.R.L. Core Wireless Licensing is a wholly-owned subsidiary of MOSAID, a leading IP management company. The company deals with development and monetization of intellectual property in the telecommunications space. Core Wireless Licensing, like Vringo, has also acquired patents that were initially filed by Nokia.

 12 of Core Wireless‟ patents are relevant to 2G and 3G, with a majority of its patents belonging to the Positioning and Power Management categories.  6 of the 12 patents have been ranked as seminal.  Core Wireless has filed a lawsuit against Apple over one of its patents related to 3GPP standard-essential technology, which it had earlier acquired from Nokia18.

Pendrell Corporation Pendrell is an intellectual property investment, advisory services and asset management firm that is in the business of acquiring, commercializing, managing and licensing IP in the fields of tablets, Smartphone and other consumer electronics.

 Pendrell acquired approximately 125 patents and patent applications worldwide from Nokia through its wholly-owned subsidiary, Helsinki Memory Technologies (HMT)19. The current patent portfolio that Pendrell holds includes inventions conceived by their employees or by global leaders such as IBM, Xerox and Phillips20.  39 of Pendrell‟s patents are relevant to 2G and 3G technology, with five of these ranked as being seminal.

16 http://www.businesswire.com/news/home/20120809005600/en/Vringo-Nokia-Execute-Patent-Purchase- Agreement#.VHMorfmUer8 17 http://www.lightreading.com/document.asp?doc_id=698844 18 http://www.pcworld.com/article/251396/mosaid_subsidiary_sues_apple_over_wireless_patents.html 19 http://www.worldipreview.com/news/nokia-sells-a-chunk-of-patents-to-pendrell 20 http://biz.yahoo.com/e/130308/pco10-k.html

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 All of those 39 patents belong to the Level 1 category relevant to Security.

Gemalto Formed in 2006 with the merger of Gemplus International and Axalto, Gemalto has been one of the leaders in the digital security domain21. It provides software applications for personal security and is a major manufacturer of smart cards.

 15 of Gemalto‟s patents are relevant to 2G and 3G technology and belong to the Security and Communication Quality categories. Four of these 15 are ranked seminal.  In its 2011 annual report, the company announced “temporary postponement of the signing of new licenses.”22 However, considering the strength of its portfolio and strong litigations it had filed in the past, the company could resume its monetization efforts.

Intellectual Ventures Management LLC Intellectual Ventures Management LLC‟s portfolio, which is known as the IV portfolio, has over 70,000 acquired patents and patent applications and 3,000 patent applications for in- house inventions23. The company often acquires patents from smaller firms or individual inventors and aggregates them into a large portfolio, which now comprises patents relating to almost all technical domains. Recently, the company joined hands with NVIDIA to acquire the patent portfolio of IPWireless, a leader in wireless technologies24.

 Its patents in the 2G and 3G domains primarily belong to Communication Quality, Data Transfer Rate and Security categories.  The company earlier involved itself in lawsuits with corporations such as AT&T and Motorola over some of its telecommunications patents25.

The above companies have successful patent monetization programs in place and the industry may see more efforts from these patent holders to monetize their patents through effective licensing and litigation campaigns against key players in the market.

21 http://www.gemalto.com/companyinfo/about/merger/ 22 http://www.businesswire.com/news/home/20120307006629/en/Gemalto-full-year-2011- results#.VHMqPPmUer8 23 http://www.intellectualventures.com/index.php/inventions-patents/patent-portfolio 24 http://nvidianews.nvidia.com/Releases/NVIDIA-and-Intellectual-Ventures-Partner-to-Acquire-Portfolio-of- Wireless-Patent-Assets-7dc.aspx 25 http://www.intellectualventures.com/assets_docs/Complaint.pdf, http://www.intellectualventures.com/assets_docs/Motorola_Complaint.pdf

2G & 3G Mobile Communication

6 Glossary of Terms

1. Communication Quality  Backhaul Network: Backhaul Network comprises intermediate links between the core network and the small sub-networks at the edge of a telecommunication network. It guarantees Quality of service (QoS) to the end customer.  Congestion Control: Congestion control prevents network collapse due to oversubscription of processing or link capabilities of network resources by regulating traffic entry into a telecommunications network and also by taking resource utilization reducing steps.  Handover: Handover is simply a process of transferring a call or a data session from one channel to another to provide uninterrupted service.

2. Data Transfer Rate  Error Control: Error Control are techniques which ensure reliable delivery of data over an unreliable telecommunication network by taking measures to remove errors which may creep in due to channel noise.  Link Adaptation: Link Adaptation, also known as Adaptive Modulation and Coding (AMC), is the process of matching modulation, coding and other signal and coding parameters to the conditions on the radio link.  Shared Traffic Channels: Shared Traffic Channels enable sharing of network resources among a group of users, enabling lower network costs and faster service.  Spreading Codes26: Spreading is basically an operation for increasing signal bandwidth by using channelization (orthogonal) codes and scrambling (pseudo-noise) codes.  Transmit Diversity: Transmit Diversity is a technology of using multiple transmit antennae to transmit identical information bearing signals varying in their transmission characteristics at any given instant.

3. Positioning  Network Based: Network Based techniques make use of the network provider‟s infrastructure to identify the location of the handset in a non-intrusive manner.

26 http://www.comlab.hut.fi/opetus/238/lecture6_ch6.pdf

2G & 3G Mobile Communication

 UE Assisted: UE Assisted methods include methods such as OTDOA that require a mobile phone to determine the time difference between specific signals from several base stations and report it to a network device (SMLC), which then calculates the mobile phone‟s location.  UE Based: UE Based techniques include A-GPS or Assisted GPS in which network signals are used to reduce the time to first fix a GPS satellite to provide faster location determination of the mobile phone.

4. Power Management  Continuous Packet Connectivity: Continuous Packet Connectivity includes Discontinuous Transmission (DTX), Discontinuous Reception (DRX) and HSCCH-less operation, which provide an always-on experience to the end-user while increasing battery life by almost 15%.  Power Control: Power Control is a mechanism for setting appropriate transmission power level of the mobile phone to ensure reliable quality of service.

5. Security  Access Control: Network Access Control unifies a wide range of technologies to ensure end-point security. This includes host intrusion prevention, vulnerability assessment, user or system authentication and network security enforcement.  Encryption: Encryption here refers to technologies pertaining to network security and cryptography that maintain confidentiality of data transmitted over a wireless network by ensuring strong data encryption and transmission over a secure channel.

6. Services  Location-Based Services: Location-Based Services cover a wide range of services, including social networking, navigation, exploration etc. that are provided using location information of the mobile handset.  Value Added Services: Value Added Services include all telecommunications services that are not core services, i.e. call or fax transmission. These include MMS, SMS, IMS and Intelligent Networks based technologies.

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