Small U.S. firm takes on Samsung, Huawei over patent claim

Across the river from Reno’s casino district, 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 dollars in royalties to Unwired Planet, which is currently valued at about $85 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 U.S. for legislation to combat so-called patent trolls.

“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 in a phone interview. “We were in the innovation business.”

The company was once known as Openwave Systems which developed mobile software before losing ground to rivals Nokia Oyj 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 percent of anything over $100 million and as much as 70 percent 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 U.K. 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.

Bloomberg