Judgment rendered on May 16, 20142013 (Ne) 10043, Appeal case seeking declaratory judgment of absence of obligations(Judgment in prior instance: Tokyo District Court 2011 (Wa) 38969)
Date of conclusion of oral argument: March 31, 2014

Judgment
Appellant:
Samsung Electronics Co., Ltd.
Counsel attorneys:
OHNO Seiji
Same as above:
MIMURA Ryoichi
Same as above:
TANAKA Masato
Same as above:
ICHIHASHI TomomineSame as above:
INOUE Yoshitaka
Same as above:
KOBAYASHI HideakiSame as above:
IIZUKA Akio
Same as above:
INOUE Soh
Same as above:
TSUJIMOTO Kensuke
Same as above:
OKADA HiroakiCounsel patent attorney: SUZUKI Mamoru
Patent attorney as assistant in court:
OTANI Kan
Appellee:Apple Japan Godo Kaisha(Successor in litigant's status from Apple Japan
Kabushiki Kaisha)Counsel attorneys: NAGASAWA Yukio
Same as above:
YAKURA Chie
Same as above:
NAGAI Hideto
Same as above:
INASE Yuichi
Same as above:
Same as above:
Same as above:
Same as above:
Same as above:
Same as above:

ISHIHARA Naoko
KANEKO Shinsuke
KURAHARA Shinichiro
KATAYAMA Eiji
KITAHARA Junichi
OKAMOTO Naomi
1

Same as above:
IWAMA Chitaka
Same as above:
KAJINAMI ShoichiroCounsel patent attorneys: OTSUKA Yasunori
Same as above:
KATO Shimako
Patent attorneys as assistant in court:
OTSUKA YasuhiroSame as above:
SAKATA Yasuhiro

Main text
1. The judgment in prior instance shall be modified as follows.
2. The court confirms that the appellant does not have a right to seek
damages from the appellee on the ground of the infringement ofPatent No. 4642898, with regard to the appellee's production,
assignment, lease, import, or offering for the assignment or lease(including displaying for the purpose of assignment or lease) of eachproduct specified in 1 and 3 of the List of Products attached hereto.
3. The court confirms that the appellant's right to seek damages fromthe appellee on the ground of the infringement of Patent No.
4642898, with regard to the appellee's production, assignment, lease,
import, or offering for the assignment or lease (including displaying
for the purpose of assignment or lease) of each product specified in 2
and 4 of the List of Products attached hereto, does not exceed JPY
9,955,854 plus the amount of interest accrued thereon at the rate of
5% per annum from September 28, 2013 until the full payment
thereof.
4. The court dismisses the appellee's claims other than the above.
5. The aggregate court costs for the first instance and the second
instance shall be equally divided into three, of which two-thirds shallbe borne by the appellant, and one-third by the appellee.
6. The additional period for the appellant to file a final appeal and apetition for acceptance of final appeal against this judgment shall bethirty (30) days.

No. 1 Gist of the appeal
2

1. The judgment in prior instance shall be revoked.
2. The claims of the appellee shall be dismissed.
3. The court costs for the first instance and the second instance shall be borne by theappellee.
No. 2 Background
1. Summary of caseThis is a court case wherein the appellee (the plaintiff in the first instance) allegesthat its production, assignment, import or other acts in relation to the products
specified in the List of Products attached hereto (hereinafter collectively referred toas the "Products"; the product stated in No. 1 of said list shall be referred to as"Product 1" and the product stated in No. 2 of said list as "Product 2," etc.) does notconstitute an act of infringement of the patent right of the appellant (the defendant in
the first instance) under Patent No. 4642898 for the invention titled "method andapparatus for transmitting/receiving packet data using a pre-defined length indicatorin a mobile communication system" (this patent is hereinafter referred to as the"Patent"; the patent right as the "Patent Right"), and seeks a declaratory judgment toconfirm that the appellant is not entitled to seek damages due to the appellee's tort ofinfringing the Patent Right in relation to the appellee's acts as mentioned above.
In the judgment in prior instance, the court of first instance upheld all of theappellee's claims, holding that Products 1 and 3 do not fall within the technicalscope of the inventions for the Patent, and that the appellant's exercise of the right toseek damages based on the Patent Right for Products 2 and 4 constituted the abuseof right in spite of these products falling within the technical scope of the Patent.
The appellant filed this appeal against said judgment.
2. Undisputed facts, etc. (the facts without any indication of the evidence are thewell-known or undisputed facts, or the facts found from the entire import of oral
arguments)(1) PartiesA.

The appellee is a limited liability company ("godo kaisha" under the laws ofJapan) whose business objectives are sale, etc. of personal computers, hardware
and software for computer-related devices, and ancillary devices for computers.
The appellee implemented an absorption-type merger of Apple Japan K.K., asubsidiary company of Apple Incorporated, a U.S. corporation, (hereinafterreferred to as "Apple Inc.") on October 30, 2011, and succeeded to the status of3

Apple Japan K.K. in this action (hereinafter the term "appellee" includes AppleJapan K.K. before the abovementioned absorption-type merger).
B. The appellant is a South Korean corporation whose business objectives are
manufacturing, sale, etc. of electric machine devices, communication andrelated machine devices, and their component parts.
(2) Patent Right
A. The appellant (the name as it appears on the patent registry is "Samsung
Electronics Company Limited") filed an international application for the Patent(the PCT international application number is PCT/KR2006/001699, its priority
date is May 4, 2005, its priority country is South Korea, and the JapaneseB.

application number is Patent Application No. 2008-507565; hereinafter referred
to as the "Patent Application") on May 4, 2006, and obtained the registration of
establishment of the Patent Right on December 10, 2010 (Exhibits Ko No. 1-1
and No. 1-2).
The claims of the Patent comprise Claims 1 to 14. Claims 1 and 8 read as
follows (the invention of Claim 8 is hereinafter referred to as "Invention 1" andthe invention of Claim 1 as "Invention 2," and these Inventions 1 and 2 shall behereinafter collectively referred to as the "Inventions").
"[Claim 1] A method of transmitting data in a mobile communication system,comprising: a stage of receiving a service data unit (SDU) from a higher layerand determining whether the SDU is included in one protocol data unit (PDU);
if the SDU is included in one PDU, a stage of configuring the PDU including aheader and a data field, wherein the header includes a sequence number (SN)field, and a one-bit field indicating that the PDU includes the whole SDU in thedata field without segmentation/concatenation/padding; if the SDU is notincluded in one PDU, a stage of segmenting the SDU into a plurality ofsegments according to the transmittable PDU size, and the data field of each
PDU configuring a plurality of PDUs comprising one of said plurality ofsegments, wherein headers of the PDUs include an SN field, a one-bit fieldindicating the presence of at least one length indicator (LI) field and said atleast one LI field; if the data field of the PDU includes an intermediate segmentof the SDU, a stage, wherein the LI field is set to the pre-defined value
indicating the presence in the PDU of an intermediate segment which is neither
the first nor last segment of the SDU, and the PDU is sent to a receiver.
"[Claim 8] An apparatus for transmitting data in a mobile communication
system, comprising: a transmission buffer for receiving a service data unit
4

(SDU) from a higher layer, determining whether the SDU is included in one
protocol data unit (PDU), and reconfiguring the SDU to at least one segment
according to the transmittable PDU size; a header inserter for configuring atleast one PDU including a serial number (SN) field and a one-bit field in aheader, and said at least one segment in a data field; a one-bit field setter for
setting the one-bit field to indicate that the PDU includes the whole SDU
without segmentation/concatenation/padding in the data field, if the SDU is
included in one PDU, and for setting the one-bit field to indicate the presenceof at least one length indicator (LI) field, if the data field of the PDU includes
an intermediate segment of the SDU; an LI inserter for inserting and setting anC.

LI field after the one-bit field in said at least one PDU if the SDU is notincluded in one PDU, wherein if the data field of the PDU includes anintermediate segment of the SDU, the LI field is set to the pre-defined value
indicating the presence in the PDU of an intermediate segment which is neither
the first nor last segment of the SDU; and a transmitter for sending at least one
PDU received from the LI inserter to a receiver."The constituent features of each of the Inventions are as follows (each of theconstituent features shall be hereinafter referred to as "Constituent Feature A,""Constituent Feature B," etc.)(A) Invention 1 (Claim 8)[A] An apparatus for transmitting data in a mobile communication
system, comprising:[B] a transmission buffer for receiving a service data unit (SDU) from ahigher layer, determining whether the SDU is included in one
protocol data unit (PDU), and reconfiguring the SDU to at least one
segment according to the transmittable PDU size;[C] a header inserter for constructing at least one PDU including a serial
number (SN) field and a one-bit field in a header, and said at least
one segment in a data field;[D] a one-bit field setter for setting the one-bit field to indicate that the
PDU
includes
the
whole
SDU
without
segmentation/concatenation/padding in the data field, if the SDU is
included in one PDU, and for setting the one-bit field to indicate thepresence of at least one length indicator (LI) field, if the data fieldof the PDU includes an intermediate segment of the SDU;
[E] an LI inserter for inserting and setting an LI field after the one-bit
5

field in said at least one PDU if the SDU is not included in one
PDU,[F] wherein if the data field of the PDU includes an intermediatesegment of the SDU, the LI field is set to the pre-defined value
indicating the presence in the PDU of an intermediate segment
which is neither the first nor the last segment of the SDU;
[G] and a transmitter for sending at least one PDU received from the LI
inserter to a receiver.
[H] an apparatus for transmitting data which comprises the features [B]
to [G] above.
(B)

Invention 2 (Claim 1)[I] A method of transmitting data in a mobile communication system,comprising:[J] a stage of receiving a service data unit (SDU) from a higher layerand determining whether the SDU is included in one protocol data
unit (PDU);[K] a stage of constructing the PDU including a header and data field, if
the SDU is included in one PDU, wherein the header includes asequence number (SN) field, and a one-bit field indicating that the
PDU includes the whole SDU in the data field without
segmentation/concatenation/padding;[L] if the SDU is not included in one PDU, a stage of segmenting the
SDU into a plurality of segments according to the transmittable
PDU size, and the data field of each PDU constructing a plurality of
PDUs comprising one of the plurality of segments, wherein headersof the PDUs include a SN field, at least a one-bit field indicating thepresence of a length indicator (LI) field and said at least one LI
field;[M] if the data field of the PDU includes an intermediate segment of the
SDU, a stage wherein the LI field is set to the pre-defined value
indicating the presence in the PDU of an intermediate segment
which is neither the first nor the last segment of the SDU;
[N] and the PDU is sent to a receiver.
[O] a method of transmitting data which comprises the features [J] to[N] above.

6

(3) Appellee's acts, etc.
A. The appellee is engaged in import and sale of the Products manufactured byApple Inc.
B. (A) The Products satisfy Constituent Features A and H of Invention 1.
(B) The method of data transmission incorporated into the Products satisfies
Constituent Features I and O of Invention 2.
C. The Products conform to the UMTS (Universal Mobile Telecommunications
System) standard, which is the telecommunications standard developed by
3GPP (Third Generation Partnership Project). 3GPP is a private organization
established for the purposes of the dissemination of the third-generation mobile
telecommunication system or mobile telephone system (3G), as well as theinternational standardization of the related specifications (Exhibits Otsu No. 1
to No. 5; the telecommunications standard developed by 3GPP may behereinafter referred to as "3GPP Standards").
The UMTS standard, comprising of a large number of technical specifications,collectively refers to the third-generation mobile telecommunication systemdeveloped by 3GPP. The UMTS standard covers various wirelesscommunication systems, such as the W-CDMA method (Wideband CodeDivision Multiple Access; Generally, the term "W-CDMA" is sometimes used
to mean the UMTS standard; however, the term "W-CDMA" in this judgment
refers to the method specified in the 25 Series of 3GPP technical specification(hereinafter, technical specification is sometimes referred to as "TS")) and the
LTE method (Long Term Evolution, as specified in the 36 Series of 3GPP TS).
(4) FRAND declaration for the Patent
A. ETSI (European Telecommunications Standards Institute), one of the standard
organizations which established 3GPP, provides the "Intellectual Property
Rights Policy" as the guidelines for the treatment of intellectual property rights(IPRs).
The IPR Policy of ETSI (effective as of April 8, 2009) contains the following
Clauses (Exhibit Ko No. 12 and No. 160, the original text is English):"3. Policy Objectives
3.1 It is ETSI's objective to create STANDARDS and TECHNICALSPECIFICATIONS that are based on solutions which best meet the technicalobjectives of the European telecommunications sector, as defined by theGeneral Assembly. In order to further this objective the ETSI IPR POLICY
seeks to reduce the risk to ETSI, MEMBERS, and others applying ETSI
7STANDARDS and TECHNICAL SPECIFICATIONS, that investment in the
preparation, adoption and application of STANDARDS could be wasted as aresult of an ESSENTIAL IPR for a STANDARD or TECHNICALSPECIFICATION being unavailable. In achieving this objective, the ETSI IPRPOLICY seeks a balance between the needs of standardization for public use in
the field of telecommunications and the rights of the owners of IPRs.
3.2 IPR holders whether members of ETSI and their AFFILIATES or third
parties, should be adequately and fairly rewarded for the use of their IPRs in
the implementation of STANDARDS and TECHNICAL SPECIFICATIONS.
4.
Disclosure of IPRs
4.1 ….. each MEMBER shall use its reasonable endeavours, in particularduring the development of a STANDARD or TECHNICAL SPECIFICATION
where it participates, to inform ETSI of ESSENTIAL IPRs in a timely manner.
In particular, a MEMBER submitting a technical proposal for a STANDARD
or TECHNICAL SPECIFICATION shall, on a bona fide basis, draw theattention of ETSI to any of that MEMBER's IPR which might be ESSENTIAL
if that proposal is adopted.
4.3 The obligations pursuant to Clause 4.1 above are deemed to be fulfilled
in respect of all existing and future members of a PATENT FAMILY if ETSI
has been informed of a member of this PATENT FAMILY in a timely manner.
6.
Availability of Licenses
6.1 When an ESSENTIAL IPR relating to a particular STANDARD or
TECHNICAL SPECIFICATION is brought to the attention of ETSI, theDirector-General of ETSI shall immediately request the owner to give within
three months an irrevocable undertaking in writing that it is prepared to grantirrevocable licenses on fair, reasonable and non-discriminatory ("FRAND")conditions under such IPR to at least the following extent:
・MANUFACTURE, including the right to make or have made customized
components and sub-systems to the licensee's own design for use in
MANUFACTURE;
・sell, lease, or otherwise dispose of EQUIPMENT so MANUFACTURED;・repair, use, or operate EQUIPMENT; and・use METHODS.
The above undertaking may be made subject to the condition that those who
seek licenses agree to reciprocate.
6.2 An undertaking pursuant to Clause 6.1 with regard to a specified member8

of a PATENT FAMILY shall apply to all existing and future ESSENTIAL IPRsof that PATENT FAMILY unless there is an explicit written exclusion of
specified IPRs at the time the undertaking is made. The extent of any suchexclusion shall be limited to those explicitly specified IPRs.
6.3 As long as the requested undertaking of the IPR owner is not granted, theCOMMITTEE Chairmen should, if appropriate, in consultation with the ETSISecretariat use their judgment as to whether or not the COMMITTEE should
suspend work on the relevant parts of the STANDARD or TECHNICALSPECIFICATION until the matter has been resolved and/or submit for
approval any relevant STANDARD or TECHNICAL SPECIFICATION.
12. The POLICY shall be governed by the laws of France.
15. Definitions (Note: In this judgment, the terms "essential," "IPR,""member" and "patent family" shall be used with the same meaning as ascribedin the following definitions.)
6. "ESSENTIAL" as applied to IPR means that it is not possible ontechnical (but not commercial) grounds, taking into account normal
technical practice and the state of the art generally available at the time ofstandardization, to make, sell, lease, otherwise dispose of, repair, use oroperate EQUIPMENT or METHODS which comply with a STANDARD
without infringing that IPR. For the avoidance of doubt in exceptional cases
where a STANDARD can only be implemented by technical solutions, allof which are infringements of IPRs, all such IPRs shall be considered
ESSENTIAL.
7. "IPR" shall mean any intellectual property right conferred by statute law
including applications therefor other than trademarks. For the avoidance of
doubt rights relating to get-up, confidential information, trade secrets or the
like are excluded from the definition of IPR. …
9. "MEMBER" shall mean a member or associate member of ETSI.
References to a MEMBER shall wherever the context permits beinterpreted as references to that MEMBER and its AFFILIATES. …

B.

13. "PATENT FAMILY" shall mean all the documents having at least onepriority in common, including the priority document(s) themselves. For the
avoidance of doubt, "documents" refers to patents, utility models, andapplications therefor.
(A) On December 14, 1998, the appellant made an undertaking (declaration)
to ETSI that it was prepared to license its essential IPR relating to9

W-CDMA technology supported by ETSI as the UMTS standard on "fair,reasonable and non-discriminatory terms and conditions" (hereinafterreferred to as the "FRAND Terms") in accordance with ETSI IPR Policy
Clause 6.1 (Exhibit Ko No. 5).
(B) On August 7, 2007, the appellant, in accordance with ETSI IPR Policy
Clause 4.1, notified ETSI of the number of the South Korean patentapplication which served as the basis for the priority claim for the Patent
Application and the international application number of the Patent
Application (PCT/KR2006/001699), and declared that the IPRs relating tothese applications are or highly likely will be an essential IPR for the
UMTS standard (such as TS 25.322), with a declaration that it was
prepared to grant an irrevocable license in accordance with the licensing
terms and conditions complying with ETSI IPR Policy Clause 6.1 (i.e. the
FRAND Terms; and this declaration shall be hereinafter referred to as the"FRAND Declaration")(Exhibit Ko No.13). The FRAND Declaration
contained the provision that the validity, etc. thereof shall be governed by
the laws of France, and the provision to make such undertaking subject tothe condition that prospective licensees agree to reciprocate.
(5) Background history of this action
A. On April 21, 2011, the appellant, alleging that the appellee's acts of production,

B.

C.

assignment, import, etc. of the Products constitutes direct or indirect
infringement of the Patent Right in relation to the Inventions (Article 101, item(iv) and (v) of the Patent Act), filed a petition for a provisional disposition
order to seek an injunction against the appellee's production, assignment,
import, etc. of the Products. The right sought to be preserved by thisprovisional disposition was the right to seek an injunction under Article 102 of
the Patent Act (Tokyo District Court, 2011 (Yo) 22027; hereinafter referred toas the "Petition for Provisional Disposition").
The appellee filed this action on September 16, 2011.
On December 6, 2011, the appellant filed a similar petition for a provisional
disposition for the product named "iPhone 4S" (Tokyo District Court 2011 (Yo)22098; hereinafter referred to as the "Additional Petition for Provisional
Disposition").
Thereafter, on September 24, 2012, the appellant partially withdrew the
Petition for Provisional Disposition in relation to Products 1 and 3.
On February 28, 2013, the Tokyo District Court rendered the judgment in prior10

instance. On the same day, the Tokyo District Court rendered the decisions to
dismiss the Petition for Provisional Disposition and the Additional Petition for
Provisional Disposition respectively, holding that the appellant's exercise of the
Patent Right constitutes the abuse of right.
3. Issues
The issues disputed in this action are as follows: [i] whether the Products fall within
the technical scope of Invention 1 (Issue 1); [ii] whether the Patent Right for Invention 2
has been indirectly infringed upon (Article 101, items (iv) and (v) of the Patent Act)
(Issue 2); [iii] whether restrictions pursuant to Article 104-3, paragraph (1) of the Patent
Act may be imposed on the exercise of the Patent Right for the Inventions (Issue 3); [iv]whether the Patent Right for the Products has been exhausted (Issue 4); [v] whether alicense agreement in relation to the Patent Right has been formed based on theappellant's FRAND Declaration (Issue 5); [vi] whether the appellant's exercise of theright to seek damages based on the Patent Right constitutes an abuse of right (Issue 6);
and [vii] the amount of damages (Issue 7).
No. 3 Parties' allegations on disputed issues
1. Issue 1 (whether the Products fall within the technical scope of Invention 1)(1) Appellant's allegations
A. Structure of the Products(A) The Products conform to the UMTS standard (W-CDMA method), which isone of the standards developed by 3GPP. It has the structures set forth in"3GPP TS 25.322 V6.9.0," the technical specification of 3GPP standards
developed by 3GPP in September 2006 (Exhibit Ko No. 1-3 and Exhibit
Otsu No. 6; hereinafter referred to as the "Technical Specification V6.9.0").
In addition, according to the subclauses "4.2.1.2 Unacknowledged mode(UM) RLC entities," "4.2.1.2.1 Transmitting UM RLC entity," "9.2.1.3
UMD PDU," "9.2.2.5 Extension bit (E)" and "9.2.2.8 Length Indicator(LI)" of Technical Specification V6.9.0 (these subclauses shall behereinafter referred to as "Subclause 4.2.1.2," "Subclause 4.2.1.2.1," etc.),
all of the Products have the following structures (each of the structures
shall be hereinafter referred to as "Structure (a)," "Structure (b)," etc.)
a. The Products are devices for transmitting data in a mobile
communication system.
b. The Products have transmission buffers for receiving a service data unit
(SDU) from a higher layer, and segmenting the SDU to a size
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appropriate to the protocol data unit (PDU) if the SDU is larger than theavailable space of one PDU (See Subclauses 4.2.1.2 and 4.2.1.2.1
referred to in Sections 1 and 2 of 3GPP TS25.322 V6.9.0 (Summary)attached hereto (hereinafter referred to as the "Attachment TS")).
c. The Products have header inserters, which add to the data a UMD
header containing a sequence number (SN) and an E-bit field and an
RLC header containing a length indicator (LI) (See Subclause 9.2.1.3
referred to in Section 3 of Attachment TS).
d. If the SDU contained in the PDU is a complete one without
segmentation/concatenation/padding, the header inserter is set to '0,'which shows that the PDU contains a complete SDU. If the SDU
contained in the PDU is not a complete one, the header inserter is set to'1,' which shows the presence of a length indicator in the E-bit (See
Subclause 9.2.2.5 referred to in Section 4 of Attachment TS).
e. If the SDU is not included in one PDU, the header inserter inserts an LI
field after the E-bit field in at least one PDU (See Subclause 9.2.2.8
referred to in Section 5(1) of Attachment TS).
f. If the PDU data field contains a segment which is neither the first nor
the last segment of the SDU, the header inserter sets the pre-definedvalue of an LI field ('111 1110' or '111 1111 1111 1110'), indicating that
the PDU contains a segment which is neither the first nor the last
segment of the SDU (See Subclause 9.2.2.8 referred to in Section 5(2)of Attachment TS).
g. The Products have transmitters for sending at least one PDU received
from the header inserter to the receiving entity.
h. The Products are devices for the transmission of data.
(B) a. According to the report on the demonstration test by Chipworks Inc., a
Canadian corporation (hereinafter referred to as the "Demonstration
Test"; Exhibit Otsu No. 13), Products 2 and 4 implement the functions
based on the "alternative E-bit interpretation" as specified in Technical
Specification V6.9.0 (Subclauses 9.2.2.5 and 9.2.2.8). This finding is
also evidenced by an expert opinion prepared by Professor A of the
University of Electro-Communications (Exhibit Otsu No. 14).
(a) In the Demonstration Test, a radio tester named "CM W500
universal radio communication tester" (hereinafter referred to as"CMW500") manufactured by Rohde & Schwarz, a German12corporation, was used as the "base station emulator." CMW500 is a
device supporting the W-CDMA method and is capable of creating acommunication environment which is exactly the same as the real
network environment (Exhibit Otsu No. 14, Page 10 and Exhibit
Otsu No. 41).
CMW500 has been certified by several international bodies, such as
GCF (Global Certification Forum) and PTCRB (PCS Type
Certification Review Board).
Test 1 (PDU Size: 488-bit, SDU size: 480-bit) was the test for the
combination of the data size for the "case in which the PDU
containsacomplete
SDU
without
segmentation/concatenation/padding." The reason for the value ofthe SDU size being larger than the PDU by eight bits was due totaking into account the addition of an 8-bit PDU header (7 serial
number (SN) bit + 1 E-bit) when the SDU is converted to a PDU(Exhibit Otsu No. 14, Page 10).
Test 2 (PDU Size: 80-bit, SDU size: 480-bit) was the test for the
combination of data size in which a PDU which is neither the firstnor last one (e.g. the second PDU) is an "intermediate segment."
This test aims to monitor the PDU as the intermediate segment(Exhibit Otsu No. 14, Page 11).
(b) The findings of the Demonstration Tests were as follows:(i) If the PDU includes the whole of SDU (Test 1), the E-bit
following the sequence number (SN) is '0,' and a PDU without alength indicator (LI) is output (Exhibit Otsu No. 13, Figures 12
and 14).
(ii) If the PDU contains an intermediate segment of an SDU (Test 2),
the E-bit following the sequence number (SN) is '1,' and a PDU
containing a pre-defined value '1111110' as an LI is output(Exhibit Otsu No. 13, Figures 13 and 15).
(c) Subclause 9.2.2.5 provides that, when interpreting the alternative
E-bit, the E-bit is configured as '0' if the "next field is a complete
SDU, which is not segmented, concatenated or padded," or '1' if the"next field is a Length Indicator and E-bit." Subclause 9.2.2.8
provides that in the case where the "alternative E-bit interpretation"is configured and a PDU contains an intermediate segment of an
13

SDU, and if a 7-bit length indicator is used, the length indicatorwith value '111 1110' shall be used.
The values of the E-bit and length indicator (see (b) above) obtained
as a result of the Demonstration Test agree with the function basedon the alternative E-bit interpretation as referred to in Technical
Specification V6.9.0. This indicates that Products 2 and 4
implement the aforementioned functions.
b. In this regard, the appellee alleges that the Demonstration Test uses the"normal E-bit interpretation" as specified in Subclause 9.2.2.5 ofTechnical Specification V6.9.0 (See Section 4 of Attachment TS), insteadof the alternative E-bit interpretation, because the "Interpretation" sectionof the Demonstration Test findings reads "next octet: data" and does not
mention "a complete SDU without segmentation/concatenation/padding."
However, for the configuration of the alternative E-bit interpretation as
well, if the E-bit is set to '0,' the following bit sequence is "data" (which isthe "data" of a "complete SDU"). Accordingly, there is no discrepancy
between the statement of "next octet: data" in the "Interpretation" section
and the use of the alternative E-bit interpretation in the Demonstration
Test.
In addition, when the appellant confirmed the results of the comparative
test based on the normal E-bit interpretation (i.e. the case where thecheckbox of "altE_bitinterpretation" of the options window of CMW500(Exhibit Otsu No. 13, Figure 11) is not ticked), the configurations of PDU
headers were different depending on whether the checkbox was ticked,
and, the PDU header according to the normal E-bit interpretation was
output if the checkbox was not ticked (Exhibit Otsu No. 55, Pages 35 to38). These comparative test results obviously show that the alternative
E-bit interpretation was used in the Demonstration Test, not the normal
E-bit interpretation.
On the basis of the foregoing, the appellee's allegations as mentionedB.

above are groundless.
Satisfaction of Constituent Features B and D(A) As explained below, the alternative E-bit interpretation referred to in
Subclause 9.2.2.5 of Technical Specification V6.9.0 discloses Constituent
Features B and D of Invention 1.
Invention 1 has the following structures: "determining whether the SDU is
14

included in one protocol data unit (PDU)" (Constituent Feature B); and"setting the one-bit field to indicate that the PDU fully contains the SDU
without segmentation/concatenation/padding in the data field, if the SDU
is included in one PDU" (Constituent Feature D).
According to the wording of Constituent Feature D, as well as Paragraph[0022] and Figure 5A of the description of the Patent (Exhibit Ko No. 1-2;
the description and the drawings shall be hereinafter collectively referred
to as the "Patent Description"), the case in which the "SDU is included in
one PDU" means the case in which the "PDU contains the whole of SDU
without segmentation/concatenation/padding in the data field," namely,
the case in which the "SDU size completely matches the size of the PDU
payload." The case where the SDU is contained in the PDU after
concatenation or padding is excluded.
Furthermore, Subclause 9.2.2.5 indicates that, in relation to the"alternative E-bit interpretation," if the "next field is a complete SDU,
which is not segmented, concatenated or padded," namely, if the SDU iscompletely contained in (completely matches) the PDU, the E-bit is set to'0,' or otherwise as '1' (See Section 4 of Attachment TS). This statement of
Subclause 9.2.2.5 can be understood as requiring the determination as towhether the SDU is completely contained in (completely matches) the
PDU and the configuration of E-bit as above in accordance with the resultof such determination. Therefore, such statement discloses the structure ofConstituent Feature B for "determining whether the SDU is included in
one protocol data unit (PDU)," and the structure of Constituent Feature D
for "setting the one-bit field to indicate that the PDU fully contains the
SDU." Meanwhile, with regard to the relationship between Subclauses
4.2.1.2.1 (See Section 2 of Attachment TS) and 9.2.2.5, it can bereasonably understood that Subclause 4.2.1.2.1 merely provides a generalstatement for the determination of whether the SDU is larger than the
PDU without regard to the type of E-bit, and that the specific method forC.

comparison in the case of use of the alternative E-bit interpretation is
specified in Subclause 9.2.2.5.
(B) On the premises of the foregoing, Structures (b) and (d) of the Products
satisfy Constituent Features B and D, respectively.
Satisfaction of Constituent Features C, E, F and G
Structure (c) of the Products satisfies Constituent Feature C, Structure (e)15D.

satisfies Constituent Feature E, Structure (f) satisfies Constituent Feature F, andStructure (g) satisfies Constituent Feature G, respectively.
Summary(A) As mentioned above, the Products satisfy Constituent Features B to G ofInvention 1, and also Constituent Features A and H as already mentionedin (3)B. of the section of "Undisputed facts, etc."
Therefore, the Products fall within the technical scope of Invention 1 asthey satisfy all of the Constituent Features of Invention 1.
(B) Contrary to this, the appellee alleges that the Products do not fall within
the technical scope of Invention 1. The appellee's reasoning for thisallegation is that, for the Products to be considered to fall within thetechnical scope of Invention 1, it is necessary to prove that the Products
implement all functions stated in the Constituent Features of Invention 1
on the real network; however, the alternative E-bit interpretation is only
optional to the normal E-bit interpretation, and there is no evidence thatthe telecommunication service providers' networks are configured to use
the alternative E-bit interpretation.
However, as long as the Products satisfy all of the Constituent Features ofInvention 1 and have a structure to implement the alternative E-bit
interpretation, they can be considered as falling within the technical scopeof Invention 1, and the question of whether the telecommunication service
providers' actual networks are configured to use the alternative E-bit
interpretation is irrelevant to the question of whether the Products fallwithin the technical scope of Invention 1.
Therefore, the abovementioned allegation of the appellee is groundless.
(2) The appellee's allegations
A. Structure of the Products(A) The processing tasks relating to the UMTS standard are implemented by
the baseband chip installed in the Products (the baseband chip installed in
the Products shall be hereinafter referred to as the "Baseband Chip"). The
Baseband Chip is the product of Intel Corporation, and Apple Inc.
purchases it through Intel Americas, Inc., which is Intel Corporation's
wholly-owned subsidiary company, and installs it in the Products.
Products 1 and 3 install Intel's baseband chip "PMB8878." This baseband
chip "PMB8878" conforms to 3GPP standards called "Release 5"
publicized before the priority date of the Patent Application, and this16

version does not reflect the alternative E-bit interpretation. Therefore, theappellee refutes the appellant's allegation that Products 1 and 3 satisfy
Structures (b) to (g).
In addition, the appellee has no knowledge as to whether Products 2 and 4
satisfy Structures (b) to (g) as alleged by the appellant.
(B) a. The Demonstration Test report relied upon by the appellant (Exhibit
Otsu No. 13) does not support that Products 2 and 4 implement thefunctions based on the alternative E-bit interpretation.
In this Demonstration Test, the test mobile device was connected to theemulator, which plays the role of base station, and the data transmitted
from such mobile device to the emulator was only tested by the data
analysis software. Thus, as such test was performed merely under thetesting environment, instead of on the real networks, the result of thetest cannot be the evidence of the Products' capability to implement thefunctions based on the alternative E-bit interpretation on the real
network.
b. In addition, as the Demonstration Test report (Exhibit Otsu No. 13)
contains the following deficiencies or problems, such report cannot be
the evidence that Products 2 and 4 implement the functions based on
the alternative E-bit interpretation.
(a) In the test log (Test 1) referred to in Exhibit Otsu No. 13, Figures 12
and 14, the E-bit is set to '0' in the second line of "68" of the "Byte"
section, and the statement "next octet: data" appears in the"Interpretation" section. Considering the statement which reads that"next field" is "data," it is logically understood that theDemonstration Test uses the normal E-bit interpretation (i.e. thecase of bit '0' for the "normal E-bit interpretation" referred to in
Subclause 9.2.2.5 of Technical Specification V6.9.0), instead of thealternative E-bit interpretation.
In addition, as the bit sequence indicated in the test log of Exhibit
Otsu No. 13, Figures 12 and 14, is merely a portion of data output
from the tested product, it is not clear whether the PDU contained acomplete SDU without segmentation/concatenation/padding orother object. Accordingly, it is impossible to conclude that the tested
product used the alternative E-bit interpretation, on the basis of thetest log referred to in Figures 12 and 14.
17

Meanwhile, ticking of the checkbox of "altE_bitinterpretation" in
Exhibit Otsu No. 13, Figures 11 is irrelevant to the question ofwhether the tested product actually used the alternative E-bit
interpretation.
(b) There is no evidence supporting that the length indicator set to'1111110,' as in the test log (Test 2) referred to in Exhibit Otsu No.
13, Figures 13 and 15, is set only for the length indicator containing
an intermediate segment. Therefore, it is impossible to conclude thatthe abovementioned value indicate the presence of a PDU
containing an intermediate segment.

B.

Further, as is the case with Exhibit Otsu No. 13, Figures 12 and 14,
Figures 13 and 15 only show the SDU indication output by thetested product, and the condition of other segments of the SDU is
not clear.
Therefore, Figures 13 and 15 cannot be regarded as the evidence
supporting that the tested product implements the alternative E-bit
interpretation.
Non-satisfaction of Constituent Features B and D
As explained below, the structures of Constituent Features B and D ofInvention 1 differ from those referred to in Technical Specification V6.9.0. So,even supposing that, as alleged by the appellant, the Products have structurescomplying with Technical Specification V6.9.0, it cannot be said that theysatisfy Constituent Features B and D.
(A) Constituent Feature B
Considering the statement of Constituent Feature B which reads"determining whether the SDU is included in one protocol data unit
(PDU)" and the statement of Constituent Feature D which reads "toindicate that the PDU fully contains the SDU without
segmentation/concatenation/padding in the data field, if the SDU is
included in one PDU" in their totality, the statement of Constituent
Feature B which reads "the SDU is included in one protocol data unit
(PDU)" should be interpreted to mean the case where "the whole of SDU
is contained in (completely matches) one PDU."
Thus, Invention 1 adopts in its Constituent Feature B the method todetermine whether the whole of SDU is contained in (completely
matches) one PDU.
18

Meanwhile, considering Subclause 4.2.1.2.1 of Technical Specification
V6.9.0 which reads "segments the RLC SDU into UMD PDUs ofappropriate size, if the RLC SDU is larger than the length of available
space in the UMD PDU," the determination method referred to in
Subclause 4.2.1.2.1 is the method aimed at determining the necessity ofsegmentation of the SDU, in other words, whether the size of the SDU islarger than the available space of the PDU (the relationship between the
SDU and the PDU in terms of size) is determined. It is different from themethod to determine whether the whole of SDU is contained in(completely matches) one PDU.
In addition, the statement of Subclause 9.2.2.5 of Technical Specification
V6.9.0 relied upon by the appellant merely provides instructions on theinterpretation of the value '0' or '1' for the E-bit, and does not mention
anything about the method of determination.
Therefore, even though the Products have Structure (b) complying withTechnical Specification V6.9.0, it does not mean that the Products satisfy
Constituent Feature B.
(B) Constituent Feature D
The case where "the SDU is included in one PDU" mentioned inConstituent Feature D refers to all of the following situations: [i] a casewhere the SDU is padded (i.e. the SDU is incorporated into the PDU withpadding); [ii] a case where the SDU is concatenated (i.e. the SDU is
incorporated into the PDU after concatenation with one or more otherSDUs); and [iii] a case where the SDU is not segmented, concatenated orpadded (i.e. the size of the SDU completely matches the size of PDU
payload). So, in order to satisfy Constituent Feature D, it is necessary that"the one-bit field is set to indicate that the PDU fully contains the SDU
without segmentation/concatenation/padding" even for the case referred toin [i] and [ii] above.
Meanwhile, in the alternative E-bit interpretation referred to in Technical
Specification V6.9.0, the one-bit field is set to indicate that the PDU fully
contains the SDU only for the abovementioned case [iii]. Accordingly,
Constituent Feature D and Structure (d) complying with Technical
Specification V6.9.0 differ in terms of the conditions for setting theone-bit field to indicate that the PDU fully contains the SDU without
segmentation/concatenation/padding, and also in terms of the method of19

C.

configuration of the one-bit field in the case where the PDU contains aconcatenated or padded SDU.
Therefore, even though the Products have Structure (d) complying withTechnical Specification V6.9.0, it does not mean that the Products satisfy
Constituent Feature D.
Lack of proof of the Products' capability to perform all functions contained in
the Constituent Features of Invention 1
In order for the Products to be regarded to fall within the technical scope ofInvention 1, it is necessary to prove that the Products are capable of performing
all functions contained in the Constituent Features of Invention 1. To this end,
it is necessary to show that the communication service providers' networks are
configured to allow the use of the alternative E-bit interpretation.
The alternative E-bit interpretation cannot be implemented by the Products
alone, and all mobile devices implement the "normal E-bit interpretation"
which is the default setting for the data transmission to a base station, unlessthe network requires the use of the alternative E-bit interpretation. If the"normal E-bit interpretation" is implemented, an E-bit or length indicator is notconfigured according to Constituent Features D and F of Invention 1. So, inorder for the Products to be considered as being capable of implementing allfunctions contained in the Constituent Features of Invention 1, it is necessaryD.

that the communication service providers' networks are configured to allow theuse of the alternative E-bit interpretation.
Nevertheless, in this action, no evidence is found which indicates that thecommunication service providers' networks are configured to allow the use of
the alternative E-bit interpretation, and thus it cannot be said that the Products
are capable of implementing all functions contained in the Constituent Featureof Invention 1. Therefore, the Products do not fall within the technical scope ofInvention 1.
Summary
As mentioned above, the Products do not satisfy the Constituent Features ofInvention 1, and cannot be considered as being capable of implementing allfunctions contained in the Constituent Features of Invention 1. Therefore, theProducts do not fall within the technical scope of Invention 1.
2. Issue 2 (whether the Patent Right for Invention 2 has been indirectly infringed upon
(Article 101, items (iv) and (v) of the Patent Act))(1) Appellant's allegations
20

A.

Structure of data transmission method of the Products
According to the structure of the Products as explained in 1(1)A. above, thedata transmission method of the Products (hereinafter referred to as the"Method") have the following structures (each of the structures shall behereinafter referred to as "Structure (i)," "Structure (j)," etc.)
i. The Method is the method for transmitting data in a mobile communication
system.
j. The Method receives a service data unit (SDU) from a higher layer anddetermines whether the SDU is included in one protocol data unit (PDU).
k. If the SDU is included in one PDU, a PDU containing a header and data is
configured. Here, the header includes a sequence number (SN) field, and an
E-bit field set to '0' indicating that the PDU includes a complete SDU
without segmentation/concatenation/padding.
l. If the SDU is larger than the space available in one PDU, the SDU issegmented into SDUs of appropriate size. Here, the header contains asequence number field, an E-bit field set to '1' indicating the presence of alength indicator if the PDU does not contain a complete SDU, and a length
indicator.
m. If the PDU data field contains a segment which is neither the first nor thelast segment of the SDU, the pre-defined value is set for the LI field,

B.

indicating that the PDU contains a segment which is neither the first nor thelast segment of the SDU ('111 1110' or '111 1111 1111 1110').
n. The Method transmits a PDU to the receiving entity.
o. The Method is for data transmission.
The Method falls within the technical scope of Invention 2.
(A) Structures (j) to (n) of the Method satisfy Constituent Features J to N of
Invention 2, respectively.
In this regard, the appellee alleges that the Method does not satisfy
Constituent Features J and L of Invention 2, for the reason that thestructures of Constituent Features J and L differ from those specified inTechnical Specification V6.9.0. However, for the same reason as
mentioned in 1(1)B. above in relation to Constituent Features B and D,
Constituent Features J and L disclose the contents of the alternative E-bit
interpretation as specified in Technical Specification V6.9.0. Therefore,
the appellee's allegation as mentioned above is groundless.
(B) Based on the above, the Method satisfies Constituent Features J to N of21

C.

Invention 2, and also Constituent Features I and O as already mentioned in(3)B.(B) of "Undisputed facts, etc." of this judgment.
Therefore, the Method falls within the technical scope of Invention 2 as it
satisfies all of the Constituent Features of Invention 2.
Establishment of indirect infringement(A) Indirect infringement under Article 101, item (iv) of the Patent Act
Even where a product for the use of the process pertaining to the patented
invention can also be used by a mode not involving the working of thepatented invention, the acts of manufacturing, sale, etc of such productcan still be considered to involve high probability of resulting in
infringement, except for the case where the product has an economic,
commercial or practical mode of use in a way using only the functions not
involving the working of the patented invention, and not using any
functions involving the working of the patented invention at all. Therefore,
it is reasonable to consider that such product still falls under the "productto be used exclusively for the use of the said process" (Article 101, item(iv) of the Patent Act) (See judgment dated June 23, 2011, of theIntellectual Property High Court).
In relation to the Products, an economic, commercial or practical mode ofuse without using functions involving the working of Invention 2 cannot
be anticipated at all. Therefore, the Products are considered to fall underthe "product to be used exclusively for the use of the said process" inrelation to Invention 2.
Based on the foregoing, the appellee's acts of import and sale of the
Products are considered to constitute indirect infringement of the Patent
Right for Invention 2 (Article 101, item (iv) of the Patent Act).
(B) Indirect infringement under Article 101, item (v) of the Patent Act
The problem to be solved by Invention 2 is as follows: "the RLC framing
based on VoIP in traditional technology leads to inefficient use of limited
radio resources in VoIP due to the use of unnecessary LI fields"(Paragraph [0012] of the Patent Description). The purpose of Invention 2
is as follows: "The invention relates generally to a mobile communication
system supporting packet service. More particularly, the invention relates
to a method and apparatus which efficiently use radio resources byreducing the header size of a protocol data unit (RLC PDU) to betransmitted on a radio link." (Paragraph [0013] of the Patent Description).
22

In addition, the effect of Invention 2 is "efficient use of limited radio
resources" (Paragraph [0018] of the Patent Description). Thus, theProducts are for the use of Invention 2, and are essential for the solution of
the problem of Invention 2 as mentioned above.
In addition, by the appellant's Petition for Provisional Disposition, theappellee must have come to know of the fact that Invention 2 is a patented
invention and the Products are used for the working of Invention 2.
Accordingly, the appellee's acts of import and sale of the Products
constitute indirect infringement of the Patent Right for Invention 2(Article 101, item (v) of the Patent Act).
D.

Summary
As explained above, the appellee's acts of import and sale of the Products
constitute indirect infringement of the Patent Right for Invention 2 (Article 101,
items (iv) and (v) of the Patent Act).
(2) Appellee's allegations
A. The Method does not fall within the technical scope of Invention 2.
(A) For the same reason as mentioned in 1(2)A. above, none of the Products
can be considered as the implementations of the functions based on thealternative E-bit interpretation, and therefore the Method does not satisfy
Structures (j) to (n) as alleged by the appellant.
In addition, for the same reason as mentioned in 1(2)B. above, the structureof Constituent Features J and L of Invention 2 differ from those referred toin Technical Specification V6.9.0. Therefore, the Method is not considered
to satisfy Constituent Features J and L.
As the Method does not satisfy Constituent Features J to N, the Method
does not fall within the technical scope of Invention 2.
(B) In addition, as mentioned in 1(2)C. above, no evidence can be found which
supports that the communication service providers' networks are configured
to allow the use of the alternative E-bit interpretation, and the actual use of
the alternative E-bit interpretation in the Products is not evidenced.

B.

Therefore, the Method does not fall within the technical scope of Invention2.
Non-existence of indirect infringement(A) In order to establish indirect infringement under Article 101, item (iv) or (v)of the Patent Act, it is necessary to establish, at least, the fact of direct
working of the invention by a third party. On the contrary, the appellant has
23not made any allegation or produced evidence of direct working of
Invention 2 by a third party.
(B) No evidence has been produced which supports the actual use of thealternative E-bit interpretation for the Products. Moreover, the Products canalso be used by an economic, commercial or practical mode which only
involves the use of functions without working Invention 2. Therefore, theProducts do not fall under the "product to be used exclusively for the use of
said process" in relation to Invention 2 (Article 101, item (iv) of the Patent
Act).
(C) For actual telecommunication complying with 3GPP standards, thepercentage by which the SDU size coincides with the PDU size isextremely low, and the situation where Invention 2 achieves its effects issignificantly limited. Therefore, the Products are not "indispensable for the
resolution of the problem" (Article 101, item (v) of the Patent Act).
C.
Summary
As mentioned above, the appellant's allegation that the appellee's acts of importand sale of the Products constitute indirect infringement of the Patent Right forInvention 2 is groundless.
3. Issue 3 (whether restrictions pursuant to Article 104-3, paragraph (1) of the Patent
Act may be imposed on the exercise of the Patent Right for the Inventions)(1) Appellee's allegations
As the Patent for the Inventions contains the following grounds for invalidation andtherefore should be invalidated by a trial for patent invalidation, the appellant isrestricted from exercising the Patent Right against the appellee in accordance with
Article 104-3, paragraph (1) of the Patent Act.
A. Ground for invalidation 1 (lack of novelty due to Exhibit Ko No. 3)
As explained below, the Inventions are substantially identical to the invention
specified in Exhibit Ko No. 3 (Publication of Unexamined Patent Application
No. 2004-179917), which is a publication distributed before the priority date of
the Patent Application. Therefore, the Patent for the Inventions has a ground forinvalidation as it violates Article 29, paragraph (1), item (iii) of the Patent Act(Article 123, paragraph (1), item (ii) of the Patent Act).
(A) Contents of Exhibit Ko No. 3
Considering Paragraphs [0001], [0003], [0004], [0008], [0009], [0013],[0025], [0026], [0028], [0029] and [0031], and Figures 2, 3, 8, and 9 of
Exhibit Ko No. 3, this Exhibit discloses all of the Constituent Features of24the Inventions.
(B) Response to appellant's allegations
The appellant alleges that Exhibit Ko No. 3 does not disclose Constituent
Features D(K) and F(M). However, such allegation is groundless due tothe following reasons:a. Constituent Feature D(K)(a) Paragraph [0008] of Exhibit Ko No. 3 states that, in relation to
PDU50 of Figure 3: "if only one SDU fulfills data domain 58 of
PDU50, the bit 55a is set to '0,' indicating that no LI is present."
This "bit 55a" means the "extension bit" (Paragraph [0008]), which
is binary data of one bit ('0' or '1') (Figure 3).
Thus, in order to make it possible to set the extension bit (E-bit) to'0,' Exhibit Ko No. 3 can be considered to disclose the presence ofthe setter referred to in Constituent Features D(K) for setting "theone-bit field to indicate that the PDU contains the whole of SDU
without segmentation/concatenation/padding in the data field, if
the SDU is included in one PDU."(b) As SDUs vary in size, it is unavoidable that one SDU can besegmented into three or more segments. In such case, PDUs
containing an intermediate segment (i.e. a segment which isneither the first nor the last segment) are inevitably generated.
Therefore, it is clearly understandable for a person ordinarily
skilled in the art who reads Exhibit Ko No. 3 that said Exhibit
discloses a PDU containing an intermediate segment. Moreover, as
the PDU containing an intermediate segment does not fall under
the case where "only one SDU fulfills data domain 58 of PDU50"
and where the E-bit is set to '0' (Paragraph [0008]), the value of theE-bit containing an intermediate segment is necessarily set to '1.'"
In addition, the "padding PDU," which is one of the examples of"alternative PDUs" referred to in Exhibit Ko No. 3 (Paragraphs[0026] and [0031], Figures 8 and 9) corresponds to "PDUs
containing an intermediate segment," as it plays the role tocombine PDUs before and after the padding PDU.
It follows from the above that Exhibit Ko No. 3 discloses thepresence of a "setter for setting the one-bit field to indicate thepresence of at least one length indicator (LI) field, if the data field25

of the PDU includes an intermediate segment of the SDU" asspecified in Constituent Feature D(K).
b. Constituent Feature F(M)Exhibit Ko No. 3 discloses that, in relation to a "padding PDU"
which correspond to a PDU including an intermediate segment, theLI field "creates special codes, all of which are '1'… the remaining
PDU…only fulfills the undefined parts, while keeping ignorable
information" (Paragraph [0026]). In addition, this Exhibit discloses,
as the value for the padding PDU containing a special LI, LI 156a
set to the defined value '111111111111111" (15 digits) in Figure 8,
and LI 156b set to the defined value '1111111" (7 digits) in Figure
9.
Therefore, Exhibit Ko No. 3 can be considered to disclose thestructure wherein "if the data field of the PDU includes anintermediate segment of the SDU, the LI field is set to thepre-defined value indicating the presence in the PDU of anintermediate segment which is neither the first nor the last segmentof the SDU" as referred to in Constituent Feature F(M).
(C) Summary
Based on the above, the Inventions are identical to the invention described
B.

in Exhibit Ko No. 3 and therefore lack novelty.
Ground for invalidation 2 (lack of inventive step (1) based on Exhibit Ko No. 3
as primarily cited reference)
As explained below, the Inventions could have been easily conceived of by aperson ordinarily skilled in the art based on the combination of the invention
disclosed in Exhibit Ko No. 3, which is a publication distributed before thepriority date of the Patent Application, and common general technicalknowledge. Therefore, the Patent for the Inventions has a ground forinvalidation as it violates Article 29, paragraph (2) of the Patent Act (Article
123, paragraph (1), item (ii) of the Patent Act).
(A) Common features and difference between the Inventions and the invention
disclosed in Exhibit Ko No. 3
The Inventions differ from the invention disclosed in Exhibit Ko No. 3 inthat it is not clear whether the latter invention has a structure wherein "if
the data field of the PDU includes an intermediate segment of the SDU,
the LI field is set to the pre-defined value indicating the presence in the26

PDU of an intermediate segment which is neither the first nor the last
segment of the SDU" as referred to in Constituent Feature F(M), but they
are identical in respect of all other structures.
(B) Whether the difference could have been easily conceived of by a person
ordinarily skilled in the art
The structure of the Inventions which constitutes the difference referred toin (A) above could have been easily conceived of by a person ordinarily
skilled in the art based on the combination of Exhibit Ko No. 3 andcommon general technical knowledge, on the basis of reasons including
the following: [i] Exhibit Ko No. 3 discloses a technical idea to "set the
pre-defined value for the length indicator so as to distinguish two types of
PDUs completely incorporating data of the same length comprising one
type of data" (Paragraphs [0008] and [0026], Figures 8 and 9, etc.); and[ii] judging from the technical point of view as well, setting the length
indicator to a pre-defined value so as to distinguish two types of PDUs is
the most realistic and simple way which would be adopted by a person
ordinarily skilled in the art as a matter of course (Exhibit Ko No. 39,
Paragraph [0007], etc.).
(C) Summary
Based on the above, the Inventions could have been easily conceived ofC.

by a person ordinarily skilled in the art based on the combination of theinvention disclosed in Exhibit Ko No. 3 and common general technicalknowledge and therefore lack inventive step.
Ground for invalidation 3 (lack of inventive step (2) based on Exhibit Ko No. 3
as primarily cited reference)
As explained below, the Inventions could have been easily conceived of by aperson ordinarily skilled in the art based on the inventions disclosed in Exhibits
Ko No. 3 and No. 4 (the minutes of the 3GPP Working Group "L2
Optimization for VoIP (R2-050969)"), which are the publications distributed
before the priority date of the Patent Application. Therefore, the Patent for theInventions has a ground for invalidation as it violates Article 29, paragraph (2)of the Patent Act (Article 123, paragraph (1), item (ii) of the Patent Act).
(A) Whether the difference could have been easily conceived of by a person
ordinarily skilled in the art
The common features and difference between the Inventions and theinvention disclosed in Exhibit Ko No. 3 are as explained in B(A) above.
27

The structure of the Inventions which constitutes the difference referred toabove could have been easily conceived of by a person ordinarily skilledin the art based on the combination of Exhibits Ko No. 3 and No. 4, on thebasis of reasons including the following: [i] Exhibit Ko No. 4 indicates the
problem of inability to distinguish two types of PDUs (PDUs of the samelength and containing data which constitute one type in total), in otherwords, the problem of inability to distinguish a PDU containing the wholeof SDU and a PDU containing an intermediate segment; and [ii] Exhibit
Ko No. 4 discloses a technical idea to solve the abovementioned problem
by setting a pre-defined specific value for the length indicator (Figures 2

D.

and 3, etc.).
(B) Summary
Based on the above, the Inventions could have been easily conceived ofby a person ordinarily skilled in the art based on the inventions disclosed
in Exhibits Ko No. 3 and No. 4, and therefore lack inventive step.
Ground for invalidation 4 (lack of inventive step (3) based on Exhibit Ko No. 3
as primarily cited reference)
As explained below, the Inventions could have been easily conceived of by aperson ordinarily skilled in the art based on the combinations of Exhibits Ko
No. 3 and No. 39 (Japanese National Publication of PCT Application No.
2002-527945), which are the publications distributed before the priority date of
the Patent Application. Therefore, the Patent for the Inventions has a ground forinvalidation as it violates Article 29, paragraph (2) of the Patent Act (Article
123, paragraph (1), item (ii) of the Patent Act).
(A) Common features and difference between the Inventions and the invention
disclosed in Exhibit Ko No. 3
The Inventions differ from the invention disclosed in Exhibit Ko No. 3 in
the following points: [i] it is not clear whether the latter invention has astructure wherein "a one-bit field setter for setting the one-bit field toindicate that the PDU contains the whole of SDU without
segmentation/concatenation/padding in the data field, if the SDU is
included in one PDU, and for setting the one-bit field to indicate thepresence of at least one length indicator (LI) field, if the data field of the
PDU includes an intermediate segment of the SDU" as referred to inConstituent Feature D(K) (hereinafter referred to as "Difference 1"); and[ii] it is not clear whether the latter invention has a structure wherein "if
28the data field of the PDU includes an intermediate segment of the SDU,
the LI field is set to the pre-defined value indicating the presence in the
PDU of an intermediate segment which is neither the first nor the last
segment of the SDU" as referred to in Constituent FeatureF(M)(hereinafter referred to as "Difference 2"). But these inventions are
identical in respect of all other structures.
(B) Description of Exhibit Ko No. 39
Exhibit Ko No. 39 discloses the following features: [i] the use of a length
indicator is needed in the receiver to correctly assemble the segmented
data ([Summary]); and [ii] a length indicator is inserted into a PDU
containing an intermediate segment of the SDU so as to distinguishwhether the SDU contained in the PDU ends in the current PDU orcontinues to the next PDU, and the pre-defined value is set for said length
indicator ([Summary], Paragraphs [0006], [0010] and [0019]).
In addition, the notice of reasons for refusal dated March 30, 2010, issued
during the examination process of the Patent Application (Exhibit Ko No.
44) indicates that it is mentioned in Exhibit Ko No. 39 that "specificinformation" on the SDU is shown by setting a pre-defined value for thelength indicator and that "the specific information instructs which one ormore payload unit contains the segment length information in the headerof the lower PDU" (this statement corresponds to the statement in the
Patent Application which reads: "set to the value indicating the presenceof an intermediate segment"). As the appellant did not, in its written
opinion dated October 6, 2010, raise any objection to the matters specified
in the abovementioned notice of reasons for refusal, the appellant is
considered to have admitted that Exhibit Ko No. 39 discloses the feature
whereby the intermediate segment is indicated by the use of the length
indicator.
(C) Whether the difference could have been easily conceived of by a person
ordinarily skilled in the art
a. Difference 1
Considering the following two facts, it can be said that it was easy fora person ordinarily skilled in the art to conceive of an idea to set the
one-bit field to indicate whether the whole of SDU is included in one
PDU or PDU includes an intermediate segment of the SDU and alength indicator is present (the structure of the Inventions which29

constitutes Difference 1), based on the combination of Exhibit Ko No.
3 and Exhibit Ko No. 39. [i] Before the priority date of the Patent
Application, a person ordinarily skilled in the art sufficiently
recognized the necessity to distinguish a PDU containing the whole of
SDU and a PDU containing an intermediate segment. [ii] Exhibit Ko
No. 39 discloses the structure wherein the length indicator is inserted
into the PDU containing an intermediate segment of the SDU and the
E-bit of said PDU is set to indicate the presence of the length indicator((B) above).
b. Difference 2
As explained in (B) above, Exhibit Ko No. 39 discloses the structureof the Inventions which constitutes Difference 2.
Accordingly, it can be said that it was easy for a person ordinarily
skilled in the art to conceive of the structure of the Inventions whichconstitutes Difference 2, based on the combination of Exhibit Ko No.
3 and Exhibit Ko No. 39.
(D) Summary
Based on the above, it can be said that the Inventions could have been
easily conceived of by a person ordinarily skilled in the art based on the
combination of Exhibit Ko No. 3 and Exhibit Ko No. 39.
E.

Ground for invalidation 5 (lack of inventive step based on Exhibit Ko No. 1-4
as primarily cited reference)
As explained below, the Inventions could have been easily conceived of by aperson ordinarily skilled in the art based on the invention disclosed in Exhibit
Ko No. 1-4 (3GPP technical specification "3GPP TS 25.322 V.6.3.0";
hereinafter referred to as "Technical Specification V.6.3.0"), which is a
publication distributed before the priority date of the Patent Application, andcommon general technical knowledge. Therefore, the Patent for the Inventions
has a ground for invalidation as it violates Article 29, paragraph (2) of the
Patent Act (Article 123, paragraph (1), item (ii) of the Patent Act).
(A) Common features and difference of the Inventions and the invention
disclosed in Exhibit Ko No. 1-4
Exhibit Ko No. 1-4 discloses the "normal E-bit interpretation," asspecified in Technical Specification V.6.3.0.
The Inventions differ from the invention disclosed in Exhibit Ko No. 1-4
in the following points: [i] based on the "normal E-bit interpretation" as30referred to in Exhibit Ko No. 1-4, the length indicator is not present if the
PDU contains an SDU without segmentation/concatenation/padding(hereinafter referred to as "Difference 1"); and [ii] based on the "normal
E-bit interpretation" as referred to in Exhibit Ko No. 1-4, if the PDU
contains an intermediate segment of the SDU, a length indicator isinserted, and a special value indicating the presence of the intermediatesegment is configured for said length indicator (hereinafter referred to as"Difference 2"). These inventions are identical in respect of all otherstructures.
(B) Common general technical knowledge before the priority date of the
Patent Application
The following matters had already become a part of common generaltechnical knowledge before the priority date of the Patent Application.
a. SDUs of the same size are frequently generated by a VoIP application
which uses a sound codec with a fixed bit rate (Exhibits Ko No. 1-2,
No. 42 and No. 92).
b. If the received data completely fills the data field of a data packet (i.e.
if one SDU completely fills the PDU's data field), the header size canbe reduced (Exhibit Ko No. 3, Paragraph [0008] which reads "if only
one SDU fulfills data domain 58 of PDU50, the bit 55a is set to '0,'
indicating that no LI is present;" Exhibit Ko No. 40).
c. In a PDU's data field, the presence of an intermediate segment isindicated by the use of a length indicator (Exhibit Ko No. 39,
Paragraph [0019]; Exhibit Ko No. 43)(C) Whether the difference could have been easily conceived of by a person
ordinarily skilled in the art
a. It has been common knowledge of a person ordinarily skilled in the artthat the data volume of the PDU header can be reduced by setting its
first E-bit to '0' and omitting the length indicator, and also that only
four types of PDUs are thus capable of reducing the data volume of
the PDU header (i.e. [i] a PDU containing the first segment of the
SDU; [ii] a PDU containing an intermediate segment of the SDU; [iii]a PDU containing the last segment of the SDU, whose size coincides
with the size of the PDU data field; and [iv] a PDU containing one
SDU, whose size coincides with the size of the PDU data field).
According to the "normal E-bit interpretation" referred to in Exhibit
31

Ko No. 1-4, in relation to the two types of PDU [ii] and [iii] above, theE-bit is set to '0' and the length indicator is omitted.
With regard to the "normal E-bit interpretation" referred to in Exhibit
Ko No. 1-4, the reason for omitting the length indicator for PDUs
containing an intermediate segment of the SDU (as mentioned in [ii]above) is as follows. In many applications, SDUs whose size is larger
than the size of the PDU data field are frequently generated, andconsequently PDUs containing intermediate segments of the SDU areoften generated, and reduction of the header size of such PDU can
reduce the overhead in total and thereby enhance the efficiency of datatransmission. This strongly suggests that 3GPP had recognized thepossibility of reducing more data volume by omitting the length
indicator of the PDU containing an intermediate segment, rather thanby omitting the length indicator of the PDU containing an SDU which
completely matches the PDU data field. In addition, considering thatthe types of PDUs capable of omitting the length indicator are limited
as above, this also suggests that 3GPP had recognized the possibilityof reducing the data transmission overhead by omitting the length
indicator for the PDU including the SDU which completely matches
the PDU data field, if the frequency of generation of such SDU ishigh.
Meanwhile, the statement of Constituent Feature D(K) which reads"setting the one-bit field to indicate that the PDU contains the wholeof SDU without segmentation/concatenation/padding in the data field,
if the SDU is included in one PDU" (hereinafter referred to as"Constituent Feature D(a)) represents the selection of the type [iv] asreferred to above for the PDU for omitting the length indicator. The
reason behind this is that, before the priority date of the Patent
Application, it was widely recognized by a person ordinarily skilled in
the art that a VoIP application which uses a sound codec with a fixed
bit rate frequently generates SDUs of the same size ((B)a. above).
Thus, the "normal E-bit interpretation" as referred to in Exhibit Ko No.
1-4 and Constituent Feature D(a) share the common technical idea toreduce the data transmission overhead by omitting the length indicatorof the PDU containing an SDU which occurs frequently, thereby toenhance the efficiency of data transmission.
32

b. (a) The adoption of the structure of Constituent Feature D(a) is
automatically and inevitably connected to the structure ofConstituent Feature D(K) which reads "setting the one-bit field toindicate the presence of at least one length indicator (LI) field, if
the data field of the PDU includes an intermediate segment of the
SDU" (hereinafter referred to as "Constituent Feature D(b)").
In other words, as the value of the E-bit is either '0' or '1,' giventhat the structure of Constituent Feature D(a) is adopted and the
PDU
containsan
SDU
without
segmentation/concatenation/padding, setting the value of the first
E-bit of the PDU to '0' inevitably means that the first E-bit of the
PDU containing any other type of data is always set to '1.'
Accordingly, if the PDU contains an intermediate segment of the
SDU, the first E-bit of the PDU is always set to '1,' indicating "thepresence of at least one length indicator (LI) field."(b) In addition, the adoption of the structure of Constituent Feature
D(a) automatically and inevitably leads to Constituent Feature
D(b), as well as the structure of Constituent Feature F(M) whichreads "the LI field is set to the pre-defined value indicating thepresence in the PDU of an intermediate segment which is neither
the first nor the last segment of the SDU, if the data field of the
PDU includes an intermediate segment of the SDU."
In other words, for the PDU containing the whole of SDU, if thefirst E-bit is set to '0' and the length indicator is omitted, it isnecessary to always set the first E-bit of the PDU containing anintermediate segment to '1' and insert the length indicator. The
length indicator is set to the value showing where in the PDU the
SDU ends or the pre-defined value showing the type of data stored
into the PDU data field. As it is impossible for the SDU to end in
an intermediate segment, there is no choice but to adopt thestructure of Constituent Feature F(M) wherein the length indicatorof a PDU containing an intermediate segment is set to thepre-defined value showing the type of data stored in the PDU data
field (i.e. intermediate segment).
c. Before the priority date of the Patent Application, it had been common
general technical knowledge that SDUs of the same size are frequently
33generated by a VoIP application using a sound codec with a fixed bit
rate, that the header size can be reduced if one SDU completely fills
the PDU's data field, and that the presence of an intermediate segment
is indicated by the use of a length indicator in a PDU's data field ((B)
above). Based on this common general technical knowledge, in
relation to a specific VoIP application whereby one SDU frequently
fills the PDU data field, it was easy for a person ordinarily skilled in
the art to apply the aforementioned common general technicalknowledge to the "normal E-bit interpretation" as referred to in Exhibit
Ko No. 1-4 and to modify the design to omit the length indicator fromthe header of the PDU containing the whole of SDU, instead of a PDU
containing an intermediate segment. In addition, such designmodification automatically and inevitably involves the insertion into
the PDU containing an intermediate segment a length indicator with apre-defined value. It follows that a person ordinarily skilled in the art
could have easily conceived of the structures of the Inventions whichconstitute Difference 1 (Constituent Feature D(a)) and Difference 2(Constituent Feature D(b) and Constituent Feature F(M)), based on the
combination of the "normal E-bit interpretation" referred to in Exhibit
Ko No. 1-4 and common general technical knowledge.
d. On the contrary, the appellant alleges the existence of a factor which
would obstruct a person ordinarily skilled in the art from applying thestructure of Constituent Feature F(M) to the "normal E-bit
interpretation" referred to in Exhibit Ko No. 1-4, for the reason thatthe addition of a length indicator to a PDU containing an intermediatesegment would result in an increase in overhead.
However, even supposing that the overhead increases in the case of
PDUs containing an intermediate segment, the header size still can be
reduced for the PDUs containing the whole of SDU, and the overhead
decreases in the case where a certain VoIP application is used.
Therefore, there is no obstructing factor for the application of thestructure of Constituent Feature F(M) to the "normal E-bit
interpretation" referred to in Exhibit Ko No. 1-4.
Based on the foregoing, the appellant's allegations as mentioned above
are groundless.
(D) Summary
34

Based on the foregoing, it can be said that the Inventions could have been
easily conceived of by a person ordinarily skilled in the art based on the
combination of the invention disclosed in Exhibit Ko No. 1-4 andcommon general technical knowledge.
(2) Appellant's allegations
A. Ground for invalidation 1(A) The invention disclosed in Exhibit Ko No. 3 and the Inventions aredifferent in that the former does not disclose Constituent Feature D(K) andConstituent Feature F(M) of the Inventions.
a. The appellee refers to the explanation of Figure 3 in Exhibit Ko No. 3
which reads: "if only one SDU fulfills data domain 58 of PDU50, thebit 55a is set to '0,' indicating that no LI is present" (Paragraph [0008]).
As stated in Paragraph [0006] which reads "Figure 3 is the simplified
drawing of AM data PDU 50 and is published in 3GPP TS25.322
V3.8.0," such explanation of Figure 3 is an explanation about "3GPP
TS25.322 V3.8.0", which is the old technical specification of 3GPP
standards before the adoption of the alternative E-bit interpretation(Exhibit Otsu No. 7, hereinafter referred to as the "Technical
Specification V3.8.0"). This explanation refers to what is called "thenormal E-bit interpretation" in the current 3GPP standards. On thecontrary, the normal E-bit interpretation makes no reference to thecase where "the PDU contains the whole of SDU without
segmentation/concatenation/padding in the data field."
In addition, even the aforementioned statement of Paragraph [0008] isliterally interpreted; the wording which goes "only one SDU fulfills
data domain 58 of PDU50" also encompasses the case where the sizeof SDU is larger than that of PDU and the PDU is filled with the first
segment or intermediate segment, in addition to the case where thesizes of SDU and PDU are the same. Thus, this statement does notnecessarily only mean the case where "the PDU contains the whole of
SDU without segmentation/concatenation/padding in the data field" asstated in Constituent Feature D(K).
Therefore, Exhibit Ko No. 3 does not disclose Constituent Feature
D(K).
b. As explained in a. above, in Exhibit Ko No. 3, the case where the35intermediate segment completely fills PDU also satisfies the casewhere "the bit 55a is set to '0,' indicating that no LI is present."
Therefore, this Exhibit is irrelevant to the structure of Constituent
Feature F(M) which reads "the LI field is set to the pre-defined value
indicating the presence in the PDU of an intermediate segment which
is neither the first nor the last segment of the SDU, if the data field of
the PDU includes the intermediate segment of the SDU."
In addition, according to Exhibit Ko No. 3, the "padding PDU does nothave actual SDU data and is to be used only in the case where theSDU data is destroyed due to an unexpected interruption of datatransmission" and is not filled with the SDU (Paragraph [0026] of
Exhibit Ko No. 3). Therefore, this padding PDU is irrelevant to the
SDU, and it is impossible to anticipate the relationship between such
PDU and SDU or an intermediate segment from this "padding PDU."
Therefore, this statement of Exhibit Ko No. 3 is irrelevant to PDUs
containing intermediate segments. In addition, in the case of "padding
PDU," the "extension bit 155a" is always set to '1,' without regard towhether such PDU is an intermediate segment or not. Therefore, the"padding PDU" is not the technology to distinguish a PDU containing
a complete SDU and a PDU containing an intermediate segment.

B.

Therefore, Exhibit Ko No. 3 does not disclose Constituent Feature
F(M).
(B) Based on the foregoing, the ground for invalidation 1 as alleged by theappellee is groundless.
Ground for invalidation 2(A) As mentioned in A.(A)a. above, as Exhibit Ko No. 3 does not disclose
Constituent Feature D(K), the Inventions and the invention disclosed in
Exhibit Ko No. 3 are also different in that the latter does not have thestructure of Constituent Feature D(K) of the Invention.
(B) The prior art referred to in Exhibit Ko No. 3 is the contents of Technical
Specification V3.8.0 and had been established as the standard by itself.
Therefore, there is no problem of inability of distinguishing the PDU
containing a complete SDU and the PDU containing an intermediatesegment.
In addition, from the technical standpoint, it was not an inevitable choice
to set the length indicator to the pre-defined value so as to distinguish the36

C.

two types of PDUs.
Therefore, it cannot be said that the structure of Constituent Feature F(M)could have been easily conceived of by a person ordinarily skilled in theart based on the combination of Exhibit Ko No. 3 and common generaltechnical knowledge.
(C) Based on the foregoing, the ground for invalidation 2 as alleged by theappellee is groundless.
Ground for invalidation 3(A) As mentioned in B.(A) and (B) above, the Inventions and the invention
disclosed in Exhibit Ko No. 3 are also different in that the latter does nothave the structure of Constituent Feature D(K). In addition, in the prior art
referred to in Exhibit Ko No. 3, no problem can be found pointing to theinability to distinguish the PDU containing a complete SDU and the PDU
containing an intermediate segment.
(B) The invention referred to in Exhibit Ko No. 4 is the method for solving the
problem that "if the previous RLC PDU is lost, it will not be possible toknow if the entire SDU was received or not" (the last line of thetranslation, Page 3), rather than the problem of the inability to distinguish
PDUs. Thus, said problem is different from the one to be solved by theinvention disclosed in Exhibit Ko No. 3.
In addition, Exhibit Ko No. 4 states: "Use one of the LI’s reserved values:
In this case, an additional LI would have to be incorporated in the RLCPDU in which the first RLC SDU is entirely included. This would result inan overhead of 3% of 12.2kbps payload" (Lines 1 to 3 of the translation,
Page 5). This indicates a technology completely opposite to Invention 1,
wherein the LI’s reserved value is used if the SDU is completely includedin the PDU. Further, Exhibit Ko No. 4 does not refer to the use of the LI’s
reserved values for the intermediate segment.
Therefore, it cannot be said that the structure of Constituent Feature F(M)could have been easily conceived of by a person ordinarily skilled in theD.

art based on the combination of Exhibits Ko No. 3 and No. 4.
(C) Based on the foregoing, the ground for invalidation 3 as alleged by theappellee is groundless.
Ground for invalidation 4(A) Exhibit Ko No. 39 discloses neither Constituent Feature D(K) nor
Constituent Feature F(M) of the Inventions.
37

a. Exhibit Ko No. 39 contains a statement which reads: "Alternatively,
the first PDU in the PDU may be provided with a length indicator
having a pre-defined value which indicates that the SDU in this PDU
continues to the next RLC PDU" (Paragraph [0019]). However, thisstatement indicates that the SDU continues to the next PDU (i.e. theSDU is not the last segment), but not that such SDU is not the first
segment. Therefore, this statement does not lead to a conclusion that
Exhibit Ko No. 39 discloses Constituent Feature F, as it makes noreference to an intermediate segment which is neither the first nor thelast segment.
In this regard, the appellee alleges that the appellant had admitted that
Exhibit Ko No. 39 refers to the indication of an intermediate segmentby the use of the length indicator, on the ground that, in the course of
examination process, the appellant did not raise any objection in its
written opinion dated October 6, 2010, about the matters relating to
Exhibit Ko No. 39 as specified in the notice of reasons for refusal
dated March 30, 2010 (Exhibit Ko No. 44).
However, as mentioned above, Exhibit Ko No. 39 does not discloseintermediate segments. In addition, it is not unreasonable at all for theexaminer to strive to grant the patent as early as possible based on the"Elements of Claim 2" (Exhibit Ko No. 44), for which the examiner
did not find any reason for refusal. Therefore, the fact that theappellant did not expressly raise an objection by submitting a written
opinion in the examination process does not necessarily mean that theappellant had admitted that the structure wherein intermediatesegments are indicated by the use of the length indicator is disclosed
in Exhibit Ko No. 39.
Based on the above, the appellee's allegations as mentioned above are
groundless.
b. In addition, Paragraph [0019] of Exhibit Ko No. 39 contains astatement which reads: "If the SDU ends at the end of the current PDU,
this is indicated by a length indicator value which points exactly to theend of the PDU." So, Exhibit Ko No. 39 clearly discloses the use of
the length indicator if the PDU contains a complete SDU, and thus
contains a disclosure which is opposite to Constituent Feature D(K).
(B) As mentioned above, Exhibit Ko No. 39 discloses neither Constituent
38

E.

Feature D(K) nor Constituent Feature F(M) of the Inventions, and nofactor exists which would motivate a person ordinarily skilled in the art tocombine Exhibits Ko No. 3 and No. 39. Therefore, it cannot be said that
the Inventions could have been easily conceived of by a person ordinarily
skilled in the art based on the combination of Exhibits Ko No. 3 and No.
39.
Based on the above, the ground for invalidation 4 as alleged by theappellee is groundless.
Ground for invalidation 5(A) a. Before the priority date of the Patent Application, a high percentage of
the SDU size completely matching the PDU size in the realcommunication environment was not recognized among persons
ordinarily skilled in the art (Exhibit Ko No. 42, etc. do not support theappellee's allegations). Therefore, no factor is found which could havemotivated any person ordinarily skilled in the art of that time toattempt to reduce the header information of the PDU containing acomplete SDU.
In addition, for the purpose of the normal E-bit interpretation as
mentioned in Exhibit Ko No. 1-4, the length indicator contained in theheader is set to a pre-defined value, if the last octet of the SDU
coincides with the last octet of the PDU (the table shown in Page 9 of
the translation indicates that the bit sequence '0000000' should be used
for the length indicator if "the previous RLC PDU was exactly filledwith the last segment of the RLC SDU and there is no 'Length
Indicator' that indicates the end of the RLC SDU in the preceding RLC
PDU"), and such length indicator was thus necessary. Accordingly, theidea to omit a length indicator did not exist even in the case of the
SDU size completely matching the PDU size. A person ordinarily
skilled in the art would not able to conceive of the idea to omit alength indicator by changing the technical specification alreadyreleased, if it were not for the circumstance where the SDU size
frequently matches the PDU size in the real communication
environment, and unless this circumstance was recognized by a person
ordinarily skilled in the art.
b. The length indicator for the normal E-bit interpretation as referred toin Exhibit Ko No. 1-4 is defined as the one that "indicates the last octet39

of each RLC SDU ending within the PDU" (9.2.2.8 of the translation,
Page 4) because it is necessary to demarcate the scope of one SDU
when the SDU is concatenated or padded. This Exhibit only suggeststhat no LI is present in the intermediate segment wherein the last octetof the SDU does not exist, and cannot serve as evidence of theexistence of a technical idea to omit an LI for the PDU containing anintermediate segment which frequently occurred in relation to thenormal E-bit interpretation.
c. The appellee alleges that the adoption of the structure of Constituent
Feature D(a) is automatically and inevitably connected to the structureof Constituent Feature D(b) and Constituent Feature F(M). This
allegation is groundless for the following reasons:(a) In Exhibit Ko No. 1-4, the one-bit field after the sequence number
has a meaning as an indicator of whether "the next field is a
Length Indicator and E-bit" (9.2.2.5 of the translation, Page 4), andsuch one-bit field is called "E-bit" in this connection. Contrary tothis, according to the appellee's allegation, this one-bit field means
an indicator of whether the SDU size completely matches the PDU
size (Constituent Feature D(a)), and is called "E-bit" in thisconnection. Here, the meaning of the term "E-bit" is completely
different from that in Exhibit Ko No. 1-4.
The appellee alleges that, if the structure of Constituent Feature
D(a) is adopted and when the PDU contains an SDU without
segmentation/concatenation/padding (i.e. the SDU size completely
matches the PDU size), setting the value of the first E-bit of the
PDU to '0' inevitably means that the first E-bit of a PDU
containing any other type of data, including the case where the
PDU is an intermediate segment of the SDU, is set to '1.' In otherwords, the appellee alleges that the adoption of the structure ofConstituent Feature D(a) inevitably boils down to Constituent
Feature D(b), and further to the structure of Constituent Feature
F(M) wherein the length indicator of the PDU containing anintermediate segment is set to a pre-defined value showing thepresence of an intermediate segment.
However, the value '1' for the E-bit of the PDU containing anintermediate segment always means the value '0' for the E-bit of40

the PDU containing a complete SDU. Thus, the purpose of
distinguishing these PDUs has already been attained. In addition,
the appellee, in alleging that the adoption of the structure ofConstituent Feature D(a) inevitably boils down to Constituent
Feature D(b), presupposes that the one-bit field after the sequencenumber is an "E-bit" with a different meaning as an indicator ofwhether the SDU size completely matches the PDU size. However,in alleging that the adoption of the structure of Constituent Feature
D(b) inevitably boils down to Constituent Feature D(M), theappellee presupposes that the one-bit field after the sequencenumber is an "E-bit" that has the traditional meaning as referred toin Exhibit Ko No. 1-4. Therefore, the appellee's allegation isinappropriate in this respect.
Furthermore, even supposing that the length indicator is omitted
from a PDU containing a complete SDU, the one-bit field after thesequence number can be used to indicate the presence of acomplete SDU ("E-bit"), and that the presence of the complete
SDU can be indicated by use of the value '0,' it only follows thatthe one-bit field after the sequence number is set to '1,' because theintermediate segment does not contain a complete SDU. Therefore,
even such presumptions would not lead to the structure wherein alength indicator is inserted into an intermediate segment.
Thus, the adoption of the structure of Constituent Feature D(a) is
not inevitably and automatically connected to the adoption ofConstituent Feature D(b) or Constituent Feature F(M).
(b) In addition, supposing that, as alleged by the appellee, the adoptionof the structure of Constituent Feature D(a) is inevitably andautomatically connected to the adoption of Constituent Feature
D(b) and Constituent Feature F(M), it would be necessary toconsider the structures adopting Constituent Feature D(b) andConstituent Feature F(M) (i.e. alternative E-bit interpretation) as
well when adopting Constituent Feature D(a). Considering the factthat the "alternative E-bit interpretation results in an increase in the
total overhead" (Exhibit Ko No. 124), as well as the appellee's
allegation that the alternative E-bit interpretation is inefficient andis highly unlikely to be implemented, a factor can be found which
41

would obstruct a person ordinarily skilled in the art from adopting
Constituent Feature D(a).
(B) Based on the above, a person ordinarily skilled in the art could nothave easily conceived of the structure of the Inventions whichconstitute Difference 1 and Difference 2 based on the combination of
the normal E-bit interpretation referred to in Exhibit Ko No. 1-4 andcommon general technical knowledge.
Therefore, the ground for invalidation 5 as alleged by the appellee isgroundless.
4. Issue 4 (whether the Patent Right for the Products has been exhausted)(1) Appellee's allegations
A. Appellant's licensing to Intel Corporation(A) For the Products, the processing tasks relating to the UMTS standard are
implemented by the Baseband Chip installed therein.
Supposing that the Products involve the working of the Inventions, it
necessarily means that the essential processes of the Inventions are
implemented by the Baseband Chip, which is one of the component partsof the Products, and the Baseband Chip would constitute indirect
infringement of the Patent Right for Invention 1.
The Baseband Chip is a product manufactured by Intel Corporation. Apple
Inc. purchased this product in the U.S. through Intel Americas, Inc., which
is Intel Corporation's wholly-owned subsidiary company, and installed itin the Products.
In this regard, the appellant alleges that the sale of Intel's Baseband Chip
to Apple Inc. is handled by IMC (Intel Mobile Communications GMBH;
former Infineon); however, such allegation is not true.
(B) Intel Corporation and the appellant entered into a patent cross-license
agreement effective from January 1, 1993 (Exhibits Ko No. 20-1 and No.
162; hereinafter referred to as the "Appellant-Intel License Agreement").
Under the Appellant-Intel License Agreement, the appellant granted toIntel Corporation a worldwide license for all of the appellant's patentrights (including the Patent Rights) whose dates of first priority precede
the expiration date of such agreement (i.e. December 31, 2009). The
purpose of this license was the manufacturing and sale (including indirect
sales through other companies including its subsidiaries) of the "Intel
Licensed Products" (including products made of semiconductor material,
42

semiconductor chip or integrated circuit).
The scope of the right licensed under the Appellant-Intel License
Agreement included Intel Corporation's right to sell the chipsets, directly,
or indirectly through other companies including its subsidiaries, and Intel
Corporation's right to extend the effect of the license to its subsidiarycompanies also (Exhibit Ko No. 20-1, Paragraphs 3.1 and 3.3). In addition,
this agreement had a survival clause (Exhibit Ko No. 20-1, Paragraph 6.4),
under which Intel Corporation and its subsidiary companies were entitled
to retain the license for any patent forming the part of the licensed patents
thereunder until the expiration of such patent, without regard to theB.

expiration of the agreement.
Therefore, Intel Corporation's sale of the Baseband Chip to Apple Inc.
through Intel Americas, Inc. falls within the scope of the license under theAppellant-Intel License Agreement.
Exhaustion of the Patent Right for the Inventions
In the judgment of the Supreme Court of July 1, 1997 (See Minshu Vol. 51, No.
6, at 2299; hereinafter referred to as the "BBS Case Supreme Court Judgment"),
the Supreme Court held as follows: "it is reasonable to understand that, in thecase where the Japanese patentee or a person deemed equivalent to the patentee
assigns a patented product outside of Japan, the patentee is restricted fromexercising in Japan its patent right for the product against a third party who
acquires the patented product from the assignee of the product and thesubsequent assignees."
There is no reason to exclude licensees from the scope of "a person deemed
equivalent to the patentee" as referred to in the BBS Case Supreme Court
Judgment, and therefore licensees, such as Intel Corporation, should also bedeemed "a person deemed equivalent to the patentee."
In addition, Invention 1 is the technology for the data transmission between the
RLC layers of a transmitter and those of a receiver, and is capable of being
implemented by the Baseband Chip alone. Therefore, the Baseband Chipshould be considered to constitute the "patented product" in relation to the
Patent Right within the same meaning as that given in the BBS Case Supreme
Court Judgment.
Even supposing that an "apparatus for transmitting data" in Invention 1(Constituent Feature H) is considered not as the Baseband Chip itself but as
one of the Products, which is the final product mounting the Baseband Chip,43

the Baseband Chip constitutes a product indirectly infringing the Patent Rightfor Invention 1. Even in the case of assignment of a component part, if suchcomponent part indirectly infringes the patent right for the product invention of
the final product, the assignor of such product can be considered to haveanticipated that the assignee and subsequent assignees of such component partcan work the patent right for the invention for the final products by the use
thereof. Accordingly, such component part should be understood to constitutethe "patented product" within the meaning as that given in the BBS Case
Supreme Court Judgment. Therefore, the Baseband Chip constitutes the"patented product" as that given in the BBS Case Supreme Court Judgment.
In addition, in relation to the patent right for the process invention having
substantially identical technical elements as a product invention, it should also
be understood that the patentee is restricted from exercising his/her patent rightfor such process invention, as long as the patentee was guaranteed the"opportunity to obtain reward for public disclosure of the patented invention"
for such process invention.
The Baseband Chip falls under the "patented product" in the context of direct
or indirect infringement. Moreover, the appellant was guaranteed the"opportunity to obtain reward for public disclosure of the patented invention"at the time when it granted Intel Corporation the distribution license for the
Baseband Chip. Based on these premises, the appellant is restricted fromexercising the Patent Right for Invention 1 against Intel Corporation's
customers in the lower stream of the distribution channel. Further, Invention 2
is the process invention having substantially identical technical elements toInvention 1. So, as the appellant is restricted from exercising the Patent Rightfor Invention 1, exercising of the Patent Right for Invention 2 should also be
prohibited.
Therefore, when Intel Corporation, the appellant's Patent licensee, sold theBaseband Chip to Apple Inc. in the U.S. through Intel Americas, Inc., thePatent Right for the Inventions have been exhausted in relation to the Baseband
Chip.
C. Summary
Based on the above, the appellant is prohibited from exercising, against theappellee, the Patent Right for the Products mounting the Baseband Chip.
(2) Appellant's allegations
The appellee alleges the exhaustion of the Patent Right for the Inventions in relation44

to the Baseband Chip; however, such allegation is groundless due to the following
reasons.
A. Termination of the Appellant-Intel License Agreement
The Appellant-Intel License Agreement expired on June 30, 2009. Thisagreement has no survival clause for the license after the expiry. As Intel
Corporation no longer has authority for the Patent Right, the Patent Right for
the Inventions cannot be exhausted by virtue of the assignment of the Baseband
Chip from Intel Corporation to Apple Inc..
B. The Products are not the licensed products under the License Agreement.
The Appellant-Intel License Agreement (Exhibits Ko No. 20-1, No. 20-3, No.
162 and No. 163) provides that the license shall not cover any Intel productmanufactured for a third party, if the product design is provided by such third
party (Article 3.2), and that a right to consign manufacturing is allowed only inlimited circumstances (Article 3.7). Considering these provisions, the "Intel
Licensed Products" to be licensed under the same license agreement should beunderstood to mean the products manufactured by Intel Corporation itself, or
products consigned from Intel Corporation to a third party with the design
drawings and other specifications.
The Baseband Chip is a product developed and manufactured not by Intel
Corporation but by IMC (formerly Infineon) (more precisely, a productC.

manufactured based on the consignment from IMC to a third party
manufacturer). Therefore, the Baseband Chip is out of the scope of the Intel
Licensed Products under the license agreement.
Non-satisfaction of requirements of international exhaustion
The BBS Case Supreme Court Judgment is understood to require, as aprerequisite for international exhaustion, the assignor's rights in the assigned
patented product to include the right of importation into Japan (as well as theright to use and assign the product in Japan). Therefore, it is obvious that "aperson deemed equivalent to the patentee" as mentioned in the BBS Case
Supreme Court Judgment means a person who has the right to import thepatented product into Japan (as well as the right to use and assign the productin Japan).
Nevertheless, Intel Corporation has no right to import the patented products (i.e.
mobile phones and tablet computers) into Japan (as well as the right to use andassign the products in Japan). Therefore, Intel Corporation does not fall under"a person deemed equivalent to the patentee."45

In addition, the Baseband Chip assigned from Intel Corporation to Apple Inc. isneither the "data transmission device" nor "data transmission method"pertaining to the Inventions. As such, the Baseband Chip is not the "patented
product" as mentioned in the BBS Case Supreme Court Judgment.
Further, as Intel Corporation entered into the license agreement(Appellant-Intel License Agreement) which excludes the license for any final
product, including mobile phones and tablet computers, the appellant still
would not be able to obtain reward for the public disclosure of the Inventions
pertaining to the "data transmission device" or "data transmission method"from Intel Corporation, even supposing that the appellant expected theBaseband Chip to be incorporated into the devices such as mobile phones. So,
it is obvious that the appellant cannot be considered to have been guaranteed
the opportunity to obtain such reward. In addition, as the unit price of theBaseband Chip represents only a very small percentage of the total price of the
Products, such limited opportunity for reward cannot be considered as theentire opportunity for gain.
D. Summary
As mentioned above, the Patent Right for the Inventions is not exhausted only
by virtue of Apple Inc. purchasing from Intel Corporation the Baseband Chip,
which is a component part of the Products. Therefore, the appellee's allegationthat the appellant is prohibited from exercising the Patent Right for the
Products is groundless, as it lacks the conditions precedent.
5. Issue 5 (whether a license agreement in relation to the Patent Right has been formed
based on the FRAND Declaration)(1) Appellee's allegations
A. Laws governing the FRAND Declaration(A) On December 14, 1998, the appellant made an undertaking (declaration) to
ETSI that it was prepared to license its essential patent for the UMTS
standard on the FRAND Terms (fair, reasonable and non-discriminatory
terms and conditions in accordance with ETSI IPR Policy Clause 6.1).
Further, on August 7, 2007, the appellant made a declaration to ETSI that it
was prepared to grant an irrevocable license for its essential patent for the
UMTS standard on the FRAND Terms, notifying the number of the South
Korean patent application, which served as the basis for the priority claim
for the Patent Application, as well as the international application numberof the Patent Application (FRAND Declaration).
46

The licensing declaration of the standards essential patent on the FRAND
Terms is applied to ETSI members, as well as all other parties including
non-members (Exhibits Ko No. 16 and No. 161, "ETSI Guide onIntellectual Property Rights (IPRs)"). Accordingly, both Apple Inc. and theappellee are eligible to obtain license under the FRAND Declaration.
(B) The governing laws for the FRAND Declaration and IPR Policy are thelaws of France (Exhibit Ko No. 13, IPR Policy Clause 12). As such, theissues such as the effect of the FRAND Declaration and the requirement for
the formation of a license agreement thereunder are governed by the lawsof France.
B.

Formation of License Agreement between the appellant and the appellee(A) The FRAND Declaration, which the appellant made to ETSI, satisfies allelements of the legally binding offer (or "offer permanente") under the lawsof France (i.e. the licensed patent, the details of the rights to be licensed,etc.), and therefore constitute the "actual licensing offer, acceptance of
which is implied by the implementation of the specification by a certain
party." Under the laws of France, the acceptance is made by way of
performance of certain acts or agreement. As for this case, the appellee
impliedly accepted the appellant's licensing offer by commencing theimport and sale of the Products. By doing so, the license agreement inrelation to the Patent Right can be regarded to have been formed between
the appellee and the appellant.
(B) a. Although the fixed royalty rate is not provided in the appellant's
FRAND Declaration, this does not affect the formation of a license
agreement.
Under the French laws, in order for the sale and purchase contract to bevalidly formed, a specific purchase price must be provided. However, alicense agreement is characterized as a special contract different from asale and purchase contract, and agreement on the royalty rate is not a
condition essential for the formation of a contract between the parties.
In addition, under the French laws, the courts have authority todetermine the royalty rate on the FRAND Terms.
b. Under the French laws, the act of licensing is invalid unless it is in theform of writing (Intellectual Property Code, Article L613-8, paragraph(5)). On the other hand, the document is deemed legally binding if it issigned by a party to be bound by such document.
47

In this regard, the appellant's FRAND Declaration has been made inwriting signed by the appellant, and therefore satisfies the requirementof written form. The lack of signature of the appellee has nothing to dowith this written form requirement. In addition, under the French laws,
the purpose of this formality requirement in the license agreement is the"protection of specific interests of licensees." As such, only the party to
be protected against the lack of written form (i.e. licensee) should be
eligible to challenge the validity of the contract on the ground of lack ofwritten form. In this court case, the appellant is not eligible to assert theinvalidity of the contract.
(C) Further, it may also be possible to interpret the FRAND Declaration as a"contract for the benefit of a third party" (stipulation pour autrui) between
the appellant and ETSI. Under the laws of France, it is understood that theparties can enter into an agreement to make a promise to assume certain
obligation for the benefit of a third party. In such case, the appellee, who isthe beneficiary, is understood to immediately acquire a direct right against
the promisor (appellant), without a need to make any consent to suchpromise to give effect to such contract.
(D) Even supposing that the appellant's FRAND Declaration does not constitutean offer to be accepted by the implementation of the standard, at least theC.

D.

FRAND Declaration should be considered as an undertaking to enter into abinding contract. As explained thus far, under the laws of France, theappellant has an obligation to grant a license to the appellee and therefore it
is not permissible for the appellant to claim the damages from the appellee.
Consequence of interpreting the governing laws as the laws of Japan
Even supposing that the FRAND Declaration is governed by the laws of Japan,
the license agreement is considered to have been formed under the laws ofJapan, as the FRAND Declaration is understood as an appellant's offer for a
non-exclusive license agreement, the acceptance of which is made by theappellee's implementation of the UMTS standard.
Summary
As explained above, the FRAND Declaration made by the appellant to ETSI
constitutes the offer for a FRAND license agreement in relation to the Patent
Right, and the appellee's commencement of the import and sale of the Products
constitutes the implicit acceptance for such offer. Accordingly, the FRAND
license agreement in relation to the Patent Right has been formed between the48

appellant and the appellee, and therefore the appellant is not entitled to exercise
the Patent Right against the appellee.
(2) Appellant's allegations
A. Non-existence of offer for contract
Upon the formation of a contract, the parties are bound by the legal obligation
to perform the contract. Therefore, an offer for the contract should be concreteenough such that the contract can be immediately formed upon the acceptancethereof.
However, the appellant's FRAND Declaration contains no important particulars
which are the elements of a contract, such as the consideration (royalty rate),
terms and territories, and provides no specific obligations for the parties.
Therefore, such declaration in no way constitutes an offer for a license
agreement.
Under the French laws as well, it has been generally understood that, in order
for a license agreement to be formed, an offer expressly providing importantparticulars of a contract (such as consideration, the licensed patent, territories,
terms, etc.), as well as the corresponding acceptance are required. As such offer
does not exist in this case, no license agreement was formed. Meanwhile, there
has been no precedent of the Supreme Court of France (Court de cassation)
dealing with the issue of whether the royalty rate is the essential element forB.

the formation of a license agreement.
Non-existence of acceptance(A) As mentioned in A. above, as there has been no offer from the appellant
for the conclusion of a license agreement in relation to the Patent Right,
acceptance of such offer by the appellee cannot exist.
(B) In this regard, the appellee alleges that the appellee has made an implicit
acceptance of the offer by commencing the import and sale of the
Products.
However, the appellee does not provide the reason why the implementation of
the standards constitutes consensus between the parties. In addition, given thatthe appellee's allegation is affirmed, the patented technology users would be
able to use such technology by merely implementing the standards, without
manifestation of their intention of acceptance to the right holder or even
without paying any consideration. Such consequence is obviously
unreasonable.
Therefore, the appellee's allegations above are groundless.
49

C.

Dissatisfaction of requirement of written form(A) For the issue of whether a license agreement was formed, even granting
the appellee's allegations under the laws of France, the French laws stillrequire that the patent license agreement be made in the form of writing.
As there is no written document relating to the license agreement between
the appellant and the appellee, the license agreement as alleged by theappellee has not been formed.
(B) In this regard, the appellee alleges satisfaction of the requirement of
written form necessary for the formation of a patent license agreement, as
the appellant's FRAND Declaration contains the signature of the appellant,
which is to be bound by the contract.
However, the license agreement as alleged by the appellee to have been
formed between the appellant and Apple Inc. does not satisfy therequirement of written form, based on the following reasons. [i] The
FRAND Declaration has no provisions necessary for explaining theparticulars of a contract, such as the purpose, consideration, terms andterritories of the license agreement. [ii] As the FRAND Declaration does
not contain the appellee's signature, it is not clear whether the parties
reached a consensus. [iii] As the FRAND Declaration contemplates across-licensing arrangement between the parties, the licensee, which is theother party, is also bound by the licensing obligation, and therefore thesignature of the appellee should not be omitted.
Therefore, the appellee's allegations as above are groundless.
D. Summary
As explained above, the appellee's allegation that a license agreement inrelation to the Patent Right was formed between the appellant and the appelleeby the FRAND Declaration is groundless.
6. Issue 6 (whether the appellant's exercise of the right to seek damages based on the
Patent Right constitutes an abuse of right)(1) Appellee's allegations
Considering the various circumstances as explained below, it is an abuse of right(Article 1, paragraph (3) of the Civil Code) for the appellant to exercise the right toseek damages based on the Patent Right against the appellee, and such exercise is
not allowed.
A. Breach of obligation to disclose the Patent in a timely manner
ETSI IPR Policy Clause 4.1 requires the ETSI members to disclose to ETSI in50

a timely manner the intellectual property rights which might be essential for the
standards already developed or under development. If any participant in thedevelopment of standards conceals any patent which makes up the standards,
the standardization working group would miss the opportunity to consider
alternative technologies for the standards or to decide to exclude such patent
from the standards, and in addition, the users of the standards andstandardization bodies might also miss the opportunity to adopt alternativetechnologies. Based on these reasons, the ETSI members are required to timely
disclose their IPRs which might be essential for the standards.
In May 2005 (the month in which the date of priority of the Patent Application

B.

C.

falls), the appellant prepared and submitted to the 3GPP Working Group theapplication for change of technologies, including the ones for which theappellant sought to obtain patent. It was not until August 2007, two years after
the adoption of the standards incorporating the Patent, that the appellant
informed ETSI of the existence of the Patent.
Thus, the appellant intentionally breached its obligation to timely disclose thepatent under IPR Policy Clause 4.1.
The appellant's Petition for Provisional Disposition was a retaliatory
countermeasure.
In April 2011, Apple Inc. filed a U.S. action against the appellant seeking an
injunction against the infringing acts, alleging that the appellant infringed thepatent rights owned by Apple Inc. which was not related to the standards.
In the same month, the appellant took retaliatory countermeasures against theappellee for the court action by Apple Inc., including the Petition for
Provisional Disposition seeking an injunction against sale, etc. of the Products
based on the Patent Right, which the appellant declared as essential for the
UMTS standard (the patent which is the subject of this declaration ishereinafter referred to as the "Standards Essential Patent").
Breach of obligation to enter into a license agreement and good-faithnegotiation obligation under the FRAND Declaration(A) "ETSI Guide on Intellectual Property Rights (IPRs)" Clause 1.4 (Exhibits
Ko No. 16 and No. 161) provides that a third party, in the capacity of theuser of the ETSI standards, is entitled to receive a FRAND license for the
standards in accordance with ETSI IPR Policy Clause 6.
As both Apple Inc. and the appellee are entitled to receive license for theStandards Essential Patent based on the appellant's FRAND Declaration,
51

the appellant is considered to be bound by an obligation to enter into alicense agreement for the Patent Right, which is the Standards Essential
Patent (obligation to enter into a license agreement). And, at least, theappellant is considered to have an obligation to negotiate the license for
the Standards Essential Patent in good faith (good-faith negotiation
obligation).
Nevertheless, as explained below, the appellant breached both the
obligation to enter into a license agreement and good-faith negotiation
obligation.
(B) a. As explained in B. above, by filing the Petition for Provisional
Disposition as a retaliatory countermeasure for the court action byApple Inc., the appellant has breached the obligation to enter into alicense agreement for the Standards Essential Patent.
The appellant did not have an intention to grant the license under the
FRAND Declaration to the appellee and Apple Inc. The intent behind
the appellant's Petition for Provisional Disposition was merely tothreaten the appellee and Apple Inc. by exercising the right to seek an
injunction based on the Patent Right declared as essential, todiscourage Apple Inc. from proceeding with its court action, and toachieve results favorable to the appellant.
b. Apple Inc., in its letter dated April 29, 2011 (Exhibit Ko No. 6-1),
inquired of the appellant the FRAND royalty or lump-sum payment
for the individual patents pertaining to the Standards Essential Patentas alleged by the appellant, as well as for the entire portfolio of theStandards Essential Patent (the term "patent portfolio" hereinafterrefers to the group of patent rights owned by an owner). In spite of
repeated requests from Apple Inc., the appellant did not present a
specific royalty proposal until July 25, 2011.
In the letter dated July 25, 2011 (Exhibit Ko No. 29), the appellant
proposed to Apple Inc. a specific royalty rate. The proposed royalty
rate was almost the same as the price of the Baseband Chip, assuming
the average sales price of the Products and the Baseband Chip to be
USD 600 and USD 15 respectively. Supposing that Apple Inc. pays thesame royalty to the owners of other UMTS Standards Essential Patents,
Apple Inc. would be required to pay the royalty of about 18 times theaverage sales price of the Baseband Chip so as to obtain licenses for52the entirety of the UMTS Standards Essential Patents. Considering theabove circumstances, the royalty suggested by the appellant is notconsistent with the FRAND Terms.
In response to this, in the letter dated August 18, 2011 (Exhibit Ko No.
34-4), Apple Inc. presented to the appellant the framework for the
calculation of the royalty rate for the Standards Essential Patent.
However, the appellant rejected the framework suggested by Apple Inc.
without making any specific counterproposal.
The appellant did not make any new counterproposal until one and ahalf years later in December 2012. The appellant, in its letter to Apple
Inc. dated December 3, 2012 (Exhibit Otsu No. 64), suggested aroyalty rate that was less than half the prior proposal, but without aexplanation for the details of the calculation basis. In addition, in thecourse of the settlement negotiation between the appellant and Apple
Inc. in December 2012, the appellant proposed the cross-licensing
scheme for their respective UMTS standard-essential patent portfolio,
subject to the condition that Apple Inc. makes a lump-sum payment tothe appellant. However, this proposal was subject to the condition
precedent that the appellant agrees to settle the worldwide disputes
only after Apple Inc. holds the appellant harmless against the liability
arising from the infringement of IPRs of Apple Inc. not related to thestandard. Such proposals made by the appellant in December 2012 canin no way be considered as being consistent with the FRAND Terms.
The appellant has not made any licensing proposal consistent with the
FRAND Terms, and has failed provide any information supporting theidea that the licensing proposal to Apple Inc. is not discriminatorycompared with the licensing terms for other licensees.
c. Further, the appellant still has not responded to the request of Apple
Inc. for a license for each patent in the Standards Essential Patent
alleged by the appellant.
ETSI IPR Policy 6.1, which provides "When an ESSENTIAL IPR
relating to a particular STANDARD or TECHNICALSPECIFICATION is brought to the attention of ETSI," makes clearthat a FRAND license shall be for each patent in principle. Allowing aStandards Essential Patent owner to force a prospective licensee toaccept the licensing terms on the entire portfolio basis may have the53detrimental consequence of such owner being able to easily
circumvent its obligation to grant a license on the FRAND Terms.
(C) In addition, the appellant has not provided any information necessary forthe evaluation of the Standards Essential Patent portfolio and thecross-licensing offer, which was requested from the appellee in the letter
dated May 16, 2013 (Exhibit Otsu No. 66). Further, the appellant has
refused to provide any information to enable Apple Inc. to determine
whether the appellant's licensing offer is consistent with the FRAND
Terms (including the information on the Standards Essential Patent license
agreements between the appellant and other licensees). Thus, the appellant
has breached the good-faith negotiation obligation as well.
(D) As mentioned above, Apple Inc. has repeatedly made a firm offer toreceive a license to the appellant, with detailed explanation of thecalculation basis of the royalty. Yet, the appellant has persisted on theprior offer without explaining the calculation basis of the proposed royalty
or making any counterproposal to Apple Inc. Further, the appellant
maintains the Petition for Provisional Disposition seeking an injunction
based on the Patent Right, which is the Standards Essential Patent, puttingpressure on Apple Inc. by the threatened provisional injunction order
based on the Standards Essential Patent.
The patented invention technology incorporated into the standards canbecome a powerful tool which far exceeds its inherent value, that is, suchtechnology has a risk of enabling the patentee to obtain an unreasonably
high royalty or non-essential IPR cross-licenses from the users of thestandards. The series of the abovementioned acts of the appellant would
create the so-called "patent hold-up" (meaning the situation where theprospective users of the standards are prohibited from using thetechnologies incorporated in the standards, because of the enforcement of
the right for such technologies).
Based on the above, the appellant is considered to have breached its
obligation to enter into a license agreement and good-faith negotiation
obligation for the Patent Right, which is the Standards Essential Patent.
(E) In this regard, the appellant alleges that it has no good-faith negotiation
obligation as Apple Inc. has not made a "firm offer to receive a license" on
the FRAND Terms.
However, in the ETSI IPR Policy, the appellant's FRAND Declaration or54

the laws of France which govern such declaration, there is no provision
which requires the prospective users of the UMTS standard to make a"firm offer to receive a license," as a precondition for the patentee of theStandards Essential Patent to have a good-faith negotiation obligation. A"firm offer to receive a license" is not required for the formation of alicense agreement or the patentee's good-faith negotiation obligation.
Under the Japanese laws as well, there is no ground for requiring a "firmoffer to receive a license." Even supposing that a Japanese law requires ofApple Inc. or the appellee a "firm offer to receive a license" as theprerequisite for the appellant's good-faith negotiation obligation, Apple
Inc., has made a "firm offer to receive a license" to the appellant by
manifesting its intention not to challenge the validity of the Patent Rightor to raise the question of whether the products of Apple Inc. conflict with
the Patent, to the extent of the purpose of executing the FRAND license
agreement.
In addition, supposing that the prospective licensees are required to waive
their right to challenge the validity of the patent or to raise the question ofwhether their products conflict with the licensed patent, as a requirement
for the offer to receive a FRAND license, the holder of the Standards
Essential Patent may be able to protect itself from any licensee's claims

D.

even if the patent turns out to be non-essential, invalid or not in conflictwith the licensee's product. This would induce patent holders to makedeclarations for non-essential patents as essential ones so as to gain thebenefit of being protected against the claim relating to the validity of thepatent or conflict with the licensee's own technologies. Such consequence
is not deemed appropriate.
Therefore, the appellant's allegations as mentioned above are groundless.
Violation of the Antimonopoly Act
The series of the appellant's acts constitute the creation of "patent hold-up"(C.(D) above). These acts run counter to the purpose of 3GPP, which aims to
widely disseminate the standards. Further, such acts are highly likely to fallunder one of the provisions related to the unfair trade practices as set out in the
Act on Prohibition of Private Monopolization and Maintenance of Fair Trade(hereinafter referred to as the "Antimonopoly Act") (Article 2, paragraph (9),item (ii) of the Antimonopoly Act, Paragraphs 2 to 4 and Paragraph 14 of the
Public Notice No. 15 of the Fair Trade Commission titled "Unfair Trade
55

E.

F.

Practices") and therefore involve violation of the Antimonopoly Act. In
addition, if the appellant refuses an individual patent-based license for the
essential patent disputed in litigation, or requires a prospective licensee toaccept a portfolio-based license for its entire essential patent portfolio, suchacts also constitute unfair trade practices (Paragraph 10 or 12 of the Public
Notice No. 15 of the Fair Trade Commission titled "Unfair Trade Practices")).
Violation of the TRIPS Agreement
Article 31 of the TRIPS Agreement is a provision setting forth the matters to beconsidered where the domestic law of a member state allows for use of a patent
without the authorization of the patentee, including the compulsory license.
Thus, this provision is not intended to be applied to a case of a claim fordamages, and does not mean that a court must always grant the claim fordamages if an infringement is found. Therefore, this provision does not prohibit
the appellant's claim for damages from being considered as the abuse of right.
Summary
As explained above, taking into consideration the various circumstances,including that the appellant intentionally breached the obligation to timely
disclose the Patent to ETSI, that the appellant's Petition for Provisional
Disposition was a retaliatory countermeasure, that the appellant breached its
obligation to enter into a license agreement and good-faith negotiation

obligation for the Patent Right, which is the Standards Essential Patent, under
the FRAND Declaration and thereby created the situation of "patent hold-up,"
and that the series of the appellant's acts may constitute violation of the
Antimonopoly Act, the appellant is prohibited from exercising the right to seek
damages against the appellee based on the Patent Right, as such exercise ofright constitutes an abuse of right.
(2) Appellant's allegations
The appellee pointed out the various circumstances to support its allegation that theappellant's exercise of the right to seek damages against the appellee based on the
Patent Right constitutes an abuse of right. However, as explained below, thesecircumstances lack the facts to be premised upon, or can in no way be relied upon as
the grounds for the abuse of right.
A. Allegation of the breach of the obligation to timely disclose the Patent underthe IPR Policy(A) ETSI IPR Policy Clause 4.1 (Exhibit Ko No. 12), which the appellee relies
upon for the allegation of the appellant's breach of the obligation to timely
56

disclose the Patent, requires the members to exercise reasonable endeavors
to disclose patents and other IPRs. However, this provision governs therelationship between ETSI and its members, not the relationship between
ETSI members and third parties. As such, the penalty for the breach ofobligation against third parties is not contemplated in the IPR Policy.
In addition, the breach of procedural obligation to ETSI does notnecessarily lead to the conclusion that the exercise of the Patent Right
constitutes the abuse of right.
(B) The appellee relies upon the fact that the appellant disclosed the Patent to
ETSI only after about two years from the priority date of the Patent
Application to allege that the appellant breached the obligation to disclose
IPRs in a timely manner.
However, for making the declaration of an essential patent, a company
needs to follow an appropriate internal process such as the selection ofpatents and examination of whether they are essential for the standards.
This process requires a significant amount of work and time, and, ofcourse, the corporate decision and action. Therefore, it generally takes one
or two years for an ETSI member to disclose the patent.
Thus, although the appellant disclosed the Patent to ETSI only after about
two years from the priority date of the Patent Application, such length ofB.

time is within the range of normal practice. The appellant is notconsidered to have failed to exercise reasonable endeavors to disclose thepatent in a timely manner, and therefore is not in breach of the obligation
to disclose IPRs in a timely manner.
Therefore, the appellee's allegation as mentioned above is groundless.
Allegation that the appellant's Petition for Provisional Disposition was a
retaliatory countermeasure
The appellee alleges that the appellant's Petition for Provisional Disposition
was a retaliatory countermeasure with the purpose of putting pressure on Apple
Inc. for the court action and thereby to achieve favorable results, relying on thefact that the appellant filed the Petition for Provisional Disposition after Apple
Inc. had filed for an injunction against the appellant in the U.S.
However, the U.S. injunction relief case filed by Apple Inc. against theappellant is completely independent of this court case. In addition, the law
contemplates that the appellee may be subject to the injunction claim for the
infringement of the Patent Rights, as a matter of consequence that the appellant
57

is entitled to seek an injunctive relief against the infringement of the Patent
Rights. Accordingly, although the appellant began exercising its right only after
the enforcement by Apple Inc., there is no reason that the appellant should beaccused of having taken a "retaliatory countermeasure" or "putting pressure on
Apple Inc. for the court action." In the ETSI IPR Policy as well, the exercise of
the right to seek an injunction is not expressly prohibited. In addition, Apple
Inc. is an unwilling licensee who has no intention of paying the royalty unlessthe outcome of the litigation becomes final. Such acts of Apple Inc. creates asituation of "reverse hold-up," namely, the use of a patent without paying any
royalty, pretending to seek license with no faithful intention to obtain theC.

license. Based on the above, it is not unreasonable for the appellant to file thePetition for Provisional Disposition.
Therefore, the appellee's allegation as mentioned above is groundless.
Allegation that the appellant breached its obligation to enter into a license
agreement and good-faith negotiation obligation under the FRAND Declaration(A) Non-existence of obligation to enter into a license agreement
By making a FRAND Declaration to ETSI, the patentee only has an
obligation to discuss and negotiate in good faith with prospective
licensees, upon the request from such prospective licensees and inaccordance with the basic principle of licensing on the FRAND Terms as
set out in IPR Policy Clause 6.1 (good-faith negotiation obligation). By
making a FRAND declaration, the appellant is not necessarily bound by
an obligation to enter into a license agreement (obligation to enter into alicense agreement).
The appellee alleges that a party who made a FRAND declaration has an
obligation to enter into a license agreement. However, the ETSI Guide on
IPRs (Exhibits Ko No. 16 and No. 161), which the appellee relies upon for
the aforementioned allegation, provides that "Specific licensing terms andnegotiations are commercial issues between the companies and shall not
be addressed within ETSI" (Clause 4.1). Therefore, such allegation isinconsistent with ETSI's policy not to intervene in individual licensing
negotiations.
Therefore, the appellee's allegation that the appellant breached its
obligation to enter into a license agreement under the FRAND Declaration
is groundless.
(B) Non-existence of good-faith negotiation obligation
58

a. The specific content of the obligations of the party which made a
FRAND Declaration is an issue directly connected to the public
policies of each country, which can be determined solely from thestandpoint of the laws of Japan. From the standpoint of the Japaneselaws, it should be understood that, as the precondition for the
good-faith negotiation obligation, a prospective licensee needs tomake a "firm offer to receive a license," which indicates suchprospective licensee's faithful intent to obtain a license without
challenging the validity of the licensed patent.
The appellee alleges that Apple Inc. made a "firm offer to receive alicense" on the FRAND Terms to the appellant on March 4, September
1 and 7 of 2012. However, this allegation is groundless.
(a) The offer dated March 4, 2012, alleged by the appellee cannot be
regarded as a "firm offer to receive a license," as the appellee
challenged the validity of the appellant's patent and raised thequestion of whether its products conflict with the Patent.
In addition, in the abovementioned offer, an unreasonably low
royalty rate was proposed. This shows that the appellee did nothave a faithful intention to obtain a license and only made a
perfunctory offer, anticipating that the negotiation would fail.
Therefore, such offer in no way constitutes a "firm offer to receive
a license."(b) In addition, the offers dated September 1 and 7 of 2012 as allegedby the appellee (Exhibits Ko No. 109 and No. 110) suggested thedeclarant's verification as to whether the patent in question isessential for the standard, while pointing out that such patent isinvalid or not in conflicts with the appellee's products (Translation,
Page 3). By doing so, the appellee is considered to have reserved
its right to question whether the appellant's patent conflicts with its
own products or to challenge the validity of the appellant's patent.
Therefore, these offers are also not considered as a "firm offer toreceive a license.". In addition, Apple Inc. has alleged that the
product for which the patent right has allegedly been exhausted
should be royalty-free (i.e. such patent shall be excluded from thebasis of calculation of royalty) (Translation, Page 4). In light of thenature of an allegation of exhaustion of patent right as a defense59against the alleged patent infringement, Apple Inc. can be virtuallyconsidered as raising a question as to whether the patent conflicts
with its own products. In conclusion, these offers do not constitutea "firm offer to receive a license."(c) As mentioned above, the offers by Apple Inc. as alleged by theappellee are not considered as firm offers which indicate thefaithful intention to obtain a license. Therefore, the appellant is notbound by any good-faith negotiation obligation from the outset.
b. In this regard, the appellee raises an allegation to accuse the appellant
of non-disclosure of licensing conditions for other licensees, although
it is possible to disclose such information to Apple Inc. within a scope
not breaching the confidentiality obligation.
However, the only obligation which the appellant owes as a result of
making the FRAND Declaration is the obligation to discuss andnegotiate in good faith with a prospective licensee who makes a firm
offer, and does not include the obligation to disclose the licensing
terms and conditions applicable to other licensees. Furthermore, Apple
Inc. has not made a firm offer to receive a license and therefore theappellant has no obligation to the appellee at all. Therefore, theappellee's allegation as mentioned above is groundless.
Further, considering the nature of information, the information on
license agreements between the appellant and other licensees isincapable of being disclosed as the appellant is bound by theconfidentiality obligation.
(C) Non-existence of breach of good-faith negotiation obligationa. The appellant has not breached its good-faith negotiation obligation as
it has continuously requested Apple Inc. to enter into negotiations in afaithful manner.
The appellant, in its Response Letter dated April 18, 2012 (Exhibit
Otsu No. 42), notified Apple Inc. of its intention to grant a FRAND
license, and invited Apple Inc. to make a good-faith proposal. In
addition, the appellant, in its letter dated September 7, 2012 (Exhibit
Ko No. 111), proposed to Apple Inc. to restart the negotiation and tohave a meeting no later than September 25, 2012. Further, theappellant, on December 18, 2012, made a new proposal to make alarge lump-sum payment as the consideration for a ten-year
60cross-licensing arrangement for the UMTS essential patent portfolio,
etc. At the meeting held on February 7, 2013, the appellant and Apple
Inc. prepared a draft memorandum stating the details on [Omitted].
Thus, the appellant has continuously invited Apple Inc. to have mutual
negotiations in a faithful manner. The royalty rate suggested by theappellant in the letter dated July 25, 2011 (Exhibit Ko No. 25) was a
so-called "headline" initial offer without the need to comply with the
FRAND Terms. Thereafter, the negotiation continued and theappellant made a counteroffer. Considering the progress of negotiation,
the FRAND Terms should not be treated as an importantconsideration.
b. In addition, the appellee alleges that the appellant refused to grant a
FRAND license to Apple Inc. and the appellee by not making a
FRAND licensing offer to Apple Inc. and seeking an injunction
against the appellee without making counterproposals.
However, as mentioned above, Apple Inc. did not make a "firm offer
to receive a license" at all. Therefore, the appellee's allegation that theappellant's act constitutes refusal of licensing on the FRAND Terms
lacks the precondition and is therefore groundless.
c. Rather, it is Apple Inc. which has not responded to the appellant's
attitude towards faithful negotiations. The point at issue in this courtcase is a so-called "reverse hold-up," namely, the use of the Standards
Essential Patent without paying any royalty, pretending to seek alicense with no faithful intention to obtain a license. The parties hadentered the stage of the preparation of the memorandum (draft) at themeeting held on February 7, 2013; however, Apple Inc. [Omitted].
Further, Apple Inc., in its letter dated May 16, 2013 (Exhibit Otsu No.
66), expressly notified that the Patent Right was out of scope of thelicensing negotiation. Considering this attitude toward negotiation,
Apple Inc. is to be considered as an "unwilling licensee" who has nofaithful intention to obtain a license.
d. As explained above, the appellee's allegation that the appellant
breached the good-faith negotiation obligation is groundless.
(E) Claim for the amount of royalty under the FRAND Terms
A FRAND declaration does not grant the free use of a patent right. As
such, there is no reason that the patentee should be restricted from
61

E.

F.

G.

claiming the amount of FRAND royalty merely on the ground of having
made the FRAND declaration. Whether a FRAND declaration creates any
restriction is an issue discussed in the context of a right to seek an
injunction, not in the context of the right to seek damages.
Allegation of violation of the Antimonopoly Act
The appellee alleges that the series of the appellant's acts fall under the unfair
trade practices as prescribed in the Antimonopoly Act and therefore violates thesame Act.
The appellee's abovementioned allegation is grounded on the appellant's breachof the obligation of timely disclosure of patents and filing of the Petition for
Provisional Disposition as a retaliatory countermeasure. Such allegation isgroundless as it contains an error in its premises.
Allegation of violation of the TRIPS Agreement
Japan has ratified the TRIPS Agreement. Article 31 of the TRIPS Agreement
provides that a member state shall ensure that the patentee shall be given
monetary compensation if said member state allows for use of a patent without
the authorization of the patentee, and that the amount of such compensation
shall be determined by the court. As for this court case, the appellant who is thepatentee should be entitled to monetary compensation, and there is no reason
that the appellant shall be restricted from exercising the right to seek damages.
Summary
As mentioned above, the appellee's allegation that the appellant's exercise of
the right to seek damages against the appellee based on the Patent Right
constitutes an abuse of right is groundless, as there exists no fact which serves
as the basis of these alleged circumstances, or, these circumstances in no way
support the alleged abuse of right. In addition, it is a violation of the TRIPS
Agreement to prohibit the exercise of the right to seek damages by theappellant.

7. Issue 7 (amount of damages)(1) The appellant's allegations
The amount of the appellee's obligation to pay a reasonable royalty for the Patent
Right shall be calculated in accordance with the following formula.
In principle, it is generally understood that the reasonable royalty rate for the Patent
Right is 5.7% of the sales turnover, which is in line with the royalty rate forcommunication devices for the technical field to which the Patent Right relates, and62

the estimate for such royalty would be at least 1%. However, in the judgment inprior instance, the court determined the Patent Right to be an essential IPR within
the meaning as ascribed in the ETSI IPR Policy, and the appellee's allegation also
predicates on this finding. Accordingly, the reasonable royalty rate needs to beamended to reflect such circumstances.
The appellee alleges the aggregate royalty rate cap for the patent right that is an
essential IPR to be 5% of the product sales turnover. From the standpoint of aspeed-up of the judicial decision, the appellant raises no objection to this point.
In addition, according to the additional declaration B submitted by the appellee(Exhibit Ko No. 134), among the patent family declared as essential for the UMTS
standard, the ones which are actually essential are 529 families. The appellant also
accepts this.
Consequently, the royalty rate for the Patent Right should be calculated inaccordance with the following formula.
(Formula) 5%×1/529 = about 0.0095%
Multiplying the amount obtained by the above-mentioned formula by the sales
turnover of Products 2 and 4 for the period from their release for sale to September
28, 2013, the following amount of reasonable royalty is obtained.
(Formula)
Product 2

JPY [Omitted]×5%×1/529≒JPY [Omitted]

Product 4 JPY [Omitted]×5%×1/529≒JPY [Omitted](2) The appellee's allegations
In order to evaluate the patent subject to a FRAND declaration in an appropriate
way, the basis of such evaluation shall be the initial value of the invention before itis adopted as the standard.
The royalty rate for the patent right subject to a FRAND declaration should bedetermined based on the product component parts which relate to the standardized
technology. In addition, for the determination of the royalty rate, consideration shallbe paid such that the amount of royalty for the entirety of the Standard Essential
Patent would not be excessively high.
A.

The amount of damages alleged by the appellant contains an error in that it
pays no attention to the initial value of the patent before it is adopted as thestandard. The alternative E-bit interpretation is not in practical use, and there isno evidence indicating the necessity or preference for the use of the alternative
E-bit interpretation. Taking into consideration these circumstances, although
the Patent forms a part of the standard, it is reasonable to understand that the63

B.

value thereof before it was adopted as the standard was zero. Given the low
technical value of the Patent, there would have been no party willing to pay theroyalty if the licensing negotiation took place before its adoption as thestandard. As such, the royalty rate for the Patent should be calculated to reflect
the zero or nearly equal to zero value of the technology before its adoption as
the standard, and cannot be as high as the amount alleged by the appellant.
The appellant uses the sales price of the Products as the basis of calculation of
the royalty; however, this would result in an excessively high royalty, as suchbase also includes the portion irrelevant to the contribution by the Inventions.
In addition, the royalty for the Patent needs to be non-discriminatory; however,using the sales price of the Products as the basis of the royalty calculation
would result in the unfavorable treatment of the companies dealing with more
expensive smart phones. In this court case, in order to avoid the unreasonable
consequences, the royalty shall be calculated based on the price of thebaseband chip, which is the minimum unit of contribution by the Inventions.
Even if the sales price of the Products is used as a base, the calculation shall bebased on the amount multiplied by the contribution ratio. As the Patent only
contributes to the baseband chip, the contribution shall be calculated according
to the price of the baseband chip. Even if this is not the case, such contribution
would not exceed the price of a mobile phone with only basic functions

C.

including a communication function (conservatively estimated to be about JPY
6,000).
The royalty for the Patent shall be determined by reflecting the percentage
accounted for by the Patent among the entire UMTS standards. In addition, theamount of the aggregate royalty due on the UMTS Standard Essential Patentshould be 5%. This 5% represents the aggregate royalty rates for the entirety of
the UMTS Standard Essential Patent (1889 patent families, according to thereport of "Fairfield Resources International" (Exhibit Ko No. 135)).
Accordingly, the royalty for the Patent alone should be calculated inaccordance with the following formula.
(Formula) 5%×1/1889=about 0.00265%
The appellant uses as the parameter the number of patents determined to be
essential in the Fairfield report, from among the number of essential declaredpatents. Although the burden of proof for the number of essential patentfamilies lies with the appellant, the appellant only refers to the Fairfield reportand has not met the burden of proof.
64

D.

Based on the above, the reasonable royalty for the Patent shall be as follows.
(A) Calculation based on the baseband chip priceThe reasonable amount of the Patent royalty calculated on the basis of thebaseband chip price is as follows.
(Formula)
JPY 1,250 [the cost of the baseband chip]×about 0.00265% [royalty rate for the Patent]
×[(omitted)] number of product units [total number of Products 2 and 4
sold]= about JPY [(the amount omitted)]
In addition, the following formula will be applied, based on the approachto distribute the royalty to the patent determined to be essential for the
standard.
JPY 1,250 [the cost of the baseband chip]×0.0095% [the royalty rate alleged by the appellant]
×[(omitted)] number of product units [total number of Products 2 and 4
sold]= about JPY [(the amount omitted)](B) Calculation based on the sales price of the Products
The amount derived by multiplying the sales price of the Products by thecontribution ratio shall be the same as the price of the baseband chip.
Accordingly, the amount thus derived is the same as the amount in (A)above.
In addition, it is not appropriate to calculate the amount of reasonableroyalty for the Patent based on the amount higher than the price of amobile phone with only basic telephone functions (JPY 6,000).
Accordingly, the amount of the reasonable royalty would not exceed theamount derived in accordance with the following formula.
JPY 6,000 [the maximum of the amount derived by multiplying the sales
price of the Products by the contribution ratio of the Patent]
×about 0.00265% [royalty rate for the Patent]
×[(omitted)] number of product units [total number of Products 2 and 4
sold]= about JPY [(the amount omitted)]

No. 4 Court Decision65

1. Issue 1 (whether the Products fall within the technical scope of Invention 1)
The court determines that Products 2 and 4 fall within the technical scope ofInvention 1; whereas Products 1 and 3 do not fall within said scope. The reasons forthis finding are as follows.
(1) Structure of the Products
The appellant alleges that Invention 1 is the implementation of the "alternative
E-bit interpretation" as referred to in Technical Specification V6.9.0 of the
3GPP standards, and also that the Products complying with this technicalspecification fall within the technical scope of Invention 1.
First of all, the court would like to determine whether the Products can beconsidered as the products complying with Technical Specification V6.9.0.
A. Products 1 and 3
There is no controversy as to the fact that Products 1 and 3 are products
complying with the UMTS standard, which is the standard communication
specification developed by 3GPP (3GPP standards).
There are multiple versions for the standards released as the UMTS
standard, and the alternative E-bit interpretation as alleged by theappellant was adopted in the technical specification in the versions after"3GPP TS 25.322 V6.4.0" (hereinafter referred to as the "Technical
Specification V6.4.0"), the publication released after the priority date of
the Patent Application (Exhibits Ko No. 2 and No. 87, and the entire
import of oral arguments).
Nevertheless, even considering the totality of the submitted evidence,
Products 1 and 3 are not to found to implement the functions based on thealternative E-bit interpretation. Rather, the evidence indicates that theBaseband Chip incorporated into Products 1 and 3 for the processing oftasks relating to the UMTS standard is Intel's "PMB8878" baseband chip,and that this baseband chip complies with 3GPP standard version "Release5" publicized before the priority date of the Patent Application and does
not have a function based upon the alternative E-bit interpretation(Exhibits Ko No. 82 to No. 85).
Therefore, the appellant's allegation that Products 1 and 3 comply withTechnical Specification V6.9.0 is groundless.
Consequently, without the need to determine the other issues, the court
finds the appellant's allegation that Products 1 and 3 fall within thetechnical scope of Invention 1 is groundless.
66

B.

Products 2 and 4(A) Alternative E-bit interpretation
Subclauses 9.2.2.5 and 9.2.2.8 of Technical Specification V6.9.0 (seeAttachment TS) contain the following descriptions. [i] For the E-bit(extension bit) in the first octet of the PDU (UMD PDU) whosetransmission mode is unacknowledged mode, either the "normal E-bit
interpretation" or the "alternative E-bit interpretation" is applied
depending on the higher layer configuration. [ii] Under the "alternative
E-bit interpretation," the E-bit '0' contained in the first octet means that"the next field is a complete SDU, which is not segmented,
concatenated or padded," whereas the E-bit '1' means that "the next
field is a length indicator and an E-bit." [iii] The "length indicator" isused to indicate the last octet of each SDU (RLC SDU) ending within
the PDU, unless the E-bit contained in the first octet indicates a"complete SDU not segmented, concatenated or padded." [iv] In thecase where the "alternative E-bit interpretation" is configured, and a
PDU (RLC PDU) contains a segment of an SDU but neither the firstoctet nor the last octet of this SDU, the 7-bit "length indicator" withvalue '111 1110' or the 15-bit "length indicator" with value '111 1111
1111 1110' shall be used.
(B) Demonstration Testa. Considering the evidence (Exhibits Otsu No. 13, No. 14 and No.
41), as well as the entire import of oral arguments, the court finds
the following facts:(a) Chipworks Inc., a Canadian corporation, tested Products 2
and 4 using CMW500 as the "base station emulator"(Demonstration Test).
(b) Test 1 of the Demonstration Test was for the "case in which
thePDU
containsacomplete
SDU
without
segmentation/concatenation/padding," and performed under
the conditions of "PDU Size: 488-bit, SDU size: 480-bit."
Test 2 was the test to monitor the PDU as an "intermediatesegment" excluding the first and last PDUs (e.g. the second
PDU), and performed under the conditions of "PDU Size:
80-bit, SDU size: 480-bit."(c) The results of the Demonstration Tests were as follows:67

[i] In Test 1, the E-bit following the sequence number (SN)was '0,' and a PDU without a length indicator (LI) was
output (Exhibit Otsu No. 13, Figures 12 and 14).
[ii] In Test 2, the E-bit following the sequence number (SN)was '1,' and a PDU containing a pre-defined value'1111110' as the length indicator was output (Exhibit Otsu
No. 13, Figures 13 and 15).
b. The values of the E-bits and length indicator as indicated by the
results of the Demonstration Test in a. above agree with the values
obtained for the alternative E-bit interpretation as referred to in (A)above (Test 1 corresponds to (A)[ii] and [iii] above, and Test 2
corresponds to (A)[ii] and [iv] above, respectively). Therefore, thecourt finds Products 2 and 4 to be the implementation of thefunctions based on the alternative E-bit interpretation.
c. In this regard, the appellee raises allegations that the"Interpretation" section of the Demonstration Test results reads"next octet: data" and does not mention "a complete SDU without
segmentation/concatenation/padding," and that therefore theDemonstration Test used the normal E-bit interpretation instead of
the alternative E-bit interpretation.

C.

However, for the alternative E-bit interpretation, if the E-bit is set
to '0,' the bit sequence of the next field shows "data" of the SDU
whichcomprisea"complete
SDU
without
segmentation/concatenation/padding." Accordingly, the indicationof "next octet: data" in the "Interpretation" section does notcontradict the use of the alternative E-bit interpretation in the
Demonstration Test.
Therefore, the appellee's allegations as mentioned above are
groundless.
Summary

Based on the above, the court finds Products 2 and 4 to comply withTechnical Specification V6.9.0 and have the structure implementing thefunctions based on the alternative E-bit interpretation.
(2) Technical significance of Invention 1
A. Matters disclosed by the Patent Description(A) The detailed explanation of the invention of the Patent Description
68

(Exhibit Ko No. 1-2) contains the following statements (for thedrawings referred to in the following statement, see the Patent
Description Figures attached hereto).
a. "[Field of Invention] The invention relates to a mobile
communication system supporting packet service. Morespecifically, the invention relates to a method and apparatus whichefficiently use radio resources by reducing the header size of a
Protocol Data Unit (PDU) to be transmitted on a radio link."(Paragraph [0001])b. "[Background of Invention] The UMTS (Universal Mobile
Telecommunication Service) system is a third-generation mobile
communication system which uses Code Division Multiple Access(hereinafter referred to as "CDMA") based on the European
telecommunication systems called GSM (Global System for
Mobile Communications) and GPRS (General Packet Radio
Services). This UMTS system provides services enabling mobile
phone subscribers and computer users to transmit packed-based
text, digitalized sound, video and multimedia data at a high speedof more than 2Mbps in all parts of the world. This UMTS system
has introduced the concept of a packet switched access systemusing a packet protocol like the Internet Protocol (hereinafterreferred to as "IP"). 3GPP (3rd Generation Partnership Project),which is the standardization body for the abovementioned UMTS
communication system, has been discussing a voicecommunication service called VoIP (Voice over IP) which assists
the voice packets using IP. VoIP is communication technology totransmit a voice frame generating from a voice codec in the formof an IP/UDP (User Datagram Protocol)/RTP (Real-time Transport
Protocol) packet. This VoIP facilitates the provision of voicecommunication service through the packet network." (Paragraph[0002]) "Figure 1 shows the composition of the usual mobile
communication system which supports VoIP." (Paragraph [0003])"In general, an RLC layer is divided into UM (UnacknowledgedMode), AM (Acknowledged Mode) and TM (Transparent Mode)depending on the operation mode. VoIP operates in the RLC UM.
In the transmitter, an RLC UM layer segments, concatenates or69

pads the RLC Service Data Unit (hereinafter referred to as "RLC
SDU") received from the higher layer into a size appropriate fortransmission through a radio channel. In the RLC UM layer,
segmentation/concatenation/padding information and a sequencenumber (SN) are inserted in the abovementioned result value, andan RLC PDU fit for transmission through a radio channel isconfigured Then, this LCP PDU (Note: a typographical error of"RLC PDU") is transmitted to the lower layer. … The operation
for the processing of the RLC SDU received from the higher layer
into a size appropriate for the transmission through a radio channel
is called 'RLC framing. '" (Paragraph [0004])"Figure 2C shows the operation for the configuration of an RLC
PDU by framing the RLC SDU in the RLC layer of the transmitter
based on the conventional technology. …The RLC layer of thetransmitter receives from the higher layer any given size of RLC
SDU, for example, RLC SDU225 which is 100-byte IP packet. If
the size of the data transmittable through a radio channel is 40
bytes, the RLC layer divides the RLC SDU225 into three, namely,
RLC PDU230, 235 and 240. In this case, the size of each of these
RLC PDUs is 40 bytes. In addition, each of these RLC PDUs
includes RLC header 245. This RLC header 245 is composed of atleast two pairs of the sequence number (hereinafter referred to as"SN") 250, E-field 255, Length Indicator (hereinafter referred to as"LI") field 260 and E-field 265. LI field 260 is contained as aresult of the segmentation. The SN field 250 shows a 7-bit SN
which increases in monotone for each RLC PDU. This SN showsan order of RLC PDU230, 235 and 240. E-field 255 showswhether the following field is a data field, or the pair set of an LI
field and E-field, and its size is 1 bit. LI field 260 has a size of 7
bits or 15 bits based on the framing of the RLC. The segment of
RLC SDU225 contained in the RLC PDU shows that it is placed atdata field 270 of the RLC PDU. That is, LI field 260 is data field
270 of the RLC PDU, and shows the start and the end of RLC
SDU225. LI field 260 is capable of indicating whether the padding
was made. The value shown by LI field 260 is configured by byte,
and means the number of bytes from the RLC header to the point70

at which the RLC SDU ends." (Paragraph [0007])c. "As mentioned above, the conventional method to indicate theposition of the last byte of the RLC SDU using an LI field isefficient, when dividing one RLC SDU into two or more RLC
PDUs or connecting two or more RLC SDUs to make up one RLC
PDU. However, the VoIP packet has a general feature wherein one
complete RLC SDU corresponds to only one RLC PDU, and RLC
SDUs without segmentation/concatenation/padding are frequently
generated. …Thus, if the size of the RLC PDU is definedaccording to the size of the RLC SDU most frequently generated,the majority of RLC SDUs are framed in the RLC PDU without
segmentation/concatenation/padding.
In
such
case,
the
conventional framing method is inefficient." (Paragraph [0011])"…In other words, for the VoIP communication system, themajority of RLC SDUs are not segmented or concatenated, and
one RLC PDU is comprised of one RLC SDU. In spite of this, as
for the existing RLC framing operation mode, at least two LI fields,
i.e., the LI field which shows the start of the RLC SDU, and the LI
field which shows the end of the RLC SDU, are always required
for the RLC PDU. The LI field which shows whether the data field
can be padded is also inserted if necessary. Therefore, when using
an RLC framing method based on the conventional VoIP
communication system, there was a problem of inefficient use oflimited radio resources due to the use of unnecessary LI field."(Paragraph [0012])
d. "[Problem to be solved by the invention] Therefore, in order tosolve the problem with the conventional technology as mentioned
above, this invention aims to provide the method and apparatus forthe mobile communication system which supports packet service,decreasing the header size of a radio link control layer's Protocol
Data Unit (RLC PDU) and using radio resources efficiently."(Paragraph [0013])
e. "[Means for solving problem] In order to achieve the purpose of
the invention as mentioned above, the invention features a methodof transmitting data in a mobile communication system by the useof a pre-defined length indicator (LI), comprising: a stage of71

receiving a service data unit (SDU) from a higher layer anddetermining whether the SDU is included in one protocol data unit
(PDU); a stage of segmenting the SDU into a plurality of segments
according to the transmittable PDU size, if the SDU is notincluded in one PDU; a stage of configuring multiple PDUs
wherein headers of the PDUs include a sequence number (SN)field, at least a one-bit field indicating the presence of a length
indicator (LI) field and said one LI field and wherein the data fieldof each PDU includes the aforementioned segments; and a stage inwhich the LI field of the PDU containing an intermediate segmentof the SDU in the data field is set to the pre-defined value
indicating the presence of the aforementioned intermediatesegment and the PDUs are sent to a receiver." (Paragraph [0014])
In addition, "the invention features an apparatus for transmitting
data in a mobile communication system by the use of a pre-defined
length indicator (LI), comprising: a transmission buffer forreceiving a service data unit (SDU) from a higher layer,
determining whether the SDU is included in one protocol data unit
(PDU), and reconfiguring the SDU to at least one segment
according to the transmittable PDU size; a header inserter forconstructing at least one PDU containing a serial number (SN)field and a one-bit field in a header, and said at least one segment
in a data field; a one-bit field setter for setting said at least one
one-bit field of the PDU to indicate the presence of at least one
subsequent LI field; an LI inserter for inserting the LI field after
the one-bit field of said at least PDU and setting the LI field of the
PDU containing an intermediate segment of the SDU to the value
indicating the presence of the intermediate segment, if the SDU is
not included in one PDU; and a transmitter for sending at least one
PDU received from the LI inserter to a receiver." (Paragraph[0016])
f. "[Effect of Invention] The invention has an effect of enabling theefficient use of limited radio resources by the use of the 1-bit
information showing the presence of a complete RLC SDU in thedata field of the RLC PDU, thereby eliminating the need to insert
the additional information for a start/end/padding of such RLC
72

SDU. In addition, the invention has the effect of enabling thesegmentation of the RLC SDU by including the LI field set to thepre-defined new LI value in the RLC PDU containing only anintermediate segment of the RLC SDU as mentioned above."(Paragraph [0018])
g. "…The RLC layer uses two framing systems based on thepreferable embodiment of the invention. In the first system, theRLC SDU which has the size most frequently used carries out theframing of the RLC PDU without the use of an LI field. The
second system frames the different sizes of RLC SDUs by the useof an LI field. ...The first E-field is called "F-field" in order todistinguish it from other E-fields." (Paragraph [0020])
h. "Figure 4 shows the structure of the RLC PDU according to thepreferable embodiment of the invention." (Paragraph [0021])"Figure 5A shows the configuration of the RLC PDU, when the
RLC SDU corresponds to the RLC PDU without
segmentation/concatenation/padding according to the preferable
embodiment of the invention. In Figure 5A, a transmitter (namely,
the RLC layer of a transmitter) sets the value of the F-field to '0'
and inserts a complete RLC SDU into the RLC PDU data field,
when it is possible to frame one complete RLC SDU into one RLC
PDU without segmentation/concatenation/padding." (Paragraph[0022])"Figure 5B shows the configuration of the RLC PDU, when theRLCisframed
in
the
RLC
PDU
after
segmentation/concatenation/padding according to the preferable
embodiment of the invention. In Figure 5B, when thesegmentation/concatenation/padding is necessary for the framingof the RLC, a transmitter sets the F-field to '1' and configures the
RLC PDU comprised of the LI field necessary for thesegmentation/concatenation/padding and the padding. …The
following problems should be solved in order to use the existing
first E-field as the F-field. Usually, if the RLC PDU was thesegment of the RLC SDU, and when neither the start nor the endof the RLC SDU was included in the RLC PDU, an LI field did
not exist in the RLC PDU. In Figure 5A, when the RLC SDU is73

framed
into
one
RLC
PDU
without
segmentation/concatenation/padding, an LI field is not used. It isnecessary to show that the RLC PDU does not contain one
complete RLC SDU, nor does it contain either the start or the endof the RLC SDU." (Paragraph [0023])
i. "Figure 6A shows the situation where one RLC SDU is segmented
into two or more RLC PDUs based on the conventional RLC
framing technology. …If an LI field is not inserted into RLCPDU615, which does not include the start or the end of the RLC
SDU, a receiver cannot determine whether the segment containedin the data field of RLC PDU615 constitutes one complete RLC
SDU, or one RLC SDU after the combination with the prior or
following segment of the RLC PDU. Therefore, in the preferable
embodiment of the invention mentioned later, a pre-defined new
LI value is determined so as to show the presence of an RLC PDU
which includes neither the start nor the end of the RLC SDU(hereinafter referred to as an "intermediate PDU"). For example,'1111 110' is defined as a pre-defined new LI value. The RLC PDU
in which the pre-defined new LI value is inserted is recognized as
an intermediate RLC PDU." (Paragraph [0024])"Figure 6B shows the situation where one RLC SDU is segmented
into two or more RLC PDUs using the pre-defined LI, according
to the preferable embodiment of the invention. In Figure 6B, one
RLC SDU625 is segmented into three, namely, PDU 630, 635, 640
that are SN 'x', 'x+1', and 'x+2'. Then, the F-field of the first RLC
PDU630 is set to '1,' the pre-defined LI value of '1111 100' isinserted into the first RLC PDU630, showing that the first byte ofthis first RLC PDU630 data field corresponds to the first byte of
RLC SDU625. Since the second RLC PDU635 includes only theintermediate portion without including the start or the end of RLC
SDU625, the F-field is set as '0', and the pre-defined LI value '1111
110' is inserted into the second RLC PDU635, showing that the
aforementioned RLC PDU635 is an intermediate RLC PDU. In thethird RLC SDU640, LI value '0100 011' is contained, which showsthat it is the end of RLC SDU625, for example, the 35th byte of adata field, is shown." (Paragraph [0025])
74

(B) Taking into consideration the wording of the scope of the claim ofInvention 1 (Claim 8) and the statement of the "detailed explanation of theinvention" of the Patent Description as referred to in (A) above (including
each drawing), the court finds that the Patent Description discloses thefollowing. [i] In relation to the mobile communication system supporting
packet service (wireless data packet communication system), in order toprovide VoIP service, which is a communication technology fortransmitting voice frames generated from a voice codec in the form ofvoice packets using the Internet Protocol, there was a problem of
unnecessary LI fields being inserted, which caused inefficient use oflimited wireless resources, when using the RLC framing method in the
VoIP communication system based on the conventional technology(operation for processing the RLC SDU received from the higher layer
into a size appropriate for transmission through wireless channel) andwhen the size of an RLC PDU is defined according to the size of an RLC
SDU most frequently generated. Namely, although the majority of RLC
SDUs are not segmented or concatenated and one RLC SDU is comprisedof one RLC PDU, if the conventional RLC framing operation is applied,at least the length indicator (LI) field indicating the starting point and the
LI field indicating the end point of the SDU are always required. [ii] The
purpose of Invention 1 is to provide a device for using radio resources
efficiently by reducing the header size of the RLC PDU (protocol data unitof radio link control layer), so as to solve the abovementioned problem of
the conventional technology. [iii] Invention 1, as a means to achieve theabovementioned purpose, adopts the structure wherein the RLC PDU data
field shows one-bit information that "one complete RLC SDU can beframed into one RLC PDU without segmentation/concatenation/padding"(i.e. the structure of Constituent Feature D which reads "setting the one-bit
field to indicate that the PDU contains the whole of SDU without
segmentation/concatenation/padding in the data field, if the SDU is
included in one PDU"), and by doing so, eliminates the need to insert
additional information showing segmentation/concatenation/padding of
the RLC SDU (i.e. use of the "LI field"). Further, to this end, Invention 1
adopts the structure wherein the LI field set to the pre-defined new LI
value indicates that the RLC PDU includes "only an intermediate segmentof the RLC SDU which does not include the start or the end of the RLC
75

SDU" (i.e. the structure of Constituent Feature D which reads "a one-bit
field setter for setting the one-bit field to indicate the presence of at least
one length indicator (LI) field, if the data field of the PDU includes anintermediate segment of the SDU" and the structure of Constituent Feature
F which reads "the LI field is set to the pre-defined value indicating thepresence in the PDU of an intermediate segment which is neither the first
nor the last segment of the SDU"). By adopting these structures, Invention
1 enables the segmentation of the RLC SDU to reduce the header size, andthereby achieves the effect to enhance efficiency for the use of radio
resources.
B.

Relationship between Invention 1 and alternative E-bit interpretation(A) The structure and effect of Constituent Feature D of Invention 1 whichreads "setting the one-bit field to indicate that the PDU contains the wholeof SDU without segmentation/concatenation/padding in the data field, if
the SDU is included in one PDU" (A.(B)[iii] above) defines that, under
the alternative E-bit interpretation, if the E-bit contained in the first octet
is '0,' it shows that the "next field is a complete SDU, which is notsegmented, concatenated or padded" and that the LI is not used((1)B.(A)[ii] and [iii] above). In addition, the structure of Constituent
Feature D which reads "a one-bit field setter for setting the one-bit field toindicate the presence of at least one length indicator (LI) field, if the data
field of the PDU includes an intermediate segment of the SDU" and thestructure of Constituent Feature F which reads "the LI field is set to thepre-defined value indicating the presence in the PDU of an intermediatesegment which is neither the first nor the last segment of the SDU" define
that, under the alternative E-bit interpretation, if the PDU (RLC PDU)
contains a segment of the SDU but does not contain either the first or thelast octet of the SDU, the 7-bit "length indicator" with value '111 1110' or
the 15-bit "length indicator" with value '111 1111 1111 1110' shall be used((1)B.(A)[iv] above).
On the basis of these findings, the court finds Invention 1 to be theimplementation of the alternative E-bit interpretation.
(B) a. In contrast, the appellee relies upon the following arguments to allege
that Technical Specification V6.9.0 contains no disclosure ofConstituent Feature B: Constituent Feature B of Invention 1 whichreads "to determine whether the whole of SDU is contained in one
76

PDU" has a meaning "to determine whether the whole of SDU is
contained in (completely matches) one PDU;" whereas, the statementof Subclause 4.2.1.2.1 of Technical Specification V6.9.0 which reads"segments the RLC SDU into UMD PDUs of appropriate size, if the
RLC SDU is larger than the length of available space in the UMD
PDU" means that the method as referred to therein aims at
determination of the necessity of segmentation of the SDU andwhether the size of the SDU is larger than the available space of the
PDU (i.e. the size relation between the SDU and the PDU) and it istherefore different from the method to determine whether the whole of
SDU is contained in (completely matches) one PDU.
In spite of such allegation by the appellee, Subclause 9.2.2.5 ofTechnical Specification V6.9.0 indicates that, under the "alternative
E-bit interpretation," the E-bit '0' contained in the first octet means that"the next field is a complete SDU, which is not segmented,
concatenated or padded," whereas the E-bit '1' means that "the next
field is a length indicator and an E-bit" (1.(1)B.(A)[ii] above)). Thesestatements can be considered as defining the configuration of the E-bit
as mentioned above, depending on the results of determination as towhether the whole of SDU is contained in (completely matches) thePDU (i.e. whether the SDU is a complete SDU, which is notsegmented, concatenated or padded) as a precondition for suchconfiguration. Therefore, these statements can be considered as
disclosing the structure of Constituent Feature B to "determine
whether the whole of SDU is contained in one protocol data unit
(PDU)."
Based on the above, the court finds the abovementioned allegations of
the appellee to be groundless.
b. In addition, the appellee alleges that the structure of Constituent
Feature D differs from the alternative E-bit interpretation as set out inTechnical Specification V6.9.0, based on the following reasons: "thecase where the SDU is included in one PDU" as referred to inConstituent Feature D includes all of the situations [i] where the SDU
is padded, [ii] where the SDU is concatenated, and [iii] where theSDU is not segmented, concatenated or padded, and, accordingly, inorder to satisfy Constituent Feature D, it is necessary that "the one-bit
77

field is set to indicate that the PDU fully contains the SDU without
segmentation/concatenation/padding" even in the case [i] or [ii] above;
whereas, according to the alternative E-bit interpretation as set out inTechnical Specification V6.9.0, the one-bit field is configured toindicate that the PDU contains a complete SDU only in the case [iii]above.
However, considering the wording of Constituent Feature D whichreads "setting the one-bit field to indicate that the PDU contains thewhole of SDU without segmentation/concatenation/padding in the data
field, if the SDU is included in one PDU," as well as the statement of
Paragraph [0022] and Figure 5A of the Patent Description, it isunderstood that the case where "the SDU is included in one PDU" asreferred to in Constituent Feature D only means the case where "thePDU
contains
the
whole
of
SDU
without
segmentation/concatenation/padding in the data field" (i.e. case [iii]above), and not the case where the concatenated SDU is contained in
the PDU or the case where the SDU is incorporated into PDU withpadding. Therefore, the appellee's allegation is unacceptable as it fails
to satisfy the conditions precedent.
(3) Whether Products 2 and 4 fall within the technical scope of Invention 1A.

B.

As already mentioned in (3)B. of "Undisputed facts, etc.," Products 2 and 4
satisfy Constituent Features A and H of Invention 1.
Further, based on the findings that Products 2 and 4 comply with Technical
Specification V6.9.0 and have a structure to implement the functions based on
the alternative E-bit interpretation ((1)C. above), and that Invention 1 is theimplementation of the alternative E-bit interpretation ((2)B.(A) above), thecourt finds Products 2 and 4 to satisfy Constituent Features B to G of Invention
1.
Based on the above, the court finds Products 2 and 4 to fall within the technicalscope of Invention 1, as they satisfy all of the Constituent Features of Invention
1.
(A) On the other hand, the appellee alleges that Products 2 and 4 do not satisfy
Constituent Features B and D, because Constituent Features B and D are
not disclosed in Technical Specification V6.9.0.
However, as already mentioned in (2)B.(B) above, the appellee's
allegation is groundless as it fails to satisfy the conditions precedent.
78

(B) In addition, the appellee alleges that, for Products 2 and 4 to be considered
to fall within the technical scope of Invention 1, it is necessary to evidence
that these Products implement all functions stated in the Constituent
Features of Invention 1 on the real network; however, the alternative E-bit
interpretation is only optional to the normal E-bit interpretation, and noevidence has been submitted which supports that the telecommunication
service providers' networks are configured to allow the use of thealternative E-bit interpretation, and therefore that the Products do not fallwithin the technical scope of Invention 1.
However, as Products 2 and 4 satisfy all of the Constituent Features ofInvention 1 and have the structure to implement the alternative E-bit
interpretation, they are found to fall within the technical scope ofInvention 1, and whether the telecommunication service providers'
networks are actually configured to allow the use of the alternative E-bit
interpretation is irrelevant to the issue of whether the Products fall within
the technical scope of Invention 1.
(4) Summary
As mentioned above, Products 1 and 3 do not fall within the technical scope ofInvention 1; whereas Products 2 and 4 fall within such technical scope.
Therefore, the appellee's acts of import, sale, etc. of Products 1 and 3 do notconstitute infringement of the Patent Right.
2. Issue 2 (whether the Patent Right for Invention 2 has been indirectly infringed upon
(Article 101, items (iv) and (v) of the Patent Act))
Considering the facts that Invention 2 is the invention for the method of datatransmission for the device of Invention 1, and as these Inventions have a common
structure (the fact not disputed by the parties), the structure of data transmission
method of Products 1 and 3 does not fall within the technical scope of Invention 2,
but the structure of data transmission method of Products 2 and 4 falls within thetechnical scope of Invention 2.
The structure of the data transmission method for Products 1 and 3 does not fallwithin the technical scope of Invention 2. Therefore, the appellee's acts of importand sale of Products 1 and 3 do not constitute indirect infringement (Article 101,
items (iv) and (v) of the Patent Act) of the Patent Right for Invention 2.
The structure of the data transmission method for Products 2 and 4 is found to fallwithin the technical scope of Invention 2; however, the court refrains from making
79determination on the issue of indirect infringement of the Patent Right for Invention
2, as allegations on Issue 2 is alternative to those on Issue 1 and the decision on
Issues 3 to 7 are common to that on Issue 1.
3. Issue 3 (whether restrictions pursuant to Article 104-3, paragraph (1) of the Patent
Act may be imposed on the exercise of the Patent Right for the Inventions)
The court determines that the Patent does not contain any ground for invalidation as
alleged by the appellee, and that the appellant is not restricted from exercising theright in accordance with Article 104-3, paragraph (1) of the Patent Act. The reasonsare as follows.
(1) Contents of technical literature
The cited references provides as follows (For the drawings referred to in these
documents, see the drawings of the cited references as attached hereto).
A. Contents of Exhibit Ko No. 3 (Publication of Unexamined Patent
Application No. 2004-179917)(A) "The invention relates to the method of the processing of unexpectedschedule interruptions occurring during wireless communication datatransmission, in particular, for the processing of scheduleinterruptions between the radio link control (RLC) layer and the
media access control (MAC) layer." (Paragraph [0001])(B) "[Description of the Prior Art] … Figure 1 shows the three-layered
communication protocol. … Application 13 on the first station
generates message 11, sends this message 11 to third layer interface
12, and further transmits it to second station 20. … Third layerinterface 12 transmits message 11 or third signal message 12a tosecond layer interface 16, in the form of service data unit (SDU) 14
of the second layer. (Paragraph [0002]) "SDU14 of the second layer
holds different sizes of data to be transmitted from third layerinterface 12 to second station 20. Such data is signal message 12a or
message 11. Second layer interface 16 assembles the received
SDU14 into one or more second layer protocol data units (PDU) 18.
The length of each of the second layer PDU18s is constant, and PDU
18s are transmitted to first layer interface 19. First layer interface 19
is a physical layer, and transmits data to second station 20."
(Paragraph [0003])(C) "Figure 2 shows the process of data transmission in the second layer.
Second layer interface 32 of transmitter 30, which is the base station80

or mobile unit, receives a series of SDU34s from third layer interface
33. In this figure, the series of SDU34s is lined from 1 to 5, andshown in different lengths on the presumption that their sizes aredifferent. Second layer interface 32 configures a series of SDU34s
into a series of PDU36s. The series of second layer PDU36s is lined
from 1 to 4, and each of them has the same length. The series of
PDU36s is sent to first layer interface 31, and waits fortransmission." (Paragraph [0004])(D) "Reference is made to Figure 3 and Figure 1. Figure 3 is a simplified
drawing of AM data PDU50, which is specified in 3GPP TS25.322
V3.8.0. specification." (Paragraph [0006])(E) "PDU50 in Figure 3 is a data PDU and is divided into various fields
according to the second layer protocol." "First field 51 is a single bit
showing whether PDU50 is a data PDU or control PDU. PDU50 is adata PDU when the value of the bit is '1.' Second field 52 is asequence number (SN) field, and the length is 12 bit at the time of
AM transmission. The subsequent PDUs 18 and 28 have large
sequence numbers, make transmitter (second station) 20 precisely
assemble the received second layer PDU28 and form second layer
SDU24." "A single polling bit 53 follows sequence number field 52."(F) "When polling bit 53 is '1,' the receiver (second station 20) needs to
respond by providing an acknowledged mode PDU." "Bit 54 isreserved and it is set to '0.' The following bit 55a is an extension bit,
and it indicates the immediate connection to the length indicator (LI)
if it is set to '1.' LI is 7-bit or 15-bit, and used to indicate the location
at which the second layer SDU ends in second layer PDU50. If only
one SDU completely fulfills data domain 58 of PDU50, bit 55a is set
to '0,' indicating that no LI is present." (Paragraphs [0007] and[0008])(G) "In the example of Figure 3, two second layers SDU57a and 57b end
in second layer PDU50. Therefore, the ends of second layers
SDU57a and 57b are shown by the two length indicators,
respectively. Then, the PDU following PDU50 (which isdistinguished by sequence number 52) indicates the end of SDU57c
by a certain LI. The extension bit 55b after the LI is set to '1,'
indicating that it is followed by additional LIs (i.e. LIs on the upper81

part of Figure 3). The extension bit 55c after the LI is set to '0,'
showing that it is not followed by any additional LIs. Data domain 58
starts following this extension bit 55c. Data domain 58 is used forstoring actual SDU data." (Paragraph [0009])(H) "Reference is made to Figure 6 and Figure 4. Figure 6 is the diagram
for the TFC selection timing, which is a prior art. … In TTI81, RLC
layer 62 needs to transmit RLC entity information to MAC layer 64.
RLC state information 84 informs MAC layer 64 of the number ofpieces of SDU information 65a waiting for the transmission by RLC
layer 62. MAC layer 64 responds to RLC state information 84, andprovides TFC data request 86. TFC data request 86 instructs RLC
layer 62 of the size and quantity of PDU65bs to be transmitted to
MAC layer 64. … Then, such PDU65bs are transmitted to MAC
layer 64 in the form of block 88." "However, once MAC layer 64 has
responded to TFC data request 86, RLC layer 62 needs to transmit
PDUs of the size and quantity which comply with TFC data request
86. If this is not implemented in accordance with the instruction, aproblem in radio device software may occur. This problem has been
also recognized in the prior art, and is significantly important interms of scheduling of data transmission." (Paragraphs [0013] and[0014])(I) "However, in addition to the situation as described above, other typesof unexpected data interruption may occur which cannot be handled
by the prior art either. Considering Figure 1, Figure 4 and Figure 6
again, the majority of such unexpected data interruption events arecaused by the command primitives transmitted from third layerinterface 12 to second layer interface 16. … When third layerinterface 12 determines to change the base station, third layerinterface 12 activates the stop command of second layer interface 16.
The stop command requires second layer interface 12 to immediately
stop the transmission of SDU information 65a. Therefore, even if
TFC data request 86 has already been received, the mode of PDU65b
is changed from the mode to be transmitted to MAC layer 64 to thetransmission hold mode." (Paragraph [0015](J) "[Problem to be solved by the invention] The purpose of this invention
is to provide the method and system for the processing of unexpected82interruptions of data transmission in wireless communication systems,
which occur between the RLC layer and the MAC layer." "[Meansfor solving the problem] The invention discloses the method andsystem for the processing of unexpected interruptions of datatransmission in wireless communication devices, which occur during
the data transmission schedule between the RLC layer and the MAC
layer. According to the invention, the RLC layer provides the MAC
layer with RLC entity information. RLC entity information showsthat the RLC layer has SDU data waiting for transmission. After thisRLC entity information is provided, the RLC layer receives an
unexpected data interruption, and requires the RLC layer to destroy
the SDU. After receiving an unexpected data interruption, the MAC
layer transmits the MAC request and instructs the RLC layer toprovide at least one PDU. According to this MAC request, the RLC
layer transmits at least one PDU to the MAC layer, and substitutes it
for the destroyed SDU." (Paragraphs [0019] and [0020])(K) "In the following descriptions, the transmitter or the receiver is a
mobile phone, PDA, personal computer or other device using
wireless communication protocols. As mentioned above, theinvention is applied to wireless communication systems or otherwireless systems. It may be easily understood by a person ordinarily
skilled in the art that the difference between this invention and theprior art, which is the element of the invention, is the result of theappropriate improvement of the prior art." (Paragraph [0023])(L) Figure 7 shows wireless communication device 100 of the invention.""Second layer interface 132 is divided into RLC layer 142 and MAC
layer 144. RLC layer 142 communicates with third interface 133,
receives the third layer data in the form of SDU, and stores it inbuffer 143. RLC layer 142 receives command instructions, such assuspension, stop or reconfiguration, from third layer interface 133.
RLC layer 142 generates PDU145 by SDU141, and then sends
PDU145 to MAC layer 144. The size and quantity of PDU145
transmitted to MAC layer 144 are specified by the TFC (transport
format combination) data request sent from MAC layer 144 to RLC
layer 142. After the indication of the presence in RLC layer 142 of
SDU data 141 to be transmitted, MAC layer 144 sends the TFC data83request to RLC layer 142 in the form of RLC entity information."(Paragraphs [0024] and [0025])(M) In the first embodiment, the method of the invention makes RLC
layer 142 provide at least one padding PDU150, so as to fulfill the
TFC data request from MAC layer 144. Padding PDU150 does nothave actual SDU data 141, and is only used when SDU data 141 is
destroyed due to the occurrence of an unexpected data interruption.
Figure 8 shows padding PDU150. Since padding PDU150a is astandard AM data PDU, PDU field 151a is set to '1.' Sequencenumber field 152a is a standard sequence number, and polling bit
153a is '0' or '1' (defined according to the polling state from second
layer interface 132). Bit 154a is reserved and its value is '0.' The
subsequent extension bit 155a is always set to '1,' indicating that it isfollowed by one LI156a. However, in LI156a, special codes which
are set to '1' are created. The lengths of these special codes are much
longer than the length of data domain 158a. The length of the actual
LI156a in the RLC entity according to the definition of the length of
LI is 7-bit or 15-bit. In Figure 8, the LI length is 15-bit. This special
LI156a shows that the remaining PDU150as only have information
for filling the undefined parts and such information can bedisregarded. However, the subsequent bit 157a to this LI156a mustbe '0,' indicating that SDU data domain 158a starts thereafter. The
contents of SDU data domain 158a are not defined, and such domain
is only for the purpose of filling. It should be noted that UM data
PDUs can be used for the purpose of filling under the UMtransmission. Figure 9 shows UM data padding PDU150b. UM data
padding PDU150b has a very simple structure, and has 7-bit
sequence number field 152b, the subsequent extension bit 155b (setto '1'), 7-bit LI156bs all set to '1' (indicating that the subsequent datais the padding field), and last extension bit 157b set to '0.' The actual
bit of LI156b is determined by the size of the maximum UMD PDU
in the UM RLC entity defined by upper layer 133, and is 7-bit or
15-bit. In Figure 9, the LI is 7-bit. As mentioned above, as the whole
PDU150b is a padding PDU, data domain 158b is undefined, or canbe any given value." (Paragraph [0026])

84

B.

(N) "In any situation where SDU data 141 in RLC layer 142 does notsatisfy the data volume according to TFC data request 166 due to an
unexpected data interruption, RLC layer 142 provides a padding
PDU of appropriate quantity and accurate size, and fulfills thedemand of TFC data request 166." "As mentioned above,
insufficiency of SDU data is supplemented by the use of a padding
PDU as an alternative PDU." (Paragraphs [0029] and [0031])
Contents of Exhibit Ko No. 1-4 (3GPP technical specification "3GPP TS
25.322 V.6.3.0"; hereinafter referred to as "Technical Specification
V.6.3.0")"4.2.1.2.1 Transmitting UM RLC entity
The transmitting UM-RLC entity receives RLC SDUs from upper layers
through the UM-SAP.
The transmitting UM RLC entity segments the RLC SDU into UMD
PDUs of appropriate size, if the RLC SDU is larger than the length ofavailable space in the UMD PDU. The UMD PDU may containsegmented and/or concatenated RLC SDUs. UMD PDU may also containpadding to ensure that it is of a valid length. Length Indicators are used todefine boundaries between RLC SDUs within UMD PDUs. Length
Indicators are also used to define whether Padding is included in the UMD
PDU.
The transmitting UM RLC entity submits UMD PDUs to the lower layer
through either a CCCH, SHCCH, DCCH, CTCH, DTCH, MCCH, MSCH
or an MTCH logical channel.""9.2.1.3 UMD PDU
The UMD PDU is used to transfer user data when RLC is operating inunacknowledged mode. The length of the data part shall be a multiple of 8
bits. The UMD PDU header consists of the first octet, which contains the"Sequence Number." The RLC header consists of the first octet and all theoctets that contain "Length Indicators.""9.2.2.5 Extension bit (E)Length: 1bit.
This bit indicates if the next octet will be a "Length Indicator" and E bit.
Bit
0

Description
The next field is data, piggybacked
85

STATUS PDU or padding
1

The next field is Length Indicator and E bit"9.2.2.8 Length Indicator (LI)A "Length Indicator" is used to indicate the last octet of each RLC SDU
ending within the PDU.
Except for the predefined values reserved for special purposes and listed
in the tables below, the "Length Indicator" shall:- be set to the number of octets between the end of the RLC header and up
to and including the last octet of an RLC SDU segment;- be included in the PDUs that they refer to.
C.

The size of the "Length Indicator" may be either 7 bits or 15 bits.
Contents of Exhibit Ko No. 4 (the minutes of the 3GPP Working Group"L2 Optimization for VoIP (R2-050969)")"The current RLC Length Indicator scheme only indicates the end of an
RLC SDU. Therefore if the previous RLC PDU is lost it will not be
possible to know if the entire SDU was received or not.
In Figure 2, it is visible that if the second RLC PDU is lost, the RLC
receiver will not be able to distinguish between scenarios A and B andthus both RLC SDUs 2 and 3 [the court understand that this is thetypographic error and should be corrected as "RLC SDUs 3 and 4"] would
have to be discarded. In the following subsection we propose a solution toaddress this limitation.""In order to address the issue described above, we propose to signal
in-band whether the first SDU is entirely included in the current PDU.
This is illustrated in Figure 3:
It is visible from the illustration that the RLC receiver would now be able
to distinguish between both scenarios and as a result would not discard thefourth RLC SDU in scenario A.
Several options for signalling this additional information are listed here:- Use one of LI’s reserved values: In this case, an additional LI wouldD.

have to be incorporated in the RLC PDU for which the first RLC SDU isentirely included in the RLC PDU. This would result in an overhead of
3% of the 12.2kbps payload. Note that this additional LI value would bepresent at the most once per RLC PDU."
Contents of Exhibit Ko No. 39 (Japanese National Publication of PCT
Application No. 2002-527945)
86

(A) "In a telecommunications system a larger higher layer data unit
(SDU) is segmented into smaller segments on the lower layer (RLC).
Segmentation length information is used to indicate the lengths of thesegments in a lower layer protocol data unit (PDU). Specific valuesof segmentation length information are employed to indicate, whennecessary, special information about the upper layer data unit (SDU),
such as whether the upper layer data unit ends in the current data
segment in the lower layer PDU or continues to the next lower layer
PDU. This information is needed in the receiver to correctly
assemble the segmented data." ([Abstract])(B) "The RLC is capable of segmenting the higher layer PDUs. The
segmenting allows a larger higher layer (e.g. L3, LAC) data unit tobe split into smaller units (segments) on the lower layer (RLC).
When segmenting is used, the transmitting end should indicate to thereceiving end whether the same higher layer unit will continue in thenext lower layer unit or a new higher level unit one will be started in
the next lower layer unit. This information is needed in the receiver(either the mobile station (MS) or the network (NW)) to correctly
assemble the segmented data." (Paragraph [0006])(C) "In a prior art approach, a separate indicator has been used in eachlower layer data segment to specify, whether the higher layer unit
starts, ends or continues in the present data segment. Possible values
may be the following, for example: 11 start & end; 10 start &continue; 00 continue; and 01 continues to end. The disadvantage ofthe prior art approach is that this extra field uses extra space in the
protocol signaling and thereby causes extra overhead." (Paragraph[0007])(D) In the present invention specific values of segmentation length
information are employed to indicate, when necessary, special
information about the upper layer data unit, such as whether theupper layer data unit ends in the current data segment in the lower
layer PDU or continues to the next lower layer PDU. Thus, a separate
indicator field used in the prior art is avoided." (Paragraph [0010])(E) "Fig. 5 illustrates a PU format with N length indicators in the first PU.
The total number of segments is O, each being M octets in length.
The flag E in the length indicator indicates whether there is another87

length indicator in the following octet (flag E = 1) or not (flag E = 0).
In the most simple case, where the PU contains data only from one
SDU, and no segmentation information is needed in the PU. In otherwords, a PU without any segmentation information means that the
PU is contiguous, comes from one SDU and the same SDU continues
until the next PU which contains segmentation information. No
separate indicator for indicating whether the SDU continues or not isneeded. If all PUs in the RLC PDU contains data from the same SDU,
no segmentation information is needed in the PDU. Alternatively, thefirst PU in the PDU may be provided with a length indicator having aE.

predefined value which indicates that the SDU in this PDU continues
in the next RLC PDU. Such a value may be 1111110, for example. If
the SDU ends at end of the current PDU, this indicated by a length
indicator value which points exactly to the end of the PDU."(Paragraph [0019])
Contents of Exhibit Ko No. 42 (3GPP Working Group minutes "L2
considerations for VoIP support (R2-041645))(A) "AMR data frames are generated every 20ms. The RFC allows thetransmission of one or several voice frames in a single packet.
However, for the purpose of VoIP, only the single voice frame perpacket case would be able to deliver the desired delay
characteristics." (Page 1)(B) "RLC-UM provides all the necessary functionality to support
arbitrary SDU sizes: segmentation, concatenation and padding.
However, the use of segmentation and concatenation is a mixed
blessing. Indeed, if a higher layer SDU is segmented into two frames,
the probability that it would be lost is equal to the probability thateither of the PDUs would be lost. …Therefore, when handling SDUs
that have equivalent sizes to the payload that can be transmitted in
one TTI, it would be preferable to align the two so as to reduce theF.

resulting SDU error rate." (Page 3)
Contents of Exhibit Ko No. 92 (Change Request (R2-051681))"CR0280 for 25.322 proposes an optimization for the RLC UM header
structure to reduce the RLC UM overhead in case of services for which
the UTRAN can tune the RLC-PDU sizes to the expected RLC-SDU sizes.
This change request introduces the necessary support in 25.331" (Page 1)
88

G.

H.

Contents of Exhibit Ko No. 40 (US Patent No. 6819658)
In operation, as seen in Figure 11A, an incoming cell or packet is
examined in step 11A-1 and in step 11A-2, a determination is made as towhether the size is equal to the minimum size, e.g., an ATM cell size. If
the incoming packet or cell is only the minimum size, a decision is madeat step 11A-3 that segmentation is not needed and in step 11A-4, theSAR1 header is generated.
The SAR1 header comprises only one byte, as shown in Figure 8. In step
11A-7, the header is applied to the data in the packet or cell and id
forwarded to the modem at a selected terminal at a site for addressing to a
destination terminal and transmission to that terminal in a predeterminedburst. Where it is determined in step 11A-2 that the incoming cell or
packet is greater than a minimum size, there is a need to have the cell or
packet segmented for transmission. Thus, in step 11A-5, the cell or packet
is divided into predetermined size segments, followed by the generation ofa SAR2 header in step 11A-6. As noted above, and as seen in Figures 7A
and 7B, the SAR2 header is a three byte header that changes for eachsegment and contains information sufficient to identify each segment ineach packet by its terminal. (Page 14)
Contents of Exhibit Ko No. 43 (PCT International Publication 02/43332)"The second mode of the invention resembles the first mode in that, whena user data packet payload is spread or segmented over plural AAL2
packets, the sequence number-related values for the AAL2 packets (whichcarry the segmented user data packets) are stored in the length indicator(LI) field of the plural AAL2 packets utilized by the segmented user data
packet. To facilitate this second mode, two ranges of values are reserved
for the length indicator (LI) field. In one illustrated implementation, thefirst range of reserved or predetermined values extends between 48 and 55,
inclusive of both 48 and 55, while the second range of reserved orpredetermined values extends between 56 and 63, inclusive of both 56 and63. When the length indicator (LI) field of a received AAL2 packet
belongs to the first range, the received AAL2 packet is recognized as
being for a first of the plural AAL2 packets containing the user data of theuser data frame. When the length indicator (LI) field of a received AAL2
packet belongs to the second range, the received AAL2 packet isrecognized as being other than the first of the plural AAL2 packets (e.g., a89second, third, fourth AAL2 packet, etc.)." (Page 7 of the Translation)(2) Ground for invalidation 1 (lack of novelty due to Exhibit Ko No. 3)
A. From the contents of Exhibit Ko No. 3 as referred to in (1)A. above, the court
finds that such Exhibit discloses the following invention (hereinafter referred toas "Exhibit Ko No. 3 Invention").
"An apparatus for transmitting data (method for transmitting data) in a mobile
communication system, comprising:a transmission buffer for receiving a service data unit (SDU) from a higher
layer, determining whether the SDU is included in one protocol data unit
(PDU), and reconfiguring the SDU to at least one segment according to theB.

transmittable PDU size;a header inserter for configuring at least one PDU including a serial number(SN) field and a one-bit field in a header, and said at least one segment in adata field;
an LI inserter for inserting and setting an LI field after the one-bit field in said
at least one PDU if the SDU is not included in one PDU; anda transmitter for sending at least one PDU received from the LI inserter to areceiver."In relation to the court's findings as mentioned above, the appellee alleges that
Exhibit Ko No. 3 discloses a setter for "setting the one-bit field to indicate that
the PDU includes the whole SDU without segmentation/concatenation/paddingin the data field, if the SDU is included in one PDU" as referred to inConstituent Feature D(K), relying on the description of said Exhibit whichreads "if only one SDU fulfills data domain 58 of PDU50, the bit 55a is set to'0,' indicating that no LI is present." (Paragraph [0008])
However, the court's findings in this respect are as follows. [i] Exhibit Ko No.
3 provides that "Figure 3 is a simplified drawing of AM data PDU50, which is
specified in 3GPP TS25.322 V3.8.0. specification" (Paragraph [0006]).
Considering the fact that this "3GPP TS25.322 V3.8.0" is one of the 3GPP
technical specifications before the alternative E-bit interpretation was
introduced into 3GPP standard, the statement relied upon by the appellee canbe understood as being connected with the normal E-bit interpretation.
However, the normal E-bit interpretation does not relate to the case where "thePDU includes the whole SDU without segmentation/concatenation/padding in
the data field." [ii] It is naturally understood that the wording of "only one SDU
completely fulfills data domain 58 of PDU50" as referred to in Exhibit Ko No.
90

3 also encompasses the case where the size of SDU is larger than that of PDU
and the PDU is filled with the first segment or intermediate segment.
Considering these circumstances, the statement of Exhibit Ko No. 3 whichreads "if only one SDU completely fulfills …indicating that no LI is present"
relied upon by the appellee cannot be considered to disclose the technology ofConstituent Feature D(K) which reads "setting the one-bit field to indicate that
the PDU includes the whole SDU without segmentation/concatenation/paddingin the data field, if the SDU is included in one PDU."
In addition, the appellee also alleges that a "padding PDU," which is one of theexamples of an "alternative PDU" referred to in Exhibit Ko No. 3, corresponds
to "a PDU containing an intermediate segment," because it performs a functionof concatenation of the PDUs before and after the padding PDU. However,Exhibit Ko No. 3 mentions the "padding PDU" as the one "does not have actual
SDU data 141, and is only used when SDU data 141 is destroyed due to theoccurrence of an unexpected data." (Paragraph [0026]) Considering thiswording, the "padding PDU," as referred to in Exhibit Ko No. 3 does not meana PDU segmented SDU or a PDU to be filled, and is irrelevant to an SDU.
Therefore, as it is impossible to associate such "padding PDU" with an SDU oran intermediate segment, such "padding PDU" cannot be considered tocorrespond to a PDU containing an intermediate segment of the SDU as
referred to in Invention 1.
Thus, although Exhibit Ko No. 3 mentions the configuration of a special codeon the LI field in relation to a "padding PDU," this statement is not considered
to be equivalent to the statement of Constituent Feature D of Invention 1 that
"if the data field of the PDU includes an intermediate segment of the SDU" and"setting the one-bit field to indicate the presence of at least one length indicator(LI) field," or the statement of Constituent Feature F of Invention 1 that "the LI
field is set to the pre-defined value indicating the presence in the PDU of anintermediate segment which is neither the first nor the last segment of the
SDU."
C.

Therefore, the appellee's allegation is unacceptable.
Comparing Exhibit Ko No. 3 Invention found in A. above against Invention 1,
these inventions are found to be different in the following respects (butidentical in all other respects).
(A) Difference 1
Invention 1 has "a one-bit field setter for setting the one-bit field to91

indicate that the PDU includes the whole SDU without
segmentation/concatenation/padding in the data field, if the SDU is
included in one PDU, and for setting the one-bit field to indicate thepresence of at least one length indicator (LI) field, if the data field of the
PDU includes an intermediate segment of the SDU" (Constituent FeatureD); whereas Exhibit Ko No. 3 Invention does not have such structure.
(B) Difference 2
Invention 1 has a structure wherein "if the data field of the PDU includes
an intermediate segment of the SDU, the LI field is set to the pre-definedvalue indicating the presence in the PDU of an intermediate segment

D.

which is neither the first nor last segment of the SDU" (Constituent
Feature F); whereas Exhibit Ko No. 3 Invention does not have such
structure.
Comparing Exhibit Ko No. 3 Invention as referred to in A. above against
Invention 2, these inventions are found to be different in the following respects(but identical in all other respects).
(A) Difference 3
Invention 2 has a structure wherein "if the SDU is included in one PDU, a
stage of configuring the PDU including a header and a data field, wherein
the header includes a sequence number (SN) field, and a one-bit fieldindicating that the PDU includes the whole SDU in the data field without
segmentation/concatenation/padding" (Constituent Feature K); whereas
Exhibit Ko No. 3 Invention does not have such structure.
(B) Difference 4
Invention 2 has a structure wherein "if the data field of the PDU includes
an intermediate segment of the SDU, a stage wherein the LI field is set tothe pre-defined value indicating the presence in the PDU of anintermediate segment which is neither the first nor the last segment of the
SDU" (Constituent Feature M); whereas Exhibit Ko No. 3 Invention does
not have such structure.

E.

As mentioned above, Exhibit Ko No. 3 Invention is different from Inventions 1
and 2 in respect of Differences 1 to 4. Therefore, the appellee's allegation that
Exhibit Ko No. 3 Invention is identical to Inventions 1 and 2 (ground forinvalidation 1) is unacceptable.
(3) Ground for invalidation 2 (lack of inventive step (1) based on Exhibit Ko No. 3 as
the primarily cited reference)
92

A.

B.

The court finds that Invention 1 attains the solution of the problem of
inefficient use of limited radio resources due to the use of an unnecessary LI
field by "setting the one-bit field to indicate that the PDU includes the whole
SDU without segmentation/concatenation/padding in the data field, if the SDU
is included in one PDU" (Constituent Feature D), and, also provides an ability
to distinguish between a PDU completely containing an SDU in the data field
without segmentation/concatenation/padding and a PDU which includes neither
the start nor the end of an SDU (i.e. a PDU containing an intermediate segmentof an SDU), by adopting the structure of "setting the one-bit field to indicate
the presence of at least one length indicator (LI) field, if the data field of the
PDU includes an intermediate segment of the SDU" (Constituent Feature D)
and the structure wherein "if the data field of the PDU includes an intermediatesegment of the SDU, the LI field is set to the pre-defined value indicating thepresence in the PDU of an intermediate segment which is neither the first nor
the last segment of the SDU" (Constituent Feature F).
The court finds that Invention 2 attains the solution of the problem of
inefficient use of limited radio resources due to the use of an unnecessary LI
field by adopting "a stage of constructing the PDU including a header and data
field, if the SDU is included in one PDU, wherein the header includes asequence number (SN) field, and a one-bit field indicating that the PDU
includes
the
whole
SDU
in
the
data
field
without
segmentation/concatenation/padding" (Constituent Feature K), and, also
provides an ability to distinguish between a PDU completely containing an
SDU in the data field without segmentation/concatenation/padding and a PDU
which includes neither the start nor the end of an SDU, by adopting thestructures wherein "if the SDU is not included in one PDU ... wherein headersof the PDUs include a SN field, at least a one-bit field indicating the presenceof a length indicator (LI) field and said at least one LI field" (Constituent
Feature L) and wherein "if the data field of the PDU includes an intermediatesegment of the SDU, a stage wherein the LI field is set to the pre-defined valueC.

indicating the presence in the PDU of an intermediate segment which is neither
the first nor the last segment of the SDU" (Constituent Feature M).
Meanwhile, the purpose of Exhibit Ko No. 3 Invention is to address an
unexpected interruption of data transmission which occurs between an RLC
layer and a MAC layer. This Invention has a structure wherein an RLC layer
provides a padding PDU of appropriate quantity and size, and this padding93

D.

PDU is used as an alternative PDU to supplement the deficiency in SDU data
and to respond to the TFC data request, if the SDU data in an RLC layer
becomes insufficient to provide the data volume as instructed by the TFC data
request from the MAC layer due to an unexpected interruption of the datatransmission.
As discussed in relation to ground for invalidation 1, Exhibit Ko No. 3
Invention cannot be regarded as having the structure for "setting the one-bit
field to indicate that the PDU includes the whole SDU without
segmentation/concatenation/padding in the data field, if the SDU is included in
one PDU." Further, Exhibit Ko No. 3 neither indicates nor implies the problemof "inefficient use of limited radio resources due to the use of unnecessary LI
field" or the problem of enabling "distinction between a PDU containing thewhole of SDU in the data field without segmentation/concatenation/padding
and a PDU which includes neither the start nor end of an SDU."
Likewise, Exhibit Ko No. 39 does not indicate any of these problems.
Therefore, in relation to Exhibit Ko No. 3 Invention, it was not easy for a
person ordinarily skilled in the art to conceive of an idea of the structure
containing "a one-bit field setter for setting the one-bit field to indicate that the
PDU includes the whole SDU without segmentation/concatenation/padding in
the data field, if the SDU is included in one PDU, and for setting the one-bitE.

field to indicate the presence of at least one length indicator (LI) field, if thedata field of the PDU includes an intermediate segment of the SDU"
(Constituent Feature D) and the structure "wherein if the data field of the PDU
includes an intermediate segment of the SDU, the LI field is set to thepre-defined value indicating the presence in the PDU of an intermediatesegment which is neither the first nor the last segment of the SDU"
(Constituent Feature F) as mentioned in Invention 1, based on the contents of
Exhibit Ko No. 3 or common general technical knowledge indicated in Exhibit
Ko No. 39.
Likewise, in relation to Exhibit Ko No. 3 Invention, it was not easy for a
person ordinarily skilled in the art to conceive of an idea of the structure
containing "a stage of constructing the PDU including a header and data field,
if the SDU is included in one PDU, wherein the header includes a sequencenumber (SN) field, and a one-bit field indicating that the PDU includes thewhole SDU in the data field without segmentation/concatenation/padding" andthe structure wherein "if the data field of the PDU includes an intermediate94segment of the SDU, a stage wherein the LI field is set to the pre-defined value
indicating the presence in the PDU of an intermediate segment which is neither
the first nor the last segment of the SDU" as mentioned in Invention 2, basedon the contents of Exhibit Ko No. 3 or common general technical knowledge
indicated in Exhibit Ko No. 39.
(4) Ground for invalidation 3 (lack of inventive step (2) based on Exhibit Ko No. 3 as
the primarily cited reference)
The problems, means to solve the problems, and function and effect of each of theInventions are as discussed in the section of ground for invalidation 2 ((3) above).
The purpose of Exhibit Ko No. 3 Invention is also as discussed in the section ofground for invalidation 2. As discussed in the section of ground for invalidation 2,
the Inventions and Exhibit Ko No. 3 Invention are different in terms of the problems
to be solved, and Exhibit Ko No. 3 neither indicates nor implies the problems to besolved by the Inventions.
Moreover, the invention referred to in Exhibit Ko No. 4 adopts a structure "to signal
in-band whether the first SDU is entirely included in the current PDU," so as tosolve the problem that "if the previous RLC PDU is lost, it will not be possible toknow if the entire SDU was received or not." Exhibit Ko No. 4 indicates that, as an
example of "signaling," if a reserved value of LI is used, "an additional LI would
have to be incorporated in the RLC PDU for which the first RLC SDU is entirely
included in the RLC PDU." This is different from the structure of the Inventions to
use a reserved value for an LI field in a case where an intermediate segment isincluded. Accordingly, Exhibit Ko No. 4 cannot be considered to indicate or imply
the structure "wherein if the data field of the PDU includes an intermediate segmentof the SDU, the LI field is set to the pre-defined value indicating the presence in the
PDU of an intermediate segment which is neither the first nor the last segment of the
SDU" (Constituent Feature F) as mentioned in Invention 1, or the structure wherein"if the data field of the PDU includes an intermediate segment of the SDU, a stage
wherein the LI field is set to the pre-defined value indicating the presence in the
PDU of an intermediate segment which is neither the first nor the last segment of the
SDU" (Constituent Feature M) as mentioned in Invention 2, so as to enable thedistinction between a PDU containing the whole of SDU in the data field without
segmentation/concatenation/padding and a PDU which includes neither the start nor
the end of an SDU.
Thus, the structure which constitutes the difference between the Inventions andExhibit Ko No. 3 Invention cannot be considered to be one which could have been95

easily conceived of by a person ordinarily skilled in the art based on Exhibit Ko No.
3 Invention and the contents of Exhibit Ko No. 4.
(5) Ground for invalidation 4 (lack of inventive step (3) based on Exhibit Ko No. 3 as
the primarily cited reference)
The problems, means to solve the problems, and function and effect of Inventions 1
and 2 are as discussed in the section of ground for invalidation 2. The purpose of
Exhibit Ko No. 3 Invention is also as discussed in the section of ground forinvalidation 2. As discussed in the section of ground for invalidation 2, Inventions 1
and 2 and Exhibit Ko No. 3 Invention are different in terms of the problems to besolved, and Exhibit Ko No. 3 neither indicates nor implies the problems to be solvedby the Inventions.
In addition, the court finds that Exhibit Ko No. 39 discloses the following. [i]Specific values of segmentation length information are employed to indicate, whennecessary, special information about the upper layer data unit (SDU), such aswhether the upper layer data unit ends in the current data segment in the lower layer
PDU or continues to the next lower layer PDU. For example, a length indicator witha predefined value indicating that the SDU in this PDU continues in the next RLC
PDU (e.g. "1111110") is given to a first payload unit of the PDU. [ii] The use ofsuch specific values of segmentation length information is needed in the receiver tocorrectly assemble the segmented data, and a separate indicator field can be avoided
by the use of such information (Paragraph [0007], Exhibit Ko No. 39).
In addition, it is reasonable to understand the statement of Exhibit Ko No. 39 whichreads "the SDU in this PDU continues in the next RLC PDU" (Paragraph [0019]) tomean that "the SDU in the PDU is not the last segment." Therefore, such statement
is considered to also indicate the possibility that "the SDU in the PDU is the first
segment," in addition to that "the SDU in the PDU is an intermediate segment."
Based on the above, Exhibit Ko No. 39 cannot be considered to indicate or imply
the structure wherein "if the data field of the PDU includes an intermediate segmentof the SDU, the LI field is set to the pre-defined value indicating the presence in the
PDU of an intermediate segment which is neither the first nor the last segment of the
SDU" as mentioned in Invention 1, or the structure wherein "if the data field of the
PDU includes an intermediate segment of the SDU, a stage wherein the LI field is
set to the pre-defined value indicating the presence in the PDU of an intermediatesegment which is neither the first nor the last segment of the SDU" as mentioned in
Invention 2, so as to enable the distinction between a PDU containing the whole of
SDU in the data field without segmentation/concatenation/padding and a PDU
96

which includes neither the start nor the end of an SDU.
Thus, the structure which constitutes the difference between the Inventions andExhibit Ko No. 3 Invention cannot be considered to be one which could have been
easily conceived of by a person ordinarily skilled in the art based on Exhibit Ko No.
3 Invention and the contents of Exhibit Ko No. 39.
(6) Ground for invalidation 5 (lack of inventive step based on Exhibit Ko No. 1-4 asprimarily cited reference)
A. According to the statements of Exhibit Ko No. 1-4, this Exhibit is found to
disclose the following invention (hereinafter referred to as "Exhibit Ko No. 1-4
Invention").
"An apparatus for transmitting data (method for transmitting data) in a mobile
communication system, comprising:a transmission buffer for receiving a service data unit (SDU) from a higher layer,
determining whether the SDU is included in one protocol data unit (PDU), andreconfiguring the SDU to at least one segment according to the transmittable
PDU size;a header inserter for configuring at least one PDU including a serial number(SN) field and a one-bit field in a header, and said at least one segment in a data
field;an LI inserter for inserting and setting an LI field after the one-bit field in said atleast one PDU if the SDU is not included in one PDU; anda transmitter for sending at least one PDU received from the LI inserter to areceiver."B. Comparing Exhibit Ko No. 1-4 Invention referred to in A. above against
Invention 1, these inventions are found to be different in the following respects(but identical in all other respects).
(A) Difference 5
Invention 1 has "a one-bit field setter for setting the one-bit field toindicate that the PDU includes the whole SDU without
segmentation/concatenation/padding in the data field, if the SDU is(B)

included in one PDU, and for setting the one-bit field to indicate thepresence of at least one length indicator (LI) field, if the data field of the
PDU includes an intermediate segment of the SDU" (Constituent FeatureD); whereas Exhibit Ko No. 1-4 Invention does not have such structure.
Difference 6
Invention 1 has a structure wherein "if the data field of the PDU includes
97

an intermediate segment of the SDU, the LI field is set to the pre-definedvalue indicating the presence in the PDU of an intermediate segment
which is neither the first nor the last segment of the SDU" (Constituent
Feature F); whereas Exhibit Ko No. 1-4 Invention does not have such
structure.
C. Comparing Exhibit Ko No. 1-4 Invention referred to in A. above against
Invention 2, these inventions are found to be different in the following respects(but identical in all other respects).
(A) Difference 7
Invention 2 has a structure wherein "if the SDU is included in one PDU, a(B)

stage of configuring the PDU including a header and a data field, wherein
the header includes a sequence number (SN) field, and a one-bit fieldindicating that the PDU includes the whole SDU in the data field without
segmentation/concatenation/padding" (Constituent Feature K); whereas
Exhibit Ko No. 1-4 Invention does not have such structure.
Difference 8
Invention 2 has a structure which reads "if the SDU is not included in one
PDU" and "wherein headers of the PDUs include a SN field, at least a
one-bit field indicating the presence of a length indicator (LI) field andsaid at least one LI field" (Constituent Feature L), and a structure whichreads "if the data field of the PDU includes an intermediate segment of the
SDU, a stage wherein the LI field is set to the pre-defined value indicating
the presence in the PDU of an intermediate segment which is neither the
first nor the last segment of the SDU" (Constituent Feature M); whereas
Exhibit Ko No. 1-4 Invention does not have such structures.
D. In the following, the discussion is made as to Differences 5 to 8.
The problems, means to solve the problems, and function and effect of each of
the Inventions are as discussed in the section of ground for invalidation 2 ((3)
above).
Meanwhile, Exhibit Ko No. 1-4 Invention differs from Invention 1 in that it does
not have structures which constitute Differences 5 and 6, and also differs fromInvention 2 in that it does not have structures which constitute Differences 7 and8. Therefore, Exhibit Ko No. 1-4 Invention is not considered as an invention tosolve the same problem as that of the Inventions, namely, the inefficient use oflimited radio resources due to the use of unnecessary LI field, or the problem ofenabling distinction between a PDU containing the whole SDU in the data field98

without segmentation/concatenation/padding and a PDU which includes neither
the start nor the end of an SDU, in the case where the "one-bit field" is set "toindicate
that
the
PDU
includes
the
whole
SDU
without
segmentation/concatenation/padding in the data field."
Exhibits Ko No. 1-2, No. 42, No. 91 and No. 92 submitted by the appellee arefound to disclose that SDUs of the same size are frequently generated by a VoIP
application which uses a sound codec with a fixed bit rate. In addition, Exhibits
Ko No. 3 and No. 40 are found to disclose that the header size can be reduced if
one SDU completely fills the PDU's data field or if the received data completely
fills the data field of a data packet. These matters are found to have been alreadyknown in the relevant field of technology before the priority date of the Patent.
However, as discussed in the section of ground for invalidation 4 ((5) above), thestatement of Exhibit Ko No. 39 which reads "the SDU in this PDU continues in
the next PDU" is considered to also indicate the possibility that "the SDU in the
PDU is the first segment," in addition to that "the SDU in the PDU is anintermediate segment." Likewise, the statement of Exhibit Ko No. 43 whichreads "When the length indicator (LI) field of a received AAL2 packet belongs
to the second range, the received AAL2 packet is recognized as being other than
the first of the plural AAL2 packets (e.g., a second, third, fourth AAL2 packet,etc.)" is considered to also indicate the possibility that the "packet other than thefirst of the plural AAL2 packets" may be the "last AAL2 packet" as well as an"intermediate AAL2 packet." Therefore, neither Exhibit Ko No. 39 nor No. 43 isfound to disclose the use of a length indicator in a PDU data field to indicate anintermediate segment, or this point cannot be regarded as having been generalknowledge in the relevant technical field before the priority date of the Patent.
In addition, neither of these Exhibits mentions or implies the solution of the
problem of inefficient use of limited radio resources due to the use of an
unnecessary LI field by adopting the structure wherein the "one-bit field" is set
to indicate that the PDU includes the whole SDU without
segmentation/concatenation/padding in the data field, as adopted by theInventions (Differences 5 and 7). Further, neither of these Exhibits mentions or
implies a structure like that of the Inventions (Differences 5, 6, and 8), wherein,when setting the "one-bit field" as mentioned above, if the data field of the PDU
includes an intermediate segment of the SDU, the one-bit field is set to indicate
the presence of at least one indicator field (LI) and the LI field is set to thepre-defined value indicating the presence in the PDU of an intermediate segment,99thereby enabling to distinguish between a PDU containing the whole of SDU in
the data field without segmentation/concatenation/padding and a PDU which
includes neither the start nor the end of an SDU.
Thus, the Inventions and Exhibit Ko No. 1-4 Invention are also different inrespect of the problems to be solved. Further, none of the abovementioned
Exhibits are considered to disclose the problems of the Inventions and the means
to solve such problems. Therefore, even applying the contents of theabovementioned Exhibits to Exhibit Ko No. 1-4 Invention, it cannot be
considered that a person ordinarily skilled in the art could have easily conceivedof the structure, which constitutes the difference between the Inventions andExhibit Ko No. 1-4 Invention.
E. According to the appellee, in the background of the adoption of the "normal
E-bit interpretation" by 3GPP, in many applications, SDUs whose size is larger
than the size of the PDU data field are frequently generated, and consequently
PDUs containing intermediate segments of the SDU are often generated. The
appellee alleges that 3GPP adopted the structure of Exhibit Ko No. 1-4 Invention
because 3GPP recognized the possibility of reducing more header data volume
by omitting the length indicator of a PDU containing an intermediate segment,
rather than by omitting the length indicator of a PDU containing an SDU which
completely matches the PDU data field. In addition, according to the appellee's
allegation, this also suggests that 3GPP had recognized the possibility of
reducing the data transmission overhead by omitting the length indicator for a
PDU containing an SDU which completely matches the PDU data field, if such
SDU is often generated.
However, the abovementioned allegation of the appellee is unacceptable.
Exhibit Ko No. 1-4 neither indicates nor implies the omission of a length
indicator for PDUs containing intermediate segments of the SDU with a view to
reduce the header size of such PDUs and the total overhead and to enhance theefficiency of data transmission, against the backdrop that in many applications,
SDUs whose size is larger than the size of the PDU data field are frequently
generated, and consequently PDUs containing intermediate segments of the
SDU are often generated. Exhibit Ko No. 1-4 does not support that these points
were recognized by 3GPP.
In addition, Exhibit Ko No. 1-4 neither indicates nor implies that, if SDUs which
completely match the PDU data field are frequently generated, the overhead ofdata transmission can be reduced by omitting the length indicator of a PDU
100

containing such SDU. Even supposing that it was general knowledge for a
person ordinarily skilled in the art before the priority date of the Patent
Application that SDUs of the same size are frequently generated by a VoIP
application using a sound codec with a fixed bit rate, Exhibit Ko No. 1-4 does
not support that these points were recognized by 3GPP.
Further, according to the contents of Exhibit Ko No. 1-4, the length indicator ofa PDU is defined as the one that "indicates the last octet of each RLC SDU
ending within the PDU," and therefore it is reasonable to understand that theomission of a length indicator of a PDU containing an intermediate segment ofan SDU is based on the definition as mentioned above.
In addition, even supposing that a person ordinarily skilled in the art could haveconceived of an idea to completely match one of the SDUs of the same size,
which are frequently generated by a VoIP application using a sound codec with afixed bit rate, with a PDU data field, and to omit a length indicator for a PDU
containing such SDU, Exhibit Ko No. 1-4 cannot be regarded as indicating or
implying that, in relation to a PDU containing an intermediate segment, a length
indicator should be set to the "pre-defined value indicating the presence in the
PDU of an intermediate segment which is neither the first nor the last segmentof the SDU," which is different from the initial definition. This also cannot be
considered as obvious knowledge.
As mentioned above, the appellee's allegation is groundless as it contains anerror in the conditions precedent.
4. Issue 4 (whether the Patent Right for the Products has been exhausted)
The court's findings are as follows. [i] The amended Appellant-Intel License
Agreement expired on June 30, 2009. Or, even supposing that this agreement
remains in force, the Baseband Chip (hereinafter only refers to those installed in
Products 2 and 4) is not covered by this agreement. Thus, the appellee's allegation of
the exhaustion of the Patent Right is groundless as it contains an error in thecondition precedent. [ii] Even supposing that the license agreement remains in force
and the Baseband Chip is covered by this agreement, there is no reason that theappellant shall be restricted from exercising the Patent Right in this court case. The
reasoning for these findings is as explained below.
(1) Fact-finding
Considering the evidence (Exhibits Ko No. 19-1-1 to No. 19-1-4, No. 19-2, No.
20-1 to No. 20-3, No. 162, No. 163, Exhibits Otsu No. 46 and No. 52), as wellas the entire import of oral arguments, the court finds the following facts in this101

respect.
A. On January 1, 1993, the appellant and Intel Corporation entered into apatent cross-license agreement, under which the parties agreed to enter
into a cross-licensing scheme for their respective patents (Exhibits Ko No.
20-1 and No. 162; hereinafter referred to as the "Appellant-Intel License
Agreement").
The following provisions were included in the Appellant-Intel License
Agreement.
"1.11 "Samsung Patent" means a patent right, utility models right andindustrial design right of any categories or kinds (including, without
limitation, the first application, divisional application, continuation
application, continuation-in-part application and re-application) owned orcontrolled by, or that will be hereafter acquired by, Samsung (or its
Subsidiaries) in any part of the world, and (a) whose date of the first
effective application date precedes the expiration or termination of thisagreement and (b) [Omitted].""1.14 "Intel Licensed Product" means (a) semiconductor material, (b)semiconductor device, or (c) all components of an integrated circuit(excluding Samsung Propriety Products).""3.1 Samsung grants Intel Corporation a world-wide, non-exclusive andnon-transferrable license to manufacture, make a consignment of
manufacturing, use, sell (directly or indirectly), make a consignment fordevelopment solely for Intel Corporation, lease or otherwise dispose of theSamsung Patent.""3.3 Intel Corporation shall have a right to extend the scope of the licenseunder Articles 3.1 and 3.2 hereof to the Intel Subsidiaries. Intel
Corporation may only extend the scope of the license to the Intel
Subsidiaries if such entity satisfies the requirements of the Subsidiary andonly for the period in which the extended right is effectively in force forIntel Corporation.""6.4 Except as provided in Article 6.3, the license for the Samsung Patentor Intel Patent as granted from one party to the other, as the case may be,shall survive the termination of this agreement as long as these patents
continue in force.""7.8 Any matters relating to this agreement or the performance hereof
shall be governed by and construed in accordance with the U.S. federal
102

B.

C.

laws and California state laws in all respect."
The Appellant-Intel License Agreement expired on December 31, 2002.
On March 18, 2003, the appellant and Intel Corporation entered into anagreement for a partial amendment to the Appellant-Intel License
Agreement (Exhibit Ko No. 20-2).
On July 1, 2004, the appellant and Intel Corporation entered into theagreement to further amend the Appellant-Intel License Agreement asfollows (Exhibits Ko No. 20-3 and No. 163; hereinafter referred to as the"Second Amendment Agreement"; and the license agreement between theappellant and Intel Corporation after the amendment under said agreement
shall be hereinafter referred to as "Amended Appellant-Intel License
Agreement") (the term "patent cross-license agreement" in the following
provisions refers to the Appellant-Intel License Agreement in thisjudgment).
"(1) Notwithstanding Article 6.1 thereof, the patent cross license
agreement shall be extended and remain in force for five (5) years fromthe date when the Second Amendment Agreement as referred to above
takes effect.""(3) Article 3.1 shall be replaced with the following provision:
3.1 Pursuant to the terms and conditions of this agreement, Samsung
grants Intel Corporation a world-wide, non-exclusive, non-transferrable
and royalty-free license under the Samsung Patent for the following
activities, without a right of sub-license.
(a)(1) to manufacture, use, sell (directly or indirectly), offer for sale,
import or otherwise dispose of all Intel Licensed Products;(2) to manufacture, make a consignment of manufacturing (subject to theconditions set out in Article 3.7), use and/or import the devices, and to
manufacture, use, import all Intel Licensed Products, and/or implement
the method or process for the sale thereof; and(3) to consign other manufacturers with the manufacturing of the Intel
Licensed Products, under the license granted under Article 3.1(a)(1) above,
and only for the purpose of distribution of said products to Intel
Corporation for the use, import, sale, offer for sale or other disposition byIntel Corporation (subject to the condition set out in Article 3.7).
The licenses granted under (1), (2) and (3) above shall not be applicable toSamsung Proprietary Products, which are excluded from the scope of the103Intel Licensed Products.""(4) The following provision shall be added after Article 3.3.
"3.7 Right to Consign Manufacturing"(a) The right of Intel Corporation to have a third party manufacture theproducts under the license granted under Article 3.1 above shall beapplicable only in the following circumstance: [i] the design drawings,
specifications, implementation drawings for the third party's
manufacturing of the products (hereinafter individually or collectively
referred to as "Product Specifications") are provided from Intel
Corporation to such third-party manufacturer, and [ii] such ProductSpecifications are not the ones initially provided from the third party
manufacturer to Intel Corporation (excluding the case where Intel
Corporation also has a proprietary right in the design without any
restriction).""(9) The term 'California' in Article 7.8 shall be replaced with 'New York.'""(13) Articles 6.2, 6.3 and 6.4 shall be replaced with the following
provisions.""6.4 Survival Clause The options under Articles 3.5 and 4.5, and Articles
1, 2, 5.4, 6.3, 6.4 and 7 shall survive the termination of this Agreement
without regard to the cause of termination."
D.
E.

The term of the Amended Appellant-Intel License Agreement was until
June 30, 2009.
The Baseband Chip is the product [i] manufactured by a third party basedon the consignment from IMC, [ii] sold by IMC to Intel Corporation
outside Japan, [iii] sold by Intel Corporation to its wholly-owned
subsidiary, Intel America, outside Japan, and then [iv] sold by Intel
America to Apple Inc. outside Japan (Exhibits Ko No. 19-1-1 to No.
19-1-4 and No. 19-2 and Exhibit Otsu No. 46). IMC is a company formed
as Infineon became the subsidiary of Intel Corporation on January 31,
2011 (Exhibit Otsu No. 52).

(2) Discussion
A. Pursuant to Article 7 of the Act on General Rules for Application of Laws
(hereinafter referred to as the "General Rules Act"), the Appellant-Intel
License Agreement shall be governed by the "U.S. federal laws andCalifornia state laws," and the Amended Appellant-Intel License
Agreement shall be governed by the "U.S. federal laws and New York
104

B.

state laws," respectively.
Article 6.4 of the Appellant-Intel License Agreement, which provides that"the license for the Samsung Patent .... shall survive the termination of thisagreement as long as these patents continue in force," expressly indicatesthat the license shall survive the termination of said agreement. However,the Second Amendment Agreement provides in its Section (13) that
Article 6.4 shall be amended and that only "the option under Articles 3.5
and 4.5, Articles 1, 2, 5.4, 6.3, 6.4 and 7" shall survive the termination of
the agreement, to the exclusion of the provisions relating to the licensesuch as Article 3.1.
Thus, based on the language of the Second Amendment Agreement, which
deletes the survival clauses for the license contained in the original
agreement, it is reasonable to understand that the license under the
Amended Appellant-Intel License Agreement for the patents including theSamsung Patent had been terminated on June 30, 2009, which is the dateof expiration of said Agreement.
In this regard, the appellee alleges that the license under the (Amended)
Appellant-Intel License Agreement is still in force, relying on the letterfrom Intel Corporation to the appellant (Exhibit Ko No. 25), the e-mailcorrespondences between Intel Corporation and the appellant (Exhibits Ko

C.

No. 126 and 165), the remark made by the appellant's counsel in the court
action in Australia (Exhibit Ko No. 127) and other evidence. However,this evidence does not affect the court's decision as mentioned above
based on the express provisions of the Amended Appellant-Intel License
Agreement. On the premises of the evidence submitted in this court case,
it is reasonable to consider that the Amended Appellant-Intel License
Agreement is terminated.
In addition, even supposing that the license under the Amended
Appellant-Intel License Agreement still remains in force, the Baseband
Chip is considered to be out of the scope of license under said agreement.
The main text of Article 3.1 of the Amended Appellant-Intel License
Agreement excludes the right of sublicensing, and, Article 3.1(a)(2),
Article 3.1(a)(3) and Article 3.7 thereof limits the Intel Corporation's rightto have a third party manufacture the products only where they satisfy
certain requirements. Considering these provisions, the terms"manufacture" and "sale (directly or indirectly)" as set out in Article105

3.1(a)(1) are understood to mean the manufacturing of the products byIntel Corporation itself and the direct and indirect sale thereof, andtherefore the products consigned to a third party manufacturer are out of
scope of "sale" under Article 3.1(a)(1). If the term "sale" under Article
3.1(a)(1) is understood without any limitation, and the sale of the products
purchased from an unrelated third party manufacturers, etc. is also
considered as "sale" within the meaning of said Article, the licensee would
be able to easily circumvent the provisions of Article 3.1(a)(2), Article
3.1(a)(3) and Article 3.7 that impose a condition for the consignment to athird party manufacturer, namely, the condition that the ProductSpecifications shall be the ones provided from Intel Corporation to thethird party manufacturer, and not the ones initially provided from the third
party to Intel Corporation. Thus, such interpretation is unreasonablebecause it may result in an inconsistent interpretation in the entirety of theagreement.
The Baseband Chip is manufactured by IMC Corporation ((1)E. above).
In order to justify this under Article 3.1, the conditions under Article
3.1(a)(2) or Article 3.1(a)(3) must be met (i.e. Intel Corporation needs tohave had IMC manufacture the products by delivering the drawings, etc.
specified in Article 3.7), or the extension of the license under Article 3.3 isD.

E.

required. Nevertheless, the entire evidence submitted before the court is
not sufficient to prove the fulfillment of any of these facts.
As discussed above, the court finds that the license under the Amended
Appellant-Intel License Agreement has been terminated, and that theBaseband Chip is not covered by the license thereunder even supposingthat the license is still in force.
For the avoidance of doubt, the court finds that the exercise of the Patent
Right is not restricted, even supposing that the Amended Appellant-Intel
License Agreement is in force and the Baseband Chip is covered by thisagreement. The reasons are as follows.
(A) When a patentee or an exclusive licensee (hereinafter simply referred
to as a "patentee" in this paragraph) assigns a product to be used
exclusively for the production of a patented product (which means a
product falling under Article 101, item (i) of the Patent Act if produced,
assigned or otherwise handled by a third party; hereinafter referred toas "Item (i) Product") in Japan, the patent right is considered to have106

been exhausted for said Item (i) Product as it has attained the purposesof the patent right. In this case, it is understood that the effect of thepatent right no longer extends to the use, assignment, etc. (meaning
the use, assignment, export or import, or offer for assignment, etc. asprovided in Article 2, paragraph (3), item (i) of the Patent Act; thesame shall apply hereinafter) of said Item (i) Product and therefore thepatentee is prohibited from exercising the patent right for said Item (i)Product, as long as said Item (i) Product maintains the status quo.
However, it is appropriate to understand that, when a third party later
produces a patented product by the use of said Item (i) Product, thepatentee is not restricted from exercising the patent right in relation tosuch acts of production of the patented product or use, assignment, etc.
thereof, because such third party has created a new product which falls
within the technical scope of a patented invention by the use of a
product which is out of the technical scope of such patented invention(BBS Case Supreme Court Judgment of July 1, 1997, Minshu Vol. 51,
No. 6, at 2299; the Supreme Court judgment of November 8, 2007,
Minshu Vol. 61, No. 8, at 2989).
Meanwhile, even in such cases, it is appropriate to understand that, if
the patentee can be considered to have impliedly consented to the
production of a patented product by the use of said Item (i) Product,the effect of the patent right does not extend to the production of thepatented product by the use of said Item (i) Product or the use,
assignment, etc. of such patented product.
This rationale is understood to also apply to the case where a Japanese
patentee (including parties deemed equivalent to a patentee, such as its
affiliated companies) assigned Item (i) Product outside Japan (BBS
Case Supreme Court judgment of July 1, 1997, Minshu Vol. 51, No. 6,
at 2299).
(B) Next, discussion is made as to the case where the assignor of Item (i)Product is a non-exclusive licensee who had received a license fromthe patentee (including a party who only has a license for theassignment of Item (i) Product).
In the case where the assignor of Item (i) Product is a non-exclusive
licensee, it is understood that, as is the case with that mentioned in (A)above, the effect of a patent right still does not extend to the use,107

assignment, etc. of said Item (i) Product; whereas the patentee is not
restricted from exercising the patent right in relation to the productionof a patented product by the use of said Item (i) Product or use,
assignment, etc. of such product. Further, even in the case where theassignor of Item (i) Product is a non-exclusive licensee, if the patentee
can be considered to have impliedly consented to the production of thepatented product by the use of said Item (i) Product, the effect of thepatent right still does not extend to the production of the patented
product by the use of said Item (i) Product or the use, assignment, etc.
of such patented product, as is the case with that mentioned in (A)above.
The issue of existence of such implied consent should be determinedin relation to a patentee; however, it would be necessary to separately
determine this issue in relation to an exclusive licensee as well, if a
non-exclusive licensee who assigned Item (i) Product had beenauthorized by the patentee to permit a third party to produce a patented
product by using said Item (i) Product.
This rationale is understood to also apply to the case where anon-exclusive licensee who had received a license from a Japanese
patentee (including parties deemed equivalent to a patentee, such as its
affiliated companies) assigned an Item (i) Product outside Japan.
(C) Next, the abovementioned rationales are applied to this court case.
a. It is presumed that Intel Corporation has been granted a license for
manufacturing, sale, etc. of the Baseband Chip under the Amended
Appellant-Intel License Agreement. Therefore, Intel Corporation
falls under a non-exclusive licensee who had received a licensefrom the patentee within the meaning as discussed in (B) above.
Meanwhile, the products which correspond to an "apparatus fortransmitting data" (Constituent Feature A) and "apparatus fortransmitting data" (Constituent Feature H) are Products 2 and 4
incorporating the Baseband Chip. In light of common sense, theBaseband Chip has no economic, commercial or practical mode ofuse other than for producing a product falling within the technicalscope of Invention 1, and therefore the Baseband Chip is a productwhich falls under Article 101, item (i) of the Patent Act ("Item (i)Product"). Apple Inc. combines various necessary component parts
108

with the Baseband Chip manufactured by Intel Corporation, andnewly produces Products 2 and 4, which fall within the technicalscope of Invention 1, and then these products are imported andsold by the appellee. Therefore, as mentioned in (A) and (B) above,
the appellant is not automatically restricted from exercising thePatent Right.
b. First, the court discusses the issue of whether the appellant can beconsidered to have given an implied consent on the production of
the patented products.
In this regard, on the presumption that the Amended
Appellant-Intel License Agreement remains in force and theBaseband Chip is covered by this agreement, such agreement is aportfolio-based cross-license agreement covering various present
and future patent rights of the appellant. Such agreement cannot be
considered as an agreement based on the due consideration of anindividual nature and value of each of the patent rights, including
the Patent Right. In addition, this agreement is for "Intel Licensed
Products," namely, "(a) semiconductor material, (b) semiconductor
device or (c) all components of an integrated circuit." As such, the"Intel Licensed Products" may cover various products of different
technical and economic values from those of the appellant's patentrights.
Accordingly, it is difficult to consider that the appellant
had given an implied consent for all of such various products thatcan be potentially produced by the use of "Intel Licensed
Products" under the portfolio-based cross-license agreement.
Further, considering the following facts in their totality, the court
cannot find that the appellant had given an implied consent for the
manufacturing of Products 2 and 4. [i] For the manufacturing of"apparatus for transmitting data" and "data transmitter" by the useof the Baseband Chip assigned by Intel Corporation, additional
component parts, including RF chip, power management chip,antenna, battery, etc., are necessary, and these component parts
also have significant technical and economic values. [ii] The pricesof Products 2 and 4 are several ten times the price of the Baseband
Chip (Exhibits Otsu No. 31 and No. 32). [iii] Products 2 and 4,
namely a smart phone and tablet device, are out of the scope of the109

"Intel Licensed Products."
Even based on the above-mentioned interpretation, as long as theBaseband Chip is distributed on the market in the original
condition, the patentee is restricted from exercising the Patent
Right. As such, even understanding that the person is required toobtain a license from the patentee for the manufacturing of
Products 2 and 4 by the use of the Baseband Chip, suchrequirement would not immediately cause a detrimental effect tothe marketing of the Baseband Chip. Further, in light of the factthat the royalty under the Amended Appellant-Intel License
Agreement does not reflect the value of the respective patent rights
covered by such agreement, the above interpretation would not
result in the appellant's double income opportunity.
c. Next, the court discusses whether Intel Corporation had theauthority to give an implied consent of the production of thepatented products. In this regard, on the presumption that theAmended Appellant-Intel License Agreement remains in force andthe Baseband Chip is covered by this agreement, such agreement
merely grants Intel Corporation a license to work the patent rightfor the "Intel Licensed Products," including Item (i) Product, anddoes not contain any provision supporting the idea that Intel
Corporation was granted any additional authority to give consent
to the production of the patented products by using Item (i)Product. In addition, in light of the background leading to the
execution of the Appellant-Intel License Agreement and theSecond Amendment Agreement, the court cannot find any
circumstance that leads to the conclusion that Intel Corporation
had given an implied consent to the production of the patented
products or that the appellant is restricted from exercising thePatent Right.
(D) Based on the above, in this court case, it is not sufficiently proved thatthe appellant had impliedly consented to the production of thepatented product, nor had Intel Corporation been authorized to do so.
Therefore, the court finds that the exercise of the Patent Right should
not be restricted in relation to the acts of import or sale of the patented
products produced by the use of the Baseband Chip (Products 2 and
110

4).
(3) Summary
As mentioned above, the appellee's allegation concerning the exhaustion ofpatent right is premised on the alleged fact that the Baseband Chip had been
manufactured and sold under the Appellant-Intel License Agreement and theAmended Appellant-Intel License Agreement. As such fact is not proved, thecourt cannot accept such allegation as it lacks the condition precedent. Even theevent that this is not the case, the appellant is not restricted from exercising thePatent Right in relation to Products 2 and 4, which are the patented products.
Therefore, the court cannot accept the appellee's allegation in this respect inany case.
5. Issue 5 (whether the license agreement for the Patent Right was formed by the
FRAND Declaration)
The court finds that the FRAND Declaration cannot be considered as an offer for alicense agreement, and consequently that no license agreement for the Patent Right
was formed as a result of the FRAND Declaration. The reasons are as follows.
(1) Governing laws
The appellee alleges that a license agreement has been formed between theparties, as the FRAND Declaration constitutes an offer for a license agreement,
and the commencement of import and sale of the Products by the appellee
constitutes the implied acceptance of such offer.
As a precondition for the decision as to whether a license agreement for the
Patent Right was formed as a result of the FRAND Declaration, the court first
decides on the issue of the governing laws.
It is reasonable to understand that the governing laws of the issue of whether
the license agreement was formed as a result of the FRAND Declaration isdetermined in accordance with Article 7 of the General Rules Act, as the natureof the legal relationship between the parties relates to the issue of formationand validity of a juridical act.
As the ETSI IPR Policy provides that the Policy shall be governed by the lawsof France (No. 2, 2.(4)A. above), and the FRAND Declaration also contains aprovision that the validity thereof shall be determined in accordance with thelaws of France (No. 2, 2.(4)B.(B) above), the "the law of the place chosen by
the parties at the time of the act" (Article 7 of the General Rules Act) is
understood as the laws of France (For the issue of whether a license agreement
for the Patent Right was formed as a result of the FRAND Declaration, the111

appellant made allegations on the presumption that the laws of France shallgovern, and the appellee also alleges, as a part of its primary claim, that thelaws of France shall govern. Thus, there has been no dispute between theparties that the governing laws shall be the French laws.)(2) Discussion of the issue of whether a license agreement was formed
The court discussed whether the FRAND Declaration constitutes an offer for alicense agreement under the laws of France.
Under the laws of France, in order for a license agreement to be formed, atleast the offer for the license agreement and the acceptance thereof is required.
Nevertheless, the FRAND Declaration cannot be considered as an offer for alicense agreement under the laws of France due to the following reasons. [i]The FRAND Declaration only uses the expression "prepared to grantirrevocable licenses." When compared with other possible wordings such as"hereby do license" or "commit to license," this expression is not definitive andcontemplates further actions by the declarant. Therefore, the FRAND
Declaration is not literally deemed a firm license grant. [ii] Even supposing thatthe laws of France do not require the specifically agreed compensation forformation of a license agreement, the FRAND Declaration provides noguidance for the scope of the binding effect of the contract to be formed upon
the acceptance, as it has no specific terms and conditions such as a royalty rate
as the consideration of the license agreement, territory or period of the license.
Thus, the FRAND Declaration does not contain any terms and conditions thatshould be normally included in a license agreement. If the FRAND Declarationis regarded as an offer for a license agreement, it is impossible to provide theterms and conditions of the license agreement to be formed. [iii] In making the
FRAND Declaration, the appellee opted for a reciprocity clause in accordancewith the ETSI IPR Policy and the FRAND Declaration contains a provisionsetting forth that the license shall be subject to the condition that the parties
agree to reciprocate in relation to the standards (No. 2, 2.(4)B.(B)). If this
FRAND Declaration is understood as an offer for a license agreement, this may
result in a situation where a license agreement can be formed only in relation to
the patent subject to a FRAND declaration without satisfying such reciprocity
condition, if there is any party who owns an essential patent for which no
FRAND declaration has been made. [iv] The FRAND Declaration was made inaccordance with the ETSI IPR Policy. The "ETSI Guide on Intellectual
Property Rights (IPRs)" (Exhibits Ko No. 16 and No. 161), which supplements
112this IPR Policy, contains some expressions contemplating that the license is left
to the negotiation between the parties, such as "potential licensor" or "potential
licensee," and the provision that "ETSI expects its Members (as well as
non-ETSI Members) to engage in an impartial and honest Essential IPR
licensing negotiation process for FRAND terms and conditions" (Clause 4.4).
In addition, the ETSI Guide on IPRs also contains the provisions clarifying thatETSI is not involved in the licensing negotiation, such as the provision that"Specific licensing terms and negotiations are commercial issues between thecompanies and shall not be addressed within ETSI" (Clause 4.1). Further,"ETSI IPR Policy FAQs" (Exhibit Ko No. 159) also states that "It is necessary
to obtain permission to use patents declared as essential to ETSI's standards. To
this end, each standard user should seek directly a license from a patent holder"(Answer 6). Thus, ETSI is also considered to contemplate that any FRAND
declaration made in accordance with the ETSI IPR Policy, including the
FRAND Declaration, does not immediately give rise to a license agreement. [v]
In the background history for the adoption of the present ETSI IPR Policy,
some participants attempted to introduce a provision enabling the "automatic
license" for users; however, this attempt failed because of strong opposition(Exhibit Otsu No. 37 and Exhibit Ko No. 69). Understanding the FRAND
Declaration as an offer for a license has virtually the same effect as the"automatic license," which was abandoned in the process of adoption of the
ETSI IPR Policy. Such consequence is not deemed appropriate as it contradicts
with the background history of adoption of the present ETSI IPR Policy.
Based on the above, the FRAND Declaration cannot be interpreted as an offer
for a license agreement.
(3) The appellee's allegations
A. In the abovementioned respects, the appellee alleges that, under the laws ofFrance, the absence of the specific royalty rate in the FRAND Declaration
does not hinder a license agreement from being formed.
However, the court cannot accept such allegation of the appellee. Even
supposing that the laws of France do not require any specific royalty rate as
the precondition for the formation of a license agreement, the FRAND
Declaration still lacks elements of a license agreement such as theterritories and terms of the license. Therefore, the FRAND Declaration
cannot be regarded as an offer for a license agreement.
B. Meanwhile, the appellee also alleges that it is possible to consider the113

FRAND Declaration as a contract for the benefit of a third party(stipulation pour autrui) between the appellant and ETSI, and that theappellee obtained a license by virtue of such contract.
However, the court also cannot accept such allegation of the appellee.
In this regard, under the laws of France, in order for a license agreement tobe formed between the appellant and the appellee based on the theory of acontract for the benefit of a third party (stipulation pour autrui) or a contract
for a contract for the benefit of a third party (stipulation de contrat pourautrui), it is at least necessary that the appellant and ETSI had agreed thatthe license agreement shall be formed between the appellant and thebeneficiary of such contract (Exhibits Ko No. 15 and No. 51-1, andExhibits Otsu No. 9 and No. 38). As for this court case, considering thefollowing facts, the court cannot find that the appellant and ETSI had
agreed that the license agreement shall be formed between the appellant
and the beneficiary of such contract, including the appellee: [i] theprovisions of the FRAND Declaration are not definitive; [ii] no importantparticulars of a license agreement are fixed; [iii] there is a risk ofcircumvention of the reciprocity clause; [iv] ETSI also provides that the
FRAND Declaration does not give rise to a license agreement; and [v]assuming the formation of a license agreement is contrary to the historicalbackground for the adoption of the ETSI IPR Policy. Therefore, thisallegation of the appellee is unacceptable.
C. The appellee further alleges that, even granting that the FRAND
Declaration does not constitute an offer for a license agreement, theappellant is still restricted from exercising the right to seek damages on the
ground of the infringement of the Patent Right, because the FRAND
Declaration still constitutes an undertaking to enter into a binding contract.
However, the appellee's allegation in this respect is unacceptable as well.
Under the laws of France, as a result of such undertaking, the appellant may
have an obligation to enter into a binding contract with the appellee, andthe appellant may be liable to compensate the damage separately if and to
the extent of which the appellant breaches such obligation. However, in thiscourt case, as mentioned above, as the FRAND Declaration neither
constitutes an offer for a license agreement nor gives rise to a contract tothe benefit of a third party, the exercise of the right to seek damages cannot
be restricted as a consequence of the FRAND Declaration.
114

In light of the remedies for the default available under the laws of Japanand France, the allegations of the appellee should be discussed in thecontext of determination of whether the appellant's exercise of the right toseek damages constitutes the abuse of right (Issue 6 as mentioned below).
(4) Summary
Based on the above, the appellee's allegation that a license agreement wasformed between the appellant and the appellee as a result of the FRAND
Declaration is groundless.
6. Issue 6 (Issue of whether the appellant's exercise of the right to seek damages basedon the Patent Right constitutes an abuse of right)
The court determines that the appellant's exercise of the right to seek damages for
Products 2 and 4 based on the Patent Right constitutes the abuse of right to theextent exceeding the amount of the FRAND royalty, but not to the extent of theamount of the FRAND royalty. The reasons of this finding are as follows.
(1) Governing laws
The appellee alleges that the appellant's claim for damages based on the Patent
Right constitutes the abuse of right.
It is understood that the nature of the legal relationship for the right to seek
damages on the ground of infringement of the Patent Right is a tort. Therefore,
the governing law is decided in accordance with Article 17 of the General
Rules Act (Note that the releases of Products 2 and 4 are facts which occurred
after the enforcement of this Act).
As for this court case, considering the fact that Products 2 and 4 were imported
and sold in Japan, and that the dispute relates to damage caused byinfringement of the Patent Right protected under the Patent Act of Japan, it
should be understood that the Japanese laws are "the laws of the place where
the result of the wrongful act occurred" (Article 17 of the General Rules Act).
Accordingly, the laws of Japan apply to this court case.
Based on the presumption as mentioned above, the court decides on the issueof whether the appellant's exercise of the right to seek damages based on the
Patent Right constitutes the abuse of right.
(2) Claim for damages in a case where a FRAND declaration is madeA. Facts on which the decision is premised
Considering the totality of the non-disputed facts, evidence (Exhibits Ko
No. 5, No. 12, No. 13, No. 16, No. 27, No. 28-1 and No. 28-2, No. 85 to No.
87, No. 160 and No. 161), and the entire import of oral arguments, the court
115

finds the following facts.
(A) ETSI IPR Policya. Outside Europe, the second-generation mobile telecommunication
system (2G) specifications were inconsistent depending on the country.
Even in the same country, different specifications were used and suchspecifications were not universally interoperable. The U.S., Japan andEurope respectively used different systems based on the
non-interoperable standards. Against this backdrop, in 1998,
international standards bodies, such as ETSI (European
Telecommunications Standards Institute), gathered to organize ab.

standard body called 3GPP. The objectives of this 3GPP were thedissemination of the third-generation mobile telecommunication
system (3G) for providing data communication service andmultimedia service, in addition to conventional voice communication
services, as well as the standardization of the related specifications.
ETSI provides the IPR Policy as the guidelines for the treatment of
IPR (intellectual property rights).
The standardization of technology is expected to have various effects,
such as ensuring product interoperability, reduction in production andprocurement costs, enhanced efficiency in research and development,
and more opportunities for partnership with other companies. In
addition, for end-users as well, standardization would havesignificance, such as more convenient products/services at cheaper
product prices and service fees. On the other hand, the potential usersof the essential patents for the standard seeking commercialization of a
product may be exposed to various risks, such as the demand for an
unreasonably high royalty by essential patent owners, or the loss of theinvestment for development of the standard-compliant products if thelicense turns out to be unavailable.
The ETSI IPR Policy aims to avoid such risks, promote thec.

standardization and strike a balance between the needs ofstandardization for public use/such expectations and the protection ofrights of IPR owners in the field of telecommunications (See "Policy
Objectives" in Clause 3.1).
The ETSI IPR Policy provides as follows:(a) IPR Policy Clause 4.1 provides that each MEMBER shall use its
116reasonable endeavors, in particular during the development of a
STANDARD or TECHNICAL SPECIFICATION where it
participates, to inform ETSI of ESSENTIAL IPRs in a timely
manner, and that, in particular, a MEMBER submitting atechnical proposal for a STANDARD or TECHNICALSPECIFICATION shall, on a bona fide basis, draw the attentionof ETSI to any of that MEMBER's IPR which might be
ESSENTIAL if that proposal is adopted. Clause 4.3 provides thatthe obligations pursuant to Clause 4.1 above are deemed to be
fulfilled in respect of all existing and future members of a
PATENT FAMILY if ETSI has been informed of a member of thisPATENT FAMILY in a timely manner.
(b) IPR Policy Clause 6.1 provides that, when an ESSENTIAL IPR
relating to a particular STANDARD or TECHNICALSPECIFICATION is brought to the attention of ETSI, theDirector-General of ETSI shall immediately request the owner togive within three months an irrevocable undertaking in writingthat it is prepared to grant irrevocable licenses on fair, reasonable
and non-discriminatory (“FRAND”) terms and conditions undersuch IPR to at least the following extent: [i] MANUFACTURE,
including the right to make or have made customized components
and sub-systems to the licensee's own design for use in
MANUFACTURE, [ii] sell, lease, or otherwise dispose of
EQUIPMENT so MANUFACTURED, [iii] repair, use, or operate
EQUIPMENT, and [ii] use METHODS. Clause 6.1 also provides
that the above undertaking may be made subject to the condition
that those who seek licenses agree to reciprocate. Clause 6.2
provides that an undertaking pursuant to Clause 6.1 with regard
to a specified member of a PATENT FAMILY shall apply to allexisting and future ESSENTIAL IPRs of that PATENT FAMILY
unless there is an explicit written exclusion of specified IPRs at
the time the undertaking is made. Clause 6.3 provides that, aslong as the requested undertaking of the IPR owner is not granted,
the COMMITTEE Chairmen should, if appropriate, in
consultation with the ETSI Secretariat use their judgment as towhether or not the COMMITTEE should suspend work on the117relevant parts of the STANDARD or TECHNICALSPECIFICATION until the matter has been resolved and/or
submit for approval any relevant STANDARD or TECHNICALSPECIFICATION.
(c) IPR Policy Clause 15, paragraph 6 provides as follows:"ESSENTIAL" as applied to IPR means that it is not possible ontechnical (but not commercial) grounds, taking into accountnormal technical practice and the state of the art generally
available at the time of standardization, to make, sell, lease,otherwise dispose of, repair, use or operate EQUIPMENT ord.

METHODS which comply with a STANDARD without
infringing that IPR.
(d) IPR Policy Clause 12 provides that the POLICY shall begoverned by the laws of France.
ETSI Guide on Intellectual Property Rights (IPRs) (Exhibits Ko No.
16 and 161 dated November 27, 2008), which supplements the IPR
Policy, provides as follows:(a) ETSI Guide on IPRs Clause 1.1 provides that the main
characteristics of the Policy can be simplified as follows:"• Members are fully entitled to hold and benefit from any IPRs
which they may own, including the right to refuse the granting oflicenses.
• It is ETSI's objective to create Standards and Technical
Specifications that are based on solutions which best meet thetechnical objectives of ETSI.
• In achieving this objective, the ETSI IPR Policy seeks a balance
between the needs of standardization for public use in the field of
telecommunications and the rights of the owners of IPRs.
• The IPR Policy seeks to reduce the risk that investment in the
preparation, adoption and application of the standards could be
wasted as a result of an Essential IPR for a standard or technicalspecification being unavailable."• Therefore, the knowledge of the existence of Essential IPRs is
required as early as possible within the standards making process,especially in the case where licenses are not available under fair,reasonable and non-discriminatory (FRAND) terms and118

conditions."(b) ETSI Guide on IPRs Clause 1.4 provides that the ETSI IPRPOLICY defines rights and obligations for ETSI as an Institute,for its Members and for the Secretariat. Non-Members of ETSI
also have certain rights under the Policy but do not have legal
obligations. The "table" as referred to in this clause provides asfollows:"Rights of members""• to refuse the inclusion of own IPRs in the standards (Clauses
8.1 and 8.2).
• to be granted licenses on fair, reasonable andnon-discriminatory terms and conditions in respect of a standard(Clause 6.1)""Obligations of Members""• to inform ETSI about their own, and other people's Essential
IPRs (Clause 4.1).
• owners of Essential IPRs are requested to undertake to grant
licenses on fair, reasonable and non-discriminatory terms andconditions (Clause 6.1)""Rights of Third Parties""• Third parties have certain RIGHTS under the ETSI IPR Policy
either as owners of Essential IPRs or as users of ETSI standards
or documentation:
・To be granted licenses on fair, reasonable andnon-discriminatory terms and conditions in respect of a standard
at least to manufacture, sell, lease, repair, use and operate,(Clause 6.1)"(B) Background of the FRAND Declarationa. On December 14, 1998, the appellant made a declaration to ETSI that
it was prepared to license its essential IPR relating to the W-CDMAb.

technology, supported by ETSI as the UMTS standard, on "fair,reasonable and non-discriminatory terms and conditions" inaccordance with ETSI IPR Policy Clause 6.1 (FRAND Terms)(Exhibit Ko No. 5).
On May 4, 2005, the appellant filed a South Korean patent application,
which is the base of the priority claim of the Patent Application
119

c.

(Priority Claim No.: 10-2005-0037774). From May 9 to 13 of 2005,
the appellant submitted to the 3GPP Working Group a change request
form (Exhibit Ko No. 85). Thereafter, the abovementioned change
request was accepted. In Technical Specification V6.4.0 of 3GPP
standards released in June of 2005 (Exhibit Ko No. 87), the alternative
E-bit interpretation was adopted as one of the standards. The appellant
filed the Patent Application on May 4, 2006, and obtained theregistration of establishment of the Patent Right on December 10,2010.
On August 7, 2007, the appellant, in accordance with ETSI IPR Policy
Clause 4.1, submitted to ETSI the document titled "Statement on IPR
Information and Licensing Declaration" (Exhibit Ko No. 13),
notifying that the IPRs relating to the South Korean patent application
number, which served as the basis of the priority claim for the Patent
Application, and the international application number of the Patent
Application (PCT/KR2006/001699) are or highly likely will beessential IPRs for the UMTS standard (such as TS 25.322). In thisdocument, the appellant made an undertaking that it was prepared to
grant an irrevocable license on the conditions complying with IPR
Policy Clause 6.1 (FRAND Terms), to the extent to which such IPRs

d.

e.

B.

continue to be essential for the standards (FRAND Declaration).
The Patent is an essential patent unavoidable for manufacturing andselling of, and using methods in relation to, the products complying
with the "alternative E-bit interpretation" as set out in Technical
Specification V6.9.0 of the UMTS standard.
It is a general practice of various types of standardization bodies tostipulate criteria for the treatment of IPRs, such as the ETSI IPR
Policy, and require the members thereof to disclose their patent rights
and other IPRs (hereinafter, the term "IPRs" refers to a patent rightonly) which would be essential for the standards developed

respectively by such bodies. Further, such bodies usually require themembers thereof to make a declaration to license the patent rightunder FRAND or RAND (reasonable and non-discriminatory) terms(the licensing declaration under the FRAND or RAND terms shall behereinafter referred to as "FRAND declaration").
Permissible scope of claim for damages120

As discussed in 1. to 5. above, the appellee's manufacturing, sale, etc. of
Products 2 and 4 falls within the technical scope of Invention 1; the Patent
Right has no ground for invalidation; the Patent Right has not been exhausted;
and no license agreement between the parties has been formed. Therefore, theappellant should be entitled to make a claim for damages from the appellee.
Next, the court discusses the scope in which a patentee who made a FRAND
declaration is allowed to seek damages based on the patent right.
(A) In the case of a claim for damages based on the essential patent for which
a FRAND declaration is made (the patent for which a FRAND declaration
is made is collectively referred to as the "Standard Essential Patent"),
allowing a claim for damages exceeding the amount of the FRAND
royalty may run counter to the reliance on use of the prospective users of
the standard, and may also result in the excessive protection of a patented
invention. Allowing the patentee such claim is unreasonable as it hasvarious detrimental effects, for example, discouraging the general publicfrom using the technologies of the patented invention, and may hinder the"development of industry," which is the purpose of the Patent Act (Article
1 of the Patent Act).
Any party intending to manufacture or sell a standard-compliant productwould first look to the IPR guidelines of the relevant standardization bodyand confirm the availability of a FRAND license for the essential patent,such as the members' obligation of a FRAND declaration for an essential
patent, before it makes an investment or commences the manufacturing
and sale of such products. If the patentee is later allowed to claim fordamages exceeding the FRAND royalty for the Standard Essential Patent,
it would be detrimental to the reasonable reliance on use of a party who
made an investment for the manufacture or sales of thestandard-compliant product in anticipation of availability of a FRAND
license. Considering that a Standard Essential Patent owner voluntarily
makes a FRAND licensing declaration on the premises that such patent
would be made available to the standard users, and that the patent forminga part of the standard makes it possible for the owner to attract a wide
range of potential licensees, allowing the owner a claim for damages
exceeding the amount of the FRAND royalty would result in the excessive
protection of such owner, discouraging the dissemination of thetechnologies of the patented invention, and consequently hinder the121

"development of industry," which is the purpose of the Patent Act (Article
1 of the Patent Act).
(B) Meanwhile, as long as a claim for damages based on a Standard Essential
Patent is within the scope of the amount of the FRAND royalty, a
restriction of its exercise would be unreasonable as such restriction would
discourage inventors, have a negative impact on the promotion ofstandardization of technologies, and have a risk of hindering the"development of industry," which is the purpose of the Patent Act (Article
1 of the Patent Act). As a party intending to manufacture or sell astandard-compliant product is presumed to anticipate the payment of theamount of the FRAND royalty, the payment of the damages claimed by
the patentee within the scope of the amount of the FRAND royalty is not
an unexpected consequence for such party.
In addition, in light of the purpose and intention of the FRAND
declaration, a patentee who made the declaration should be restricted fromexercising the right to seek an injunction against the party willing to enter
into a FRAND license agreement. (In connection with the two petitions
for provisional disposition for an injunction, this court rendered thedecisions to uphold the decisions in prior instances dismissing thepetitions of the appellant (the appeal against the decision case for the
Petition for Provisional Disposition and the Additional Petition for
Provisional Disposition; Intellectual Property High Court, 2013 (Ra)
10007 and 10008). In the prior instances, the appellant filed petitions forprovisional disposition for an injunction against the appellee's sale, etc. of
Products 2 and 4 and "iPhone 4S," and the right sought to be preserved
under these provisional disposition cases was the right to seek an
injunction based on the Patent Right.) Considering the abovementioned
restriction on the patentee who made a FRAND declaration for the
exercise of the right to seek an injunction, allowing the patentee to claim
for the damages not exceeding the amount of the FRAND royalty has amaterial significance as the reward for public disclosure of the invention.
Therefore, a careful consideration shall be given to the restriction of suchright to seek damages.
(C) Next, the court discusses the above in more detail, in accordance with thefacts of this court case, dividing it into two situations, namely, a "claim fordamages exceeding the FRAND royalty" and "claim for damages within122the FRAND royalty."
a. Claim for damages exceeding the FRAND royalty
A party intending to engage in the manufacturing, sale, etc. of a
UMTS standard-compliant product would recognize that, among thepatent rights essential for the manufacturing, sale, etc. of such product,
at least those owned by ETSI members require the timely disclosure inaccordance with ETSI IPR Policy Clause 4.1 and the FRAND
licensing declaration under ETSI IPR Policy Clause 6.1. Such party
would rely on the availability of a FRAND license through anappropriate negotiation with the patentee. Such reliance is worth
protecting. Accordingly, in connection with the Patent subject to the
FRAND Declaration, allowing the exercise of the right to seek
damages exceeding the amount of the FRAND royalty would be
detrimental to the reliance of parties who manufacture or sell the
UMTS standard-compliant product on the availability of such license.
Owing to such reliance of the UMTS standard users, the patent rights(including the Patent Right) incorporated into the UMTS standard canbe widely disseminated among a large number of business enterprises
in all parts of the world. As a result, an owner of a Standard Essential
Patent can benefit from royalty income, which would be unavailable if
the patent was not adopted as part of the UMTS standard. In addition,a party which makes a FRAND declaration as required by the ETSIIPR Policy, including the FRAND Declaration, declares on a voluntarybasis that it is prepared to grant an irrevocable license under the
FRAND Terms. Considering these circumstances, it is not sonecessary to allow such owner the right to seek damages exceeding the
FRAND royalty.
Hence, if a patentee who made a FRAND declaration claims damages
exceeding the FRAND royalty based on such patent right, thecounterparty to such claim should be entitled to refuse the payment to
the extent exceeding the amount of royalty, as long as suchcounterparty successfully alleges and proves the fact of the patentee's
FRAND declaration.
Meanwhile, if a patentee successfully alleges and proves the fact of theexistence of special circumstances, such as that the prospective
licensee has no intention of receiving a FRAND license, the patentee
123

should be allowed to claim damages exceeding the amount of the
FRAND royalty. As such prospective licensee has no intention of
benefiting from the FRAND declaration from the outset, no reason canbe found to restrict the patentee's right to seek damages up to theamount of the FRAND royalty. Nevertheless, considering the potential
detrimental consequences as mentioned above, before allowing thepatentee to claim damages exceeding the amount of the FRAND
royalty, scrutiny shall be made to determine the existence of special
circumstances in which the prospective licensee has no intention ofreceiving a FRAND license.
b. Claim for damages not exceeding the amount of the FRAND royalty
As for the claim for damages not exceeding the amount of the FRAND
royalty, the patentee should not be restricted from exercising suchclaim even where the patent is a Standard Essential Patent.
A party intending to engage in the manufacturing, sale, etc. of a
UMTS standard-compliant product is presumed to have started its
business understanding the necessity of paying the amount of the
FRAND royalty in the future. In addition, as one of the purposes of the
ETSI IPR Policy, Clause 3.2 thereof provides "IPR holders … should
be adequately and fairly rewarded for the use of their IPRs." So, in thiscontext as well, it is necessary to ensure that the patentee is adequately
rewarded.
However, if the prospective licensee successfully alleges and proves
the existence of special circumstances, such as that, after discussing
various circumstances in the process of the FRAND declaration andlicensing negotiation, it is considered extremely unfair to permit thepatentee to claim for damages not exceeding the amount of royalty,
even considering the significance of the right to seek damages as acompensation for the public disclosure of an invention, the possibility
cannot be precluded that such patentee's claim is restricted as an abuseof right.
c. Summary
Considering the totality of the above circumstances, the following
shall be applied to a claim for damages by a party that made a FRAND
declaration, including the appellant who made the FRAND
Declaration. [i] A claim for damages exceeding the amount of the124

FRAND royalty should not be allowed, unless special circumstances
as explained in a. above exist. [ii] The claim for damages notexceeding the amount of the FRAND royalty shall not be restrictedeven in the case of a Standard Essential Patent, unless special
circumstances as explained in b. above exist.
(3) Discussion of whether special circumstances/any special circumstance can befound
In this court case, the appellant makes a claim for damages exceeding theamount of the FRAND royalty as explained in 7. below. Therefore, the court
discusses the following issues: [i] for the portion of the claimed damages
considered not to exceed the amount of FRAND royalty, whether any special
circumstances exists, such as a circumstance that would render the appellant's
claim for damages extremely unfair; and [ii] for the portion of the claimed
damages exceeding the amount of the FRAND royalty, whether any special
circumstances exist, such as that the appellee has no intention of obtaining alicense under the FRAND Terms.
A. Facts on which the decision is premised
Considering the totality of the non-disputed facts, evidence (Exhibits Ko
No. 5, No. 6, No. 12, No. 13, No. 16, No. 27 to No. 29, No. 32 to No. 37,
No. 65, No. 85 to No. 87, No. 109 to No. 111, No. 133, No. 160, No. 161,
Exhibits Otsu No. 36, No. 42, No. 53 and No. 59 (branch number isomitted)), and the entire import of oral arguments, the court finds thefollowing facts.
[i] In the letter dated July 25, 2011, the appellant proposed to Apple Inc. a
specific royalty rate as the condition for license of its Standard Essential
Patent portfolio. [ii] Apple Inc., in its letter dated August 18, 2011,
proposed the royalty rate cap. Apple Inc., in its letter dated March 4, 2012,
made an offer for a license agreement, proposing to pay the royalty at a rate
less than the prior proposal by several decimal fractions. Apple Inc., in its
letter dated September 7, 2012, made a specific licensing proposal,
including a proposal for a cross-license agreement. [iii] In response, theappellant only requested Apple Inc. to make a specific counterproposal if
dissatisfied with the appellant's proposal. [iv] The appellant, in its letter
dated September 14, 2012, made a proposal of reduction of the cap rate,
which is the basis of calculation of the royalty. [v] The appellant, in its
letter dated December 3, 2012, made a proposal to discount the initially125proposed royalty rate by less than half. [vi] Apple Inc. and the appellant
held conferences on December 12, 17 and 18 of 2012, when the appellant
made some proposals, including a large lump-sum payment by Apple Inc.,
and Apple Inc. proposed a cross-license agreement for the UMTS standard
essential patent portfolio. [vii] Apple Inc. and the appellant met on January
14, 2013, when Apple Inc. made a proposal of a royalty-free cross-license
agreement. [viii] When Apple Inc. and the appellant held a conference on
February 7, 2013, a draft agreement was prepared […….] [ix] Even after
these conferences, the appellant and Apple Inc. have had negotiations fromtime to time for various issues, including the conditions for the settlementof the dispute through an arbitration.
B. Claim for damages not exceeding the amount of the FRAND royalty(A) Good-faith negotiation obligation
In light of the fact that the appellant has made the FRAND Declaration,
the court finds that the appellant at least has an obligation to have agood-faith negotiation with the appellee for the execution of a
FRAND license agreement, based on the principle of good faith under
the Civil Code of Japan.
As mentioned in A. above, the court finds that, although the appellant
made a licensing proposal on July 25, 2011, it did not present a
specific counterproposal until December 3, 2012 in spite of receiving
the specific proposal by Apple Inc., and, in addition, the appellant's
licensing offer was the entire patent portfolio-basis only, and did not
make any proposal for the patent-based royalty rate until thecommencement of this litigation nor did provide a sufficient
explanation to support consistency of the proposed licensing termswith the FRAND Terms. Therefore, the court finds the appellant's
attempt toward negotiation did not facilitate the execution of a license
agreement with Apple Inc.
Nevertheless, the following facts should be taken into account. [i]Although the appellant did not quickly present the counterproposal toApple Inc., it has held several conferences with Apple Inc. after
December, 2012. At such conferences, the appellant presented a
counterproposal, showing a continuous effort toward the conclusion ofan agreement. [ii] Among the manufacturers involved in the
production of mobile communication devices in which the appellant
126

and the appellee are included, it is common practice to enter into a
portfolio-based cross-license agreement (Exhibit Otsu No. 57, etc.).
Therefore, making only a portfolio-based licensing offer does not
immediately result in the breach of the good-faith principle. [iii] The
terms and conditions of license agreements between the appellant andother licensees are subject to the confidentiality obligation andtherefore disclosure thereof is impermissible by the nature of theinformation (Exhibit Otsu No. 57, etc). Such terms and conditions
reflect the relative strength and weakness of licensees' patentportfolios, and disclosure of such information would not always be
helpful for the determination of terms and conditions of the agreement
between the appellant and the appellee, as backgrounds are different
from cases of agreements with other licensees. [iv] Further, the terms
and conditions of a license agreement may include the license of apatent right or business terms not related to the standards.
Considering the above facts, although it was necessary for theappellant to explain that the proposed licensing conditions wereconsistent with the FRAND Terms, the appellant cannot be
immediately accused of non-disclosure of the terms and conditions oflicense agreements with other licensees. In addition, the appellant's
attitude in the course of the licensing negotiation cannot be proof thatthe appellant's claim for damages within the FRAND royalty isextremely unfair.
(B) Obligation to disclose IPRs in a timely manner
The IPR Policy provides that each member shall use its reasonableendeavors, in particular during the development of a standard or
technical specification where it participates, to inform ETSI of
essential IPRs in a timely manner ((2)A. above). Therefore, theappellant is also considered to be bound by such obligation.
In this regard, as mentioned in (2)A. above, on May 4, 2005, theappellant filed a South Korean patent application, which is the base of
the priority claim of the Patent. A few days later, the appellant
submitted to the 3GPP Working Group held between May 9 and 13,
2005 the change request, which resulted in the adoption of thealternative E-bit interpretation. However, the appellant did not informETSI of the Patent Right until it made the FRAND Declaration on
127August 7, 2007. Thus, the appellant failed to inform ETSI of the
Patent Right for about two years after the Patent Right came to its
attention.
However, notwithstanding the above background facts, considering [i]that the appellant finally made the FRAND Declaration, [ii] whether
ETSI had the knowledge of the appellant's Patent Right cannot be
considered to have had any impact on the adoption of the alternative
E-bit interpretation in the UMTS standard, and [iii] the over two-year
period required for the disclosure to ETSI cannot be consideredextremely long when compared with other companies (Exhibit Otsu
No. 8), it is not sufficiently proved that the appellant's claim fordamages within the FRAND royalty is extremely unfair.
(C) The Petition for Provisional Disposition and the Additional Petition for
Provisional Disposition
As mentioned above, the owner of an essential patent who made a
FRAND declaration is restricted from exercising the right to seek an
injunction based on such standard essential patent against the party
willing to conclude a license agreement under the FRAND Terms, assuch exercise constitutes an abuse of right. Although the appellant had
filed the Petition for Provisional Disposition and the Additional
Petition for Provisional Disposition to seek an injunction of
assignment, etc. of Products 2 and 4, as well as "iPhone 4S," the factof the appellant having filed these petitions would not lead to theconclusion that the appellant should be prohibited from exercising theright to seek damages within the FRAND royalty.
(D) The Antimonopoly Act
In connection with the above, the appellee also alleges that the seriesof the appellant's acts constitutes a violation of the Antimonopoly Act.
However, in light of the fact that the amount of the damages claimedby the appellant does not exceed the FRAND royalty as alleged byitself (3. above and 7.), and that the claim for damages exceeding the
FRAND royalty is generally prohibited as an abuse of right, the entire
evidence submitted before the court is not sufficient to prove that theclaim for damages not exceeding the FRAND royalty constitutes abreach of the Antimonopoly Act.
(E) Summary
128

Even considering the totality of all circumstances of this court case, nocircumstances can be found which renders the appellant's claim fordamages not exceeding the amount of the FRAND royalty extremely
unfair. Moreover, no evidence has been submitted which sufficiently
proves the existence of special circumstances as mentioned above.
C. Claim for damages exceeding the FRAND royalty
In light of the background of licensing negotiation between Apple Inc. andthe appellant as explained in A. above, Apple Inc. can be considered tohave had continuous negotiations with a view to enter into a license
agreement with the appellant, as Apple Inc. made several specific royalty
rate proposals showing their calculation basis, including the proposal of theroyalty rate cap in its letter dated August 18, 2011, and held several
conferences with the appellant for focused licensing negotiation. There has
been a material discrepancy in opinions between the appellant and Apple
Inc. as to the appropriate royalty rate for a long time. Even so, the proposals
made by Apple Inc. can be considered fairly reasonable, considering thefact that the parties are by nature in a conflict-of-interest situation as theprospective licensor and licensee, and that the royalty to be consideredappropriate may vary depending on the different assessment of the essential
nature or significance of an individual patent in terms of the UMTS
standard, as there is no definite criteria for determining the FRAND royalty.
In addition, as mentioned in B.(A) above, considering that the appellant's
attempt toward negotiation did not facilitate the execution of a license
agreement with Apple Inc., it cannot be immediately determined that such
persistent and material discrepancy in the opinions between the parties
indicates the lack of the parties' willingness to enter into a FRAND license
agreement. Accordingly, in this court case, the court finds no such special
circumstance, such as the lack of the appellee's intention to receive a
FRAND license.
In this regard, the appellant alleges that the appellee has no faithfulintention to receive a license, as Apple Inc. entered into the stage ofpreparation of a memorandum (draft) at the meeting held in February, 2013
but [Omitted]. However, in light of the purpose and significance of thedevelopment of the standards, scrutiny shall be made before determiningthat the prospective licensee has no intention to enter into a license
agreement. As for this court case, the circumstances as alleged by the129appellant cannot be the evidence for finding that the appellee or Apple Inc.
had no intention to enter into a FRAND license agreement. In addition, thecourt cannot accept the appellant's allegation that it is a breach of the
TRIPS Agreement to restrict the right to seek damages.
(4) Summary
Therefore, the appellee's allegation that the appellant's claim for damages
constitutes an abuse of right is acceptable to the extent that the amount ofdamages alleged by the appellant exceeds the amount of the FRAND
royalty as mentioned in 7. below; however, this allegation is unacceptablein respect of the amount of damages not exceeding the FRAND royalty.
7.

Issue 7 (amount of damages)
Based on the foregoing, the court discusses the amount of the FRAND royalty
in relation to the infringement of the Patent Right by Products 2 and 4. The
court determines the amount of such royalty to be as described in (3)C. below.
(1) Facts on which the decision is premised
Considering the totality of the evidence (Exhibits Ko No. 10, No. 11, No.
30-1, No. 108, No. 134, No. 135, No. 164, No. 172, No. 193-1 and No.
193-2, No. 197, No. 205, No. 206, Exhibit Otsu No. 2, No. 4, No. 94-1
and No. 94-2) and the entire import of oral arguments, the court finds thefollowing facts.
A. The total sales turnover of Products 2 and 4 for the period from therelease date to September 28, 2013 is as specified in the relevant
column of (3)C. below.
B. Product 2 supports the W-CDMA, GSM and EDGE mobile
communication systems (it seems that "iPhone 4" also has a model
supporting CDMA 2000 developed by 3GPP2 (Third Generation
Partnership Project 2), but this model is not on sale in Japan), and also
has functions of wireless communications based on Wi-Fi 802.11b/g/n
and Bluetooth 2.1+EDR. Other features of Product 2 include thehigh-definition "Retina Display" and "5 mega pixel iSight camera."
Product 2 has various models depending on the installed memory size.
The suggested retail price of the 32GB model was JPY 57,600 and the
16GB model JPY 46,080 (lump-sum payment) (Exhibit Ko No. 193-1
and Exhibit Otsu No. 4).
C. Product 4 supports the W-CDMA, GSM and EDGE mobile
communication systems (it seems that "iPad 2 Wi-Fi+3G" also has a130model supporting CDMA 2000, but the evidence submitted before thecourt only indicates the above three systems), and also has functionsof wireless communications based on Wi-Fi 802.11a/b/g/n andBluetooth 2.1+EDR. The features of Product 4 include "Apple A5"
processor, and various sensors such as acceleration sensor, digitalcompass and Assisted GPS.
Product 4 also has various models depending on the installed memory
size. A model of Product 4 without mobile communication function("iPad 2 Wi-Fi") has been separately released. The suggested retailprices of the model without mobile communication function ("iPad 2
Wi-Fi") were JPY 44,800 for the 16GB model, JPY 52,800 for the
32GB model and JPY 60,800 for the 64GB model. The suggested
retail prices of the model with mobile communication function(Product 4) were JPY 56,640 for the 16GB model, JPY 64,800 for the
32GB model and 72,720 for the 64GB model (Exhibit Ko No. 193-2).
D. In May 2002, Nokia, the owner of a large number of the UMTS
standard essential patents, advocated that the industry-wide aggregate
royalty rates for the IPRs for the WCDMA should not exceed 5%.
The appellant's counsel made a remark in the hearing of the U.S.
International Trade Commission that all the participant companies of
the UMTS standard agreed that the aggregate royalty rates for thepatent licenses should be around 5%.
In 2002, NTT Docomo, Ericsson, Nokia and Siemens reached anagreement that the royalty for the respective UMTS standard patent
owners should be determined according to the percentage of essential
patents owned. Other essential patent owners in Japan manifested theirintention to cooperate with this agreement. This agreement was
expected to assist the dissemination of the UMTS standard by limiting
the aggregate royalty to not more than 5%.
The W-CDMA patent platform, which is a patent pool created by the
UMTS standard essential patent owners, stipulates the standard license
agreement. This standard agreement sets a standard royalty rate of
0.1% of the ex-factory price for each of the essential patents, and amaximum aggregate royalty rate of 5% for the essential patents. If thisaggregate royalty rate exceeds 5%, the standard royalty rate isrecalculated so that the aggregate royalty does not exceed 5%.
131

The distribution of royalty to licensors in the patent pool is generally
calculated by dividing the amount of royalty by the number of patents,
without regard to the technical value of an individual patent.
E. In relation to the development of the standards, the participants tend to
make essential patent declarations more than necessary, with a view tostrengthening their patent portfolio and to gain a dominant position
over the licensing negotiation. As such, essential declared patents
include a large number of patents which are not practically essential.
An analysis was made by Fairfield Resources International, Inc. on the
UMTS standard patents declared as essential by members of 3GPP,
including ETSI, the Association of Radio Industries and Businesses(ARIB) of Japan and Telecommunications Technology Association(TTA) of South Korea before December of 2008 (Fairfield Report,
Exhibit Ko No. 135; Although the Fairfield Report is titled "Review ofPatents Declared as Essential to WCDMA," according to the definitionin this judgment, this "WCDMA" is understood to mean the UMTS
standard effective as of December of 2008. At that time, the LTE
method was not adopted in the UMTS standard.)
According to the results of the review, out of 1889 patent families
declared as essential for the UMTS standard, there were 529 that are(2)or are likely to be essential.
F. Some so-called feature phones, i.e. mobile phones focused oncommunication function, are sold at several thousand yen to several
ten thousand yen. In addition, some dongles (USB connection modem)
connected to a computer for communication under the UMTS standard
and wireless communication routers are sold at several thousand yen.
Method of calculation of the amount of the FRAND royalty in this court
case
The ETSI IPR Policy and the ETSI Guide on IPRs do not provide any
guidance on the calculation of the royalty for FRAND license, and suchcalculation is left to the negotiation of the parties. Considering the totalityof various circumstances, including the purpose of adoption of the ETSIIPR Policy and the nature of Products 2 and 4, the court finds it reasonable
to calculate the amount of the FRAND royalty in accordance with thefollowing calculation method.
First, among the total sales turnover of Products 2 and 4, the percentage of132

the contribution of the compliance with the UMTS standard should be
calculated ((3)A. below). Next, among the contribution ratio of thecompliance with the UMTS standard, the contribution ratio of the Patentshould be calculated ((3)B. below). For the purpose of the calculation of
the contribution of the Patent among the contribution of the compliancewith the UMTS standard, in order to prevent an excessively high royalty
in aggregate, the calculation method should be such that the amount ofroyalty for the entire essential patent pool does not exceed a certain ratio((3)B.(A) below). In this court case, as the specific details of otheressential patents are unknown, the amount of FRAND royalty should bebased on the division by the number of UMTS standard essential patents((3)B.(B) below).
(3) Specific calculation
A. Portion which the compliance with the UMTS standard has
contributed to the sales turnoverOf the total sales turnover as mentioned above, the contribution ratioof the compliance with the UMTS standard should be [omitted]
percent of the total sales turnover for Products 2, and [omitted] percentof the total sales turnover for Products 4, and the calculation of theamount of the FRAND royalty should be based on the amount
multiplied by these percentages.
As mentioned in the above findings, Products 2 and 4 also havemobile communication functions supporting methods in addition to
the W-CDMA, such as GSM, and also have wireless communication
function such as Wi-Fi communication. Many other features andfunctions, such as designs, user interfaces, available software, CPU,
camera, audio function, display, GPS function, and various sensors
such as three-axis gyro sensor and acceleration sensor also contributeto the total sales turnover of Products 2 and 4. Further, the brandstrength of Apple Inc. and the appellee in the smart phone market andtablet device market, as well as their marketing efforts to maintain andenhance such brand strength also make a significant contribution to
the sales turnover. In addition, in light of the difference in the prices
between the models of Products 2 and 4 depending on the memory
sizes, the size of memory is presumed to have significantly contributed
to the sales turnover. Thus, although the compliance with the UMTS
133

standard contributes to the sales turnover of Products 2 and 4, suchcontribution is limited, and other portions of the sales turnover wereachieved without regard to the compliance with the UMTS standard.
Accordingly, for determining the amount of FRAND royalty for the
Patent, only the portion which the compliance with the UMTS
standard may have contributed to the sales turnover of Products 2 and4 should be taken into account as the basis of calculation.
The court determines the specific ratio to be as follows. Although
Product 2 is a so-called smart phone with various functions in addition
to mobile communication, as compared to Products 4, it is reasonable
to understand that the basic function as socially accepted is a mobile
communication function. Meanwhile, in the case of Product 4,
considering the circumstances that [i] this product is a so-called tablet
device and the use thereof does not always require the mobile
communication function, [ii] one of the models of Product 4 without
the mobile communication function ("iPad 2 Wi-Fi") is on sale, [iii]the sales price of the model without mobile communication function("iPad 2 Wi-Fi") is cheaper than the model with mobile
communication function ("iPad 2 Wi-Fi +3G model"; Product 4) byaround twelve thousand yen, it is reasonable to understand that thecontribution ratio of the mobile communication to the sales turnover isless than that for Product 2. In addition to the above circumstances,taking into account various circumstances including the price of theBaseband Chip and the sales price of feature phones, dongles andwireless communication routers, the contribution ratio of thecompliance with the UMTS standard to the total sales turnover of
Products 2 and 4 should be [omitted] percent of the total sales turnoverfor Products 2, and [omitted] percent of the total sales turnover for
Products 4.
B. Contribution ratio of the Patent
Further, the amount of the FRAND royalty of the Patent should be therate specified in the formula shown in (D) below, calculated from thecontribution ratio of the compliance with the UMTS standard to thesales turnover of Products 2 and 4.
(A) Maximum of aggregate royalty
The ETSI IPR Policy aims to "reduce the risk to ETSI,134

MEMBERS, and others applying ETSI STANDARDS andTECHNICAL SPECIFICATIONS, that investment in the
preparation, adoption and application of STANDARDS could be
wasted as a result of an ESSENTIAL IPR for a STANDARD or
TECHNICAL SPECIFICATION being unavailable" (Clause 3.1).
In order to achieve this goal, it is reasonable to understand that,
not only the amount of royalty for each of the individual essential
patents, but also the aggregate of such royalty (aggregate royalty)
should be limited within the economically reasonable range. The
implementation of a technical standard, including the UMTS
standard, often requires the implementation of a large number of
essential patents. In such cases, even if the absolute value of theroyalty rate for the individual patent right is low, the aggregate
amount of such royalty can be unreasonably high insomuch asthat it becomes economically unfeasible for the users to comply
with the standard. In addition, when a new standard is developedin the same business sector, the existing standard technologies areoften incorporated into such new standard so as to ensure theinteroperability (so-called "chain of standards"). Therefore, there
is a tendency that the newer the standard is, the more essential
patents such standard contains. If the aggregate royalty becomes
unreasonably high, it would be practically impossible for users to
put the essential patent licenses into practice even if they obtainsuch licenses. Such situations would result in the inability toachieve the goal of the ETSI IPR Policy to "reduce the risk …
that investment …could be wasted as a result of an ESSENTIAL
IPR for a STANDARD … being unavailable." Therefore, the
FRAND Declaration made in accordance with the ETSI IPR
Policy is understood to contain, as a part of the FRAND Terms,
the restriction that the aggregate royalty shall not exceed thereasonable range. Consequently, it is reasonable to understandthat the determination of the amount of the FRAND royalty alsoentails such restriction.
Next, the court determines the reasonable cap for the aggregate
royalty in the context of this court case. In this court case, boththe appellant and the appellee have submitted their respective
135allegations on the premise of the aggregate royalty cap of 5%. In
addition, as explained in (1)D. above, many owners of the UMTS
standard essential patents support the 5% aggregate royalty cap
with a view to prevent the aggregate royalty from being
excessively high. Considering this, it is reasonable, fordetermination of the amount of the FRAND royalty for the Patent,
to apply a formula whereby the aggregate royalty rates for theentire UMTS standard will not exceed 5% of the contribution
ratio of the compliance with the UMTS standard to the sales
turnover of Products 2 and 4 ([omitted] percent for Products 2,
and [omitted] percent for Products 4).
(B) Relationship with other UMTS standard essential patents
Next, the court discusses the relationship between the Patent andother patent rights essential for the UMTS standard. The UMTS
standard includes a large number of essential patents in addition
to the Patent, and the UMTS standard cannot be implemented by
the Patent alone. Therefore, it would be necessary to consider the
degree of contribution of the Patent to the UMTS standard, in
relation to other essential patents patented in Japan.
The Inventions are focused on the feature of the VoIP
communication, namely, one complete RLC SDU corresponds toonly one RLC PDU, and RLC SDUs without
segmentation/concatenation/padding are frequently generated(Paragraph [0011] of the Patent Description). The Inventions only
achieve the efficient use of radio resources by reducing theheader size of the PDU transmitted on a radio link for VoIP
communication, and otherwise may result in the waste of radio
resources. Thus, as the Inventions achieve their effects only inthis limited circumstance, the technical contribution of the Patentto the UMTS standard is not significantly high. Also, no evidence
has been submitted which proves that the contribution of the
Patent to the UMTS standard is higher than other essential
patents. In this court case, as no evidence showing the details ofother UMTS standard essential patents has been submitted, thecontribution of other essential patents to the UMTS standard is
not clear. In addition, no evidence has been submitted which136

proves that the contribution of other essential patents to the
UMTS standard is higher than the Patent. Based on the above, it
is reasonable to determine, based on the evidence submitted inthis court action, that the contribution of the Patent to the UMTS
standard is equivalent to other essential patents.
Accordingly, given that the contribution by the Patent and otheressential patents to the UMTS standard are equivalent, theamount of the FRAND royalty for the Patent shall be calculatedby dividing the amount of royalty by the number of all UMTS
standard essential patents.
The distribution of royalty to licensors in the patent pool is
generally calculated by dividing the amount of royalty by the
number of patents, without regard to the technical value ofindividual patents. The "W-CDMA patent platform" for the
UMTS standard has also adopted such method of dividing theroyalty amount by the number of patents. Calculation of theamount of the FRAND royalty by dividing the amount of royalty
by the number of the UMTS essential patents is consistent withsuch practice in patent pools.
(C) Number of the UMTS standard essential patents
For the purpose of calculation of the amount of FRAND royalty,
the court assumes the number of the UMTS standard essential
patents to be 529. The number of patent families determined by
Fairfield Resources as being or highly likely to be the UMTS
standard essential patents was 529 ((1)E. above). The Fairfieldreport analyzes the number of the UMTS standard essential
patent families in all parts of the world, and does not only focus
on the number of the UMTS standard essential patents in Japan,
and the breakdown of the patent families determined as being or
highly likely to be essential is not clear. However, no otherevidence has been submitted which sufficiently proves thenumber of the UMTS standard essential patents granted in Japan.
In addition, as both parties predicate their allegations on the
Fairfield report, leaving aside the questions of whether the
calculation base shall be the number of all patents declared as
essential or the number of patents determined as being or highly137likely to be essential, it is reasonable to rely on the number ofpatent families indicated in the Fairfield report as the number of
essential patents. In light of the fact that the standard participants
tend to make essential patent declaration more than necessary
upon the development of the standards ((1)E. above), the numberof the UMTS standard essential patents should be 529 asindicated in the Fairfield report as being or highly likely to be
essential, instead of 1889 which is the total number of patents
declared as essential.
(D) Summary
Based on the above, the contribution ratio of the Patent to thetotal sales turnover of Products 2 and 4 should be calculated bymultiplying the aggregate royalty cap ratio ((A) above) by thecontribution ratio of the compliance with the UMTS standard to
the total sales turnover (A. above), and then dividing the derived
figure by the number of patents considered as essential ((C)
above). Therefore, the calculation formula shall be as follows:(Formula)
Product 2 [Omitted]%×5%×1/529≒[Omitted]%
Product 4 [Omitted]%×5%×1/529≒[Omitted]%
C. The amount of the FRAND royalty
Based on the above, the amount of the FRAND royalty shall becalculated by the following formula. As for the delinquency charge, as
the precise release dates of Products 2 and 4 are unknown, it isreasonable to consider that such delinquency charge accrued from
September 28, 2013, which is the last day of the sales period inquestion.
(Formula)

8.

Product 2 JPY [Omitted]×[Omitted]%≒JPY 9,239,308
Product 4 JPY [Omitted]×[Omitted]%≒JPY 716,546
Total: JPY 9,239,308 + JPY 716,546 = JPY 9,955,854
Conclusion
Based on the above, the appellee's claim has a ground and should be upheld tothe extent of seeking a court's confirmation that [i] the appellant does not havea right to seek damages from the appellee on the ground of infringement of the
Patent, with regard to the appellee's production, assignment, lease, import or138

offering for assignment or lease (including displaying for the purpose of
assignment or lease) of Products 1 and 3, and that [ii] the appellant's right toseek damages from the appellee on the ground of infringement of the Patent,with regard to the appellee's production, assignment, lease, import or offering
for assignment or lease (including displaying for the purpose of assignment orlease) of Products 2 and 4 does not exceed JPY 9,955,854 plus the interest
thereon at the rate of 5% per annum as provided in the Civil Code for theperiod between September 28, 2013 and the full payment thereof. The otherclaims of the appellee should be dismissed since they are groundless. As the
judgment in prior instance, which is different from these determinations, should
9.

be modified, the court renders the judgment as given in the main text.
Opinions from public consultation(1) In this court case, the Petition for Provisional Disposition and the
Additional Petition for Provisional Disposition, the major issue was theeffect of a FRAND declaration for a standard essential patent. This topic isa key issue which requires a discussion in the domestic and international
context. Further, the judicial decision of this court has a material
implication on the framework for technological development andutilization, as well as on corporate activities and citizens' lives. From thesestandpoints, this court decided to seek domestic and foreign public
opinions within the framework of existing laws, with the cooperation of
the litigation parties.
In the public consultation, the court asked "whether an owner of a patentessential for a standard developed by a standardization body, for which a(F)RAND declaration (a declaration to grant a license under (fair),reasonable and non-discriminatory conditions) is made, should be
restricted from exercising the right to seek an injunction or the right toseek damages."(2) In response to the public consultation, the court received many opinionsfrom individuals, companies and organizations from Japan and abroad.
The following is the summary of these opinions.
A. Whether the owner of an essential patent for which a FRAND
declaration is made should be restricted from exercising the right toseek an injunction
Briefly speaking, the majority of the opinions were divided into thefollowing three types.
139

[i]

[ii]

[iii]

Opinions that it is not appropriate to impose any restriction, as
such restriction would have a negative impact on voluntary
efforts of the licensor and licensee for the execution of a license
agreement, and also may be detrimental to the technologicalinnovation and standardization efforts.
Opinions pointing to the issues such as "patent hold-up," andasserting that a patentee should be subject to certain restrictions
once it has made the FRAND declaration.
Opinions that a patentee should in no event be permitted toexercise the right to seek an injunction based on the patent rightfor which a FRAND declaration was made.
B. Possible legal theories for restriction of a right to seek an injunction,
where such restriction is possible[i]
Opinions that a FRAND declaration gives rise to a contract forthe benefit of a third party, and opinions denying the formationof such contract. The court received a large number of both ofthese opinions.
[ii] Opinions that the injunction should be restricted, relying on theprinciple of good faith or theory of abuse of right. The court
received a large number of this opinion.
[iii]

Opinions that the Antimonopoly Act shall be applied. Such
opinions were quite few.
C. Criteria for the restriction of a right to seek an injunction, where such
restriction is possible
A comparatively large number of respondents commented that thelicensees should be categorized into those who have intentions to enter
into a license agreement ("willing licensee") and those who do not("unwilling licensee"), and that the exercise of the right to seek an
injunction is possible for an unwilling licensee, but not for a willing
licensee. However, these comments varied as to the specific criteria
for determining an unwilling licensee.
D. Whether the owner of an essential patent for which a FRAND
declaration is made should be restricted from exercising the right toseek damages
The majority of the respondents who expressed opinions on the rightto seek damages answered that no restriction should be imposed on140this right. However, some commented that the permissible amount ofdamages should be limited to the amount of the FRAND royalty. In
addition, there were also some who commented on the method ofdetermination of the amount of the FRAND royalty.
E. Other issues
The majority of the respondents commented that an essential patent
owner should have an obligation of a good-faith negotiation. However,
the reasoning for imposing such obligation varied. In addition, some
respondents commented that the licensees of the essential patentshould also have an obligation of a good-faith negotiation. In addition,
as to the opinion that the appellant has an obligation to disclose to theappellee information on the essential patent license agreement withother licensees (e.g. the court's finding in the judgment in priorinstance), many respondents answered that this is not appropriate.
(3) Some respondents presented an analysis of situations in foreign countries,
a discussion for preferable solutions based on the detailed analysis fromthe standpoint of economic science, an analysis of key legal issues
necessary for the conclusion, and an analysis which provided a newperspective that had been rarely discussed before.
These opinions are valuable and useful references that helped the court
make an appropriate judgment from a broad perspective, and we hereby
express our profound gratitude to all the parties who kindly made great
efforts to submit their opinions.
Intellectual Property High Court, Special Division

Presiding Judge:
Judge:
Judge:
Judge:
Judge:

Toshiaki Iimura
Ryuichi Shitara
Yoshinori Tomita
Misao Shimizu
Shinji Oda

141

(Attachment)
List of Products
1.
2.
3.
4.

"iPhone 3GS"
"iPhone 4""iPad Wi-Fi+3G model""iPad 2 Wi-Fi+3G model"

142

(Attachment 1)
3GPP TS25.322 V6.9.0(Summary)

143

144

145

146

(Attachment)
Figures Attached to the Patent Description[Figure 1]

IP Network

Core Network

147

[Figure 2C]
IP packet

Sequence number (SN)

Data field[Figure 3]

Data field[Figure 4]

Data part
Padding148

[Figure 5A][Figure 5B]

Data part
Data part
Padding[Figure 6A]

First segment

Intermediatesegment

Last segment[Figure 6B]

New pre-defined valueFirst segment

Intermediatesegment

Last segment

149

(Attachment)
Drawings of the Cited References[Figure 1] of Exhibit Ko No. 3

First station
First
stationApplication

Second station

Message

Signal message

Application

Third layer

Signal message

message

Second layer

Second layer

First layer

First layer[Figure 2] of Exhibit Ko No. 3

Third layer

Third layer

First layer

Transmit / Receive
First layer

150

MessageThird layer

[Figure 3] of Exhibit Ko No. 3[Figure 4] of Exhibit Ko No.3

Second layeriInterface
layer
Bufferlayer

First layer[Figure 7] of Exhibit Ko No. 3[Figure 8] Exhibit Ko No. 3

Wireless communication device
Processor
MemoryProgram code
Application layer

Third layer interface
Destroy timer

Second layer interface
layer
Buffer

Padding

layerFirst layer interface151

[Figure 9] of Exhibit Ko No.3

[Figure 5] of Exhibit Ko No. 39
Length indicator
Length indicator
Length indicator

PU data(Segment 1)
PU data(Segment 2)
PU data(Segment 0)

Figure 2 of Exhibit Ko No.4

Scenario A

Scenario B

Figure 2: RLC current LI Scheme

Figure 3 of Exhibit Ko No. 4

Scenario A

Scenario B

Figure 3: Proposed RLC LI Scheme

152