Exhibit A 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 1 of 134
[Translation]

1

Case No. 2010 (Han) No. 1

Decision

5775 Morehouse Drive, San Diego, California 92121

USA

The Respondent: Qualcomm Incorporated

Representatives: Steve M. Mollenkopf

Attorneys for the Respondent: 

Harumi Kojo

Kimitoshi Yabuki

Yoshihito Shibata

Subagent attorneys for the Respondent:

Atsushi Yamada

Takahiko Ito

Tomohiko Makino

Atsushi Nishitani

Aya Takahashi

Ken Kawai

Sayuri Tago

Izumi Katayama

 The Japan Fair Trade Commission, with respect to the Cease and Desist Order case against the 

above the Respondent based on the Act on Prohibition of Private Monopolization and Maintenance 

of Fair Trade (Act No. 54 of 1947) (hereinafter, the “Anti-Monopoly Act (AMA)”) prior to the 

amendment by the provision of Article 2 of the Supplementary Provision of the Act for the Partial 

Revision of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act 

No. 100 of 2013) that shall remain applicable based on said Act for the Partial Revision of the Act 

on Prohibition of Private Monopolization and Maintenance of Fair Trade, investigated the Draft 

Decision submitted by Mitsuhiro Saito, Chief Hearing Examiner, pursuant to Article 73 of the 

Rules on Hearings by the Fair Trade Commission (Fair Trade Commission Rules No. 8 of 2005) 

(hereinafter, the “Rules”) prior to the abolishment by the Rules for Establishment of the JFTC 

Relevant Rules upon Enforcement of the Act for the Partial Revision of the Act on Prohibition of 

Private Monopolization and Maintenance of Fair Trade (Fair Trade Commission Rules No. 2 of 

2015), attached hereto as an attachment, and renders its decision as follows.

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[Translation]

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Main Text

 The JFTC hereby renders its decision that the Cease and Desist Order dated September 28, 

2009 (2009 (Measure) No. 22) shall be revoked.

Grounds

1 The facts, evidence, decision and application of laws as found by the Commission are identical 

to those provided in Parts I. to VII. of the Grounds for the Draft Decision, attached hereto as an 

attachment, and are thus incorporated herein as reference.

 Of the terms used in the cited draft decision, the terms listed in the "terms" section of 

Attachment 1 of the Draft Decision shall have the meanings ascribed to them in the “definition” 

section thereof.

2 In the present case, the Cease and Desist Order had been issued on grounds of violation of 

Article 19 of the AMA, as conduct constituting trading with restrictive conditions as stipulated in 

Article 2 (9) (iv) of the AMA prior to the 2009 amendment and Former General Designation 

Paragraph 13.

Based on the evidence ( Shin 1 to 3, 13, 19, 20, 79, 221, 275, 276) and based on the status of 

how the Respondent owns industrial properties essential for the 3G wireless mobile 

communication standard (Draft Decision Part III.2.(4)B), it could be inferred that the Respondent

held an influential position in the market for the technology concerning CDMA Subscriber Units, 

etc. (hereinafter, “the Subject Market Under Consideration in this case”), and in the course of such 

a process in which the Respondent entered into the License Agreements with Domestic 

Manufacturers/Sellers of Handsets, etc., it is believed that there could have been room to find some 

sort of conduct of the Respondent that should be regulated in some way under the AMA. However, 

as described in Part VI.1 of the Draft Decision, there is not enough evidence to find that the 

Respondent’s having entered into the License Agreements which included No-Compensation 

License Provisions, etc. with the Domestic Manufacturers/Sellers of Handsets, etc., constituted 

trading with restrictive conditions as described in the Cease and Desist Order, thus having the 

tendency to impede fair competition.

Consequently, the violating acts of this case by the Respondent cannot be found to constitute 

trading with restrictive conditions as stipulated in Article 2 (9) (iv) of the AMA prior to the 2009 

amendment and Former General Designation Paragraph 13, or to be in violation of Article 19 of 

the AMA, and a Cease and Desist Order may not be issued against the Respondent on the grounds 

of these provisions.

3 Therefore, pursuant to Article 66 (3) of the AMA and Article 78 (1) of the Rules, a decision is 

rendered as provided in the main text.

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[Translation]

3

March 13, 2019

Japan Fair Trade Commission

Chairman Kazuyuki Sugimoto

Commissioner Akiko Mimura

Commissioner Reiko Aoki

Commissioner Yoshiharu Ojima

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[Translation]

1

Attachment

Case No. 2010 (Han) No. 1

Draft Decision

5775 Morehouse Drive, San Diego, California 92121

USA

The Respondent: Qualcomm Incorporated

Representatives: Steve M. Mollenkopf

Attorneys for the Respondent: 

Harumi Kojo

Kimitoshi Yabuki

Yoshihito Shibata

Subagent attorneys for the Respondent:

Atsushi Yamada

Takahiko Ito

Tomohiko Makino

Atsushi Nishitani

Aya Takahashi

Ken Kawai

Sayuri Tago

Izumi Katayama

 With respect to the Cease and Desist Order trial case against the above Respondent based on 

the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 

1947) (hereinafter, the “Anti-Monopoly Act (AMA)”) prior to the amendment by the provision of 

Article 2 of the Supplementary Provision of the Act for the Partial Revision of the Act on 

Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 100 of 2013) that 

shall remain applicable based on said Act for the Partial Revision of the Act on Prohibition of 

Private Monopolization and Maintenance of Fair Trade, we, who had been appointed by the Japan 

Fair Trade Commission (hereinafter, “JFTC”) as Hearing Examiners in accordance with Article 56 

(1) of the AMA as well as the provision of Article 12(1) of the Rules on Hearings by the Fair Trade 

Commission (Fair Trade Commission Rules No. 8 of 2005) (hereinafter, the “Rules”) prior to the 

abolishment by the Rules for Establishment of the JFTC Relevant Rules upon Enforcement of the 

Act for the Partial Revision of the Act on Prohibition of Private Monopolization and Maintenance 

of Fair Trade, having examined the matter and on the belief that the following decision is 

appropriate, hereby prepare this Draft Decision in accordance with the provisions of Article 73 and 

Article 74 of the Rules.

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[Translation]

2

 The terms listed in Attachment 1 shall have the meanings ascribed to them in the “Definition” 

section thereof.

Main text

The JFTC hereby renders its decision that the Cease and Desist Order dated September 28, 

2009 (2009 (Measure) No. 22) shall be revoked.

Grounds

Part I Purpose of the Appeal

Refer to the main text.

Part II Overview of the Case (facts not disputed by the Parties and facts that are publicly known)

1. The JFTC held that, the Respondent, in entering into agreements granting licenses, etc. to the 

portfolio of intellectual property rights for CDMA Mobile Wireless Communications owned by or 

to be owned by the Respondent, etc. to the Domestic Manufacturers and/or Sellers of Handsets, 

etc. (hereinafter, “DMSHs”), forced the DMSHs, etc. to grant licenses, etc. to the intellectual 

property rights owned by or to be owned by the DMSHs, etc. for no compensation, as well as to 

make a pledge not to assert its rights based on the intellectual property rights owned by or to be 

owned by the DMSHs, and this means that the Respondent is transacting with the DMSHs by 

attaching conditions that unfairly restrict the business activities of the DMSHs, which falls under 

Article 2 (9) (iv) of the AMA prior to the amendment by the Act for the Partial Revision of the Act 

on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 51 of 2009, the 

“2009 Amendment”) (Paragraph 13 of the Designation of Unfair Trade Practices prior to the 

amendment by Fair Trade Commission Public Notice No. 18 of 2009 [Fair Trade Commission 

Public Notice No. 15 of 1982] [the “Former General Designation Paragraph 13”]), and is in 

violation with the provision of Article 19 of the AMA, and issued the Cease and Desist Order to 

the Respondent (2009 (So) No. 22.; this order is hereinafter referred to as the “CDO,” and the 

Respondent’s acts found to be violation in this Order are hereinafter referred to as the “Violating 

Acts of this case”). 

 The copy of the order concerning the CDO was served upon the Respondent on September 30, 

2009.

2. The Respondent made a demand for a hearing seeking revocation of the CDO in its entirety on 

November 24, 2009. 

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[Translation]

3

Part III Assumed Facts (The facts with evidence number in the parenthesis at the end of each 

Paragraph are the facts found based on such evidence, and the other facts are the facts that are not 

contested between the parties or are publicly known. Evidence numbers are referenced simply as 

“Sa XX” or “Shin XX,” omitting “No.” or “Exhibit.”)

1. Concerning the Respondent

The Respondent has its head office at the address stated above and engages in research and 

development concerning mobile wireless communications (as described in 2 (1) below), licensing 

of intellectual property rights concerning mobile wireless communications, and manufacturing, 

sales, etc. of semiconductor integrated circuits (hereinafter also referred to as “Chips”) used in 

Subscriber Units or Wireless Telephone Base Stations.

2. Concerning 3G Mobile Wireless Communications

(1) Overview of Mobile Wireless Communications

Mobile Wireless Communications means such wireless communications defined in Article 3 (1) 

of the Rules on Applications for Radio Equipment (Radio Regulatory Committee Rules No. 18 of 

1950) and/or similar wireless communications that are currently or will be stipulated in foreign 

laws and regulations, the purpose of which is to conduct telecommunications activities, and refers 

to wireless communications, etc. between land mobile stations that are established to be used by 

mobile devices, and base stations that are established telecommunication purposes.

(2) Standards of Mobile Wireless Communications and their transitions

The mobile wireless communications system is stipulated as a “standard” by the International 

Telecommunication Union (“ITU”) and other standards organizations in different countries and 

regions. (Sa 2)

International standards of Mobile Wireless Communications have been established and revised 

in accordance with the development of communication technologies, and these standards are 

distinguished in the order that they were put to practice, as first generation (1G), second generation 

(2G), third generation (3G), etc. (hereinafter, equipment conforming to Mobile Wireless 

Communication Standards shall, for example, in the case of third-generation Mobile Wireless 

Communication Standards, Subscriber Units conforming to said standard shall be referred to as 

“3G Subscriber Units” and Base Stations shall be referred to as “3G Base Stations,” etc.).

In Japan, services utilizing the 1G Mobile Wireless Communications started in 1979, which 

eventually transitioned to services utilizing the 2G Mobile Wireless Communications around 1994, 

and after 2001, services utilizing CDMA Mobile Wireless Communications, which is the 3G

Mobile Wireless Communications through Code Division Multiple Access (“CDMA”) were 

provided. (Sa 4)

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[Translation]

4

Third generation Mobile Wireless Communications enables higher-speed data communications 

compared to Mobile Wireless Communications of the second generation and is able to provide a 

variety of multimedia communication services including phone calls with high-quality sound, 

video streaming, video telephone function, etc.

(3) The historical background, etc. of 3G Mobile Wireless Communications Standards

A. Establishment of the 3G Mobile Wireless Communications Standards by ITU

In May 2000, the ITU approved a total of five standards concerning 3G Mobile Wireless 

Communications including “DS-CDMA (Direct Spread-SDMA)” and “MC-CDMA (Multi 

Carrier-CDMA)” as the international standard called “IMT-2000.”

The former is a standard conforming to the W-CDMA system proposed by Japan and the EU 

and the latter is a standard conforming to the CDMA2000 system proposed by the U.S.

(Sa 2, Sa 6 through Sa 8)

B. Establishment of the 3G Mobile Wireless Communications Standards in Japan

In March 2000, the Standards Assembly (“Standards Assembly”) established in the Association 

of Radio Industries and Businesses (“ARIB,” which became a general incorporated association as 

of April 1, 2011) approved two standards concerning 3G Mobile Wireless Communications in 

Japan including the “IMT-2000 DS-CDMA System ARIB Standard (ARIB STD-T63 Ver. 1.00) 

(“ARIB-STD-T63 Ver. 1.00”)” and the “IMT-2000 MC-CDMA System ARIB Standard (“ARIB 

STD-T64 Ver. 1.00”)” (these standards and any revision thereof are hereinafter referred to as the 

“3G Mobile Wireless Communications Standards”). The former is a standard conforming to the 

W-CDMA system proposed by Japan and the EU to the ITU, and the latter is a standard conforming 

to the CDMA2000 system proposed by the U.S. (Sa 2)

(4) Treatment of Industrial Property Rights in connection with the ARIB Standard

A. Basic Guidelines for Treatment of Industrial Property Rights in connection with the ARIB 

Standard

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[Translation]

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(A) The Standards Assembly established the “Basic Guidelines for Treatment of Industrial 

Property Rights in connection with the ARIB Standard” (approved at the 1st Standards Assembly

Meeting on September 5, 1995; the “ARIB Guidelines”) regarding the treatment of Industrial 

Property Rights that are essential to all or part of the ARIB Standard (Industrial Property Rights 

refer to patent rights, utility model rights and design rights, and includes those that are pending. 

Essential Industrial Property Right refers to any Industrial Property Right that makes it technically 

impossible to manufacture, sell or use devices, equipment, systems or software in compliance with 

ARIB standards without infringing the same; hereinafter, “Essential Industrial Property Rights” 

except for the descriptions in this Paragraph and the following (b) which explains the contents of 

the ARIB standard). (Sa 2, Sa 10)

(B) The ARIB Guidelines set forth the following:

a. The Standards Assembly shall, in a case in which all or a portion of the content stipulated by the 

ARIB Standard is included in the scope of an Essential Industrial Property Right, where the holder 

of such Essential Industrial Property Rights (hereinafter, "Right Holder") opts for the treatment of 

option 1 or option 2 below, deem such right as being subject to the ARIB Guidelines, and where 

said Rights Holder opts for the treatment of option 3, deem such right as not being subject to the 

ARIB Guidelines. (ARIB Guidelines 1.1)

Option 1: The Right Holder grants a license for the use of said Essential Industrial Property Rights

to anyone who uses such an ARIB Standard without conditions and without asserting any rights 

whatsoever.

Option 2:The Right Holder, upon disclosing the contents and the terms of such Essential Industrial 

Property Rights, grants a non-exclusive and nondiscriminatory license for the use of such Essential 

Industrial Property Rights under appropriate terms to an entity that uses said ARIB Standard.

Option 3: The Right Holders does not engage in either of the aforesaid treatments referred to in 

option 1 or option 2.

b. The Standards Assembly is not responsible for confirming whether all or a portion of the content 

stipulated by the ARIB Standard is included in the scope of an Essential Industrial Property Right, 

nor is it liable for any disputes regarding Industrial Property Rights. (ARIB Guidelines 1.2)

c. In the event that all or a portion of the contents of the provisions of a particular ARIB Standard 

are included in the scope of an Essential Industrial Property Rights, and when the Right Holder 

opts for option 2 of section a. above, the Right Holder shall, upon specifying the title of the ARIB 

Standard, the subject Industrial Property Right (TEIPRs), and the terms such as the consideration, 

etc. for using said Essential Industrial Property Rights, submit to the chairman of the Standards 

Assembly the “Attached Form No. 2: Confirmation Forms relating to a license for the use of 

Essential Industrial Property Rights” confirming that the Right Holder opts for the treatment 

described in option 2 of section a. above relating to the Essential Industrial Property Right

(“Confirmation Forms”). (ARIB Guidelines 2.1, Attached Form No. 2)

(Sa 10)

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[Translation]

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B. Submission of Confirmation Form, etc. by the Respondent

(A) The Respondent elected the treatment described in Option 2, A (b) a. above and submitted the 

Confirmation Form to the chairman of the Standards Assembly on January 21, 2000, prior to the 

establishment of the ARIB Standards (3G Mobile Wireless Communications Standards) in the 

Standards Assembly. The Confirmation Form submitted by the Respondent stated 63 Industrial 

Property Rights concerning the “ARIB STD-T63 Ver. 1.00” standard and 64 Industrial Property 

Rights concerning the “ARIB STD-T64 Ver. 1.00” standard as the TEIPRs owned by the 

Respondent. (Sa 2, Sa 11)

(B) Similar to the Respondent, some of the DMSHs also submitted the Confirmation Forms to the 

chairman of the Standards Assembly stating the Industrial Property Rights that they claimed to be 

essential for the 3G Mobile Wireless Communications Standards.

With respect to the “ARIB STD-T63 Ver. 1.00” standard, Matsushita Electric Industrial Co., Ltd. 

(currently, Panasonic Corporation, “Panasonic”) listed 31 relevant Industrial Property Rights, 

Hitachi, Ltd. (“Hitachi) listed 26 relevant Industrial Property Rights, Fujitsu Limited (“Fujitsu”) 

listed 21 relevant Industrial Property Rights, NEC Corporation (“NEC”) listed 21 relevant 

Industrial Property Rights, and Toshiba Corporation (“Toshiba”) listed 7 relevant Industrial 

Property Rights in their respective Confirmation Forms as TEIPRs owned by each of the DMSHs. 

With respect to the “ARIB STD-T64 Ver. 1.00” standard, Hitachi listed 19 relevant Industrial 

Property Rights, Panasonic listed 8 relevant Industrial Property Rights, Fujitsu listed 8 relevant 

Industrial Property Rights, NEC listed 6 relevant Industrial Property Rights and Mitsubishi Electric 

Corporation (“Mitsubishi Electric”) listed 5 relevant Industrial Property Rights in their respective 

Confirmation Forms as TEIPRs owned by each of the DMSHs.

(Sa 11)

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(C) In the Confirmation Forms submitted to the chairman of the Standards Assembly, the total 

number of relevant Industrial Property Rights (TEIPRs) listed as those concerning the “ARIB 

STD-T63 Ver. 1.00” standard was 350 and those concerning the “ARIB STD-T64 Ver. 1.00” 

standard was 233. (Sa 2, Sa 11)

3. Concerning technology transactions relating to CDMA Mobile Wireless Communications

(1) Intellectual property rights for technology relating to CDMA Mobile Wireless Communications

 Among the intellectual property rights (“IPRs”) that are used to manufacture and sell 

subscriber units (the “CDMA Subscriber Units”), base stations (the “CDMA Base Stations”), 

semiconductor integrated circuits (chips), and other parts for the CDMA Base Stations (hereinafter 

referred to as the “CDMA Parts,” and the CDMA Subscriber Units and the CDMA Base Stations 

shall be collectively referred to as the “CDMA Subscriber Units, etc.”) to be used for conducting 

CDMA Mobile Wireless Communications, there are the technically essential intellectual property 

rights (the “TEIPRs”) for the CDMA Mobile Wireless Communications, and although not falling 

under these categories, there are IPRs that provide competitive advantages to the apparatus, device, 

system, or software or those that enable functions or provide other features that are reasonably in 

demand by the market (“commercially essential intellectual property rights,” “CEIPRs”). (Sa 22)

The TEIPRs to the CDMA Mobile Wireless Communications are loaded on the chips that 

process signals for the CDMA Mobile Wireless Communications which are then built into the 

CDMA Subscriber Units, etc., but recently, with regard to these chips that are used in subscriber 

units, the trend has been to consolidate into one chip such functions as the function to save power 

consumption of the Subscriber Units, the audio-visual function to play music and display video, 

and the function to process signals, and in terms of the manufacturing, selling, etc. of these 

integrated chips that have these diverse functions, there are cases in which not only TEIPRs but 

also CEIPRs to CDMA Mobile Wireless Communications are being used.

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[Translation]

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(2) The types of transactions involving IPRs for technology relating to CDMA Mobile Wireless 

Communications

The transactions for the IPRs to technology for the CDMA Mobile Wireless Communications 

take the form of individual license agreements between the IPR holder and the IPR user (including 

cross-license agreements where the licensor and the licensee mutually grant license for the rights 

held respectively) or the granting of licenses through a patent pool.

4. Concerning the License Agreements between the DMSHs and the Respondent

(1) The DMSHs

 The major DMSHs that manufactured and sold the CDMA Subscriber Units, etc. in Japan 

between 2000 and 2009 were Casio Computer Co., Ltd. (which transferred its subscriber unit 

business to its subsidiary, Casio Hitachi Mobile Communications Co., Ltd. (“Casio Hitachi”) on 

April 1, 2004, hereinafter, referred to as “Casio”), Kyocera Corporation (“Kyocera”), SANYO 

Electric Co., Ltd. (which transferred its subscriber unit business to Kyocera on April 1, 2008, 

hereinafter “SANYO”), Sharp Corporation (“Sharp”), Toshiba, NEC, Panasonic Mobile 

Communications Co., Ltd. (which changed its trade name from Matsushita Communication 

Industrial Co., Ltd. on January 1, 2003, hereinafter “Panasonic Mobile”), Hitachi, Ltd. (which 

transferred its subscriber unit business to Casio Hitachi on April 1, 2004), Fujitsu, and Mitsubishi 

Electric Corporation (which announced that it would cease its subscriber unit business on March 

3, 2008).

 Of these, NEC, Panasonic Mobile, Hitachi, Fujitsu and Mitsubishi Electric Corporation were 

also engaged in the manufacture and sale of CDMA Base Stations. Furthermore, NEC, Panasonic 

Mobile, and Fujitsu, etc. were also manufacturing chips to be used in the CDMA Subscriber Units, 

etc. either themselves or through their affiliates.

(2) Overview of the circumstances that lead to the execution of the License Agreements between 

the DMSHs and the Respondent

A. Since 1995, the DMSHs and the Respondent executed license agreements for the 2G Subscriber 

Units and/or the license agreements for the 2G Base Stations for the DMSHs to receive licenses

from the Respondent for the IPRs to the 2G Mobile Wireless Communications Standards held or 

to be held by the Respondent.

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9

B. Around 1999, it was necessary for the DMSHs to receive licenses from other holders of the 

TEIPRs to the CDMA Mobile Wireless Communications in order to manufacture and sell CDMA 

Subscriber Units, etc. because the telecommunication carriers such as NTT Docomo, Inc. (“NTT 

Docomo”) and KDDI Corporation (“KDDI”) were preparing to change their services to those

which use mobile wireless communications that conform to the 3G Mobile Wireless 

Communications Standards, and, as stated in above 2(3)B, because the Standards Assembly

officially established the 3G Mobile Wireless Communications Standards in Japan in March 2000. 

(Investigation Officials’ Evidence Nos. 3, 37).

 Meanwhile, the Respondent, as stated in above 2(4)B, submitted to the chairman of the 

Standards Assembly the Confirmation Form identifying multiple TEIPRs to the 3G Mobile 

Wireless Communications Standards held by it, and from around August 1999, it asserted to the 

DMSHs that it holds numerous TEIPRs to the CDMA Mobile Wireless Communications and 

demanded that they obtain licenses for the IPRs held by the Respondent if they wished to 

manufacture and sell CDMA Subscriber Units, etc.

As such, the Respondent, from around March 2000 to March 2001, based on the license 

agreements for the 2G Subscriber Units and/or the license agreements for the 2G Base Stations, 

and by revising these agreements, executed with the DMSHs as indicated in the attachment (The 

attachment includes a summary of the license agreements executed between the Respondent and 

the DMSHs to the extent needed to make judgments, but the agreements that were actually 

executed included more details on the scope of IPRs subject to the license and other matters.), the 

license agreements for the 3G Subscriber Units and/or the license agreements for the 3G Base 

Stations pursuant to which the Respondent granted licenses for the IPRs to the CDMA Mobile 

Wireless Communications held by the Respondent that are necessary to manufacture and sell the 

CDMA Subscriber Units, etc. (The agreements executed between the Respondent and DMSHs 

during the above period pursuant to which the Respondent granted licenses for the IPRs to the 

CDMA Mobile Wireless Communications held or to be held by the Respondent shall be referred 

to as the “License Agreements.”).

The history of the negotiations that were held to execute the License Agreements between the 

Respondent with each of NEC, Panasonic Mobile, Toshiba, Mitsubishi Electric Corporation, and 

Fujitsu is set forth in Attachment 2.

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[Translation]

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(3) Overview of the License Agreements

With respect to the contents of the License Agreements, the contents for the Subscriber Units 

are stipulated in the agreements, etc. entitled “Subscriber Unit License Agreement” and their 

revised agreements entitled “Amendment to Subscriber Unit License Agreement,” and the contents 

for the Base Stations are stipulated in the agreements entitled “Infrastructure Equipment License 

Agreement,” and their revised agreements entitled “Amendment to Infrastructure Equipment 

License Agreement,” respectively. The summary of the License Agreements are as follows (The 

contents of the License Agreements are as indicated in the exhibit. Furthermore, although there are 

differences in the contents of agreements among each of the DMSHs, in the below, those minor 

differences that do not affect the decision in this case shall be abstracted and the facts shall be 

indicated.).

A. The Respondent shall grant to the DMSHs a personal (nontransferable), worldwide, and 

nonexclusive license for the IPRs concerning the CDMA Wireless Communications that are held 

or to be held by the Respondent, etc. that are specified in the License Agreements as the subjects 

of the license in order for the DMSHs, etc. to manufacture and sell the CDMA Subscriber Units, 

etc. (Shin 52) 

B. The DMSHs shall pay the Respondent a certain sum (the “Lump Sum License Fee”) at the time 

of execution and revision of the agreements, and they shall also pay on each calendar quarterly 

basis, a prescribed ratio of the amount obtained by multiplying the units of contracted products 

sold by the DMSHs during said period by the net sales price per unit of the contracted product (the 

“Royalty”). The prescribed ratio of the amount of the net sales price per unit of the contracted 

product (the “Royalty Rate”) approximately range from 5% to 6.5% depending on the number of 

units of the contracted product sold under the license.

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[Translation]

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C. The DMSHs, as indicated in the attachment, shall grant to the Respondent, a personal 

(nontransferable), worldwide, and nonexclusive license for the IPRs that are held or to be held by 

the DMSHs, etc. that are specified in the License Agreements as the subjects of the license in order 

for the Respondent, etc. to manufacture and sell the CDMA Subscriber Units, etc. (The 

Investigation Officials view this provision as a no-compensation license provision and the 

Respondent views this as a cross-license provision. From the view of analyzing the fairness of the 

Investigation Officials’ assertion, this provision shall be referred to as the “No-Compensation 

License Provision” in this Draft Decision. The License Provision means, as stated above, the grant 

of license for IPRs in order for the Respondent to manufacture and sell, etc. the CDMA Subscriber 

Units and CDMA Parts. However, because the Respondent already ceased its business of 

manufacturing and selling, etc. the CDMA Subscriber Units at the time License Agreements were 

executed, unless otherwise noted, the License Provision shall herein mean the manufacture and 

sale, etc. of CDMA Parts by the Respondent.)

D. As indicated in the attachment, among the DMSHs, NEC, Panasonic Mobile and Mitsubishi 

Electric Corporation, pledge that they will not assert their IPRs held or to be held by them that are 

specified as the subjects of the license in the License Agreements against the Respondent, etc. for 

manufacturing and selling, etc. the CDMA Parts, and/or to the Respondent’s customers that 

purchased the CDMA Parts from the Respondent (the “the Respondent’s Customers”) and 

incorporated these in their products (The Investigation Officials view this provision as a nonassertion provision against the Respondent, etc. and the Respondent views this provision as a 

cross-covenant provision. From the view of analyzing the fairness of the Investigation Officials’

assertion, this provision shall be referred to as the “Non-Assertion Provision against the 

Respondent, etc.” in this Draft Decision.).

E. The DMSHs pledge not assert their IPRs held or to be held by the DMSHs, etc. that are specified 

as the subjects of the license in the License Agreements towards the Respondent’s licensees for 

the manufacture and sale, etc. of the CDMA Subscriber Units, etc. by such the Respondent’s 

licensees.

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[Translation]

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(The Investigation Officials view this provision as a non-assertion provision against the licensees 

and the Respondent views this provision as a non-assertion provision. From the view of analyzing 

the fairness of the Investigation Officials’ assertion, this provision shall be referred to as the “NonAssertion Provision against the Respondent’s Licensees” in this Draft Decision. Furthermore, the 

No-Compensation License Provision, Non-Assertion Provision against the Respondent, etc. and 

the Non-Assertion Provision against the Respondent’s Licensees shall collectively referred to as 

the “No-Compensation License Provisions, etc.”)

With respect to the Non-Assertion Provision against the Respondent’s Licensees, the DMSHs 

may freely choose whether or not to stipulate to this and if this provision is stipulated, this 

provision applies only to other of the Respondent’s licensees who similarly stipulated this 

provision.

F. There are no fixed terms for the License Agreements.

Part IV Issues in Dispute

1. Whether the execution of the License Agreements that include the No-Compensation License 

Provisions, etc. fall within the scope of Former General Designation Paragraph 13 by restricting 

the business operation of the DMSHs with a tendency to impede fair competition ("a tendency to 

impede fair competition ") (Issue 1).

2. Whether the scope of application of the CDO violates international law regarding regulatory 

jurisdictional rights and international comity (Issue 2).

3. Whether the CDO violates Articles 20 and 21 of the AMA and Article 31 of the Constitution 

(Issue 3).

Part V Assertions of the Parties

1. Concerning Issue 1

(1) The Investigation Officials’ Assertions

A. The Violating Acts of this case

 The Respondent, upon executing the License Agreements, and through the No-Compensation 

License Provisions, etc. stipulated therein, forced the DMSHs, etc. to grant licenses to the IPRs 

held or to be held by the DMSHs for no compensation and forced the DMSHs, etc. to pledge that 

they will not assert any rights based on the IPRs held or to be held by the DMSHs (the “Violating 

Acts of this case”).

B. The tendency to impede fair competition

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 16 of 134
[Translation]

13

In view of the fact that the degree and the contents of restriction of the No-Compensation 

License Provisions, etc. are unreasonable to such degree where it could be presumed that these 

have the tendency to impede the research and development incentive of the DMSHs, and because 

there was no possibility for the DMSHs to compensate for or to avoid the disadvantages caused 

by such restrictions, the Violating Acts of this case have the tendency to impede the research and 

development incentive of the DMSHs, enhance the influential position of the Respondent, and 

adversely affect the fair competition order, it could be found that the Violating Acts of this case

have the tendency to impede fair competition.

C. The tendency to impede the research and development incentive of the DMSHs

(A) The degree and the contents of restriction of the No-Compensation License Provisions, etc.

are unreasonable to a degree where it could be presumed that these have the tendency to impede

the research and development incentive of the DMSHs 

a. The scope of restriction on the assertion of rights by the No-Compensation License Provisions, 

etc. is overly broad

(a) The scope of rights subject to restriction on assertion 

The scope of rights that the DMSHs would be restricted from asserting by the NoCompensation License Provisions, etc. extends not only to the TEIPRs to the CDMA Mobile 

Wireless Communications that is a leading technology but also to CEIPRs (The scope of rights 

subject to restriction on assertion pursuant to the Non-Assertion Provision against the 

Respondent’s Licensees are only TEIPRs) and the scope is overly broad.

(b) The time period in which the rights subject to restriction on assertion were acquired

The time period in which the rights subject to the granting of licenses and subject to the pledge

of non-assertion pursuant to the No-Compensation License Provisions, etc. can be acquired 

(improvement period) is indefinite for most of the TEIPRs, and the scope of restriction on nonassertion is broad.

On the other hand, with respect to CEIPRs, many of them have a stipulated improvement 

period of up to January 1, 2002.

However, the technology innovation of CDMA Mobile Wireless Communications evolves 

very fast and the No-Compensation License Provisions, etc. will prevent the DMSHs from quickly 

engaging in research and development and from freely using the fruits of their research and 

development at the right time in the market for the technology for the CDMA Subscriber Units, 

etc. for which the market was expected to grow. Furthermore, even if the improvement period was 

stipulated, if the DMSHs manufacture and sell Subscriber Units, etc. that conform to the 3G Mobile 

Wireless Communication Standards without obtaining licenses for the IPRs to be developed or 

acquired by the Respondent after the improvement period has lapsed, they may face consequences 

of infringing the IPRs held by the Respondent and be sued by the Respondent for injunction, etc. 

For this reason, the DMSHs have no choice but to accept if the Respondent demands an extension 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 17 of 134
[Translation]

14

of the improvement period. Even if the Respondent does not demand an extension of the 

improvement period, and the improvement period is not extended by any provision of the License 

Agreements, if the DMSHs assert their IPRs developed or acquired by the DMSHs after the 

improvement period towards the Respondent, the Respondent will counter such assertion with the 

IPRs similarly developed or acquired after the improvement period, or the DMSHs might be 

prevented from asserting their rights by the Respondent’s spin-off of its semiconductor business. 

As such, the IPRs to be developed or acquired after the improvement period are excluded merely 

as a matter of formality from the subjects of the No-Compensation License Provisions, etc. but 

they are substantially subject to those provisions, and based on the fact that all IPRs to the CDMA 

Mobile Wireless Communications acquired or developed by the DMSHs during the period of the 

License Agreements could become subject to the No-Compensation License Provisions, etc., the 

scope of restriction on assertion is overly broad.

(c) The counterparties for whom assertion is restricted

There are at least 100 counterparties for which the DMSHs are restricted from asserting their 

rights pursuant to the No-Compensation License Provisions, etc. and Non-Assertion Provision 

against the Respondent, etc. that are comprised of the Respondent and the Respondent’s Customers, 

etc. around the world with which the DMSHs compete in the market for the products for the CDMA 

Subscriber Units, etc.

Furthermore, there are at least 130 counterparties for which the DMSHs are restricted from 

asserting their rights pursuant to the Non-Assertion Provision against the Respondent’s Licensees 

that are comprised of the other licensees of the Respondent that stipulated similar provisions.

(d) The period during which assertion is restricted

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 18 of 134
[Translation]

15

The License Agreements do not stipulate the contract period of the agreements, nor does it 

specifically stipulate the period during which rights cannot be asserted under the NoCompensation License Provisions, etc., which means that the DMSHs may not assert their rights 

as long as the No-Compensation License Provisions, etc. are effective.

(e) Brief summary

As explained above, the scope of application of the No-Compensation License Provisions, etc.

is broad both in terms of the scope of rights and acquisition period subject to restriction on assertion 

and also in terms of the counterparty and period subject to restriction on assertion by these 

provisions, and these provisions broadly restrict the DMSHs from asserting their rights with 

respect to the technology currently held by the DMSHs and the technology and the rights with 

respect to the technology for the CDMA Mobile Subscriber Units, etc. to be developed by the 

DMSHs in the future.

b. Having the nature of a no-compensation license

As can be seen from the fact that with respect to the No-Compensation License Provisions, 

etc. it is indicated in the License Agreements that they are “fully-paid and royalty free license[s]” 

(no-compensation license), the DMSHs may not receive any compensation from the Respondent

for licenses granted to the Respondent with respect to their portfolio of IPRs held or to be held by 

them, or for promising non-assertion, etc.

Furthermore, the Respondent unilaterally presented to the DMSHs its draft License 

Agreements that include the No-Compensation License Provisions, etc. at a stage when the details 

of the IPRs subject to license are still unclear and the value thereof had not yet been considered or 

evaluated. In addition, even when the DMSHs requested adjustments of the license terms presented 

to them in said draft such as the Royalty Rate, etc. as these being unfair and not appropriately 

reflecting the value of the mutual portfolio of IPRs, the Respondent expressly maintained that the 

Respondent would not evaluate the value of the IPRs held by the DMSHs and refused to accept 

the requests for adjustments from the DMSHs.

In view of the contents of the No-Compensation License Provisions, etc. and the manner in 

which the No-Compensation License Provisions, etc. were stipulated as described above, the NoCompensation License Provisions, etc. did not adjust the Royalty Rate and other contractual terms 

based on the result of reviewing and evaluating the value of the portfolio of IPRs held by the 

DMSHs subject to the agreement, and thus these provisions can be said to have the nature of a nocompensation license.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 19 of 134
[Translation]

16

c. The No-Compensation License Provisions, etc. are imbalanced

Based on the No-Compensation License Provisions, etc., the DMSHs were obligated to grant 

to the Respondent, the Respondent’s Customers, and licensees, free license to the broad portfolio 

of IPRs that the DMSHs develop through massive investment and efforts and were obligated to 

pay Royalties based on the Royalty Rate unilaterally decided by the Respondent. On the other 

hand, because it became possible for the Respondent to use a very broad scope of IPRs to the 

CDMA Subscriber Units, etc. held or to be held by the DMSHs, etc. without paying any 

compensation, and because it also became possible for the Respondent to supply its customers 

with the CDMA Parts under highly stable conditions of not being subject to the assertion of rights 

such as an injunction as a result of a filing of a suit for patent infringement or the like, it could be 

said that the No-Compensation License Provisions, etc. created an imbalance between the DMSHs 

and the Respondent.

In addition, the No-Compensation License Provisions, etc. substantially discriminated against 

each of the DMSHs by not taking into consideration the value of the IPRs of the DMSHs where 

ownership in IPRs differed among each of the DMSHs, and thus these provisions created an

imbalance among the DMSHs as well.

d. Summary

Based on a through c above, the No-Compensation License Provisions, etc. place restrictions

on the DMSHs to substantially grant free licenses for a broad scope of IPRs to the technology

invented or to be invented in the future by the DMSHs, etc. for a long period of time to the 

Respondent and the Respondent’s Customers worldwide that compete with the DMSHs in the 

markets of the products for the CDMA Subscriber Units, etc.

The degree and content of the restrictions that are imposed by the No-Compensation License 

Provisions, etc. prevent the DMSHs from utilizing their broad scope of IPRs to the technology 

invented or to be invented in the future by the DMSHs by monetizing them in the form of license 

fees to be received corresponding to the value of their IPRs even if they are used by the Respondent

or the Respondent’s Customers for a long period of time, and this would result in many cases 

where the DMSHs would not be able to receive compensation no matter how valuable a technology 

they developed.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 20 of 134
[Translation]

17

Furthermore, the counterparties against which the DMSHs are restricted from asserting rights

based on the No-Compensation License Provisions, etc. include many competitors in the markets 

of the product of the CDMA Subscriber Units, etc., and this presents the risk of creating difficulties

for the DMSHs in differentiating their CDMA Subscriber Units, etc.

In addition, the No-Compensation License Provisions, etc. create an imbalance between the 

Respondent and the DMSHs, as well as among each of the DMSHs, and the more IPRs held by 

the DMSHs as a result of developing valuable technology, the more the degree of this imbalance 

expands.

Therefore, the degree and content of the restriction of the No-Compensation License 

Provisions, etc. not only restricts the free use of the technology or the IPRs in the technology that 

are the fruits of the research and development by the DMSHs that should be freely available to the 

right holder of these IPRs to use in whatever way they choose, but it is also unreasonable to the

degree that it could be presumed that these restrictions have the tendency to impede the research 

and development incentives of the DMSHs that are licensees.

(b) The DMSHs were unable to compensate for or avoid the disadvantages that they might suffer 

from the No-Compensation License Provisions, etc.

Even if the degree and content of the restrictions of the No-Compensation License Provisions, 

etc. were unreasonable to the degree that it could be presumed that these restrictions have the 

tendency to impede the research and development incentives of the DMSHs, if the DMSHs were 

able to compensate for or avoid the disadvantages from the No-Compensation License Provisions, 

etc. during the course of negotiations for the License Agreements, then it would not be found that 

there are facts to support that these restrictions have the tendency to impede the research and 

development incentive.

In this regard, given the fact that the DMSHs had business with telecommunication business 

operators such as NTT Docomo and KDDI that were planning to adopt the 3G Mobile Wireless 

Communications Standards that were adopted by the standards body such as the ARIB, and the 

fact that the DMSHs were preparing to manufacture and sell the CDMA Subscriber Units, etc. by 

making huge investments, it was substantially difficult for the DMSHs to withdraw from 

manufacture and sale of the CDMA Subscriber Units at the time they executed the License 

Agreements. For this reason, it was essential for the DMSHs to obtain licenses for the TEIPRs 

held by the Respondent that submitted a Confirmation Form to the standards body such as the 

ARIB stating that the Respondent holds numerous TEIPRs to the 3G Mobile Wireless 

Communications Standards, and the DMSHs had no other practical option other than to accept the 

License Agreements that stipulated the No-Compensation License Provisions, etc..

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 21 of 134
[Translation]

18

On the other hand, the Respondent, under these circumstances, had no intention of revising 

the contractual terms of the License Agreements upon request from the DMSHs, and the 

Respondent intentionally restricted the opportunity for the DMSHs to conduct negotiations or their 

method of conducting negotiations by means such as unilaterally setting the negotiation period, 

notifying the plans for a spin-off of its semiconductor business, and implying that the Respondent

would not hesitate to file a suit seeking injunction for the sale of the 3G Base Stations, and urged

the DMSHs to quickly execute the License Agreements that stipulated the No-Compensation 

License Provisions, etc.

Having to negotiate with the Respondent having the stance as described above, the DMSHs

had no realistic chance of requesting an adjustment of the Royalty Rate demanded by the 

Respondent to an appropriate rate reflecting the value of the portfolio of IPRs that were subject to 

the No-Compensation License Provisions, etc. or of requesting the deletion of No-Compensation 

License Provisions, etc., and therefore, the DMSHs were unable to compensate for or avoid the 

disadvantages that they risked suffering from the No-Compensation License Provisions, etc.

As explained above, as the DMSHs were unable to compensate for or avoid the disadvantages 

that they risked suffering from the No-Compensation License Provisions, etc., the fact that 

supports that the No-Compensation License Provisions, etc. have the tendency to impede the 

research and development incentives of the DMSHs cannot be denied.

(c) The concrete effect of the No-Compensation License Provisions, etc. could be found, and 

therefore, the tendency to impede the research and development incentives of the DMSHs is 

concretely proven

a. The fact that reinvestment in research and development activities for new technology is being 

prevented

Even though the DMSHs actually had broad and leading IPRs including the TEIPRs to which 

they could demand commensurate royalties of other business operators, due to the restrictions 

imposed by the No-Compensation License Provisions, etc., the DMSHs were prevented from 

demanding royalties of the Respondent that used those IPRs. Furthermore, because the Respondent

refused to adjust the contractual terms such as the Royalty Rate based on an evaluation of the value 

of the IPRs that are subject to the No-Compensation License Provisions, etc. and the results of 

such evaluation, the DMSHs were not granted adjustments on the Royalty Rate corresponding to 

the value of the IPRs held by the DMSHs that are subject to the No-Compensation License 

Provisions, etc.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 22 of 134
[Translation]

19

Also, due to the restrictions imposed by the No-Compensation License Provisions, etc., the 

DMSHs were also prevented from asserting their IPRs towards the customers that purchase 

semiconductor products from the Respondent, and towards other of the Respondent’s licensees 

that also stipulated a Non-Assertion Provision against the Respondent’s Licensees in their License 

Agreements with the Respondent, and thus, the DMSHs were denied the opportunity to gain 

economic benefits such as royalty income.

In addition, because it would be difficult for the DMSHs to differentiate their products from 

the competitors’ products due to the No-Compensation License Provisions, etc., even if they made 

large investments in research and development for the IPRs to the CDMA Subscriber Units, etc. 

in order to compete with their competitors’ products, it is getting difficult for the DMSHs to gain 

any economic benefit by expanding their sales through differentiation.

As such, the DMSHs are prevented by the No-Compensation License Provisions, etc. from 

asserting their broad and leading IPRs including the TEIPRs held by the DMSHs for a broad scope 

and long period of time, they are losing the opportunity to gain economic benefits such as royalty 

income, and they are prevented from reinvesting in research and development for new technology.

b. The DMSHs have no choice but to engage in research and development based on the recognition 

that the content of the restriction is broad, for a long period of time, and imbalanced

Because the DMSHs inevitably have to engage in research and development with the 

recognition that (i) the DMSHs cannot use the fruits of their IPRs held by them to differentiate 

their products, to gain profit such as by granting licenses to other companies, or to include these 

as subjects of a license when executing a cross-license agreement with other companies including 

the Respondent and thereby reduce royalties payable to other companies, (ii) the No-Compensation 

License Provisions, etc. enable the Respondent to gain considerably larger profits than the DMSHs 

from research and development, (iii) the Royalty Rate payable to the Respondent is the same 

regardless of whether or not there are IPRs held or to be held by the DMSHs, and that (iv) as long 

as the Respondent holds IPRs that are indispensable to continuing business relating to the CDMA 

Subscriber Units, etc., there is no choice but to revise the License Agreements or to execute new 

agreements with the Respondent in the future, and in such case, as they must inevitably accept 

standard license terms including the No-Compensation License Provisions, etc. at that time, the 

DMSHs are losing incentive to proactively expand their research and development activity.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 23 of 134
[Translation]

20

c. Brief summary

As shown above, because it is found that as a concrete effect of the No-Compensation License 

Provisions, etc., the DMSHs are prevented from reinvesting in research and development activities 

for new technology, and, furthermore, that they must engage in research and development activities 

with the recognition that the content of the restriction is broad, for a long period of time, and 

imbalanced, it is concretely proven that there is a tendency to impede the research and development

incentives of the DMSHs.

D. The tendency to enhance the influential position of the Respondent

The Respondent submitted a Confirmation Form to the Standards Assembly declaring that it 

holds numerous TEIPRs to the 3G Mobile Wireless Communications Standards, and the 

Respondent in fact holds numerous TEIPRs to the 3G Mobile Wireless Communications Standards. 

Furthermore, from the fact that it was essential for the DMSHs to receive license for the IPRs held 

by the Respondent, etc. in order to manufacture and sell CDMA Subscriber Units, etc., it could be

found that the Respondent held an influential position in the market for technology for the CDMA 

Subscriber Units, etc. (the “Subject Market Under Consideration in this case”).

Also, as stated in C above, as a result of the DMSHs being forced to execute the License 

Agreements that include the No-Compensation License Provisions, etc. due to the Respondent’s 

Violating Acts of this case, there was a tendency to impede the research and development

incentives for technology relating to the CDMA Subscriber Units, etc., and therefore, the position 

of the DMSHs in the Subject Market Under Consideration in this case would decline while the 

Respondent’s influential position would be relatively enhanced. In addition, while the Respondent

would be saved from spending on technology held by the DMSHs, etc. that the Respondent would

be using, the Respondent would receive continuous and steady income based on the Royalty Rate 

that the Respondent unilaterally stipulated for technology held by the Respondent, etc.

Furthermore, the Respondent would be able secure profit from selling to its customers 

semiconductor chips under stable conditions without the possibility of being sued for patent

infringement, etc.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 24 of 134
[Translation]

21

As such, the Violating Acts of this case enable the Respondent to accumulate necessary 

resources for research and development under more advantageous conditions than other business 

operators including the DMSHs, and by appropriating those resources to its research and 

development activity, the Respondent will be able to build a strong portfolio of IPRs, which would 

enable it to further enhance its influential position.

E. Adverse effects on the fair competition order

While the Subject Market Under Consideration in this case is the market for technology for 

the CDMA Subscriber Units, etc. (the Subject Market Under Consideration in this case), when 

taking into account that the DMSHs and the Respondent compete with each other in the Subject 

Market Under Consideration in this case, and that the DMSHs are the leading business operators 

in the Subject Market that holds the technology for the CDMA Subscriber Units, etc., it could be 

said that the No-Compensation License Provisions, etc. that have the tendency to impede the 

research and development incentive of the DMSHs will prevent the emergence of technology and 

products relating to such technology for the CDMA Subscriber Units, etc. that compete with the 

Respondent’s technology for the CDMA Subscriber Units, etc., and thus have the tendency to 

impede competition in the Subject Market Under Consideration in this case, and thereby adversely 

affects the competition order in the Subject Market Under Consideration in this case.

Also, if the Respondent, through the No-Compensation License Provisions, etc., engages in 

its research and development activities under conditions that are more advantageous than the 

DMSHs that are the leading competitors, and thereby were to accumulate leading technology, the 

DMSHs would not be able to avoid using the portfolio of IPRs held by the Respondent. As such, 

the Respondent’s superior position would be enhanced in the license negotiation which may enable 

the Respondent to arbitrarily set license terms for future transactions for technology in the Subject 

Market Under Consideration in this case, thereby adversely affecting competition in this market.

F. Non-existence of justifiable grounds

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 25 of 134
[Translation]

22

As for what constitutes unfair trade practices, each of the items in Article 2, Paragraph 9 of 

the AMA stipulates the criteria for such acts, and as long as the outward facts that show that there 

is “a tendency to impede fair competition” can be proven, such act in principle satisfies the 

elements of Article 19 of the AMA. As an exception, however, if it is found that it cannot be said 

that such an act would not have the tendency to adversely affect the fair competition order from 

the standpoint of the existence and degree of necessity and reasonableness in light of the purpose 

of that act and the method of achieving that purpose (justifiable grounds), then it would be judged 

that such an act does not have a tendency to impede fair competition.

On this point, the Respondent asserts that the No-Compensation License Provisions, etc. have 

a pro-competitive effect, and therefore, there are justifiable grounds for the Violating Acts of this 

case, and there is no tendency to impede fair competition.

However, even if a certain act has a pro-competitive effect, if there are other methods that are 

less restrictive in achieving the same purpose, then such act is not justified (the “LRA Standards”). 

Because the pro-competitive effect that is asserted by the Respondent could be sufficiently realized 

by a method that does not have the tendency to impede fair competition such as by evaluating the 

value of the IPRs held by the DMSHs upon execution of the License Agreements instead of the 

DMSHs granting free licenses for the IPRs held by the DMSHs, the Respondent’s Violating Acts 

of this case cannot be justified.

(2) The Respondent’s assertion

A. It is not proven that the provisions of the License Agreements have the tendency to impede fair 

competition

The Investigation Officials assert concerning the License Agreements that (i) the provisions 

that license the IPRs held by the DMSHs themselves are unreasonable, and because (ii) the DMSHs 

were forced to execute agreements that stipulated such provision, (iii) the DMSHs suffered reduced 

royalty income, (iv) the research and development incentives of the DMSHs were undermined, (v) 

the Respondent’s position was enhanced, and (vi) competition will thus be reduced. However, not 

only are the Investigation Officials’ findings of the basic facts arbitrary, but the causal effects the 

Investigation Officials found are also merely speculation, and the actual qualitative and 

quantitative effects that must be taken into account pursuant to Article 19 of the AMA and Former 

General Designation Paragraph 13 are not taken into account. 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 26 of 134
[Translation]

23

Furthermore, the Investigation Officials did not prove the tendency to impede fair competition 

which is required to start with, unilaterally found for there to have been “unreasonableness” and 

“forced” circumstances that are not even factors for consideration under the criteria of Article 19 

of the AMA and Former General Designation Paragraph 13, and simply asserted the causal 

relationship described above in an attempt to unjustly mitigate its burden of proof.

Furthermore, in order to assert a violation of Former General Designation Paragraph 13, it is 

necessary to give concrete facts and economic evidence that supports that the act in question is an 

unfair trade practice with the counterparty that unreasonably restrains the business activity of the 

counterparty and has the tendency to impede fair competition. In particular, in view of the fact that 

the provision under which the DMSHs grant licenses to the Respondent for the IPRs and the 

provision under which the DMSHs pledge not to assert their IPRs towards the Respondent's 

licensee, both of which the Investigation Officials claim as being No-Compensation License 

Provisions, etc. (No-Compensation License Provision, etc.) are typical license terms that generally 

have a pro-competitive effect, when reviewing whether the License Agreements that stipulate these 

provisions have the tendency to impede fair competition, the pro-competitive effect and the effect 

of reducing competition must be comprehensively reviewed, and it is absolutely necessary to 

conduct an analysis based on objective facts and economic evidence. However, in this case, most 

of the evidence used by the Investigation Officials are the written statements of the DMSHs that 

are interested parties in this case prepared for purposes of this case, and no objective evidence that 

supports the tendency to impede fair competition has been presented.

In addition, the judgement on the tendency to impede fair competition must be made through 

an objective and independently verifiable method of the substantial criteria (“unjustly”), and as a 

precondition, it is necessary to define the market based on expert opinion. However, the 

Investigation Officials did not appropriately define the market whatsoever through such objective 

method and the appropriate geographic scope of the market or the perimeter of the market 

participants are vague, and it cannot be said that the tendency to impede fair competition has been

proven.

B. The provisions stipulated in the License Agreements do not have the tendency to impede the 

research and development incentive of the DMSHs

 The Investigation Officials assert that the provisions stipulated in the License Agreements have 

the tendency to impede the research and development incentive of the DMSHs and that the 

Violating Acts of this case have the tendency to impede fair competition. However, as stated below, 

the provisions stipulated in the License Agreements do not have the tendency to impede the 

research and development incentive of the DMSHs.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 27 of 134
[Translation]

24

(a) The provisions stipulated in the License Agreements are not unreasonable

a. The provisions stipulated in the License Agreements are reasonable

In comprehensive cross-license agreements such as the License Agreements, as the parties 

mutually license broad and relevant IPRs, it is natural for the parties to mutually set certain 

restrictions on the assertion of their own IPRs.

Also, under the License Agreements, the DMSHs are obtaining the great benefit of being able 

to use the valuable portfolio of IPRs held by the Respondent, etc. in exchange for restrictions on 

the assertion of their own IPRs, or the portfolio of IPRs of the other licensees of the Respondent

who have executed License Agreements that stipulate a Non-Assertion Provision against the 

Respondent’s Licensees.

Notwithstanding the above, the Investigation Officials only focus on the restriction on 

assertion placed on the DMSHs by the provision that requires the DMSHs to grant licenses to the 

Respondent, etc. for their IPRs and the provision that requires the DMSHs to pledge not to assert 

their IPRs against the Respondent’s other licensees (the No-Compensation License Provision, etc.) 

and asserts that these provisions broadly restrict the DMSHs from asserting their IPRs currently 

held or to be developed in the future and held by the DMSHs, etc. However, the Investigation 

Officials ignore the benefits that the DMSHs gain from the License Agreements which is a mistake 

as a method of analyzing the effect on competition of a comprehensive cross-license agreement 

such as the License Agreements.

The provision under which the DMSHs grant licenses to the Respondent, etc. on their IPRs is 

reasonable given that (i) the licenses for the IPRs are non-exclusive licenses and the scope of 

application of the IPRs of the DMSHs’ for pass-through to the Respondent’s chipset customers is 

narrow, (ii) the scope of the subject IPRs could be adjusted through negotiation between the parties 

and such adjustments were indeed made in many cases, (iii) the scope of the subject IPRs is limited 

by the capture period (improvement period) that is set through negotiation, (iv) the scope of the 

subject IPRs under the provision and the scope of IPRs subject to license from the Respondent are 

of content that is mutually balanced, and (v) the License Agreements that stipulate this provision 

reflect the appropriate price that is determined through normal commercial negotiations.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 28 of 134
[Translation]

25

b. The scope of the application of the provision under which the DMSHs grant licenses to the 

Respondent, etc. for their IPRs is not broad

(a) The scope of IPRs subject to restriction on assertion

As stated in a above, the Investigation Officials’ assertion focuses only on the restriction on 

assertion placed on the DMSHs by the provision that requires the DMSHs to grant licenses to the 

Respondent, etc. for their IPRs and ignores the benefits that the DMSHs could gain from the 

License Agreements.

Furthermore, the scope of the IPRs that are subject to each of the above provisions are limited 

to a reasonable and necessary scope to achieve the objectives, and because such scope was agreed 

on through negotiation between the Respondent and the DMSHs, it cannot be said that the 

restrictions based on each of these provisions are unjustly broad.

(b) The time period in which the IPRs subject to restriction on assertion were acquired

The Investigation Officials assert that the time period in which of acquisition of the TEIPRs 

(The Respondent asserts these IPRs as “Technically Necessary IPRs” from the terms and 

definitions used in the License Agreements. The term TEIPRs appearing in the Respondent’s 

assertion below in this Draft Decision shall mean the “Technically Necessary IPRs” referred to 

above.) that are subject to the provision that requires the DMSHs to grant licenses to the 

Respondent, etc. for their IPRs and the provision that requires the DMSHs to pledge that they will 

not assert their IPRs towards the Respondent’s other licensees (the No-Compensation License 

Provisions, etc.) is indefinite in most of the License Agreements. However, the number of License 

Agreements that stipulate an indefinite improvement period for the TEIPRs is less than half.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 29 of 134
[Translation]

26

Furthermore, nearly all of the License Agreements executed with the DMSHs in which the 

DMSHs assert that they held the TEIPRs at the time of execution of the License Agreements 

stipulate a very short and fixed improvement period for the TEIPRs. On the other hand, for the 

DMSHs that did not assert that they held the TEIPRs at the time of execution of the License 

Agreements, the improvement period is not set for a short period because it would be advantageous 

to the DMSHs not to limit the improvement period rather than limiting the improvement period 

which also stipulates the time of acquisition of the Respondent’s TEIPRs.

The Investigation Officials assert that even in cases where the License Agreements stipulate a 

short improvement period, the IPRs that the DMSHs will develop or acquire after the improvement 

period are not subject to licensing as a matter of formality only and that these IPRs are also 

substantially subject to the provisions of a granting of a license to the Respondent, etc. from 

DMSHs, and that the scope of such restriction is overly broad. However, this assertion is not 

supported by any evidence, and in fact, the improvement period stipulated in the License 

Agreements could not be changed unless through mutual agreement between the parties, and most 

of the improvement periods were never changed.

(c) The counterparties against whom assertion is restricted

The scope of counterparties to which the DMSHs are restricted from asserting their rights

pursuant to the provision that requires the DMSHs to grant to the Respondent, etc. licenses for 

their IPRs and the provision that requires the DMSHs to pledge that they will not assert their IPRs 

towards the Respondent’s other licensees (the No-Compensation License Provisions, etc.) is 

limited to a reasonable and necessary scope to achieve the objectives.

Furthermore, among the DMSHs, Panasonic Mobile and NEC, etc. requested that the 

Respondent set a restriction on the scope of the parties that could gain the benefits based on the 

exhaustion of rights doctrine under the provision in which the DMSHs grant licenses to the 

Respondent for licenses to their IPRs, and that restriction was granted.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 30 of 134
[Translation]

27

The Investigation Officials assert that the provision under which the DMSHs pledge not to 

assert their IPRs against the other Respondent licensees (the Non-Assertion Provision against the 

Respondent’s Licensees) applies to all other licensees that have made the same pledge, and that 

therefore, the scope of the application is broad. However, to begin with, the restriction under this 

provision does not apply whatsoever to the DMSHs that did not voluntarily choose to stipulate that 

provision in the License Agreements.

(d) The period during which assertion is restricted

Whether or not the newly developed IPRs become subject to the provision that requires the 

DMSHs to grant license to the Respondent, etc. for their IPRs and the provision that requires the 

DMSHs to pledge not to assert their IPRs against the Respondent’s other licensees (the NoCompensation License Provisions, etc.) depends on the improvement period and not on the period 

of the License Agreements.

Furthermore, because the relationship between the Respondent and the DMSHs is reciprocal 

under the License Agreements, if the provision that requires the DMSHs to grant license to the 

Respondent, etc. for their IPRs continues indefinitely, the DMSHs would be able to continuously 

gain the benefits from the licenses received from the Respondent.

In addition, some of the DMSHs have a right to terminate the License Agreements “for any 

reason” and if such a DMSH were to decide that it is not sufficiently benefitting from the license 

received from the Respondent, it may terminate the agreement by exercising this termination right.

c. The characteristics of a no-compensation license have not been found

(a) The structure of the License Agreements overall (the nature of the consideration)

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 31 of 134
[Translation]

28

 Based on the fact that the DMSHs are granted licenses for the IPRs held by the Respondent, 

etc. under the License Agreements in consideration of (1) the lump-sum fee payment; (2) the 

royalty payment; and (3) the granting of licenses to, or the pledge not to assert rights of, certain 

IPRs held by the DMSHs, etc., there is a relationship of consideration overall between the 

obligations borne by the DMSHs and the obligations borne by the Respondent, and it cannot be 

said that the licenses for the IPRs granted by the DMSHs to the Respondent, etc. is for no 

compensation.

 Further, in regard to the pledge not to assert rights against the other licensees of the Respondent

made by the DMSHs (Non-Assertion Provision against the Respondent’s Licensees), 

consideration clearly exists from the fact that the DMSHs are to be granted licenses for relevant 

IPRs held by the other licensees of the Respondent that agreed to the provisions, in consideration 

of the agreement to such provision.

(b) Stipulations under the License Agreements

 It is stipulated under the License Agreements that the licenses to IPRs made by the DMSHs to 

the Respondent, etc. are “fully paid and royalty free.” As such, the consideration in regard to this 

provision has already been paid, and royalties are thus not be paid under the License Agreements.

 Also, in the preamble of the License Agreements of certain DMSHs, it is clearly written that 

the stipulations including the above provisions, as a whole, constitute a part of the consideration 

for the Respondent’s granting of licenses for IPRs.

 Thus, it is clear also from the stipulations under the License Agreements that the above 

provisions are not for no compensation.

(c) Negotiation history of the License Agreements

 In the negotiation minutes and internal documents of the DMSHs, there are statements which 

suggest that the DMSHs fully recognized the fact that they received consideration for the licenses

of IPRs granted by the DMSHs to the Respondent, etc.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 32 of 134
[Translation]

29

(d) Adjustment of the contractual provisions under the License Agreements

 In regard to the licenses for IPRs granted by the DMSHs to the Respondent, etc. and the pledges 

made by the DMSHs not to assert rights against the other licensees of the Respondent (NoCompensation License Provisions, etc.), Investigation Officials assert that considering the content 

of the provision and the history thereof, the Respondent did not examine and evaluate the value of 

the patent portfolios of the DMSHs, and did not adjust the royalty rates and other contractual terms 

based on such results, and that they therefore have the nature of a no-compensation license.

 However, in the negotiations of the License Agreements for the IPRs, it is unrealistic to 

examine and evaluate the value of intellectual property and to make adjustment based on those

results, and the assertion by the Investigation Officials is based on particular standards 

contradicting the general doctrine in regard to the evaluation of consideration in commercial 

transactions pertaining to license agreements.

 Moreover, based on the fact that the DMSHs did not have IPRs that are valuable and significant 

enough for adjusting the royalty rates, and that among the DMSHs listed in the Appendix, only 

three companies (Panasonic Mobile, NEC Corporation and Toshiba) offered concrete IPRs and 

requested the evaluation of such rights for the purpose of adjusting the contractual terms based on 

the result of such evaluation, while the other 11 companies did not make such a request, it cannot 

be said that it was necessary for the Respondent to evaluate the IPRs held by the DMSHs and make 

adjustments, etc.

 Furthermore, in the negotiations leading up to the execution of the License Agreements, the 

Respondent did respond to those DMSHs who presented certain concrete IPRs and requested an 

evaluation and adjustment (the three companies above) by conducting such evaluation, and

although the Respondent judged based on such evaluation that it was not worth adjusting the 

royalty rates, the Respondent nonetheless substantially amended the contractual terms under the 

License Agreements in response to the request from the three companies above.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 33 of 134
[Translation]

30

 In addition, the pledge not to assert rights against the other licensees of the Respondent made 

by the DMSHs (Non-Assertion Provision against the Respondent’s Licensees) is completely 

optional and does not benefit the Respondent, and thus, there is no reason for the Respondent to 

examine and evaluate the contents of the subject IPRs and make adjustments based on the results.

 Therefore, the assertion by the Investigation Officials that the above provisions have a nature 

of a no-compensation license is groundless.

d. The provisions are not unbalanced

 The Investigation Officials assert that the granting of licenses for IPRs by the DMSHs to the 

Respondent, etc. and the pledge not to assert rights against the other licensees of the Respondent

made by the DMSHs (No-Compensation License Provisions, etc.) are imbalanced between the 

Respondent and the DMSHs. However, this assertion relies on the wrong premise that each of the 

provisions are for no compensation and that the extent of the limitation of asserting rights is 

unreasonably broad, and thus the assertion is unreasonable.

 The Investigation Officials also assert that the above provisions lack balance among each of 

the DMSHs, but based on the fact that there was no meaningful difference between the values of 

the patent portfolios held by each of the DMSHs, it cannot be said that the provisions lack balance

among each of the DMSHs.

(B) That the DMSHs were not forced to enter into the License Agreements (even if there was a 

risk of being at a disadvantage due to the No-Compensation License Provisions, etc., it was 

possible to compensate for or avoid such disadvantage)

a. In regards to the assertion by the Investigation Officials that the DMSHs were “forced,” this is 

not addressed in the provisions of the AMA under Article 19 and the Former General Designation 

Paragraph 13, and thus, it is not a factor for judging whether there is a tendency to impede fair 

competition in trading with restrictive conditions.

b. Next, the four acts of the Respondent which were identified in the CDO as problems ((1) not 

disclosing on a timely basis the information relevant to the IPRs; (2) suggesting to gradually 

increase the amount of money (lump-sum fee) to be paid at the time of entering into the agreement; 

(3) suggesting that an injunction will be sought by filing a lawsuit; and (4) announcing the 

possibility of separating the chipset business from the licensing business) were conducted as lawful 

business negotiations, and these types of actions of the Respondent cannot be used as grounds 

evaluating that the DMSHs were forced to enter into the License Agreements.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 34 of 134
[Translation]

31

 Also, the DMSHs had alternative methods to entering into the License Agreements, such as

electing not to enter into a license agreement with the Respondent or refusing to enter into such 

agreement, filing a patent litigation against the Respondent, or asserting breach of the FRAND 

obligations (breach of the right holder’s obligation to grant licenses to Essential Industrial Property 

Rights under appropriate conditions in a non-exclusive and non-discriminatory manner to those 

using the standard) against the patent litigation or injunction demand from the Respondent. In fact, 

the Respondent offered an option to Panasonic Mobile and NEC Corporation to enter into an 

agreement not including the cross-license provisions at all, but Panasonic Mobile and NEC 

Corporation did not accept this offer.

 In addition, considering the fact that the company size of the DMSHs was larger than that of 

the Respondent, and that the employees and others of the DMSHs negotiating with the Respondent

had highly intelligent backgrounds as well as thorough knowledge of the Respondent’s technology 

and the existing license agreements with the Respondent, it is not possible that the DMSHs were 

forced to enter into License Agreements that included the granting of licenses for IPRs by the 

DMSHs to the Respondent, etc., and a pledge for the DMSHs not to assert rights against the other 

licensees of the Respondent (No-Compensation License Provisions, etc.).

(C) The tendency to impede the incentives of the DMSHs to engage in research and development 

has not been proven in concrete terms

a. Reinvestment in research and development activities for new technology is not impeded

 The Investigation Officials assert that the DMSHs are impeded from reinvesting in research 

and development activities as they have lost the opportunity to acquire economic profit due to the 

granting of licenses for IPRs by the DMSHs to the Respondent, etc. and the pledges made by the 

DMSHs not to assert rights against the other licensees of the Respondent (No-Compensation 

License Provisions, etc.).

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 35 of 134
[Translation]

32

 However, the assertion by the Investigation Officials relies on the premise that the DMSHs at 

the time of entering into the License Agreements had beneficial IPRs, but there is no evidence that 

proves this premise. Rather, according to the evidence submitted by the Respondent, it has been 

found that the DMSHs did not have technically essential IPRs that have high value or importance.

 Moreover, there is no evidence proving that the DMSHs planned to acquire profit by granting 

license of the IPRs they hold. In fact, it is not confirmed either that because each of the above 

provisions existed, the DMSHs were impeded from exercising rights against the Respondent’s 

customers and others, and that as a result, they lost the opportunity to acquire economic profits 

such as royalty income.

 Furthermore, according to the objective history for more than ten years, the DMSHs expanded 

their manufacture and sale of CDMA Subscriber Units, etc. under the License Agreements and 

their revenues increased, and they invest the profits to further research and development activities.

 In addition, the IPRs necessary to differentiate products from others are commercially essential 

IPRs (The Respondent asserts, based on terms and definitions under the License Agreements, that 

they are “commercially necessary IPRs,” and the term CEIPRs as used in the Respondent’s 

assertion in this Draft Decision hereinafter means the “commercially necessary IPRs” referred to 

above.). In the License Agreements, the improvement period of the commercially essential IPRs

ends in a short period of time, and the DMSHs differentiated their products from others by 

commercially essential IPRs applied or acquired after the end of the improvement period and were 

able to increase their sales.

 Therefore, there is no fact that the DMSHs were impeded from reinvesting in research and 

development activities by entering into the License Agreements having each of the above 

provisions.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 36 of 134
[Translation]

33

b. That research and development had to be carried out with the recognition that the content of the 

restrictions is broad, for a long period of time, and unbalanced

 The assertion by the Investigation Officials is based on the wrong premises that the restrictions 

on the exercising of rights by the DMSHs is broad due to the granting of licenses for IPRs by the 

DMSHs to the Respondent, etc. and the pledges made by the DMSHs not to assert rights against 

the other licensees of the Respondent (No-Compensation License Provisions, etc.), that each of 

the provisions has the nature of a no-compensation license, and that the contents of each of the 

provisions is unbalanced.

 Moreover, in fact, there is no objective evidence proving that the DMSHs scaled down their 

research and development as a result of the License Agreements and changed their direction. 

Rather, according to the evidence, right after entering into the License Agreements, the number of 

patent applications by the DMSHs in regard to subscriber units, communication devices and 

infrastructure devices has substantially increased, and it is confirmed that the DMSHs have 

maintained and improved their incentives to engage in research and development.

C. The Respondent’s influential position has not been enhanced by the granting of licenses for 

IPRs by the DMSHs to the Respondent, etc. and the pledges made by the DMSHs not to assert 

rights against the other licensees of the Respondent

 Even if, as the Investigation Officials assert, the Respondent’s influential position was 

enhanced after entering into the License Agreements having the grant of licenses for IPRs by the 

DMSHs to the Respondent, etc. and the pledges made by the DMSHs not to assert rights against 

the other licensees of the Respondent (No-Compensation License Provisions, etc.), it was a result 

of the investment by the Respondent itself or its efforts to win the competition in the market, or it 

can be attributed to the business strategy of the Respondent and the DMSHs, and thus, the 

Respondent’s success in the market and the decline in the status of the DMSHs are irrelevant to 

the execution of the License Agreements.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 37 of 134
[Translation]

34

D. The licensing of IPRs granted by the DMSHs to the Respondent, etc. and the pledges made by 

the DMSHs not to assert rights against the other licensees of the Respondent do not adversely 

affect the fair competition order

(A) The market is not appropriately defined, and the analysis is insufficient

 In order to judge the tendency to impede fair competition, as a premise, it is necessary to define 

the market based on expert opinion. Nevertheless, the Investigation Officials did not appropriately 

define the market by an objective method, and they without presenting any grounds set forth that 

the Subject Market Under Consideration in this case is “the market related to technology for

CDMA Subscriber Units and others,” making an arbitrary and convenient definition of the market.

 Also, in order to accurately analyze the incentives for engaging in research and development 

in the technology market, it is necessary to examine the business activities of companies in the 

product market where the technology is used to begin with. In this case as well, it is necessary to 

appropriately define the market taking into consideration not only the market related to the 

technology for CDMA Subscriber Units and others, but also the downstream product market. 

Nevertheless, the Investigation Officials regard only the technology market as the Subject Market 

Under Consideration in this case, and they wrongly define the market in this regard as well.

 Moreover, even if the market pertaining to the manufacture and sale of the final products of 

CDMA Subscriber Units, etc. is limited to within Japan, there is worldwide competition in regards

to the development of the technology, and based on the fact that worldwide competition affects the 

competition within Japan, it is necessary to examine the positions of companies abroad in addition 

to the Respondent in the market. Nevertheless, the Investigation Officials exclusively focus on the 

relationship between the Respondent and the DMSHs as the subject of their analysis, while 

presenting companies abroad such as Nokia Corporation as examples of participants in the Subject 

Market Under Consideration in this case (supplier of technology). Thus, it cannot be said that they 

are appropriately defining the market or conducting an accurate analysis.

(B) Competitive or alternative technology does not exist in the market asserted by the 

Investigation Officials

 The technically essential IPRs included in the Subject Market Under Consideration in this case

asserted by the Investigation Officials, by definition, have a complementary relationship with other 

technically essential IPRs and they are not in a competitive or alternative relationship. Thus, even 

if the DMSHs, etc. have technically essential IPRs in regards to CDMA Subscriber Units, there is 

no competitive or alternative relationship between those technically essential IPRs and those held 

by the Respondent, etc.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 38 of 134
[Translation]

35

 Also, the Investigation Officials in the Subject Market Under Consideration in this case have 

not conducted an analysis or been able to prove at all the competition existing among several 

technically essential IPRs, or between technically essential IPRs and commercially essential IPRs.

(C) The tendency to impede fair competition has not been proven

 The Investigation Officials have not offered any evidence proving the concrete adverse effect 

on competition brought by the granting of licenses for IPRs by the DMSHs to the Respondent, etc.

and the pledges made by the DMSHs not to assert rights against the other licensees of the 

Respondent (No-Compensation License Provisions, etc.), and have not proven the tendency to 

impede fair competition.

(D) The licensing of IPRs granted by the DMSHs to the Respondent, etc. and the pledges made by 

the DMSHs not to assert rights against the other licensees of the Respondent have a procompetitive effect

 In this case, based on the fact that trading with restrictive conditions, which is not a type of act 

that is illegal in principle, is at issue, and that the procompetitive effect of patent peace that is 

rendered by each of the above provisions is inherently involved in each of those provisions, a 

judgement as to whether or not the effect of inhibiting competition exists should not be simply 

made based on the outward appearance of the act, but should rather be made based on a framework 

which squarely considers the pro-competitive effect as well in determining whether there is a

tendency to impede fair competition.

 Moreover, each of the above provisions have a pro-competitive effect, such as (1) promoting 

new entry to the subscriber unit market; (2) reducing the transaction cost for manufacturers 

including the DMSHs; and (3) reducing the risk of facing a lawsuit, all of which are factors that 

negate the formation itself of the requirements for the tendency to impede fair competition. Also, 

in actuality, according to the evidence, License Agreements having each of these provisions have 

been found to promote competition related to the CDMA Subscriber Units, and therefore, 

executing License Agreements having each of these provisions cannot be found to impede fair 

competition. 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 39 of 134
[Translation]

36

E. Justifiable grounds

(A) Even if there is an anticompetitive effect in the granting of licenses for IPRs by the DMSHs

to the Respondent, etc. and the pledges made by the DMSHs not to assert rights against the other 

licensees of the Respondent (No-Compensation License Provisions, etc.), if it can be confirmed 

that these acts do not substantially violate the ultimate objective of the AMA to “secure profits of 

general customers and promote democratic and sound development of the country’s economy,” 

considering their purpose and means, it should be said that there are justifiable grounds, and that 

the tendency to impede fair competition cannot be found.

 Moreover, as trading with restrictive conditions is not a type of act that is illegal in principle 

and each of the above provisions has a pro-competitive effect, the judgment as to whether or not 

it is justifiable should be made not on the basis of strict standards such as the LRA standards but

based on the standard of whether or not it can be said to be within a reasonably necessary scope 

necessary for achieving a legitimate objective.

(B) The licensing provisions for IPRs granted by the DMSHs to the Respondent, etc. is to allow 

the Respondent to sell CDMA components without being exposed to the risk of patent litigation, 

and for licensor to request of the licensee cross-licenses and other rights for this purpose, and such 

provisions are used generally and broadly. As such, the purpose of these provisions is legitimate.

 In addition, based on facts such as that (1) the range of rights of the DMSHs not being able to 

exercise rights against the Respondent’s customers by the exhaustion of rights doctrine has been 

narrowly adjusted; (2) this range can be adjusted by negotiation between the parties, and it actually 

was adjusted; (3) the scope of cross-licensed rights has been restricted by the improvement period 

that was decided upon as a result of negotiation; (4) the scope of the IPRs which are covered by

the grant of license by the Respondent, and the scope of the IPRs which are covered by the crosslicenses or cross-covenants by the DMSHs are reciprocal and balanced in content; and (5) the 

License Agreements are appropriate as they were decided upon through normal commercial 

negotiations between sophisticated large corporations that are knowledgeable about the business 

environment of the industry, it can be said that the granting of licenses for IPRs by the DMSHs to 

the Respondent, etc. was within a reasonable scope for achieving the purpose.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 40 of 134
[Translation]

37

(C) The provision under which the DMSHs pledge not to assert rights against the other licensees

of the Respondent (Non-Assertion Provision against the Respondent’s Licensees) has a legitimate 

purpose of maintaining a patent peace among the licensees who have agreed to the provision and 

improving the competitiveness of the DMSHs.

 Moreover, based on the fact that (1) the adoption of the above provisions is completely optional 

for the licensee; (2) the subject range of the provisions is limited to the technically essential IPRs; 

(3) the Respondent itself has not directly received profit from the provisions; and (4) all of the 

licensees who have agreed to the provisions are granted the same rights as other licensees who 

have agreed to the provisions, it can be said that the provisions are within a reasonable scope for 

achieving the purpose.

(D) As explained above, even if the Violating Acts of this case as asserted by the Investigation 

Officials have an anticompetitive effect, the purpose of the granting of licenses for IPRs by the 

DMSHs to the Respondent, etc. and the pledges made by the DMSHs not to assert rights against 

the other licensees of the Respondent (No-Compensation License Provisions, etc.) can be said to 

be legitimate, and the Violating Acts of this case can be said to be within the a range reasonably 

necessary for achieving this. Therefore, there reasons are justifiable, and a tendency to impede fair 

competition cannot be found.

2. Issue 2

(1) Assertions by the Investigation Officials

A. The legal jurisdiction in Japan is affirmed in regard to the CDO

 The Violating Acts of this case by the Respondent which are identified as being problematic in 

the CDO are the acts of the Respondent that force the DMSHs to enter into License Agreements 

that have provisions such as the No-Compensation License Provisions, etc.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 41 of 134
[Translation]

38

 In regards to this point, first, the negotiations of the License Agreements between the 

Respondent and the DMSHs were conducted by methods such as face-to-face negotiations at the 

headquarters of each of the DMSHs located in Japan and the Respondent’s headquarters located 

at the address on their letterhead, and by remote negotiation by facsimile, email or other method, 

and the Respondent’s acts such as the notification on their spin-off plan, warnings of filing a suit 

seeking injunction, etc. have been conducted within Japan. As such, the act of the Respondent of 

forcing the execution the License Agreements that include No-Compensation License Provisions, 

etc. can be said to have actually been conducted within the territories of Japan.

 Moreover, in this case, the tendency to impede the incentives of the DMSHs to engage in 

research and development and the tendency to enhance the influential position of the Respondent

due to the Violating Acts of this case has arisen, as has the tendency to impede fair competition, in 

the Subject Market Under Consideration in this case in which the DMSHs are consumers. 

 As explained above, in this case, the Violating Acts of this case by the Respondent have

actually taken place within the territories of Japan, and as such, the tendency to impede fair 

competition has also arisen within the territories of Japan. Thus, based on the territoriality principle 

which is the principle of jurisdiction that is adopted mutually among countries, Japan can be 

recognized as having legal jurisdiction in the matter of the CDO.

B. The exercising of legal jurisdiction is not restricted by international comity

 International comity under international law is not a legal obligation or mandate recognized 

under international law, but is rather a way to handle matters simply for political convenience or 

in consideration of customs and formalities between nations, and it is distinguished from issues 

relating to rights and obligations under international law.

 Therefore, the exercise of legal jurisdiction is never restricted by international comity.

(2) Assertions by the Respondent

A. Legal jurisdiction and international comity

 In the area of competition law, the scope of legal jurisdiction may be expanded to cover acts 

that are the subject of regulation but which are carried out beyond the borders of the regulating 

country, but this is limited to cases in which such acts have a direct and substantial influence on 

the competition in the regulating country, and in such cases, it is necessary for such legal 

jurisdiction to be exercised in consideration of the effects that it may have on the interests of other 

countries.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 42 of 134
[Translation]

39

 On the other hand, international comity refers to when it is reasonable for a certain country to

extraterritorially exercise its legal jurisdiction, but in cases in which the interests of another country 

is greater than said country, before taking measures that could infringe on the sovereign powers of 

another country, said country makes a request to entrust the matter to the other country and its 

measures. 

B. The applicable scope of the CDO is in conflict with legal jurisdiction and international comity

 The CDO places restrictions on the IPRs held by the Respondent, etc. and their licensees which 

were granted under the legal jurisdiction of another country based on another country’s laws by 

subjecting them to the laws of Japan. As this is unreasonable and is in conflict with legal 

jurisdiction and international comity, the CDO should be revoked, or at the very least, limited. 

3. Issue 3

(1) Assertions of the Investigation Officials

 The assertion by the Respondent that the contents of the CDO violates the AMA Articles 20

and 21 and the Constitution Article 31 is groundless as follows.

A. The assertion by the Respondent that the main text of the CDO is unreasonably vague and 

unclear

 The “act of forcing” in Paragraph 2 of the main text of the CDO, as it literally suggests, is an 

act which gives rise to a situation where any other option such as having provisions similar to the 

No-Compensation License Provisions, etc. are withheld from the DMSHs, such that the DMSHs

cannot avoid accepting such provisions. As such, the assertion by the Respondent that the main 

text of the CDO is unreasonably vague and unclear is incorrect.

B. The assertion by the Respondent that the order to abandon the No-Compensation License 

Provisions, etc. exceeds the scope of discretion of the Fair Trade Commission

 The abandonment of the No-Compensation License Provisions, etc. ordered to the Respondent 

in the CDO was ordered pursuant to the provisions of the AMA Article 20 as a necessary measure 

to eliminate the illegal acts of the Respondent, and as it ordered the abandonment of the NoCompensation License Provisions, etc. regardless of the will of the counterparties, the 

Respondent’s assertion that it is impossible to unilaterally abandon the provisions is unreasonable 

as the premise itself for their argument is wrong. Even if there were to be a counterparty that 

objected to the abandonment of the No-Compensation License Provisions, etc., it would suffice to 

abandon the No-Compensation License Provisions, etc. while, at the same time, newly agree to 

the same content as the No-Compensation License Provisions, etc., and no substantial problems 

would arise from the abandonment. 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 43 of 134
[Translation]

40

 Also, the Respondent asserts that the License Agreements are balanced with the current contents, 

and to abandon them would actually make them unbalanced. However, based on the fact that the 

contractual terms such as the royalty rate corresponding to the value of the IPRs held by the 

DMSHs, etc. which are the subject of the No-Compensation License Provisions, etc. are not 

adjusted, it cannot be said in the first place that the contents of the License Agreements are 

balanced. The above assertion by the Respondent disregards that the Violating Acts of this case are

unbalanced and that they have the tendency to impede fair competition.

 Therefore, it cannot be said that the order to abandon the No-Compensation License Provisions, 

etc. exceeds the scope of discretion of the Fair Trade Commission.

C. The assertion by the Respondent that the CDO violates Article 21 of the AMA

 Article 21 of the AMA provides that the AMA shall not be applied to acts which are recognized 

as being an exercise of rights under the Copyright Act, etc. This provision means exactly what it 

states which is that the provisions of the AMA shall not be applied to acts which are recognized to 

be an exercise of rights under the Copyright Act, etc., and the provision is construed to have been 

established for confirming that, even if an act seems to be an exercise of rights under the Copyright 

Act, etc., if said act is found to deviate from the intent of or be in conflict with the objectives of

the intellectual property rights system, taking into consideration the objective, form, and influence 

on competition and the like of said act, then such act would not be evaluated as “an act found to 

be an exercise of rights” as provided under said Article, and the AMA would become applicable

(Japan Fair Trade Commission, August 1, 2001 Decision, Fair Trade Commission Decisions 

Volume 48, page 3 <Case against Sony Computer Entertainment>).

 On this point, the Violating Acts of this case by the Respondent deviates from the intent of, and 

contradicts the objectives of the intellectual property rights system, and therefore, are clearly not 

“acts found to be an exercise of rights” as set forth in this Article.

 Therefore, the CDO does not violate Article 21 of the AMA.

D. The assertion by the Respondent that the CDO usurps the rights of the Respondent’s licensees

and customers without giving them the right to due process set forth in Article 31 of the 

Constitution 

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[Translation]

41

 In the first place, the guarantee of due process set forth in Article 31 of the Constitution directly 

relates to criminal proceedings, and the question as to whether it is necessary to provide the 

opportunity of due process to counterparties under administrative disposition is, in itself, a point 

of legal dispute (See Supreme Court, July 1, 1992 Judgment, Civil Procedure Casebook Vol. 46-5, 

p. 437).

 Also, the CDO does not address the Respondent’s customers and licensees by name, nor does it 

directly impose any obligations on them whatsoever. Even if the CDO were to somehow influence 

the Respondent’s customers and licensees, it merely is an indirect influence arising from the 

abandonment of the No-Compensation License Provisions, etc. included in the License 

Agreements between the Respondent and the DMSHs which were concluded without their 

involved, and thus, the guarantee of due process set forth in Article 31 of the Constitution is not 

an issue that would concern them.

 Therefore, the CDO is in no way illegal in lacking the guarantee to due process set forth in 

Article 31 of the Constitution.

(2) Assertions of the Respondent

 The contents of the CDO violate Articles 20 and 21 of the AMA and Article 31 of the 

Constitution as follows.

A. The main text of the CDO is unreasonably vague and unclear

 Paragraph 2 of the main text of the CDO prohibits the Respondent from engaging in “acts that 

force” the DMSHs to grant no-compensation license for their IPRs and not assert their intellectual 

property rights, but it does not indicate whatsoever what the objective standard is that would 

categorize an act as “an act of forcing.” The contents of the CDO are so abstract that the 

Respondent who was issued said CDO does not know specifically what it needs to do in order to 

satisfy the CDO, and also, because it is impossible or significantly difficult to satisfy said CDO

(Tokyo High Court, July 17, 1971 Judgment, Japan Fair Trade Commission Decisions Vol. 18, 

page 167 >Case seeking to rescind a trial decision, filed by Meiji Shoji Kabushiki Kaisha>), the 

measures that are ordered under the CDO are unreasonably vague and unclear, thus making the 

CDO illegal.

B. It is outside the scope of discretion of the Japan Fair Trade Commission to order the 

abandonment of the granting of licenses for IPRs by the DMSHs to the Respondent, etc. and the 

making of pledges not to assert their intellectual property rights against the other licensees of the 

Respondent

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[Translation]

42

 The main text of the CDO obliges the Respondent to abandon the granting of licenses for IPRs

by the DMSHs to the Respondent, etc. and the pledges made by the DMSHs not to assert their

rights against the other licensees of the Respondent (No-Compensation License Provisions, etc.), 

but in order to remove or amend certain provisions from the License Agreements, the Respondent

needs to acquire consent from the counterparties of each agreement, and it is impossible for the 

Respondent to unilaterally abandon the provisions of the License Agreements. In particular, the 

pledges made by the DMSHs not to assert their rights against the other licensees of the Respondent 

(Non-Assertion Provision against the Respondent’s Licensees) was provided to bring profits to the 

licensee’s business activities and it is unlikely that a licensee who provided this would agree to its 

removal. Therefore, the order the abandonment each of these provisions would mean ordering the 

Respondent to do something that is impossible or significantly difficult, and would be outside the 

scope of the discretion of the Fair Trade Commission.

 Moreover, each of the provisions of the License Agreements are provided as a result of 

negotiations, and they mutually relate to each other and are balanced. If these provisions were to 

be abandoned, for example, the Respondent and its customers as well as the other licensees of the 

Respondent who agreed to the non-assertion provision would be obliged to grant licenses to their 

intellectual property to the DMSHs, but on the other hand, they would lose their rights pertaining 

to the intellectual property of the DMSHs that were subject to the provisions, which would give 

rise to an extreme imbalance. The Fair Trade Commission does not have the authority to order 

such measures to private companies, and thus, the order to abandon each of these provisions is 

outside the scope of authority of the Japan Fair Trade Commission.

C. The CDO violates Article 21 of the AMA

 The negotiation and agreement by the Respondent to enter into the License Agreements which 

include the granting of licenses for IPRs by the DMSHs to the Respondent, etc., and the request 

by the Respondent to include in said License Agreements a provision under which the DMSHs 

pledge not to assert their rights against the other licensees of the Respondent (Non-Assertion 

Provision against the Respondent’s Licensees) are a legitimate exercise of rights granted to the 

Respondent under the Patent Act.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 46 of 134
[Translation]

43

 Therefore, under Article 21 of the AMA which sets forth that “the provisions under this Act do 

not apply to acts that are recognized as an exercise of rights under the Copyright Act, Patent Act, 

Utility Model Act, Design Act and Trademark Act,” the Act does not apply to the Violating Acts 

of this case asserted by the Investigation Officials.

D. The CDO usurps the rights of the Respondent’s licensee and its customers to the guarantee of 

due process as provided under Article 31 of the Constitution Article 31

 If the granting of licenses for IPRs by the DMSHs to the Respondent, etc. and the pledges 

made by the DMSHs not to assert their rights against the other licensees of the Respondent (NoCompensation License Provisions, etc.) were to be abandoned in accordance with the CDO, the 

Respondent’s licensees and customers would be unfairly usurped of their right to be protected from 

patent infringement claims being brought against them by the DMSHs without compensation or 

legal recourse, and thus, the CDO is in violation of the guarantee of due process as set forth under 

Article 31 of the Constitution.

VI. The Hearing Examiners’ Decision

1. Regarding Issue 1

(1) Practice which falls within the scope of trading with unfair restrictive conditions

A. Article 19 of the AMA provides that “an enterprise must not employ unfair trade practices,” and 

Article 2, Paragraph 9, item 4 of the AMA before the amendment by the Amended Act of 2009 

lists acts falling within the scope of unfair trade practices, one of which is an act of trading on 

terms unjustly restricting the business activities of another party which tends to impede fair 

competition and which is designated by the Fair Trade Commission. The Former General 

Designation Paragraph 13 referred to therein identifies the act of “attaching conditions that unjustly 

restricts the business activities of the counterparty on transactions between a counterparty and the 

counterparty to that transaction, and engaging in transactions with said counterparty.”

B. The requirement for “unjustly” provided in Former General Designation Paragraph 13 is 

interpreted as meaning that there is “a tendency to impede fair competition” as defined under 

Article 2, Paragraph 9 of the AMA before the amendment by the Amended Act of 2009.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 47 of 134
[Translation]

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 The reason why the AMA regulates trading on unjustly restrictive conditions is that an act of 

imposing restrictions which has a direct impact on competition involves an aspect of artificially 

impeding competition, which otherwise should be achieved by another party’s provision of goods 

and services of low price and high quality in said party’s business activities. Since the details of 

trading with restrictive conditions vary, in determining whether or not an act falls within the scope 

of trading on unjustly restrictive conditions, the tendency to impede fair competition should be 

judged on a case by case basis taking into consideration the form of trading and the extent of the 

restrictions. The act should be considered as falling within the scope of trading on terms which 

“unjustly” restrict another party’s business activities only if and when it is found to tend to have 

an adverse effect on the fair competition order (See Supreme Court Judgment of December 18, 

1998, Civil Procedure Casebook Vol.52, No.9 at 1866, JFTC Decision Review Vol.45 at p. 461 

<Appeal case of seeking declaratory judgment to confirm the status filed by Yugen Gaisha Egawa 

Kikaku>).

In addition, in order to determine whether or not an act falls within the scope of trading on 

unjustly restrictive conditions, it is not a requirement that the act has a specific adverse effect on 

competition, and it is sufficient if it is found that there is some degree of risk that there will be an 

adverse effect on competition. However, it should not be interpreted as being sufficient if the act 

is vaguely likely to have an adverse effect on competition. It is required to determine whether or 

not the act tends to impede fair competition by examining the individual quantitative or qualitative 

impact thereof on competition (See JFTC Decision of September 16, 2008, JFTC Decision Review 

Vol.55 at p. 380 <Case against Microsoft Corporation>).

C. According to the Investigation Officials, the No-Compensation License Provisions, etc. provide 

that the DMSHs shall grant to the Respondent a license of IPRs owned or to be owned by them, 

or shall pledge not to assert their rights against the Respondent and the Respondent’s customers 

and other licensees, and thus those provisions fall within the scope of the terms which restrict the 

business activities of DMSHs.

 Accordingly, in order to determine whether or not the Violating Acts of this case fall within the 

scope of Former General Designation Paragraph 13, it is necessary to determine whether or not it 

can be said the inclusion of the No-Compensation License Provisions, etc. in the License 

Agreements between the Respondent and DMSHs, thereby restricting the business activities of 

DMSHs, causes a tendency to impede fair competition.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 48 of 134
[Translation]

45

(2) The License Agreements and facts related thereto (undisputed facts, background facts, and facts 

found by these and evidence described at the end of the relevant Paragraphs)

A. Regarding the content of the License Agreements

(A) Overview

 The License Agreements generally provide, on one hand, that the Respondent shall grant the

DMSHs a personal (non-transferrable), worldwide and non-exclusive license to IPRs to CDMA

Mobile Wireless Communications owned or to be owned by the Respondent which are identified 

as covered by the License Agreements to allow DMSHs, etc. to manufacture and sell CDMA 

subscriber Units, CDMA components (limited to those incorporated in CDMA subscriber Units of 

DMSHs) and CDMA base stations and, on the other hand, that the DMSHs shall not only pay 

royalties to the Respondent, but also (i) grant the Respondent a personal (non-transferrable), 

worldwide and non-exclusive license to IPRs owned or to be owned by the DMSHs, etc. which 

are identified as covered by the License Agreements to allow the Respondent, etc. to manufacture 

and sell CDMA Subscriber Units and CDMA components (No-Compensation License Provisions, 

etc.), and (ii) pledge not to assert their intellectual property rights regarding CDMA Mobile 

Wireless Communications owned or to be owned by the DMSHs which are identified as covered 

by the License Agreements against the Respondent, etc. or in addition thereto, against the 

Respondent’s customers for the Respondent’s manufacture or sale of CDMA components or, in 

addition thereto, for the Respondent’s customers’ incorporation of the Respondent’s CDMA 

components in their products (Non-Assertion Provision against the Respondent, etc.), and (iii) with 

respect to the DMSHs that agreed to the Non-Assertion Provision against the Respondent’s 

licensees, pledge not to assert their intellectual property rights owned or to be owned by the 

DMSHs, etc. which are identified as covered by the License Agreements against the Respondent’s 

licensees that agreed to similar provisions for such licensees’ manufacture, use and sale of CDMA 

Subscriber Units and (or) CDMA components.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 49 of 134
[Translation]

46

(As stated in III 4 (3) above, although the content of the License Agreements varies depending on 

DMSHs, the following sections will only address facts, and any variations/differences that do not 

affect the judgment in this case will be discarded. While the Respondent uses the phrase 

“technically necessary IPRs” for “technically essential IPRs” covered by the License Agreements, 

and similarly the phrase “commercially necessary IPRs” for “commercially essential IPRs,” 

respectively, based on the terms and definitions used in the License Agreements, IPRs covered by 

the License Agreements are hereinafter referred to simply as “TEIPRs” or “CEIPRs” as the case 

may be. In addition, when the terms “TEIPRs” and “CEIPRs” are used as referring to those subject 

to the relevant provisions of the License Agreements, unless otherwise specified, they refer to those 

that are identified as covered by the License Agreements.)

(B) Licensing of IPRs by the Respondent to the DMSHs

a. Overview

 The Respondent grants the DMSHs a personal (non-transferrable), worldwide and nonexclusive license of IPRs to CDMA Mobile Wireless Communications owned or to be owned by 

the Respondent which are identified as covered by the License Agreements to allow DMSHs, etc. 

to manufacture and sell CDMA Subscriber Units, CDMA components (limited to those 

incorporated in CDMA Subscriber Units of DMSHs) and CDMA base stations.

b. Scope of IPRs licensed by the Respondent

 IPRs licensed by the Respondent to the DMSHs under the License Agreements are TEIPRs 

and CEIPRs to CDMA Mobile Wireless Communications, which include both those developed (or 

for which a patent application has been filed; the same applies hereinafter) or acquired by the 

Respondent, etc. on or before the effective date of the License Agreements, and the improvement 

technology to be developed or acquired by the Respondent, etc. during the improvement period 

specified in the License Agreements.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 50 of 134
[Translation]

47

 This means that under the License Agreements, the Respondent grants to the DMSHs a license 

of not only TEIPRs and CEIPRs developed or acquired by the Respondent, etc. on or before the 

effective date of the License Agreements but also TEIPRs and CEIPRs to be developed or acquired 

by the Respondent, etc. during the improvement period.

c. Timeframe of IPRs licensed by the Respondent (improvement period)

 As stated in b. above, IPRs which the Respondent licenses to the DMSHs under the License 

Agreements include those to be developed or acquired after the effective date of the License 

Agreements, and the scope is limited according to the improvement period specified in the License 

Agreements (as shown in “Expiry Date of Improvement Period” section in Appendix (Chart), the 

improvement period varies depending on DMSHs).

 Many of the License Agreements have different improvement periods for TEIPRs and CEIPRs. 

For TEIPRs, the License Agreements with 8 out of 14 DMSHs listed in Appendix (Chart) have an 

unlimited improvement period (in the case of Mitsubishi Electric, only the base station agreement 

has an unlimited period, and in the case of Hitachi, an unlimited period applies only to IPRs owned 

by specific business divisions), and the License Agreements with the other 6 DMSHs have an 

improvement period of between several months and two years from the effective date thereof (in 

the case of Sanyo Electric, the improvement period was later amended to be unlimited). In the 

meanwhile, for CEIPRs, none of the License Agreements with the above-mentioned 14 DMSHs 

have an unlimited improvement period. Instead, they have an improvement period of between 

several months and three years from the effective date thereof (see “Expiry Date of Improvement 

Period” section in Appendix (Chart)).

 It is noted that the improvement period used as the criteria for limiting the scope of IPRs 

licensed by the Respondent to the DMSHs under the License Agreements is the same as the 

improvement period used as the criteria for limiting the scope of IPRs licensed by the DMSHs to 

the Respondent under No-Compensation License Provisions, etc.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 51 of 134
[Translation]

48

d. Scope of other parties against whom the Respondent cannot assert its rights

 The Respondent licenses IPRs falling within the scope described in a. and b. above to the 

DMSHs under the License Agreements, the effect of which prevents the Respondent from asserting 

its rights against not only DMSHs but also other parties who purchase Subscriber Units 

manufactured using the aforementioned IPRs from DMSHs even if such Subscriber Units, etc. 

infringe such IPRs.

e. Period during which the Respondent licenses IPRs (license period)

 The License Agreements between the Respondent and DMSHs do not specify the license 

period.

f. Restrictions on the Respondent asserting its IPRs

 As long as the License Agreements remain effective, the grant of a license of IPRs referred to 

in b. above which are developed or acquired by the Respondent, etc. before the effective date of 

the License Agreements as well as IPRs referred to in b. above which are to be developed or 

acquired by the Respondent, etc. during the improvement period to the DMSHs under the License 

Agreements prevents the Respondent from seeking an injunction or damages or otherwise 

asserting its rights against infringement of the aforementioned IPRs by the DMSHs and those that 

purchase their products.

 On the contrary, the Respondent can, after the termination of the License Agreements, assert 

its rights if any product subsequently manufactured or sold by the DMSHs, etc. infringes the 

Respondent’s IPRs covered by the License Agreements, and also can, even before the termination 

of the License Agreements, seek an injunction or damages or otherwise assert its rights against the 

DMSHs and those that purchase their products if they infringe any IPR developed or acquired by 

the Respondent, etc. after the expiry of the improvement period.

 Looking at this from the viewpoint of the DMSHs, as long as the License Agreements remain 

effective, the payment of royalties to the Respondent under the License Agreement protects the 

DMSHs from an injunction or damages sought by or other right asserted by the Respondent even 

if they infringe any IPR developed or acquired by the Respondent, etc. before the effective date of 

the License Agreements or any IPR developed or acquired by the Respondent, etc. during the 

improvement period.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 52 of 134
[Translation]

49

 Meanwhile, the DMSHs may, after the termination of the License Agreements, be subject to 

an injunction or damages sought by or other right asserted by the Respondent if any product 

subsequently manufactured or sold by the DMSHs infringes any IPR of the Respondent, etc. 

covered by the License Agreements, and may also, even before the termination of the License 

Agreements, be subject to an injunction or damages sought by or other right asserted by the 

Respondent if they infringe any IPR developed or acquired by the Respondent, etc. after the expiry 

of the improvement period.

(C) Royalty payment and licensing of IPRs by the DMSHs to the Respondent

a. Payment of money (royalty)

 The DMSHs shall pay to the Respondent a certain up-front fee when entering into and 

extending the agreement, and in addition, pay the amount calculated by multiplying the number of 

contracted product sold by the DMSHs, etc. who are the licensees during such period and the predetermined percentage of the net selling price per contracted product every quarter of a calendar 

year. The pre-determined percentage of the net selling price per contracted product is determined 

depending on the number of contracted products sold by the licensees, and falls in within the 

approximate range of 5% to 6.5%.

 It is noted that in the License Agreements between the Respondent and DMSHs, the royalty 

rate is not adjusted according to the value of IPRs owned by the DMSHs, etc. (Sa 116, Sa 161, 

Shin 88).

 Furthermore, the License Agreements do not provide that the Respondent shall pay any 

particular money to the DMSHs.

b. Licensing of IPRs by way of No-Compensation License Provisions, etc.

(a) Overview

 The DMSHs grant to the Respondent a personal (non-transferrable), worldwide and nonexclusive license of IPRs owned or to be owned by the DMSHs, etc. which are identified as 

covered by the License Agreement to allow the Respondent, etc. to manufacture and sell CDMA 

Subscriber Units and CDMA components.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 53 of 134
[Translation]

50

(b) Scope of IPRs licensed by the DMSHs

 The IPRs licensed by the DMSHs under the No-Compensation License Provisions, etc. are 

TEIPRs to CDMA Mobile Wireless Communications (which mean “IPRs” (i) for which DMSHs 

have the right to grant a license to the Respondent without paying royalty or other consideration 

to other third parties, and (ii) which are essential in manufacturing, using or selling “Subscriber 

Units” and (or) “Components” compliant with the common air interface (including IS-95 standard 

and substantially similar standard as well as other standards related to CDMA Mobile Wireless 

Communications; the “CAI”); the same generally applies with respect to No-Compensation 

License Provisions, etc. unless otherwise specifically indicated) and CEIPRs (which mean “IPRs” 

(i) for which the DMSHs have the right to grant a license to the Respondent without paying royalty 

or other consideration to other third parties, (ii) which are not essential in manufacturing, using or 

selling “Subscriber Units” and (or) “Components” compliant with the CAI, and (iii) which provide 

“Subscriber Units” and (or) “Components” with competitive advantage (e.g., cost, lead time or 

quality advantage) or add a feature or other characteristic which may be reasonably required by 

the market; the same generally applies with respect to the No-Compensation License Provisions, 

etc. unless otherwise specifically indicated; it is noted that what the No-Compensation License 

Provisions, etc. require Panasonic Mobile and NEC to license is limited to TEIPRs), which include 

both those developed or acquired by the DMSHs, etc. before the effective date of the License 

Agreements and the improvement technology to be developed or acquired by the DMSHs, etc. 

during the improvement period.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 54 of 134
[Translation]

51

 This means that under the No-Compensation License Provisions, etc., the DMSHs grant the 

Respondent a license of not only TEIPRs and CEIPRs developed or acquired by the DMSHs, etc. 

before the effective date of the License Agreements but also TEIPRs and CEIPRs to be developed 

or acquired by the DMSHs, etc. during the improvement period.

 As shown in the appended table attachment, the No-Compensation License Provisions, etc. are 

contained in the License Agreements between the Respondent and all of the DMSHs who entered 

into the License Agreements. While most of the DMSHs granted a license for both TEIPRs and 

CEIPRs to the Respondent, Panasonic Mobile and NEC requested that the Respondent narrow 

down the scope of other parties against whom they would not be able to assert their rights under

the licenses for the IPRs. As a result, as described above, they do not grant to the Respondent a 

license of CEIPRs to allow the Respondent, etc. to manufacture and sell “Components,” and 

instead agree on the Non-Assertion Provision against the Respondent, etc. – i.e., a pledge not to 

assert their rights against certain parties. Also, Panasonic Mobile does not grant a license of 

TEIPRs for the sale, etc. of particular “Components” to third parties, and the scope of the license 

granted by Panasonic Mobile is partially limited.

(c) Timeframe of IPRs licensed by the DMSHs (improvement period)

 As stated in (b) above, IPRs that the DMSHs license under the License Agreements include 

those to be developed or acquired by the DMSHs, etc. after the effective date of the License 

Agreements, and the scope is limited according to the improvement period specified in the License 

Agreements (as shown in the “Expiry Date of Improvement Period” section in the appended table, 

the improvement period varies depending on DMSHs).

 It is noted that the improvement period used as the criteria for limiting the scope of IPRs 

licensed by the DMSHs to the Respondent under the No-Compensation License Provisions, etc. is 

the same as the improvement period (described in (b) c. above) used as the criteria for limiting the 

scope of IPRs licensed by the Respondent to the DMSHs.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 55 of 134
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52

(d) Scope of other parties against whom the DMSHs cannot assert their rights

 The DMSHs license IPRs falling within the scope described in (b) and (c) above to the 

Respondent under the No-Compensation License Provisions, etc., the effect of which is that the 

DMSHs are prevented from asserting their rights against not only the Respondent, etc. but also the 

Respondent’s customers even if a CDMA Component purchased by any the Respondent’s 

customer infringes such IPRs.

 It is noted that DMSHs are restricted from asserting their rights against the Respondent’s 

customers only for infringement by the CDMA Component purchased by such customers from the 

Respondent, etc. of their IPRs. Therefore, DMSHs can seek an infringement or damages against 

the Respondent’s customers not only if a product in which the CDMA Component purchased from 

the Respondent, etc. is not incorporated infringes their IPRs, but also if, where the CDMA 

Component purchased from the Respondent, etc. is incorporated in a product of the Respondent’s 

customer, any portion or function other than such CDMA Component of the relevant product 

infringes their IPR.

(e) Period during which DMSHs license IPRs

 As stated in (B) e above, the License Agreements between the Respondent and the DMSHs 

neither specify the license period, nor specifically identify the effective period of the NoCompensation License Provisions, etc.

(f) Restriction on the DMSHs asserting their IPRs

 As long as the License Agreements remain effective, the grant of a license to IPRs referred to 

in (b) above which are developed or acquired by the DMSHs before the effective date of the 

License Agreements as well as IPRs referred to in (b) above which are to be developed or acquired 

by the DMSHs during the improvement period (or only TEIPRs in the case of Panasonic Mobile 

and NEC) to the Respondent under the No-Compensation License Provisions, etc. prevents the 

DMSHs from seeking an injunction or damages or otherwise asserting their rights against 

infringement of the aforementioned IPRs by the Respondent, etc. and the Respondent’s customers.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 56 of 134
[Translation]

53

 Meanwhile, DMSHs can, after the termination of the License Agreements, seek an injunction 

or damages or otherwise assert their rights against the Respondent, etc. and the Respondent’s 

customers if any product subsequently manufactured or sold by the Respondent, etc. infringes their 

IPRs covered by the No-Compensation License Provisions, etc., and may also, even before the 

termination of the License Agreements, assert their rights against the Respondent, etc. and the 

Respondent’s customers if any IPR developed or acquired by the DMSHs after the expiry of the 

improvement period is infringed, and assert their rights against the Respondent’s customers even 

if any product of the Respondent’s customers in which a CDMA Component manufactured or sold 

by the Respondent, etc. is incorporated infringes IPRs of DMSHs as long as the infringement is 

not caused by such CDMA Component.

(g) Description in the agreement

 The License Agreements executed by the DMSHs contain the wording “fully-paid and royalty 

free license” with respect to the No-Compensation License Provisions, etc., and the License 

Agreements executed by some of the DMSHs specify, in their preamble, that the provisions 

including the No-Compensation License Provisions, etc. as a whole form a part of the 

consideration for a license of IPRs by the Respondent (Shin 50-64-1, Shin 50-72-1, Shin 51-64-1, 

etc.).

c. Pledge not to assert rights against the Respondent, etc. by way of the Non-Assertion Provision

(a) Overview

 Among the DMSHs, Panasonic Mobile, Mitsubishi Electric and NEC, who entered into the 

License Agreements containing the Non-Assertion Provision against the Respondent, etc. pledge

not to assert their rights based on IPRs to CDMA Mobile Wireless Communications owned or to 

be owned by the DMSHs which are identified as covered by the License Agreements against the 

Respondent, etc. or in addition thereto, against the Respondent’s customers, for the Respondent’s 

manufacture or sale of CDMA components or, in addition thereto, for the Respondent’s customers’ 

incorporation of the Respondent’s CDMA components in their products.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 57 of 134
[Translation]

54

 As stated in b (a) above, the No-Compensation License Provisions, etc. grant a license of IPRs 

by the DMSHs to the Respondent, and as stated in b (d) above, the effect thereof prevents DMSHs 

from asserting some of their rights against both the Respondent, etc. and the Respondent’s 

customers. Unlike the No-Compensation License Provisions, etc., the Non-Assertion Provision 

against the Respondent, etc. does not require the DMSHs to grant a license of IPRs to the 

Respondent, but constitutes a pledge not to assert rights – principally regarding CEIPRs - against 

other parties specified in the agreement.

 NEC and Panasonic Mobile, as described in 1 and 2 of Attachment 2, were initially requested 

by the Respondent to agree on the No-Compensation License Provisions, etc.. Through 

negotiations, however, they agreed to make mainly CEIPRs the subject of the Non-Assertion 

Provision against the Respondent, etc., or in addition thereto against the Respondent’s customers, 

instead of licensing the CEIPRs to the Respondent. (In the case of Mitsubishi Electric, although 

the Non-Assertion Provision against the Respondent, etc. regarding TEIPRs in the former license 

agreement executed with the Respondent in 1995 remains in the License Agreement, the License 

Agreement separately specifies the No-Compensation License Provisions, etc., thereby making the 

Non-Assertion Provision substantially meaningless. Therefore, the following sections will address 

the Non-Assertion Provision against the Respondent, etc. to which Panasonic Mobile and NEC 

agreed.)

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 58 of 134
[Translation]

55

(Sa 67-1 through 67-4, Sa 70-1 through 70-4, Sa 71-1 through 71-4, Sa 189, Sa 189-2, Shin 52, 

Shin 73, Shin 73-2)

(b) Scope of IPRs the DMSHs made a pledge not to assert

 The IPRs that Panasonic Mobile made a pledge not to assert under the Non-Assertion Provision 

against the Respondent, etc. are TEIPRs and CEIPRs to CDMAMobile Wireless Communications,

and the IPRs that NEC made a pledge not to assert against the Respondent, etc. are CEIPRs to 

CDMA Mobile Wireless Communications. These TEIPRs and CEIPRs include both those 

developed or acquired by the DMSHs, etc. before the effective date of the License Agreements 

and the improved technology to be developed or acquired by the DMSHs, etc. during the 

improvement period, respectively (Sa 67-1 through 67-4, Sa 70-1 through 70-4, Sa 189, Sa 189-2, 

Shin 52, Shin 73, Shin 73-2).

(c) Timeframe of IPRs DMSHs made a pledge not to assert (improvement period)

 As stated in (b) above, the IPRs for which Panasonic Mobile and NEC made a pledge not to 

assert include those to be developed or acquired by the DMSHs, etc. after the effective date of the 

License Agreements, and the scope is classified according to the improvement period specified in 

the License Agreements (as shown in “Expiry Date of Improvement Period” section in Appendix 

(Chart), the improvement period varies depending on the DMSHs).

 It is noted that the improvement period used as the criteria for classifying the scope of IPRs 

for which Panasonic Mobile and NEC cannot assert against the Respondent, etc. and the 

Respondent’s customers due to the Non-Assertion Provision against the Respondent, etc. is in 

common with the improvement period (described in (b) c. above) used as the criteria for classifying

the scope of TEIPRs and CEIPRs licensed by the Respondent to the DMSHs.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 59 of 134
[Translation]

56

(Sa 67-1 through 67-4, Sa 70-1 through 70-4, Sa 189, Sa 189-2, Shin 52, Shin 73, Shin 73-2)

(d) Scope of other parties against whom the DMSHs cannot assert their rights

 The other parties against whom the Non-Assertion Provision against the Respondent, etc.

prevents DMSHs from asserting their rights are limited to those specified in the agreement. 

Specifically, Panasonic Mobile made a pledge not to assert its rights only against infringement 

caused by the manufacture and sale of “Component” by the Respondent, etc. and the incorporation 

of “Customer Components” (which is defined as narrower than “Component”) purchased from the 

Respondent, etc. in customer products. Also, since the License Agreement provides that Panasonic 

Mobile can assert its rights against infringement caused by the combination of “Customer 

Components” and other products, other parties against whom Panasonic Mobile cannot assert its 

rights are the Respondent, etc. and customers who purchase the Respondent's “Customer 

Components” from the Respondent, etc. and incorporate the same in their products (excluding 

customers whose infringement is caused by the combination of “Customer Components” and other 

products).

 On the other hand, since NEC made a pledge not to assert its rights against [infringement 

caused by] the manufacture and sale, etc. by the Respondent, etc., other parties against whom NEC 

cannot assert its rights are the Respondent, etc.

(Sa 67-1 through 67-4, Sa 70-1 through 70-4, Sa 189, Sa 189-2, Shin 52, Shin 73, Shin 73-2)

(e) Period during which DMSHs cannot assert IPRs

 As stated in (b) e above, the License Agreements between the Respondent and the DMSHs 

neither specify the license period, nor specifically identify the effective period of the NonAssertion Provision against the Respondent, etc.

(f) Restriction on DMSHs asserting their IPRs

 As long as the License Agreements remain effective, the Non-Assertion Provision against the 

Respondent, etc. prevents Panasonic Mobile and NEC who entered into the License Agreements 

containing the Non-Assertion Provision against the Respondent, etc. from seeking an injunction 

or damages or otherwise asserting their rights against infringement by other parties against whom 

they made a pledge not to assert their rights of IPRs referred to in (b) above which are developed 

or acquired before the effective date of the License Agreements as well as IPRs referred to in (b) 

above which are to be developed or acquired during the improvement period.

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[Translation]

57

 However, Panasonic Mobile and NEC can, after the termination of the License Agreements, 

assert their rights against IPR infringement as described above, and may also, even before the 

termination of the License Agreements, assert their rights against other parties who made a pledge

not to assert their rights by way of the Non-Assertion Provision against the Respondent, etc. for 

any infringement of IPRs developed or acquired after the expiry of the improvement period.

 The Non-Assertion Provision against the Respondent, etc. prevents Panasonic Mobile from 

asserting its rights against not only the Respondent, etc. but also against the Respondent’s 

customers who purchase the Respondent’s “Customer Component” from the Respondent, etc. and 

incorporate it in their products. However, since the Non-Assertion Provision prevents Panasonic 

Mobile from asserting its rights only against infringement caused by the “Customer Component,” 

Panasonic Mobile can seek an injunction or damages or otherwise assert its rights against the 

Respondent’s customers who purchase the Respondent’s “Customer Component” and incorporate 

it in their products not only if their products in which a “Customer Component” is not incorporated 

infringe its IPR, but also if their products in which a “Customer Component” is incorporated 

infringe its IPR and such infringement is caused by a portion or function other than the “Customer 

Component” or if any product manufactured from combination of CDMA component of the 

Respondent, etc. and their product infringes its IPR.

 On the other hand, the Non-Assertion Provision against the Respondent, etc. prevents NEC 

from asserting its rights against the Respondent, etc. while it does not restrict NEC from asserting 

its rights against the Respondent’s customers.

d. Pledge not to assert rights against the Respondent’s licensees by way of the Non-Assertion

Provision

(a) Overview

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[Translation]

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 The DMSHs who entered into the License Agreements containing the Non-Assertion Provision

against the Respondent's licensees made a pledge not to assert their rights based on IPRs owned 

or to be owned by the DMSHs, etc. which are identified as covered by the License Agreements 

against other the Respondent’s licensees who agreed on the similar provisions for those licensees’ 

manufacture, use or sale of CDMA Subscriber Units and (or) CDMA components.

 Thus, although DMSHs who agreed on the Non-Assertion Provision against the Respondent’s 

licensees in the License Agreements are restricted, to a certain extent, from asserting their rights 

against other of the Respondent’s licensees who agreed on the similar provisions, they are 

protected from the Respondent’s other licensees asserting their rights even if their manufacture, 

use or sale of CDMA Subscriber Units and (or) CDMA Components infringes TEIPRs owned by 

the other the Respondent’s licensees who agreed on the similar provisions. Therefore, those 

DMSHs who agreed on the Non-Assertion Provision against the Respondent’s licensees and the 

Respondent’s other licensees who agreed on the similar provisions are free to use each other’s 

IPRs without paying or receiving any money.

 For the record, the decision to include the Non-Assertion Provision in the License Agreements 

is at the option of the DMSHs, and among the 14 DMSHs listed in Appendix (Chart), 11 companies 

other than Panasonic Mobile, NEC and Hitachi agreed to include the Non-Assertion Provision

against the Respondent’s licensees in the License Agreements.

(b) Scope of IPRs DMSHs made a pledge not to assert

 IPRs that DMSHs made a pledge not to assert against the Respondent’s licensees who agreed 

on the similar provisions are limited to TEIPRs to CDMA Mobile Wireless Communications. 

These TEIPRs include both those developed or acquired by the DMSHs, etc. before the effective 

date of the License Agreements and the improved technology to be developed or acquired by the 

DMSHs, etc. during the improvement period.

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[Translation]

59

(c) Timeframe of IPRs DMSHs made a pledge not to assert (improvement period)

 As stated in (b) above, TEIPRs which DMSHs who agreed on the Non-Assertion Provision

against the Respondent’s licensees made a pledge not to assert against the Respondent’s other 

licensees who agreed on the similar provisions include those to be developed or acquired by the 

DMSHs, etc. after the effective date of the License Agreements, and the scope thereof is divided 

according to the improvement period specified in the License Agreements (as shown in “Expiry 

Date of Improvement Period” section in Appendix (Chart), the improvement period varies 

depending on the DMSHs).

(d) Scope of other parties against whom the DMSHs cannot assert their rights

 Other parties against whom the Non-Assertion Provision against the Respondent’s licensees 

prevents DMSHs from asserting their rights are limited to other the Respondent’s licensees who 

agreed on the similar provisions.

(e) Period during which the DMSHs cannot assert IPRs

 As stated in (b) e above, the License Agreements between the Respondent and DMSHs neither 

specify the license period, nor specifically identify the effective period of the Non-Assertion 

Provision against the Respondent’s licensees.

(f) Restrictions on DMSHs asserting IPRs

 As long as the License Agreements remain effective, the Non-Assertion Provision against the 

Respondent’s licensees prevents DMSHs who agree on the Non-Assertion Provision against the 

Respondent’s licensees from seeking an injunction or damages or otherwise asserting their rights 

against infringement by other the Respondent’s licensees who agreed to similar provisions for 

TEIPRs developed or acquired by the DMSHs, etc. before the effective date of the License 

Agreements and TEIPRs to be developed or acquired by the DMSHs, etc. during the improvement 

period.

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[Translation]

60

 However, those DMSHs who agreed on the Non-Assertion Provision against the Respondent’s 

licensees may, after the termination of the License Agreements, assert their rights against IPR 

infringement described above, and may also, even before the termination of the License 

Agreements, assert their rights against the Respondent’s other licensees who agreed on the similar 

provisions for any infringement of IPRs developed or acquired after the expiry of the improvement 

period.

(g) No compensation

 The License Agreements do not provide that the DMSHs who agreed on the Non-Assertion 

Provision against the Respondent’s licensees are to pay or receive certain monies to or from other 

the Respondent’s licensees who agreed to the similar provisions.

B. Other

(A) At the time of negotiating the License Agreements, among the 14 DMSHs listed in the 

appended table, Hitachi, Fujitsu, NEC, Toshiba and Mitsubishi Electric submitted Confirmation

Forms regarding the technology for 3G Mobile Wireless Communications Standards. 9 companies 

other than the 5 companies named above did not submit Confirmation Forms (Although Panasonic 

Mobile did not submit them, Panasonic did. See III, 2 (4) B (B)), and 5 companies (i.e., Sanyo 

Electric, Casio, Kenwood Corporation (“Kenwood”), Alps Electric Co., Ltd. (“Alps”) and 

Kyocera) out of them did not actually own TEIPRs to CDMA Mobile Wireless Communications

at the time of executing the License Agreements (Sa 181 through Sa 183, Sa 207, Sa 265).

(B) Among the 14 DMSHs listed in the appended table, 11 companies other than NEC, Panasonic 

Mobile and Toshiba did not disclose IPRs owned by them, or request the Respondent to examine 

or evaluate them to adjust license terms while negotiating the License Agreements with the 

Respondent.

(3) Whether the execution of the License Agreements that sets forth the No-Compensation License 

Provisions, etc. has a tendency to impede fair competition by restricting business activities

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[Translation]

61

A. Tendency to impede fair competition asserted by the Investigation Officials

(A) The Guidelines for the Use of Intellectual Property under the AMA (hereinafter, “IP 

Guidelines”) provides in Part 4, (5) (vi) that, when a licensor imposes on licensees “an obligation 

to refrain from exercising, in whole or in part, the rights owned or to be acquired by them against 

the licensor or any entrepreneurs designated by the licensor” or “an obligation to license the 

licensor or any entrepreneur designated by the licensor to use the patents and other rights owned 

or to be acquired by licensees in whole or in part,” this obligation could result in enhancing the 

influential position of the licensor in a product or technology market or could impede the licensee’s 

incentive to engage in research and development, thereby impeding the development of new 

technologies by restricting the exercise of the licensee’s rights, etc. It therefore is an unfair trade 

practice if it tends to impede fair competition.

(B) The Investigation Officials assert that, in light of the viewpoint of the IP Guidelines stated in 

(A) above, as the degree and content of the restrictions of the No-Compensation License Provisions, 

etc. are unreasonable enough to presume that they have a tendency to impede the incentives of the 

DMSHs to engage in research and development and as it was not possible to supplement or avoid 

the disadvantages caused by such restrictions, it is likely to strengthen the Respondent’s dominant 

position, and thus, the Violating Acts of this case of providing the No-Compensation License 

Provisions, etc. in the License Agreements and restricting the business activities of the DMSHs

are found to be likely to have an adverse impact on the order of fair competition.

(C) In this respect, as stated in (1) above, to judge whether a transaction falls under the trading on 

unfair restrictive conditions, it is not necessary that specific adverse effect on competition actually 

occur, and it is sufficient if it is found that there is a possibility of an occurrence of adverse effect 

on competition. However, it should not be understood concerning the degree of the “possibility”

that a vague possibility that adverse effect on competition may occur would be sufficient.

Further, when comprehensively considering the relations of rights and duties under the License 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 65 of 134
[Translation]

62

Agreements that set forth the No-Compensation License Provisions, etc. and the Non-Assertion 

Provision against the Respondent, etc. based on the facts found in (2) above, under the License 

Agreements, the Respondent grants the DMSHsthe license for the IPRs to CDMA Mobile Wireless 

Communications, while the DMSHs pay a lump sum license fee and continuous royalties, grant 

the Respondent and its customers the license for the IPRs to CDMA Mobile Wireless 

Communications (No-Compensation License Provisions, etc.) or makes a pledge not to assert its 

rights based on the IPRs against the Respondent or its customers (Non-Assertion Provision against

the Respondent, etc.), and the basic structure of the License Agreements have the nature of crosslicense agreements in which the Respondent grants the license to its own IPRs, and the DMSHs

also grant nonexclusive licenses to their own IPRs (including those who pledged not to assert their 

rights concerning part of their patent rights; the same shall apply hereinafter) (although the 

Respondent is not obliged to pay any money and only the DMSHs are obliged to pay money, this 

type of agreement is not atypical as a cross-license agreement, nor can the amount of the money 

be found to affect the nature of the agreement.). In addition, the Non-Assertion Provision against

the Licensees is also a provision by which the DMSHs and the other Respondent’s licensees that 

provided the same provision made a pledge not to assert their rights based on their own IPRs 

against each other for no compensation and allows one another to use the other party’s own IPRs, 

which should be acknowledged as being similar in nature to cross-license agreements. Here, 

entering into a cross-license agreement is not found to have a tendency to impair fair competition 

(The descriptions in Part 1 (1), Part 4 (5) (vi) and (ix) of the IP Guidelines are also understood to 

be based on the same thinking.).

 As such, in order to have the License Agreements providing the No-Compensation License 

Provisions, etc. which has a nature of a cross-license agreement to be found to be likely to have an 

adverse impact on the order of fair competition by impeding the incentives of the DMSHs to 

engage in research and development, specific proof would be necessary based on evidence, etc. 

concerning the following points.

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[Translation]

63

 The following section further discusses these points.

B. Whether the degree and content of the restrictions of the No-Compensation License Provisions, 

etc. are unreasonable enough to presume that they have a tendency to impede the incentives of the 

DMSHs to engage in research and development

(A) The Investigation Officials’ assertions

 First, the Investigation Officials assert that the degree and content of the restrictions of the NoCompensation License Provisions, etc. are unreasonable enough to presume that they have a 

tendency to impede the incentives of the DMSHs to engage in research and development, and as 

grounds for that, stated that (1) the scope of application of the No-Compensation License 

Provisions, etc. is broad, (2) the No-Compensation License Provisions, etc. have nature of a nocompensation license and that (3) the No-Compensation License Provisions, etc. are imbalanced.

(B) The scope of application of the No-Compensation License Provisions, etc. is broad

a. The Investigation Officials assert that the scope of application of the No-Compensation License 

Provisions, etc. is broad with respect to both the range and the time of acquisition of IPRs as well 

as the counterparty and the period concerning which the rights cannot be exercised in accordance 

with said Provisions, etc. and the provisions restrict the exercising of rights by the DMSHs to a 

great extent, and that the degree and content of the restrictions of the No-Compensation License 

Provisions, etc. are unreasonable enough to presume that they have a tendency to impede the 

incentives of the DMSHs to engage in research and development.

b. (a) However, as explained in A. (c) above, the License Agreements containing the NoCompensation License Provisions, etc. have the nature of a cross-license agreement, and due to 

the nature of the agreement, it is natural that the exercising of IPRs by both parties is restricted, 

and focusing only on the restriction of exercise of IPRs owned by the DMSHs, etc. and discussing 

their wide scope of application are not appropriate. 

 (b) According to (2) above, the IPRs owned by the DMSHs for which licenses are granted that 

include the No-Compensation License Provisions, etc. or a pledge not to assert their rights include

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 67 of 134
[Translation]

64

TEIPRs and CEIPRs to the CDMA Mobile Wireless Communications Standards for manufacture, 

sales, etc. of CDMA Subscriber Units, etc. (the Respondent’s Non-Assertion Provision against the 

Licensees is provided only for TEIPRs), and there is no evidence sufficient to demonstrate that the 

scope of those IPRs is different from those provided in normal agreements and are particularly 

broad in scope in terms of the IPRs that are the subject of the license agreements or cross-license 

agreements for the manufacture, sale, etc. of Handsets and Base Stations for Mobile Wireless

Communications as well as components to be used therein. Furthermore, considering the fact that 

the DMSHs, on the one hand, grant licenses for the IPRs that they own or make a pledge not to 

assert their rights to the Respondent, etc., while being granted licenses to TEIPRs and CEIPRs for

CDMA Mobile Wireless Communications owned by the Respondent, etc. and the other

Respondent’s licensees do not assert their rights to the DMSHs, it is difficult to find that the scope 

of the IPRs that are the subject of the No-Compensation License Provisions, etc. and based on 

which the DMSHs are restricted from the exercising of their rights is broad and that the degree and 

content of the restrictions of the No-Compensation License Provisions, etc. are unreasonable 

enough to presume that they have a tendency to impede the incentives of the DMSHs to engage in 

research and development. 

(c) Next, the IPR owned by the DMSHs to which licenses are granted under the No-Compensation 

License Provisions, etc. include not only those developed or obtained on or before the Effective 

Date of the License Agreements, but also those to be developed or obtained within the 

Improvement Period set forth in the License Agreements.

 In this respect, as stated in the appended table, although in the License Agreements with 9 of 

the 14 DMSHs listed in the appended table, the Improvement Period of the TEIPRs are set forth 

as unlimited, to begin with, the TEIPRs comprise the ARIB Standard (3G Mobile Wireless 

Communications Standards) and the Standards Assembly provides that the Rights Holder to which 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 68 of 134
[Translation]

65

the ARIB Standards apply agrees not to assert their rights and to grant a license unconditionally or 

to grant a non-exclusive and nondiscriminatory license on reasonable terms and conditions, and 

thus, it cannot be a differentiation factor for products such as CDMA Subscriber Units, etc. 

Furthermore, the Improvement Period that limits the scope of the IPRs concerning which the 

Respondent grants licenses to the DMSHs is the same as the Improvement Period that limits the 

scope of the IPRs for which the DMSHs grant licenses to the Respondent, and if the Improvement 

Period is not fixed (or stated as being indefinite), the Respondent also grants licenses to the IPRs 

to be developed or obtained during the unlimited period from the Effective Date of the License 

Agreements. Therefore, it cannot be found that, for the reason that the Improvement Period of the 

TEIPRs is stated as being unlimited, the scope is broad and that the degree and content of the 

restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to presume 

that they have a tendency to impede the incentives of the DMSHs to engage in research and 

development.

 Further, as stated in the appended table, in the License Agreements with 5 of the 14 DMSHs, 

the Improvement Period of the TEIPRs are provided to be several months to two years from the 

Effective Date, and concerning CEIPRs, in the License Agreements with all 14 DMSHs, the 

Improvement Period is not set to be unlimited and they are several months to three years from the 

Effective Date of the License Agreements, and these Improvement Periods are the same as those 

of the TEIPRs and CEIPRs to which the Respondent grants licenses to the DMSHs. Therefore, it 

cannot be found that, on the grounds that the IPRs for which the DMSHs grants licenses based on 

the No-Compensation License Provisions, etc. or makes a pledge not to assert 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 69 of 134
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66

their rights include not only those developed or obtained on or before the Effective Date of the 

License Agreements, but also those to be developed or obtained within the Improvement Period 

set forth in the License Agreements, and that the scope of the IPRs is so broad that it establishes

that the degree and content of the restrictions of the No-Compensation License Provisions, etc. are 

unreasonable enough to presume that they have a tendency to impede the incentives of the DMSHs

to engage in research and development.

(d) As stated in (2) A. (C) b (d), the counterparties against which the DMSHs are restricted from 

exercising its rights by granting the Respondent licenses to its IPRs include the Respondent, etc. 

and any person who purchases CDMA components from the Respondent (the Respondent’s 

customers), but in actuality, the one time that the DMSHs cannot actually exercise their rights 

against the Respondent’s customers is when the Respondent’s customer infringes upon the IPRs 

owned by the DMSHs with the IPRs used in the Respondent, etc.’s CDMA components. If the 

DMSHs’ IPRs are infringed upon by any part or function that does not contain the Respondent, 

etc.’s CDMA component, the DMSHs are not restricted from the exercising of their rights. It is 

normal in general license agreements or cross-license agreements that a person who grants a 

license of its IPRs is restricted from exercising its rights against a person who purchases a product 

manufactured by using the IPRs for the infringement of the IPRs by the product. Further, as 

explained in A (c) above, the License Agreements that include the No-Compensation License 

Provisions, etc. have the nature of a cross-license agreement, and while, on the one hand, as 

described above, the DMSHs are restricted from the exercising their rights against the 

Respondent’s customers based on the No-Compensation License Provisions, etc. to some extent, 

on the other hand, the DMSHs have the benefit of not being subjected to the exercising of rights 

by the Respondent in connection with an infringement of the Respondent’s IPRs in products 

manufactured by the customers of the DMSHs that purchased such products if the products were 

manufactured by using the Respondent, etc.’s IPRs whose license was granted based on the 

License Agreements. Based on this, it cannot be said that the scope of the parties against whom

the DMSHs cannot exercise their rights based on the No-Compensation License Provisions, etc. is 

broad, and that the degree and content of the restrictions of the No-Compensation License 

Provisions, etc. are unreasonable enough to presume that they have a tendency to impede the 

incentives of the DMSHs to engage in research and development.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 70 of 134
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67

 According to (2) A. (C) c (a) above, the Non-Assertion Provision against the Respondent, etc. 

does not stipulate that the DMSHs grant the Respondent licenses of their IPRs, but rather, 

individually sets forth the scope of the parties against whom the DMSHs cannot exercise their 

rights. The Non-Assertion Provision against the Respondent, etc. was provided, concerning part 

of the IPRs developed or obtained or to be developed or obtained by the DMSHs, etc., in order to 

avoid making them subject of the No-Compensation License Provisions, etc. and to set forth the 

specific scope of the restriction on the exercising of rights by the DMSHs, and thus, with respect 

to the Non-Assertion Provision against the Respondent, etc. for which the scope of the 

counterparties concerning which exercise of rights is restricted is set to be narrower than the NoCompensation License Provisions, etc., it cannot be found that the scope is broad and that the 

degree and content of the restrictions of the No-Compensation License Provisions, etc. are 

unreasonable enough to presume that they have a tendency to impede the incentives of the DMSHs

to engage in research and development.

 Likewise, according to (2) A (C) d (d) above, with respect to the Non-Assertion Provision 

against the Licensees of the Respondent, considering that the scope of the counterparties against 

whom the exercising of rights is restricted is limited only to the other licensees of the Respondent

that provided the same provision in their License Agreements, which corresponds with the scope 

of the counterparties against whom rights cannot be exercised, it cannot be found that the scope of 

the counterparties against which exercise of rights is restricted is broad or that the degree and 

content of the restrictions of the No-Compensation License Provisions, etc. are unreasonable 

enough to presume that they have a tendency to impede the incentives of the DMSHs to engage in 

research and development.

(e) The License Agreements between the Respondent and the DMSHs do not specify the contract 

period of the agreement, but this only means that the period is not fixed during which the licensing

of the IPRs that are the subject of the License Agreements and the No-Compensation License 

Provisions, etc. are granted or the rights based thereon cannot be exercised, and it does not mean 

that the period is not fixed during which No-Compensation License Provisions, etc. grant licenses 

to the Respondent, etc. or cannot exercise their rights based on their own IPRs. In other words, 

regardless of the term of the License Agreements, the DMSHs may separately exercise their IPRs 

to be developed or obtained after the expiry of the Improvement Period, and thus, it cannot be said 

that because the term of the License Agreement is unlimited or for a long period, the scope of the 

IPRs that the DMSHs cannot exercise is broad.

 

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[Translation]

68

 Although the term of the License Agreements being unlimited or for a long term means that 

the period during which the DMSHs are restricted from exercising their IPRs to which they grant 

licenses, etc. based on the No-Compensation License Provisions, etc. is unlimited or for a long 

term, this period corresponds with the period in which the Respondent grants licenses of its own 

IPRs to the DMSHs and it is not that only the period in which the DMSHs cannot assert their rights 

is unlimited or for a long term in a unilateral manner, and thus, as stated above, it does not change 

the fact that the DMSHs may separately exercise their IPRs to be developed or obtained after the 

expiry of the Improvement Period.

 Accordingly, it cannot be found that the term of the License Agreements being unlimited or 

for a long term indicates that the degree and content of the restrictions of the No-Compensation 

License Provisions, etc. are unreasonable enough to presume that they have a tendency to impede 

the incentives of the DMSHs to engage in research and development.

(f) Based on the above arguments, the Investigation Officials’ assertions that the scope of 

application of the No-Compensation License Provisions, etc. (the scope in which the DMSHs are 

restricted from the exercising of their rights) is broad, and that the degree and content of the 

restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to presume 

that they have a tendency to impede the incentives of the DMSHs to engage in research and 

development cannot be accepted.

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[Translation]

69

c. (a) In response to this, the Investigation Officials firstly assert concerning the scope of the IPRs 

based on which the DMSHs are restricted from the exercising of their rights by the NoCompensation License Provisions, etc., that, even if the No-Compensation License Provisions, etc.

set forth the Improvement Period, the DMSHs have to obtain licenses of the TEIPRs to be owned 

by the Respondent, etc. after the expiry of the Improvement Period, and therefore, if the 

Respondent demands an extension of the Improvement Period, they have no choice but to accept 

the demand, and even if the Respondent does not demand an extension of the Improvement Period, 

the Respondent may assert against an exercise of rights after the expiry of the Improvement Period, 

and thus, the No-Compensation License Provisions, etc. could practically be applied to all the IPRs 

concerning CDMA Subscriber Units, etc. to be obtained by the DMSHs, etc. during the term of 

the License Agreement.

 However, based on the facts that the License Agreement that sets forth the No-Compensation 

License Provisions, etc. has the nature of a cross-license agreement, and that the Improvement 

Periods are common that define the time during which rights cannot be exercised by the 

Respondent or the DMSHs based on the pledge due to the granting of licenses or the pledge not to 

assert their rights, an extension of the Improvement Period means not only an extension of the 

IPRs licensed, etc. by the DMSHs, but also an extension of the IPRs licensed by the Respondent

to the DMSHs. Therefore, even if the Respondent or the DMSHs are highly likely to extend the 

Improvement Period in order to use the IPRs to be developed or obtained by the other party after 

the expiry of the Improvement Period as asserted by the Investigation Officials, it cannot be said 

that the scope of the IPRs concerning which the DMSHs are restricted from the exercising of their 

rights is unlimited by focusing only on the IPRs concerning which the DMSHs are restricted from 

the exercising of their rights.

 Moreover, it is common for license agreements that limit the scope of relevant IPRs to a 

certain period of time to have a possibility of an extension of the IPRs concerning which the 

exercising of rights is restricted as asserted by the Investigation Officials, and even if there is a 

possibility of an extension of the time period defining the scope the IPRs to be covered by such an 

agreement, that cannot be grounds to allege that the period provided in the agreement is practically

unlimited.

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[Translation]

70

Likewise, with respect to the License Agreements that sets forth the No-Compensation License 

Provisions, etc., whether the Improvement Periods are extended is determined based on the number 

and content of the IPRs developed by the Respondent and the DMSHs after the expiry of the 

Improvement Period and other business judgments, and even if there is a high possibility of an 

extension, it cannot be judged based on such uncertain facts that the IPRs to be developed or 

obtained by the DMSHs, etc. after the expiry of the Improvement Period are also unlimitedly 

captured. Furthermore, this is not a matter that would be affected just because there was actually 

a case in which an improvement period was actually extended.

 Based on the above, the Investigation Officials’ assertion that the No-Compensation License 

Provisions, etc. could be practically applied to all the IPRs concerning CDMA Subscriber Units, 

etc. to be obtained by the DMSHs during the term of the License Agreement cannot be accepted, 

and it cannot be found that the scope of the IPRs which the DMSHs are restricted from the 

exercising of their rights under the No-Compensation License Provisions, etc. is broad and that the 

degree and content of the restrictions of the No-Compensation License Provisions, etc. are 

unreasonable enough to presume that they have a tendency to impede the incentives of the DMSHs

to engage in research and development.

(b) Next, the Investigation Officials assert that, in the present circumstances in which the singlechip project is being developed, which integrates various functions such as the power-saving 

function by which the power consumption of subscriber units can be reduced, and/or the audio and 

visual functions which enable the playing of music and movie display, etc. with the signal 

processing concerning CDMA Mobile Wireless Communications into a single semiconductor 

integrated circuit (Part 3, 3 (1) above), it cannot be said that the scope of the IPRs concerning 

which the DMSHs, etc. would be restricted from the exercising of their rights by the NoCompensation License Provisions, etc. is narrow, considering the facts that as such technologies 

owned by the DMSHs are also used in the Respondent’s chips, many CEIPRs as well as TEIPRs

could be the subject of the exhaustion of rights doctrine, and that the Respondent has at least 100 

customers.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 74 of 134
[Translation]

71

 However, it is natural due to the nature of the license of the IPRs that the DMSHs, etc. are 

restricted from the exercising of their rights concerning the CDMA Components, etc. 

manufactured and sold by the Respondent through the use of the IPRs owned and licensed by the 

DMSHs based on the No-Compensation License Provisions, etc. (it is also natural that they are 

restricted from the exercising of their rights against the Respondent’s customers of certain scope 

in accordance with the Non-Assertion Provision against the Respondent, etc.). On the other hand, 

the DMSHs are also licensed by the Respondent to use the Respondent’s IPRs and the number of 

customers who purchase products that utilize the single-chip project asserted by the Investigation 

Officials and the licensed IPRs increases, and thus, the scope for which the Respondent cannot 

exercise its rights also becomes broader, and therefore, it cannot be unilaterally said that only the 

scope of IPRs concerning which the DMSHs cannot exercise their rights due to the NoCompensation License Provisions, etc. is broad. It seems that the Investigation Officials assert that 

the scope of restriction of the rights of the DMSHs is broad for the reason that the Respondent has 

a large number of customers. However, the scope of the IPRs that the DMSHs should grant the 

Respondent and the scope of the IPRs that the Respondent should grant the DMSHs are basically 

the same, and it is unreasonable to discuss the breadth and narrowness of the scope of the restriction 

based on the number of IPRs owned by each party, and likewise, it is unreasonable to discuss the 

breadth and narrowness of the scope of restrictions based on the number of products manufactured 

by using the license and the number of customers. Therefore, the Investigation Officials’ assertion 

cannot be accepted.

 Consequently, even based on the above assertion by the Investigation Officials, it cannot be 

found that the scope of the IPRs based on which the DMSHs are restricted from the exercising of 

their rights under the No-Compensation License Provisions, etc. is broad, and that the degree and 

content of the restrictions of the No-Compensation License Provisions, etc. are unreasonable 

enough to presume that they have a tendency to impede the incentives of the DMSHs to engage in 

research and development.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 75 of 134
[Translation]

72

(c) The Investigation Officials further assert that the scope of the IPRs concerning which the 

DMSHs cannot exercise their rights due to the No-Compensation License Provisions, etc. can be 

easily extended because, if the Respondent’s customers want to benefit from non-assertion of 

rights by the DMSHs, it would be possible to expand the scope of the products against which the 

DMSHs cannot exercise their rights by incorporating the semiconductor integrated circuit or other 

CDMA products manufactured by the Respondent into CDMA Subscriber Units, etc.

 However, as stated in (b) above, it is natural based on the nature of IPR licensing that, 

concerning an infringement of the IPRs by the CDMA Components manufactured and sold by the 

Respondent through the use of the IPRs owned and licensed by the DMSHs, the exercising of 

rights against the Respondent’s customers who purchased the relevant CDMA Components is 

restricted and that the exercising of rights against certain of the Respondent’s customers is 

restricted in accordance with the Non-Assertion Provision against the Respondent, etc. In this 

regard, it is the same situation as that in which concerning an infringement of the IPRs by the 

Subscriber Units manufactured and sold by the DMSHs through the use of the IPRs owned and 

licensed by the Respondent, the exercising of rights against the customers of the DMSHs who 

purchased the relevant Subscriber Units is restricted.

 Furthermore, the restriction on the exercising of rights by the DMSHs against the Respondent, 

etc. pursuant to the No-Compensation License Provisions, etc. and the Non-Assertion Provision 

against the Respondent, etc. is limited to the infringement of the IPRs by the CDMA Components 

of the Respondent, etc., and if the IPR owned by the DMSHs are infringed by any components or 

functions other than the relevant components of the products loaded with the components, etc. of 

the Respondent, etc., the DMSHs can exercise their rights. Even if it becomes difficult to exercise 

their rights against the customers who used CDMA Components manufactured by the Respondent, 

etc. due to the No-Compensation License Provisions, etc. and the Non-Assertion Provision against

the Respondent, etc., it is a common issue with license agreements in general, and even if the 

DMSHs could not actually exercise their rights or had no choice but to give up exercising their 

rights, it cannot be said based on such a fact that the scope of the IPRs concerning which the 

DMSHs may exercise their rights is broad or that it could be expanded. 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 76 of 134
[Translation]

73

 Therefore, even based on the above assertion by the Investigation Officials, it cannot be found 

that the scope of the IPRs based on which the DMSHs are restricted from the exercising of their 

rights under the No-Compensation License Provisions, etc. is broad and that the degree and content

of the restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to 

presume that they have a tendency to impede the incentives of the DMSHs to engage in research 

and development.

d. Based on the above, it cannot be found that the scope of the IPRs based on which the DMSHs

are restricted from the exercising of their rights under the No-Compensation License Provisions, 

etc. is broad and that the degree and content of the restrictions of the No-Compensation License 

Provisions, etc. are unreasonable enough to presume that they have a tendency to impede the 

incentives of the DMSHs to engage in research and development.

(C) Having the nature of a no-compensation license

a. The Investigation Officials assert that the No-Compensation License Provisions, etc. have the 

nature of a no-compensation license, and that the degree and content of the restrictions of the NoCompensation License Provisions, etc. are unreasonable enough to presume that they have a 

tendency to impede the incentives of the DMSHs to engage in research and development.

b. (a) In this respect, in discussing the No-Compensation License Provisions, etc. and the NonAssertion Provision against the Respondent, etc., it is certain that, as stated in (2) A. (c) a above, 

while the License Agreement provides that the DMSHs shall pay royalties to the Respondent, it 

contains the term “royalty free license” in the No-Compensation License Provisions, etc., and that

the Respondent is not obliged to pay certain monies to the DMSHs.

(b) However, as explained in A. (c) above, the License Agreement providing the No-Compensation 

License Provisions, etc. and the Non-Assertion Provision against the Respondent, etc. is found to 

have the nature of a cross-license agreement in which the Respondent and the DMSHs license their 

own IPRs to each other, and it is appropriate to understand that, because of the nature of the 

agreement, such an agreement usually sets forth the obligations of both parties thereunder, which

relate to each other, and therefore, it is not appropriate to focus only on a portion of the obligations 

of one party to make a judgment.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 77 of 134
[Translation]

74

 Further, under the License Agreement, on the one hand, the DMSHs grant license of the IPRs 

owned or to be owned by the DMSHs, etc. to the Respondent in accordance with the NoCompensation License Provisions, etc. or pledge not to assert their rights against certain scope of 

the counterparties, and pay moneys such as the lump sum license fee and royalties, but on the other 

hand, they obtain the license of the IPRs owned or to be owned by the Respondent, etc. Therefore, 

it is not an appropriate interpretation of the License Agreement to focus only on the NoCompensation License Provisions, etc. in which the DMSHs license certain IPRs or pledge not to 

assert their rights against certain counterparties and thereby construe that the DMSHs are forced 

to provide such provisions without obtaining any compensation, and this cannot be the basis on 

which to determine that the No-Compensation License Provisions, etc. are free of compensation 

and provides no consideration to the DMSHs.

 Even if, as a result of examining the contents of the License Agreement in a substantial manner, 

it is found that the lump sum license fee and royalties and the benefit of being licensed concerning 

the IPRs owned by the DMSHs, etc. to be obtained by the Respondent and the benefit of being 

licensed concerning the IPRs owned by the Respondent to be obtained by the DMSHs are not equal

(the benefit to be obtained by the DMSHs is smaller), based on the abovementioned nature of the 

License Agreement providing the No-Compensation License Provisions, etc. and the NonAssertion Provision against the Respondent, etc. as well as the fact that the License Agreement 

was entered into as a result of the negotiations between the Respondent and the DMSHs, it is 

difficult to judge that part of the provisions set forth in the License Agreement are free of 

compensation and provides no consideration.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 78 of 134
[Translation]

75

 Even putting aside this point, with respect to the License Agreements, it is difficult to prove 

based on evidence the specific number and contents of the IPR licenses that the Respondent and 

the DMSHs grant each other, how they are evaluated in terms of monetary value, whether the 

Respondent needs to pay royalties to the DMSHs, and what royalty rate would be appropriate, and 

these are actually not clear based on the evidence of this case, either. Therefore, with respect to the 

License Agreements, it cannot be recognized that the benefit to be obtained by the Respondent and 

the benefit to be obtained by the DMSHs are not equal or that the obligations that the DMSHs are 

imposed by the No-Compensation License Provisions, etc. and the Non-Assertion Provision 

against the Respondent, etc. are free of compensation.

In addition, while as stated in (2) A. (C) b (g) above, the License Agreement contains the term 

“royalty free” concerning the No-Compensation License Provisions, etc., and that payment of 

money is not required, as well as the term “fully-paid,” and the preamble of the License Agreement 

with some of the DMSHs contains a statement indicating that the provisions including the NoCompensation License Provisions, etc. as a whole comprises part of the consideration concerning 

the license of the IPRs by the Respondent. Therefore, it cannot be recognized based on the 

language of the License Agreements that the No-Compensation License Provisions, etc. and the 

Non-Assertion Provision against the Respondent, etc. are free of consideration.

Consequently, it cannot be recognized that the No-Compensation License Provisions, etc. and 

the Non-Assertion Provision against the Respondent, etc. have the nature of a no-compensation

license.

(c) In response to this, the Investigation Officials assert that, considering the interpretation of the 

term “royalty free,” the fact that the Respondent is not obliged to pay money to the DMSHs, the 

understanding of the DMSHs concerning the contractual language of the No-Compensation 

License Provisions, etc., and the fact that the Respondent refused an adjustment process of 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 79 of 134
[Translation]

76

contractual terms and conditions such as royalty rates in accordance with the value of the licensees’ 

IPRs that are the subject of the No-Compensation License Provisions, etc., the No-Compensation 

License Provisions, etc. and the Non-Assertion Provision against the Respondent, etc. are not the 

result of examination and evaluation of the value of patent portfolios owned by the DMSHs and 

adjustment of royalty rates and other contractual terms based on the result of the examination and 

evaluation, and thus, they have the nature of a no-compensation license.

 However, it cannot be judged that the obligations of the DMSHs under the No-Compensation 

License Provisions, etc. and the Non-Assertion Provision against the Respondent, etc. are for no

compensation on the grounds that the License Agreements contain the term “fully paid and royalty 

free” concerning the No-Compensation License Provisions, etc. and that the Respondent is not 

obliged to pay money to the DMSHs as explained in (b) above, and the judgment would not be 

affected by only the understanding of the DMSHs concerning the contractual languages of the NoCompensation License Provisions, etc.

Next, it is understood that the Investigation Officials assert that, even if the No-Compensation

License Provisions, etc. and the Non-Assertion Provision against the Respondent, etc. cannot be 

immediately construed as being for no compensation based on the structure of the License 

Agreements and that it is difficult to evaluate them as being for no compensation by objectively 

evaluating the values of the IPRs owned by the Respondent, etc. and the DMSHs, etc., it is possible 

to find that the No-Compensation License Provisions, etc. and the Non-Assertion Provision against

the Respondent, etc. are essentially free of compensation based on the negotiation process between 

the Respondent and the DMSHs (in which the Respondent refused an adjustment process of the 

royalty rate or other contractual terms in accordance with the value of the licensees’ IPRs that are 

the subject of the No-Compensation License Provisions, etc.).

In this respect, it is possible to presume based on the evidence that, some of the DMSHs owned 

certain IPRs concerning CDMA Mobile Wireless Communications technologies, setting aside the 

value or importance thereof, and that according to the negotiation process described in Attachment

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 80 of 134
[Translation]

77

2, the Respondent was requested by some of the DMSHs to reduce the royalty (reduction of the 

royalty rates) based on the IPRs owned by the relevant DMSHs but refused the request and 

basically set the royalty rates in the License Agreements uniformly among the DMSHs as stated 

in (2) A. (C) a. above, and that therefore, it is certain that the Respondent did not adjust royalty 

rates in consideration of the contents of the IPRs owned by the DMSHs, etc. as asserted by the 

Investigation Officials.

However, the License Agreements that provide the No-Compensation License Provisions, etc.

and the Non-Assertion Provision against the Respondent, etc. have the nature of a cross-license 

agreement in which both parties assume certain obligations. Moreover, the License Agreements 

were entered into through certain negotiations between the Respondent and the DMSHs. Therefore, 

even if there were problems with the Respondent’s negotiation attitude such as not sufficiently 

examining the IPRs owned by the DMSHs, etc. or not adjusting royalty rates, or taking a negative 

attitude towards reducing the royalties, it is difficult to determine that the No-Compensation 

License Provisions, etc. and the Non-Assertion Provision against the Respondent, etc. are free of 

compensation based on such facts. (Likewise, even if there were such facts that the Respondent’s 

response to the request from the DMSHs for disclosure of IPRs was insufficient in terms of timing 

or content, or that the DMSHs were forced to enter into the License Agreement providing the NoCompensation License Provisions, etc. with the Respondent, which presumably have a significant 

number of TEIPRs, it cannot be found that the No-Compensation License Provisions, etc. have the 

nature of a no-compensation license based on the abovementioned facts in the process of entering 

into the License Agreements providing the No-Compensation License Provisions, etc. and the 

Non-Assertion Provision against the Respondent, etc.).

Furthermore, even putting aside the abovementioned point, as stated in (2) B., 9 of the 14 

DMSHs listed in the appended table except for Hitachi, Fujitsu, NEC, Toshiba and Mitsubishi 

Electronics have not submitted Confirmation Forms concerning their technologies of 3G Mobile 

Wireless Communications Standards (Panasonic Mobile did not submit the documents, but 

Panasonic did.). Further, 5 of the above 9 companies (Sanyo, Casio, Kenwood, Alps Electronic 

and Kyocera) did not actually own TEIPRs concerning CDMA.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 81 of 134
[Translation]

78

In the negotiations for the License Agreements, 11 of 14 DMSHs listed in the appended table

except for NEC, Panasonic Mobile and Toshiba did not specifically present their own IPRs and 

ask for examination, evaluation and adjustment, and that, with respect to the License Agreements 

with at least said 11 companies, it would not have been unreasonable even if the Respondent had 

not considered or evaluated the value of their patent portfolios that are the subject of the NoCompensation License Provisions, etc. and the Non-Assertion Provision against the Respondent, 

etc. or did not adjust the royalty rates and other contractual terms based on the result of the 

consideration and examination. Therefore, it cannot be found that the No-Compensation License 

Provisions, etc. and the Non-Assertion Provision against the Respondent, etc. provided in the 

License Agreements with the above 11 companies have the nature of a no-compensation license 

on the grounds that the Respondent did not carry out such consideration, examination or 

adjustment. Moreover, even if the abovementioned 11 companies assumed based on the 

Respondent’s attitude that the reduction of royalties would not be accepted and gave up negotiating, 

as long as these 11 companies did not specifically present their own IPRs and ask for consideration, 

evaluation or adjustment, the above judgment would not be affected.

On the other hand, according to the negotiation process described in Attachment 2, the three 

companies including NEC, Panasonic Mobile and Toshiba presented specific IPRs they owned and 

negotiated with the Respondent, and although the Respondent did not adjust the royalty rates of 

the License Agreements with these three companies, it did adjust the contractual terms of the 

License Agreements that contains the No-Compensation License Provisions, etc. by making the 

CEIPRs subject to the Non-Assertion Provision against the Respondent, etc. instead of licensing 

based on the No-Compensation License Provisions, etc., allowing the DMSHs to exercise their 

rights in the event that the Respondent’s customers assert their rights against the DMSHs, or if the 

chips manufactured by the Respondent and a third party’s products are combined, limiting the 

definition of “Components” and “customer’s components” that stipulates the scope of the pledge

not to exercise rights as set forth in the Non-Assertion Provision against the Respondent, etc., 

excluding the Respondent’s customers from the subject parties against which rights are not 

exercised in accordance with the Non-Assertion Provision against the Respondent, etc., and 

reducing the fixed fee to be collected at the time of execution of the agreement (lump sum license 

fee) to be paid upon conclusion of the agreement. 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 82 of 134
[Translation]

79

Therefore, with respect to the above three companies, it cannot be found that the Respondent did 

not consider or evaluate the value of their patent portfolios that are the subject of the NoCompensation License Provisions, etc. and the Non-Assertion Provision against the Respondent, 

etc. or adjust the royalty rates and other contractual terms based thereon, and at least the assertion 

by the Investigation Officials that the No-Compensation License Provisions, etc. and the NonAssertion Provision against the Respondent, etc. have the nature of a no-compensation license on 

the grounds that such adjustment was not made lacks its premise, and it cannot be determined that 

the No-Compensation License Provisions, etc. are essentially free on the grounds that royalty rates 

were not adjusted, either.

Furthermore, although the negotiation process described in the Attachment 2 and evidence

show that some of the DMSHs were dissatisfied that royalty rates were not reduced (Sa 172, etc.), 

there is no evidence sufficient to prove that the royalty rates were unreasonable, and even if it 

could be said that the dissatisfaction of the DMSHs concerning the royalty rates was

understandable, that cannot be a reason to say that the No-Compensation License Provisions, etc.

in the License Agreements have the nature of a no-compensation license.

Based on the above, the assertion by the Investigation Officials that the No-Compensation 

License Provisions, etc. and the Non-Assertion Provision against the Respondent, etc. have the 

nature of a no-compensation license on the grounds that they are not the result of consideration 

and evaluation of the value of patent portfolios owned by the DMSHs which are the subject of said

provisions as well as adjustment of the royalty rates and other contractual terms based on the result 

of such consideration and evaluation cannot be accepted.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 83 of 134
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c. Next, in considering the Non-Assertion Provision against the Respondent's Licensees, this is a 

provision under which the Respondent’s licensees that provided similar provisions in the License 

Agreements with the Respondent pledge not to assert their rights based on the IPRs owned or to 

be owned by them against the other licensees, and from a practical viewpoint, it is a provision that

aims to allow the Respondent’s licensees to mutually utilize the IPRs owned or to be owned by 

such licensees.

 As such, the Non-Assertion Provision against the Respondent's Licensees provides the DMSHs

with the compensation of access to the IPRs owned by the other the Respondent's licensees that 

provided the same provision as the Non-Assertion Provision against the Licensees, and therefore, 

it cannot be said that the Non-Assertion Provision against the Respondent's Licensees has the 

nature of a no-compensation license.

Further, because the Non-Assertion Provision against the Respondent's Licensees does not 

cause a direct relationship between the DMSHs and the Respondent, it cannot be said that the NonAssertion Provision against the Respondent's Licensees has the nature of a no-compensation

license on the grounds that the Respondent did not consider or evaluate the value of the patent 

portfolios owned by the DMSHs that are the subject of these provisions and adjust royalty rates 

and other contractual terms based on the result of such consideration or evaluation.

d. Based on the above, the Investigation Officials’ assertion that the No-Compensation License 

Provisions, etc. have the nature of a no-compensation license, and that the degree and content of 

the restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to 

presume that they have a tendency to impede the incentives of the DMSHs to engage in research 

and development, cannot be accepted. 

(D) Concerning the point that the provisions are imbalanced

a. The Investigation Officials firstly assert that the provisions are imbalanced between the DMSHs

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 84 of 134
[Translation]

81

and the Respondent because, under the No-Compensation License Provisions, etc., while the 

DMSHs grant licenses for no compensation to their broad patent portfolio that the DMSHs, etc. 

developed having invested a large amount of cost and labor and/or pledge not to assert their rights 

against the Respondent, the Respondent’s customers and other licensees and are obliged to pay the 

royalties based on the royalty rates unilaterally determined by the Respondent, while the 

Respondent is allowed to use an extremely broad range of IPRs for CDMA Subscriber Units, etc. 

without paying any compensation and to provide CDMA components to customers in a stable 

environment of not being exposed to the exercising of rights such as the filing of a patent

infringement suit, etc. seeking an injunction.

However, as stated in A. (C) above, while the License Agreements that contain the NoCompensation License Provisions, etc. have the nature of a cross-license agreement, the 

Investigation Officials’ assertion only considers the obligations assumed by the DMSHs and the 

rights obtained by the Respondent concerning certain provisions of the License Agreement that 

contain the No-Compensation License Provisions, etc. and does not consider the rights obtained 

by the DMSHs and the obligations assumed by the Respondent, which cannot be considered an 

appropriate way to examine the imbalance of the No-Compensation License Provisions, etc. of the 

License Agreements.

Even putting the above point aside, the Investigation Officials’ assertion is based on the 

premise that the DMSHs granted licenses to their own IPRs to the Respondent for no compensation, 

but as explained in (c) above, it cannot be found that the No-Compensation License Provisions, 

etc. have the nature of a no-compensation license, and therefore, the Investigation Officials’ 

assertion lacks premise.

The reason why it appears that there is an imbalance between the parties is because the DMSHs

unilaterally assume the obligations to pay a lump sum license fee and royalties to the Respondent. 

However, to begin with, in a cross-license agreement, it is not always agreed that the values of the 

IPRs concerning which both parties grant licenses to each other are equivalent, and if there is any 

difference between them, it is not unreasonable at all that an agreement is made that a party pays 

money to the other party in addition to granting licenses to their IPRs. Therefore, naturally it cannot 

be said that the cross-license agreement is imbalanced because of the agreement of the payment of 

money by one party in such a cross-license agreement.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 85 of 134
[Translation]

82

Further, based on the circumstances leading to the conclusion of the License Agreements and the 

number of the IPRs stated in the Confirmation Forms, the Respondent presumably owned IPRs of 

higher value as a whole than each of the DMSHs that entered into the License Agreements, and 

thus, the License Agreement, under which the DMSHs grant licenses to IPRs owned or to be owned 

by the DMSHs, etc. and pledge not to exercise their rights and pay royalties, etc. to the Respondent, 

cannot be said to obviously be imbalanced. In addition, the DMSHs, on the one hand, grant licenses 

to IPRs owned by the DMSHs, etc. or pledge not to assert their rights against the Respondent, etc., 

and on the other hand, they receive licenses to IPRs owned by the Respondent, etc., and that the 

other the Respondent’s licensees will not assert their rights concerning TEIPRs owned by them 

against the DMSHs, and thus, even though there are differences in that the scope to which the 

DMSHs are licensed with the TEIPRs and the CEIPRs concerning the CDMA Mobile Wireless 

Communications owned by the Respondent, etc. is limited to those incorporated in CDMA 

subscriber Units of DMSHs, as explained in (C) b (b) above, it has to be said that, as long as the 

number, contents or evaluation of the IPRs to which both parties grant licenses in the License 

Agreement that include the No-Compensation License Provisions, etc. or pledge not to exercise 

their rights are not clear, there is no evidence sufficient to acknowledge that the granting of licenses 

to the IPRs by the Respondent to the DMSHs and the payment of the lump sum license fee and 

royalties as well as the granting of licenses to IPRs and the pledge not to assert their rights by the 

DMSHs to the Respondent are imbalanced. 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 86 of 134
[Translation]

83

 Based on the above, it cannot be found that the profits obtained and obligations assumed by 

the Respondent and the DMSHs respectively are imbalanced, and that the degree and content of 

the restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to 

presume that they have a tendency to impede the incentives of the DMSHs to engage in research 

and development.

b. Next, the Investigation Officials assert that the No-Compensation License Provisions, etc. treat 

the DMSHs essentially in a discriminatory manner in that they do not consider the differences in 

the values of the IPRs owned by the DMSHs, and that therefore, there is an imbalance among the 

DMSHs. 

However, although it is certain that the values of the IPRs owned by the DMSHs cannot be 

exactly the same, whether the differences in the values of the IPRs are large enough to warrant any

differences in the provisions of the License Agreements that contain the No-Compensation License 

Provisions, etc. is not clear based on the evidence, and it cannot be said that not having established 

any differences in the contractual terms among the DMSHs indicates that the degree and content

of the restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to 

presume that they have a tendency to impede the incentives of the DMSHs to engage in research 

and development. Furthermore, even if there was no difference in royalty rates as stated in 

Attachment 2, considering the fact that the provision of the Improvement Periods, scope of rights 

covered, the amount of lump sum license fees, etc. stipulated in the No-Compensation License 

Provisions, etc. are partly different, it cannot be said that the Respondent does not consider the 

value of IPRs owned by the DMSHs or treats each of the DMSHs in an essentially discriminatory 

manner.

c. Based on the above, the Investigation Officials’ assertion that the No-Compensation License 

Provisions, etc. are imbalanced, and that the degree and content of the restrictions of the NoCompensation License Provisions, etc. are unreasonable enough to presume that they have a 

tendency to impede the incentives of the DMSHs to engage in research and development cannot 

be accepted.

(E) Whether the No-Compensation License Provisions, etc. are unreasonable enough to presume 

that they have a tendency to impede the incentives of the DMSHs.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 87 of 134
[Translation]

84

a. The Investigation Officials assert on the grounds that (1) the scope of application of the NoCompensation License Provisions, etc. is broad, (2) the Compensation No-Compensation License 

Provisions, etc. have the nature of a no-compensation license, and (3) the No-Compensation 

License Provisions, etc. is imbalanced, that the degree and content of the restrictions of the NoCompensation License Provisions, etc. impede the incentives of the DMSHs to engage in research 

and development in a competitive manner because there will be many cases where, even if the 

DMSHs develop valuable technology, they cannot receive compensation, that the counterparties 

against which they cannot exercise their rights include many competitors, which makes it difficult 

to differentiate products such as CDMA Subscriber Units, etc., and that the more the DMSHs

develop valuable technologies and come to own IPRs for such technologies, the greater the 

imbalance will be between the Respondent and the DMSHs or among the DMSHs.

b. However, as already explained in (b) above, it cannot be said that the scope of the IPRs for

which the DMSHs grant licenses to the Respondent or pledge not to exercise their rights against 

the Respondent, etc. or the Respondent’s licensees is broad, and that the degree and content of the 

restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to presume 

that they have a tendency to impede the incentives of the DMSHs to engage in research and 

development. In particular, in terms of impeding innovative incentives concerning the IPRs in the 

License Agreements, among the IPRs for which the contracting party grants licenses or pledges 

not to exercise its rights in the License Agreement of the relevant IPR, the scope of the IPRs to be 

developed or obtained by the party thereafter (rather than those already owned at the time of the 

agreement) becomes an issue. With respect to the License Agreements, the Improvement Period 

of the TEIPRs in many of the License Agreements and the CEIPRs in all of them are set to be 

several months to three years at most, and even though some of them provide for the Improvement 

Period of the CEIPRs to be unlimited, as explained in (B) b (c) above, the TEIPRs comprise the 

ARIB Standard (3G Mobile Wireless Communications Standards) and the Standards Assembly

provides that the Right Holder to which the ARIB Standards apply agrees not to assert their rights 

and to grant a license unconditionally or to grant a non-exclusive and nondiscriminatory license 

on reasonable terms and conditions in the first place, which is not a differentiating factor for 

products such as CDMA Subscriber Units, etc. Therefore, it cannot be found that, among the IPRs 

to which the DMSHs, which are contracting parties, grant licenses or pledge not to exercise their 

rights in the License Agreements containing the No-Compensation License Provisions, etc., the 

scope of the IPRs to be developed or obtained after the conclusion of the agreement is different 

from the normal contractual provisions and is broad enough to impede the incentives of the 

DMSHs, etc. to engage in research and development.

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Further, as explained in (c) above, it cannot be found that the No-Compensation License 

Provisions, etc. have the nature of a no-compensation license, and even if part of the provisions 

have the nature of a no-compensation license, that is not sufficient to directly support a finding

that the provisions impede the incentives of the DMSHs to engage in research and development.

In addition, as explained in (d) above, there is no evidence sufficient to find that the License 

Agreements that set forth the No-Compensation License Provisions, etc. are imbalanced, and even 

if part of the provisions have the nature of a no-compensation license, that is not sufficient to

directly support a finding that the provisions impede the incentives of the DMSHs to engage in 

research and development.

Therefore, the Investigation Officials’ assertion that the degree and content of the restrictions 

of the No-Compensation License Provisions, etc. are unreasonable enough to presume that they 

have a tendency to impede the incentives of the DMSHs to engage in research and development 

lacks grounds.

c. Even if the content and nature of the License Agreements that contain the No-Compensation 

License Provisions, etc. as well as the factors asserted by the Investigation Officials such as the

broad scope and nature of a no-compensation license, and imbalance are comprehensively 

considered, it still has to be said that there is no evidence to find that the contents of the License 

Agreements, which contain the No-Compensation License Provisions, etc. that basically have the 

nature of a cross-license agreement of granting non-exclusive licenses to IPRs, are unreasonable 

enough to presume that they have a tendency to impede the incentives of the DMSHs to engage in 

research and development, in comparison to general cross-license agreements that are believed to 

have no tendency to impede fair competition.

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Although in the License Agreements that contain the No-Compensation License Provisions, 

etc., the Respondent is not obliged to pay money to the DMSHs and only the DMSHs are obliged 

to pay money to the Respondent, it is nothing special in cross-license agreements that only one of 

the parties assumes an obligation to pay money, and in this respect, there is no evidence to find 

that these provisions are unreasonable enough to presume that they have a tendency to impede the 

innovation incentives of the party obliged pay the money, and as explained in (d) above, there is 

no evidence sufficient to acknowledge that the granting of licenses to the IPRs by the Respondent

to the DMSHs and the payment of the lump sum license fee and royalties as well as the granting

of licenses to IPRs and the pledge not to assert their rights by the DMSHs against the Respondent

are imbalanced.

d. The Investigation Officials further assert that the parties for whom the exercising of rights is

restricted under the No-Compensation License Provisions, etc. include many competitors of the 

DMSHs, which makes it difficult to differentiate products such as CDMA Subscriber Units, etc., 

and thereby impedes the innovation incentives of the DMSHs. However, even if the parties against 

whom the DMSHs are restricted from exercising their rights include many competitors, with 

respect to the CEIPRs, which is important for the differentiation of their products from those of 

their competitors, relatively short Improvement Periods are provided, which are several months to 

approximately three years, and the DMSHs, etc. are able to exercise their rights concerning the 

IPRs developed or obtained after the expiry of the Improvement Period. Evidence (Shin 30 through 

Shin 49, Shin 239, Shin 253 through Shin 273) also shows that the DMSHs have actually actively 

engaged in technological development and filed patent applications in the field of mobile wireless 

communications after the conclusion of the License Agreements, and considering these facts, it 

cannot be found that the License Agreements that include the No-Compensation License 

Provisions, etc. make it difficult for the DMSHs to conduct research and development for 

differentiating their products in the field of Subscriber Units, etc. or that they are unreasonable 

enough to presume that they have a tendency to impede the innovation incentives of the DMSHs.

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e. The Investigation Officials further assert that, under the No-Compensation License Provisions, 

etc., the more the DMSHs develop valuable technologies and own IPRs concerning such 

technologies, the further the imbalance between the Respondent and the DMSHs or among the 

DMSHs extend, and thereby the innovation incentives of the DMSHs would be reduced. However, 

in addition to the matters explained in b. through d. above, especially the DMSHs, on the one hand, 

grant licenses of the IPRs developed or obtained by the DMSHs, etc. during the Improvement 

Period or pledge not to assert their rights against the Respondent, etc., and on the other hand, they 

receive grant of licenses of TEIPRs and CEIPRs concerning the CDMA Mobile Wireless 

Communications developed or owned by the Respondent, etc. during the same Improvement 

Period, and therefore, the Investigation Officials’ assertion that, under License Agreements that 

contain the No-Compensation License Provisions, etc., the more the DMSHs develop valuable 

technologies and own IPRs concerning such technologies, the further the imbalance between the 

Respondent and the DMSHs or among the DMSHs extend cannot be accepted.

f. Even if there is a fact that the DMSHs were forced to enter into the License Agreement that sets 

forth the No-Compensation License Provisions, etc., whether they were “being forced” is a 

different matter from whether the degree and content of the restrictions of the No-Compensation 

License Provisions, etc. are unreasonable enough to presume that they have a tendency to impede 

the incentives of the DMSHs to engage in research and development, and does not support such 

assertion, either.

g. Based on the above, the Investigation Officials’ assertion that the degree and content of the 

restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to presume 

that they have a tendency to impede the incentives of the DMSHs to engage in research and 

development misinterprets the License Agreement that sets forth the No-Compensation License 

Provisions, etc., and thus, cannot be accepted.

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C. The Investigation Officials’ assertion that the DMSHs were unable to compensate or avoid any 

possible disadvantages suffered by them as a result of No-Compensation License Provisions, etc.

The Investigation Officials assert that, even if the degree and the content of the restrictions of 

the No-Compensation License Provisions, etc. are unreasonable enough to presume that they have 

a tendency to impede the incentives of the DMSHs to engage in research and development, if the 

DMSHs could have compensated or avoided any possible disadvantages suffered by them as a 

result of No-Compensation License Provisions, etc., no facts would be found to establish a 

tendency to impede the innovation incentives, but in this case, the DMSHs were “forced” to enter 

into the License Agreements that set forth the No-Compensation License Provisions, etc. and they 

could not have compensated or avoided any possible disadvantages suffered by them as a result of

No-Compensation License Provisions, etc.

In this respect, firstly, the CDO does not state that the Respondent is in a dominant bargaining 

position and has abused such position to force the DMSHs to include the No-Compensation 

License Provisions, etc. in the License Agreements that is unfairly disadvantageous to the DMSHs. 

While it states that the Violating Acts of this case fall under the trading with restrictive conditions

regulated by Former General Designation Paragraph 13, whether the Respondent “forced” the 

DMSHs to agree to the trading with restrictive conditions is not a direct factor for falling under 

the trading with restrictive conditions.

The Investigation Officials further assert, based on the premise that the degree and the content 

of the restrictions of the No-Compensation License Provisions, etc. are unreasonable enough to 

presume that they have a tendency to impede the incentives of the DMSHs to engage in research 

and development, that because the DMSHs were unable to compensate or avoid any possible 

disadvantages suffered by them as a result of No-Compensation License Provisions, etc., the facts 

supporting the tendency to impede the incentives of the DMSHs to engage in research and 

development can be found. However, as explained in B. above, it cannot be found that the degree 

and the content of the restriction of the No-Compensation License Provisions, etc. are 

unreasonable enough to presume that they have a tendency to impede the incentives of the DMSHs. 

to engage in research and development. Therefore, the Investigation Officials’ assertion that the 

DMSHs. were unable to compensate or avoid any possible disadvantages suffered by them as a 

result of No-Compensation License Provisions, etc. lacks its premise, and thus, need not be 

considered or judged.

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D. Concerning the Investigation Officials’ assertion that concrete effect of the No-Compensation 

License Provisions, etc. can be recognized, and that it is concretely proven that these provisions 

have a tendency to impede the research and development incentives of the DMSHs

(a) The Investigation Officials’ assertions 

The Investigation Officials assert as a concrete effect of the No-Compensation License 

Provisions, etc., etc. that these provisions prevent the DMSHs from reinvesting in their research 

and development activities for new technology, and because the DMSHs must engage in research 

and development recognizing that the content of the restrictions is broad, for a long period of time, 

and imbalanced, it is concretely proven that these provisions have a tendency to undermine the 

research and development incentives of the DMSHs.

In this respect, it could be understood that the Investigation Officials’ above assertion assumes, 

with respect to the tendency to impede fair competition of the License Agreements that include the 

No-Compensation License Provisions, etc., etc., that it is unnecessary to go as far as to assert and 

prove that the provisions actually undermine the research and development incentives of the 

DMSHs and impede the development of new technology, and that proof of their tendency to 

impede research and development incentive is sufficient, and that they are attempting to indirectly 

prove that the No-Compensation License Provisions, etc. have the tendency to impede the research 

and development incentive by asserting and showing that the No-Compensation License 

Provisions, etc. have actually undermined the research and development incentive of the DMSHs.

The following is an analysis of these arguments.

(b) Concerning the assertion that the DMSHs are being prevented from reinvesting in research and 

development activities for new technology

a. The Investigation Officials assert that the No-Compensation License Provisions, etc. prevent the 

DMSHs from asserting their IPRs, and because the DMSHs were deprived of the opportunity to 

gain economic benefit that they should have gained otherwise, the DMSHs were prevented from 

reinvesting in research and development activities for new technology, and their research and 

development incentive was undermined.

b. However, to begin with, the License Agreements that include the No-Compensation License 

Provisions, etc. have the nature of a cross-license agreement, and by that nature, it is natural that 

each party to the contract is restricted from asserting their IPRs for which it granted licenses, and 

the opportunity to receive compensation from separate grants of license would be reduced. 

Therefore, it is not possible to jump straight to the conclusion that the DMSHs were deprived of 

the opportunity to gain economic benefit that they could have gained otherwise because the NoCompensation License Provisions, etc. limited the opportunity to assert their IPRs.

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90

 Furthermore, with respect to the assertion that the DMSHs were unable to receive royalties

from the Respondent, etc. or the Respondent’s Customers, or were not granted adjustments to the 

royalty rate that the DMSHs were to pay the Respondent under the License Agreements, as stated 

in above B(d), since there is no evidence sufficient to support a finding that there was an imbalance 

between the granting of licenses by the Respondent to the DMSHs for the IPRs held by the 

Respondent, and the payment of the Lump Sum License Fee and Royalty, and the granting of 

licenses to the IPRs or the pledge to not assert the IPRs by the DMSHs to the Respondent, it cannot 

be found that the DMSHs were deprived of the opportunity to gain economic benefit due to the 

License Agreements that include the No-Compensation License Provisions, etc.

Additionally, as to the CEIPRs that are necessary to differentiate products from those of other 

business operators, based on the fact that the improvement period was set from several months to 

approximately three (3) years and that the DMSHs, etc. could assert their IPRs developed or 

acquired after the lapse of the improvement period, it should be said that there is no evidence 

sufficient to support the finding that it actually became difficult for the DMSHs to differentiate 

their products due to the License Agreements that include the No-Compensation License 

Provisions, etc.

In addition, the Investigation Officials’ assertion is based on the assumption that the DMSHs 

earn licensing income from their IPRs and reinvest this income in research and development

activities. However, licensing income from IPRs is not the only source of income for the DMSHs. 

The DMSHs could, through the License Agreements that include the No-Compensation License 

Provisions, etc., and in exchange for the non-assertion of the IPRs held by them, use the IPRs of 

the Respondent, etc. without being asserted the rights of the Respondent, etc. (and also from other 

the Respondent’s licensees if the License Agreements stipulated a Non-Assertion Provision against

the Respondent’s Licensees) to manufacture and sell Subscriber Units, etc. by using the IPRs held 

by these parties and earn income. Therefore, it should be said that there is not sufficient evidence 

to find that the DMSHs were deprived of the opportunity to gain economic benefit to reinvest in

research and development because of the No-Compensation License Provisions, etc. or that those 

provisions actually undermined the research and development incentives of the DMSHs. 

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 94 of 134
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91

In this regard, if there is any business operator among the DMSHs that reinvests its license income 

into research and development, that is a matter of business strategy of the DMSHs, and the 

existence of such a business operator does not support a finding that the No-Compensation License 

Provisions, etc. ordinarily cause shortages in funds for research and development, and that the NoCompensation License Provisions, etc. undermine research and development incentive.

 Moreover, because the No-Compensation License Provisions, etc. do not require the DMSHs 

to grant exclusive licenses to the Respondent for their IPRs, the DMSHs may charge license fees

for their IPRs to business operators other than the Respondent, etc. and the Respondent’s 

Customers, and because the IPRs that are the subject of restriction on assertion against the 

Respondent, etc., the Respondent’s Customers, and the Respondent’s licensees are limited just to 

the IPRs developed or acquired by the DMSHs before the effective date of the License Agreements 

and the IPRs developed or acquired by the DMSHs, etc. during the improvement period, the 

DMSHs, etc. may assert their IPRs developed or acquired after the lapse of the improvement period 

and charge license fees to the Respondent, etc., the Respondent’s Customers, and to other the 

Respondent’s licensee for those IPRs. And, according to the evidence (Investigation Officials’

Evidence Nos. 24 to 28, 45 to 47, and 50 to 54), based on the fact that some of the DMSHs actually 

executed license agreements with leading business operators, and that Fujitsu, Mitsubishi Electric 

Corporation, NEC, Sharp, Panasonic, and Toshiba participated, as of September, 2009, in the “WCDMA Patent Licensing Programme” which is a patent pool established in 2003 for W-CDMA 

platform which is the 3G Mobile Wireless Communications Standard, and each received license 

fees, even if assuming that the DMSHs were deprived of the opportunity to gain a certain economic 

benefit due to the No-Compensation License Provisions, etc., it cannot be said that there is 

sufficient proof that it actually undermined the research and development incentive of the DMSHs.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 95 of 134
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c. The Investigation Officials also submitted a report on the number of patent applications filed 

around 2000 to 2001 when the License Agreements were executed and thereafter (Shin 255) as 

evidence that the No-Compensation License Provisions, etc. prevented proactive expansion of 

research and development investments by the DMSHs (Shin 255).

However, the number of patent applications filed is affected by various factors (the timespan 

of research and development, market conditions, etc.), and it is difficult to isolate and directly 

prove the effect on the number of patent applications caused by the No-Compensation License 

Provisions, etc. Similar to there being insufficient evidence to find that the patent application

activities of the DMSHs were maintained or activated as asserted by the Respondent, there is 

insufficient proof to find that the No-Compensation License Provisions, etc. caused a reduction in 

the patent applications by the DMSHs even with the Investigation Officials’ report on the number 

of patent applications (Shin 255).

Therefore, it cannot be found from the number of patent applications filed by the DMSHs that 

the License Agreements that include the No-Compensation License Provisions, etc. have the 

tendency to undermine the research and development incentive of the DMSHs.

d. The Investigation Officials also assert that there were actual cases where the DMSHs lost the 

opportunity to assert their IPRs due to the No-Compensation License Provisions, etc. However, to 

begin with, it is a natural consequence that the DMSHs who executed the License Agreements that 

have the nature of a cross-license agreement become restricted from asserting their IPRs within a 

certain scope. It cannot be understood from the existence of a case where assertion of the IPRs was 

prevented that the degree and content of the No-Compensation License Provisions, etc. are so 

unreasonable that it could be presumed that they have the tendency to undermine the research and 

development incentives of the DMSHs.

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Moreover, looking at the specific statements by the employees of the DMSHs alleging that 

the DMSHs were prevented from asserting their rights (Investigation Officials’ Evidence Nos. 16, 

24 to 28, 30, 31, 34, 45 to 47, 55, 248, 251, 281-1 and 2), there are several cases where the DMSHs 

were actually capable of asserting their rights despite the No-Compensation License Provisions, 

etc., but the counterparty refused due to the No-Compensation License Provisions, etc. and the 

DMSHs gave up without filing suit, or compromised on the terms, which is, in sum, a case in 

which the assertion of rights was not possible due to unsuccessful negotiations rather than the 

DMSHs being barred from asserting their IPRS due to the legal effect of the No-Compensation 

License Provisions, etc. It cannot be said that these cases resulted from the restriction on the 

assertion of rights based on the No-Compensation License Provisions, etc., and even assuming that 

the research and development incentives of the DMSHs were undermined, it cannot be said that 

the License Agreements that include the No-Compensation License Provisions, etc. undermined 

the research and development incentives, nor does it establish that the No-Compensation License 

Provisions, etc. have the tendency to impede fair competition.

e. Even if the employees of the DMSHs that were in charge stated that the DMSHs were unable to 

use their IPRs as they intended and were unable to gain economic benefit which they could 

otherwise have gained because it entered into the License Agreements that include the NoCompensation License Provisions, etc. (Sa 15, 16, 33, 35, etc.), to begin with, an entity that 

develops an IPR is not necessarily guaranteed to gain profit from that IPR as it may anticipate, and 

the statements of the employees of the DMSHs who are interested parties in this case are 

insufficient to prove that the DMSHs lost the opportunity to gain economic benefit which they 

could have reinvested because of the License Agreements that include the No-Compensation 

License Provisions, etc.

f. From the foregoing, the Investigation Officials’ assertion that the DMSHs were prevented from 

reinvesting in research and development and that their research and development incentive was 

undermined because they were restricted from asserting their IPRs due to the No-Compensation 

License Provisions, etc. cannot be accepted.

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(c) Concerning the assertion that the DMSHs had to engage in research and development

recognizing that the content of restrictions of the No-Compensation License Provisions, etc. is 

broad, for a long period of time, and imbalanced

The Investigation Officials give the disadvantages that the DMSHs would have been aware of

from the restrictions imposed by the No-Compensation License Provisions, etc. (See above Part V, 

1(1)C(c)b(i) to (iv)) and asserts that this leads to the undermining of the incentive of the DMSHs 

to proactively engage in research and development.

However, as explained in above B, it cannot be found that the No-Compensation License 

Provisions, etc., by their nature, are so unreasonable that it could be presumed that these provisions 

have the tendency to undermine the research and development incentive of the DMSHs. The 

Investigation Officials’ above assertion is merely an expression of this from the viewpoint of the 

DMSHs, and this assertion is not a novel assertion of the Investigation Official.

Furthermore, while the employees of Panasonic and the employees of Mitsubishi Electric who 

are DMSHs gave a statement as if their research and development incentive was actually 

undermined by the No-Compensation License Provisions, etc. (Investigation Officials’ Evidence 

Nos. 23, 35), as explained in above B(b) to (d), there are still no evidence sufficient to allow a 

finding that the No-Compensation License Provisions, etc., in itself, are overly broad, lacking 

compensation, imbalanced, and so unreasonable that it could be presumed that they have the 

tendency to impede research and development incentive of the DMSHs. The written statements of 

the employees of the DMSHs who are interested parties in this case is not sufficient to find that 

the License Agreements that include the No-Compensation License Provisions, etc. are so 

unreasonable that it could be presumed that they have a tendency to undermine the research and 

development incentive of the DMSHs.

Accordingly, the Investigation Officials’ above assertion cannot be accepted.

(d) Summary

As shown above, the Investigation Officials’ assertion that concrete effects of the NoCompensation License Provisions, etc. can be found and that the tendency for these provisions to 

undermine the research and development incentive of the DMSHs is concretely proven cannot be 

accepted.

E. The tendency to enhance the dominant position of the Respondent

(a) The Investigation Officials, on the assumption that the Respondent held a dominant position in 

the Subject Market, assert that as a consequence of being forced by the Respondent to execute the 

License Agreements that include the No-Compensation License Provisions, etc., there is a 

tendency for the research and development incentives of the DMSHs to be undermined and that

while the position of the DMSHs falls as a result, the dominant position of the Respondent is

relatively enhanced.

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 The Investigation Officials also assert that the Respondent will be saved from expenditures

when using technology owned by the DMSHs while receiving continuous income from royalties

and will earn stable profit from its sale of semiconductor integrated circuits, obtain funds for its 

research and development activities under advantageous conditions, and by appropriating those 

funds to its research and development activities, it will be able to build a strong IPR portfolio, 

which would enable it to enhance its dominant position.

(b) However, as the Investigation Officials assert, even if the Respondent holds a dominant 

position in the market for the CDMA Subscriber Units, etc. due to the fact that it submitted

Confirmation Forms to the Standardization Assembly declaring that it holds numerous TEIPRs for 

the 3G Mobile Wireless Communications Standards, and the Respondent in fact holds these IPRs,

as stated in above B and D, since the License Agreements that include the No-Compensation

License Provisions, etc. cannot be found to be so unreasonable as to presume that they have a

tendency to undermine the research and development incentives of the DMSHs for technology 

related to CDMA subscriber Units, etc., the Investigation Officials’ assertion that the License 

Agreements that include the No-Compensation License Provisions, etc. have the tendency to 

undermine the research and development incentive of the DMSHs which would cause the position 

of the DMSHs to fall and further enhance the dominant position of the Respondent lacks grounds.

The Investigation Officials also assert that the Respondent would be relieved from 

expenditures when using the technology held by the DMSHs, etc. However, the License 

Agreements that include the No-Compensation License Provisions, etc. basically have the nature 

of a cross-license agreement, where the Respondent on the one hand receives royalty payments

and the benefit of a license or non-assertion to the IPRs held by the DMSHs, etc., and the DMSHs, 

on the other hand, also receive licenses to the IPRs held by the Respondent, and because there is

no evidence that sufficiently proves that there is an imbalance between the granting of the licenses

to IPRs by the Respondent to the DMSHs, and the payment of a Lump Sum License Fee and 

Royalty by the DMSHs to the Respondent and the DMSHs’ granting of licenses to their IPRs or

making of a pledge not to assert their IPRs on the other hand, it cannot be found that the License 

Agreements or the No-Compensation License Provisions, etc. unilaterally enhance the dominant 

position of the Respondent beyond the scope of the IPRs held by the Respondent.

(c) Therefore, the Investigation Officials’ assertion that the License Agreements that include the 

No-Compensation License Provisions, etc. enhance the dominant position of the Respondent

cannot be accepted.

(4) Adverse effect on the fair competition order

As stated in (3) above, because it cannot be found that the No-Compensation License 

Provisions, etc. have a tendency to undermine the research and development incentive of the 

DMSHs, or to enhance the dominant position of the Respondent, it cannot be said that the NoCompensation License Provisions, etc. have an adverse effect on the fair competition order in the 

Subject Market.

The Investigation Officials assert that the No-Compensation License Provisions, etc. enable 

the Respondent to engage in research and development activities under advantageous conditions,

and by the Respondent accumulating leading technology, the Respondent’s dominant negotiation 

position would be enhanced, thus enabling the Respondent to arbitrarily set license terms. However, 

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96

those are merely abstract possibilities, and because there is no evidence that supports any adverse 

effect on the competition order, the Investigation Officials’ assertion cannot be accepted.

2. Conclusion

As stated in 1 above, because it cannot be said that the No-Compensation License Provisions, 

etc. have the tendency to impede fair competition, without the need to decide the remaining issues, 

it cannot be said that the Violating Acts of this case as asserted by the Investigation Officials violate 

Article 19 of the AMA as falling under Article 2, Paragraph 9, Item (iv) of the AMA before its 

amendment of 2009 and Paragraph 13 of the Former General Designation.

Part VII Application of the Law

For the above reasons, the Request by the Respondent is reasonable and, therefore, the 

revocation of the CDO as stated in the Main Text is appropriate pursuant to Article 66, Paragraph 

3 of the AMA.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 100 of 134
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97

December 4, 2018

Fair Trade Commission General Secretariat

Chief Hearing Examiner Mitsuhiro Saito

Hearing Examiner Satoru Horiuchi and Hearing Examiner Akiko 

Watanabe are unable to sign and seal because they were transferred.

Chief Hearing Examiner Mitsuhiro Saito

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 101 of 134
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98

Attachment 1

No. Term / Phrase Definition

1 Respondent, etc. The Respondent and those defined in the License Agreements (See III 

4 (3) of the Draft Decision) respectively as the Respondent's affiliates 

and successors of their business relating to the manufacture, sales etc. 

of semiconductor integrated circuits.

2 CDMA Mobile 

Wireless 

Communications

Of all forms of Mobile Wireless Communications (see III 2 (1) of the 

Draft Decision), mobile wireless communications stipulated in Article 

3 (3) of the Rules on Applications for Radio Equipment (Radio 

Regulatory Committee Rules No. 18 of 1950) and which meet the 3G 

Mobile Wireless Communications Standards, those mobile wireless 

communications stipulated in Article 3 (4) and (4-2) of said Rules, and

other similar mobile wireless communications which are or will be 

stipulated in foreign laws and regulations, etc.

3 Intellectual Property 

Rights [“IPRs”]

Intellectual property rights stipulated in Article 2 (2) of the Intellectual 

Property Basic Act (Act No. 122 of 2002) and any similar rights 

protected under foreign laws and regulations.

4 Domestic 

Manufacturers/Sellers 

of Handsets, etc. 

["DMSHs"]

Domestic Manufacturers/Sellers of Handsets, etc. (as defined in No.6 

below) or Wireless Telephone Base Stations (as defined in No.7 below).

5 Domestic 

Manufacturers/Sellers

etc. of Handsets, etc. 

["DMSHs, etc."]

Domestic Manufacturers/Sellers of Handsets, etc., their parent 

companies and those defined in the License Agreements (See III 4 (3) 

of the Draft Decision), respectively, as affiliates of the Domestic 

Manufacturers/Sellers of Handsets, etc.

6 Subscriber Units Equipment which is used or is to be used as land mobile stations as 

stipulated in Article 4, Item 1 (12) of the Ordinance for the Enforcement 

of Radio Law (Radio Regulatory Committee Rules No. 14 of 1950), or 

equipment which has equivalent functions thereto which is used or is to 

be used in foreign countries (including not only mobile phones but also 

modem cards and communication modules used for data 

communication on personal computers and other electronic devices).

7 Wireless Telephone 

Base Stations

Equipment which is used as or is to be used as, or is used with or is to

be used with, the base stations stipulated in Article 4, Item 1 (6) of the

Ordinance for the Enforcement of Radio Law (Radio Regulatory 

Committee Rules No. 14 of 1950), or other equipment which have

equivalent functions and is used or is to be used in foreign countries.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 102 of 134
[Translation]

99

Attachment 2

History of Negotiations between the Respondent and Major DMSHs

1. NEC

(1) NEC and the Respondent entered into the license agreement for 2G subscriber units 

["SULA"] on December 15, 1994 and the license agreement for 2G infrastructure 

equipment ["IELA"] on June 2, 1995.

(2) At the August 26, 1999 meeting, the Respondent proposed to NEC the execution of a 

license agreement for 3G mobile wireless communications. On that occasion, the 

Respondent explained to NEC its strategy concerning 3G mobile phone wireless 

communications standards and the status of its IPRs. With respect to the 3G license 

agreement, the Respondent proposed to NEC certain terms, including that it would be 

based on the license agreements for the 2G mobile phone wireless communication, and 

revised to allow for the development, manufacture, and sale of products compatible with 

the 3G mobile phone wireless communications standards by expanding the scope of 

covered patents, that the royalty rates may not be modified and that certain fixed fees

would be collected upon execution of the agreement (Sa 14, Sa 99-1 and 99-2)

(3) On February 3, 2000, the Respondent notified NEC that the validity of the license terms 

proposed by the Respondent on August 26, 1999 could not be guaranteed from March 26, 

2000 onward, and that the Respondent reserved the right to raise the fee depending on 

market conditions.

 On February 10, 2000, the Respondent also notified NEC that if NEC executed the 

agreement by March 25, 2000, payment of the fixed fee to be collected at the execution 

of the agreement could be postponed by several months and installment payments would 

be permitted.

(4) On February 22, 2000, NEC responded to the Respondent, stating that considering that

NEC possessed an important IP portfolio of W-CDMA technologies and that the 

Respondent was planning to provide W-CDMA compatible semiconductor integrated 

circuits for manufacturers, an arrangement whereby NEC unilaterally paid royalties to the 

Respondent for 3G Subscriber Units, etc. would be inappropriate, and therefore, NEC 

could not accept the license terms proposed by the Respondent at the August 26, 1999 

meeting. NEC also sent a list of patents and patent applications held by NEC concerning 

3G mobile phone wireless communications standards and of patents and patent 

applications held by NEC which they believed were being used in the semiconductor 

integrated circuits manufactured and sold by the Respondent (including patent/patent 

application numbers, application dates, and application countries), to which the 

Respondent did not make any response until about August 2000.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 103 of 134
[Translation]

100

(5) On August 9, 2000, the Respondent explained to NEC that the Respondent’s business 

of manufacturing and selling semiconductor integrated circuits would be spun off to a 

separate corporation called Spinco, and that some of the Respondent’s patents concerning

CDMA mobile wireless communication standards would be assigned to Spinco, and 

stated that due to the possibility that those patents might be assigned to Spinco, the form 

in which the licensing would take place after October 2000 was unclear.

 In addition, on August 12, 2000, the Respondent informed NEC that as long as it was 

before the initial public offering of Spinco shares, it was guaranteed that the Respondent

could, by means of a single agreement, grant a license to NEC for the patents held by the 

Respondent and the patents to be assigned by the Respondent to Spinco, but that the form 

of licensing and fees, etc. after the initial public offering of Spinco shares were unclear 

and that following completion of the spin-off of the semiconductor business, the 

Respondent would have little or no need to receive a cross-license from NEC (Sa 103-1 

and 103-2, Sa 104-1 and 104-2).

(6) On August 28, 2000, NEC again sent the Respondent a list of relevant patents and 

patent applications held by NEC (the list sent on February 22, 2000 with new patents 

added) and requested a meeting to negotiate on the license terms.

 On August 31, 2000, the Respondent explained to NEC the outline of the 

semiconductor business spin-off plan and the form of licensing, etc. following the spinoff. The Respondent also stated to NEC that the Respondent’s patent team concluded, 

after closely examining whether or not the Respondent would need a license of the patents 

presented by NEC on February 22, 2000 for the Respondent’s application specific 

integrated circuit business, that it would be unnecessary for the Respondent to obtain the 

license; that the Respondent would have its patent team evaluate the latest patents that 

NEC believed might be used in Spinco’s application specific integrated circuits; that in 

any case, as a result of the spin-off of the semiconductor business, the Respondent

believed that it would be unnecessary for the Respondent to obtain such cross-license 

from NEC; that if NEC had no intention of granting the cross-license for semiconductor 

integrated circuits to Spinco, the Respondent would have to exclude the relevant patents 

and patent applications which were pending assignment to Spinco from those licensed by 

the Respondent to NEC; and at the same time that NEC would need to expand the current 

license agreements if NEC were to use important patents applied for on or after July 1, 

1995 including W-CDMA related patents.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 104 of 134
[Translation]

101

 The Respondent further indicated that if NEC did not enter into the license agreements 

for 3G mobile wireless communications by September 30, 2000, starting on October 1, 

2000, the fixed fee to be collected at the execution of the agreement would double from 

$2.5 million to $5 million with respect to the SULA and would double from $5 million to 

$10 million with respect to the IELA, and prompted NEC to execute 3G license 

agreements by September 30, 2000 (Sa 106-1 and 106-2).

(7) On September 5, 2000, NEC sent the Respondent a claim chart for some of the patents 

held by NEC that were included in the list sent from NEC on August 28, 2000 for the 

meeting scheduled for September 8.

(8) On September 6, 2000, the Respondent sent NEC the draft license agreements for 3G 

mobile wireless communications (the “September 6, 2000 Draft Agreements”) in advance 

of the September 8 meeting between the Respondent and NEC.

 The September 6, 2000 Draft Agreements included the provisions under which NEC 

patents would be licensed. Like the license agreements for 2G mobile wireless 

communications, such provisions covered patents for licensee’s TEIPRs. However, with 

respect to “Components,” the provisions did not limit the scope of the coverage to 

instances where the relevant “Components” are incorporated into Subscriber Units, etc. 

by the Respondent and used as a part of the Respondent’s Subscriber Units or Base 

Stations by the Respondent, but rather allowed the Respondent to sell “Components” to 

third parties.

(9) At the September 8, 2000 meeting with NEC, the Respondent explained the September 

6, 2000 Draft Agreements and stated that the Respondent would not need to obtain a crosslicense for the NEC patents as of October 1, 2000, and explained that while negotiations 

would continue, the fixed fee to be collected at the execution of the agreement would be 

doubled from October 1, 2000 onward as provided in the draft agreements 

 In response, NEC protested against the deadline suddenly imposed by the Respondent

while NEC was waiting for a response from the Respondent after sending the list of its 

patents and patent applications to the Respondent in February 2000 and requesting the 

Respondent to engage in discussions concerning the patents held by NEC.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 105 of 134
[Translation]

102

 As a result, NEC and the Respondent scheduled a meeting to be held at the 

Respondent’s head office in the United States on September 28, 2000, where a technical 

explanation was to be provided on the patents held by NEC with the attendance of 

engineers from both sides.

(Sa 109-1 and 109-2)

(10) On September 11, 2000, the Respondent made a request to NEC to postpone the 

meeting scheduled for September 28 until late-October.

(11) On or about September 28, 2000, Tetsuzo Matsumoto, President of QUALCOMM 

Japan which is a subsidiary of the Respondent and engages in marketing business for the 

Respondent’s business, pointed to a news release announcing NEC’s delivery of WCDMA Base Stations, and told NEC that depending on the circumstances, they might 

have to take legal action including seeking an injunction preventing shipment and that the 

Respondent had no intention of discussing patents, which was why the Respondent

postponed the meeting until late October. (Sa 111)

(12) On September 29, 2000, NEC requested that the Respondent extend the negotiation 

deadline for the license agreements for 3G mobile wireless communications without the 

doubling of the fixed fee to be collected at the execution of the agreement by a maximum 

of four weeks, and the Respondent agreed to extend the negotiation deadline until October 

31, 2000.

(13) On October 5, 2000, NEC requested a meeting with the Respondent for licensing 

negotiations, and on October 11, NEC held a meeting with the Respondent and conducted 

negotiations based on the September 6, 2000 Draft Agreements. At the meeting, NEC 

requested the Respondent to reduce the royalty rates considering the patents held by NEC, 

but the Respondent did not accommodate this request. At the meeting, however, it was 

agreed that the provisions proposed in the draft agreements to the effect that NEC would 

license its TEIPRs for the Respondent’s manufacture and sale of “Components” should 

be changed to provisions under which NEC would make a pledge not to assert its rights 

against Spinco and Spinco’s customers as long as Spinco and Spinco’s customers did not 

attack NEC in the area of wireless communications patents (Non-Assertion Provision 

against the Respondent, etc.). (Sa 115)

(14) On October 23, 2000, NEC had a meeting with the Respondent, where NEC explained 

the strength of its IP portfolio to the Respondent and again requested that the royalty rates 

be reduced, but the Respondent refused this request. NEC and the Respondent also 

confirmed that, as agreed at the October 11 meeting, the provisions enabling the 

Respondent to manufacture and sell “Components” would not be provisions under which 

NEC would license its patents to the Respondent, but would be a Non-Assertion Provision 

against the Respondent, etc. The Respondent was to prepare revised draft agreements and 

send them to NEC.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 106 of 134
[Translation]

103

(15) Following the October 23, 2000 meeting, the Respondent sent to NEC the revised draft 

license agreements for 3G mobile wireless communications.

 In response, NEC protested to the Respondent on the same day that the Non-Assertion 

Provision against the Respondent, etc. in the aforementioned revised draft agreements 

were far different from the content agreed upon at the meeting on that day, and asserted 

that the scope of patents subject to the Non-Assertion Provision should be limited to 

NEC’s TEIPRs as agreed at the meeting, and that the scope of subject products should be 

limited to “Components” manufactured by the Respondent or Spinco and sold to their 

customers. NEC also sent revised drafts reflecting these assertions.

(16) On October 24, 2000, the Respondent told NEC that the Respondent could not agree 

to limit the scope of patents subject to the Non-Assertion Provision against the 

Respondent, etc. to NEC’s TEIPRs, and sent the following two options and two versions 

of the draft agreements reflecting these options regarding the Non-Assertion Provision:

A. Option 1

NEC’s Non-Assertion Provision regarding ”Components” would be deleted. In 

exchange, however, all of Spinco’s patents would be excluded from the scope of the 

Respondent’s license to NEC.

B. Option 2

Only NEC’s TEIPRs would be subject to the Non-Assertion Provision, while only 

Spinco’s TEIPRs would be licensed to NEC. However, for a period of three years 

after Spinco ceases to be affiliated with the Respondent, all of NEC’s patents would 

be subject to the Non-Assertion Provision and all of Spinco’s patents would be 

subject to the Respondent’s license to NEC.

(Sa 119-1 and 119-2)

(17) On October 25, 2000, NEC protested to the Respondent that the content of the two 

versions of the draft agreements described in (16) above was far different from the details 

discussed at the October 23 meeting by the two companies and also from the September 

6, 2000 Draft Agreements that the Respondent initially proposed. NEC sent counter-draft 

agreements that contained the provisions (which were based on the provisions in the 

September 6, 2000 Draft Agreements under which NEC’s patents would be licensed) 

specifying that if a Respondent’s customer asserted TEIPRs against NEC’s mobile 

wireless communication devices, the provisions would be terminated with respect to that 

customer only.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 107 of 134
[Translation]

104

 In response, on October 25, 2000, the Respondent stated to NEC that the limitation of 

the scope of NEC’s license to TEIPRs in the September 6, 2000 Draft Agreements was a 

“mistake on our part,” and sent to NEC a revised draft agreements that included, by adding 

to the draft NEC proposed, a Non-Assertion Provision whereby NEC makes a pledge not 

to assert its rights against the Respondent, etc. (excluding the Respondent’s customers) 

with respect to the “licensee’s (in this case, NEC’s) pledge patents” (i.e., all NEC patents 

and patent applications included in “the licensee’s IPRs” other than “TEIPRs” subject to 

the license provisions), in addition to the provisions under which the licensee’s TEIPRs 

would be licensed.

(Sa 121-1 and 121-2)

(18) On October 31, 2000, NEC entered into the License Agreements with the Respondent.

 The main contents of the No-Compensation License Provisions, etc. and other 

provisions in the License Agreements are described in the appended chart. Specifically, 

(1) CEIPRs held by NEC shall not be subject to the No-Compensation License Provisions, 

etc., but subject to the Non-Assertion Provision against the Respondent, etc., and NEC 

shall make a pledge not to assert its CEIPRs against the Respondent and its affiliates, 

contracted manufacturers, and sellers only (excluding the Respondent’s customers) with

respect to the Respondent's manufacturing and selling of components, and (2) if a 

customer of the Respondent asserts its TEIPRs against NEC, the license of NEC’s TEIPRs 

to that customer for the use of the Respondent’s components shall be terminated for such 

customer with respect to the components sold after April 1, 2001.

(Sa 67-2, Sa 67-4, Shin 50-67-2, Shin 51-67-2-2, Shin 78)

(19) On July 24, 2001, the Respondent announced that it was cancelling the spin-off of its 

business for the manufacture and sale of semiconductor integrated circuits. The 

Respondent also announced that the corporate split was intended to provide its integrated 

circuit manufacturing and sales business with reasonable access as a separate company to 

third-party IPRs, and following announcement of the spin-off, the Respondent has 

executed or revised license agreements with approximately 40 businesses including NEC, 

Fujitsu, and Panasonic Mobile, and as a result, the Respondent had obtained the rights 

necessary to supply semiconductor integrated circuits. Further, the Respondent

announced that it may consider a new spin-off in the future if there arise disputes that 

have an adverse impact on its business activities.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 108 of 134
[Translation]

105

2. Panasonic Mobile

(1) On December 20, 1993, Panasonic Mobile executed SULAs with the Respondent (the 

“Original Agreement”). The Respondent’s technologies covered by the Original 

Agreement were 2G CDMA standards known as IS-95 and other CDMA standards, which 

were described as standards that had the potential of being adopted by standardization 

organizations and the de facto CDMA standards, and included 3G CDMA standards such 

as W-CDMA and CDMA-2000. The Original Agreement contained the provisions under 

which TEIPRs of the licensee, i.e., Panasonic Mobile would be licensed to the Respondent.

(2) On December 5, 1997, the Respondent proposed revisions of the Original Agreement 

to include the Non-Assertion Provision, etc. against the Respondent’s licensees by listing 

names of the companies that had agreed to include the Non-Assertion Provision against 

the Respondent’s licensees in their original agreements, and informed NEC that the 

Respondent would not discuss or accept the reduction of royalty rates. (Sa 142-1 and142-

2)

(3) In and around 1997 to 1998, Panasonic Mobile was considering entering the business 

of manufacturing and sales of the Base Stations and other infrastructure facilities and field 

testing equipment compatible with the W-CDMA standards, which are 3G Mobile 

Wireless Communications Standards, for NTT DOCOMO (Sa 12).

 Therefore, on August 5, 1998, Panasonic Mobile notified the Respondent that 

Panasonic Mobile was interested in entering into a license agreement for the 3G Base 

Stations and testing equipment compatible with the CDMA standards and requested the 

Respondent to hold a meeting to discuss the possibility of concluding such an agreement. 

Panasonic Mobile also notified that it was still discussing internally about adding to the 

Original Agreement the Non-Assertion Provision against the Respondent’s licensees.

(4) On August 13, 1998, the Respondent agreed to Panasonic Mobile’s proposal for a 

meeting, and sent Panasonic Mobile the latest list of companies that had agreed to the 

Non-Assertion Provision against the Respondent’s licensees in the SULAs, indicating at 

the meeting that the Respondent would like to ask about the conclusion of Panasonic 

Mobile’s internal consideration regarding the Respondent’s proposal to include the NonAssertion Provision against the Respondent’s licensees in the revised agreement of the 

Original Agreement.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 109 of 134
[Translation]

106

(5) Subsequently, on the belief that the Respondent announced to European standards

organizations and such with respect to development of the CDMA Mobile Wireless 

Communications Standards its policy of not granting licenses to TEIPRs for the WCDMA standards, Panasonic Mobile concluded that even if it continued negotiating with 

the Respondent, it could not anticipate that the Respondent would license essential patents 

for Base Stations and testing equipment for the W-CDMA standardsto it in the near future,

and made a request to the Respondent to postpone the negotiations. (Sa 12)

(6) At the August 23, 1999 meeting, approximately one year after the negotiations were 

postponed, the Respondent explained to Panasonic Mobile its strategy concerning 3G 

Mobile Wireless Communications Standards and the status of its IPRs. Indicating 

licensing terms such as that it would be based on the Original Agreement, expanding the 

scope of covered patents, thereby enabling development, manufacture and sale of 

products compatible with the 3G Mobile Wireless Communications Standards, not 

modifying the royalty rates and the collection of an upfront fee, the Respondent proposed 

amendments to the Original Agreement and execution of the license agreement for 3G 

Base Stations and testing equipment.

(7) On September 16, 1999, Panasonic Mobile notified the Respondent that Panasonic 

Mobile was looking into the Respondent’s proposals made on August 23, 1999 and that 

Panasonic Mobile was conducting assessment work with respect to its patents and 

technologies which would be of interest and value to the Respondent so they could be 

incorporated into the revised agreement and that it would notify the Respondent as soon 

as the assessment is completed.

(8) On December 27, 1999, Panasonic Mobile notified the Respondent that its patent 

assessments were nearly completed and the assessment results could be presented to the 

Respondent. Panasonic Mobile also proposed discussing the extension or revision of the 

Original Agreement while it provided explanation to its patents, and stated that Panasonic 

Mobile’s patents included patents that would be of interest and value to the Respondent

(Sa 147-1 and 147-2).

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 110 of 134
[Translation]

107

(9) On December 28, 1999, the Respondent replied to Panasonic Mobile that the 

Respondent would agree to have a meeting with Panasonic Mobile to discuss the 

extension or revision of the Original Agreement. The Respondent further indicated that 

the Respondent might be interested in Panasonic Mobile’s patents, but would need more 

detailed information concerning the technologies that could be achieved by those patents, 

and that the Respondent had sold its base station business and had also announced that it 

would sell its subscriber units business, and therefore, that the focus of the Respondent’s 

product sales would be narrowed down substantially. (Sa 148-1 and 148-2)

(10) On February 3, 2000, the Respondent notified Panasonic Mobile that the validity of the 

licensing terms proposed by the Respondent at the August 23, 1999 meeting could not be 

guaranteed from March 26, 2000 onward, and that the Respondent reserved the right to 

raise the charges depending on market conditions. Further, the Respondent told Panasonic 

Mobile to contact the Respondent immediately if Panasonic Mobile was interested in 

entering into a license agreement for 3G mobile wireless communications.

(11) On February 11, 2000, the Respondent sent Panasonic Mobile a draft license agreement 

for 3G Base Stations and testing equipment, in advance of the meeting scheduled for 

February 18, 2000. The draft agreement contained provisions under which the “Licensee’s 

IPRs” would be licensed, and the “Licensee’s IPRs” included the TEIPRs and CEIPRs 

held by Panasonic’s “Affiliates” (including Panasonic, Panasonic Mobile’s parent 

company). In addition, the draft agreement contained the Non-Assertion Provision against 

the Respondent’s licensees.

(12) On February 18, 2000, Panasonic Mobile had a meeting with the Respondent, where 

Panasonic Mobile discussed revisions of the Original Agreement and the details of the 

license agreement for 3G Base Stations and testing equipment and concluded that the 

improvement period needed to be extended to December 31, 2000. Panasonic Mobile also 

stated that if Panasonic Mobile’s and Panasonic’s patents necessary for the manufacture 

and sale of “Components” by the Respondent were licensed to the Respondent for no 

compensation, this would essentially be the same as licensing patents held by Panasonic 

Mobile and Panasonic to subscriber units manufacturers that purchase the “Components” 

manufactured by the Respondent from the Respondent, and stated that Panasonic 

Mobile’s and Panasonic’s patents could not be licensed to the Respondent for no 

compensation.

 In response, the Respondent indicated that it could understand the concerns that 

licensing the patents held by Panasonic Mobile and Panasonic for the Respondent to the 

Respondent for the manufacture and sale of the “Components” would amount to licensing 

those patents to Panasonic Mobile’s competitors and proposed that Panasonic Mobile 

provide a pledge not to assert their rights against the Respondent as an alternative measure.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 111 of 134
[Translation]

108

 At that time, the Respondent rejected the revisions to the royalty rates requested by 

Panasonic Mobile and stated that if the Respondent could not obtain the patent licenses 

necessary for the Respondent to manufacture and sell the “Components” from Panasonic 

Mobile and Panasonic, the Respondent had no intention of licensing patents that it 

developed during the extended improvement period to Panasonic Mobile.

 Panasonic Mobile then disclosed a list of Panasonic Mobile’s or Panasonic’s patents 

related to 3G Mobile Wireless Communications Standards, and furthermore, made a 

proposal to the Respondent that it would disclose to the Respondent specific patents 

relating to MPEG4 standards.

 In response, the Respondent stated that it would evaluate the patents held by Panasonic 

Mobile and Panasonic and promised to disclose to Panasonic Mobile on a later date the 

patents that it developed after the improvement period of the Original Agreement.

 Panasonic Mobile also pointed out that the draft license agreement for 3G Base Stations 

proposed by the Respondent on February 11, 2000 had issues including that the patents 

held by Panasonic, Panasonic Mobile’s parent company, were included in the scope of the 

no-compensation license to the Respondent.

(Sa 151, Sa 152)

(13) On April 4, 2000, the Respondent requested that Panasonic Mobile provide additional 

information concerning patents held by Panasonic Mobile or Panasonic.

 In response to the request for additional information, on April 13, Panasonic Mobile 

provided the Respondent with additional information concerning patents held by 

Panasonic Mobile or Panasonic.

(14) On April 18, 2000, Panasonic Mobile informed the Respondent that Panasonic Mobile 

had sent the Respondent a list of patents related to 3G Mobile Wireless Communications 

Standards and patents related to MPEG4 standards in accordance with the agreement 

made at the February 18, 2000 meeting but had not received the Respondent’s patent list, 

and prompted the Respondent to send its list of patents developed or acquired by the 

Respondent after the improvement period stipulated in the Original Agreement in 

accordance with the agreement reached at that meeting.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 112 of 134
[Translation]

109

(15) On May 16, 2000, the Respondent instructed Panasonic Mobile to refer to the list of 

essential patents in connection with 3G Mobile Wireless Communications Standards 

published by ARIB (“ARIB List,” which lists patent owners, title of patents, patent 

application numbers as well as countries of application with respect to patents on which 

Declaration of Essential Patents has been made).

 However, since the ARIB List which Panasonic Mobile was instructed by the 

Respondent to refer to was not a list of patents developed or acquired by the Respondent

after the improvement period in the Original Agreement and the Respondent did not 

provide information regarding characteristics of the patent inventions described in the 

ARIB List or the construction of the claim elements, Panasonic Mobile was not able to 

properly assess whether or not the Respondent had significant TEIPRs.

(Sa 194)

(16) On August 17, 2000, the Respondent explained to Panasonic Mobile that the 

Respondent’s business of manufacturing and selling semiconductor integrated circuits 

would be spun off to a separate corporation called Spinco and that some of the 

Respondent’s patents for CDMA Mobile Wireless Communications Standards would be 

assigned to Spinco. With respect to its impact on the license agreement between the 

Respondent and Panasonic Mobile, the Respondent indicated that after the initial public 

offering of Spinco shares, Panasonic Mobile would need to pay royalties not only to the 

Respondent but also to Spinco, and that the Respondent would no longer need to receive 

patent licenses from Panasonic Mobile. (Sa 12, Sa 155)

(17) On September 8, 2000, the Respondent explained to Panasonic Mobile the outline of 

the spin-off plan for the semiconductor business and the forms of licensing, etc. following 

the spin-off, and informed them that as a result of the spin-off of the semiconductor 

business, the Respondent would have almost no need to receive licenses of IPRs held by 

Panasonic Mobile, but that Panasonic Mobile would need to expand the current license 

agreement so that Panasonic Mobile would be able to use the important patents for which 

applications were filed on or after July 26, 1995. The Respondent further indicated that if 

Panasonic Mobile did not enter into the license agreement for 3G Mobile Wireless 

Communications by September 30, 2000, starting on October 1, 2000, the fixed fee to be 

collected at the execution of the agreement would be doubled from $2.5 million to $5 

million, and prompted Panasonic Mobile to execute the license agreement for 3G Mobile 

Wireless Communications by September 30, 2000.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 113 of 134
[Translation]

110

(18) On September 12, 2000, Panasonic Mobile stated that the draft agreement the 

Respondent sent on February 11 of that year was substantially different from the Original 

Agreement and that Panasonic Mobile was having difficulty obtaining internal approval, 

and therefore requested that the Respondent expand the Original Agreement by adding 

Base Stations and testing equipment to the licensed products as an alternative measure. 

(19) On September 21, 2000, the Respondent sent to Panasonic Mobile the following two 

proposals concerning the addition of Base Stations and testing equipment to the licensed 

products under the Original Agreement with an effective period ending October 1, 2000 

and a list of the Respondent’s patent numbers:

A. Option 1

The improvement period would be extended. In this case, the upfront fee would be 

$4.5 million (the territory for the base station would be limited to Japan). The 

revisions would include the Respondent’s standard “no compensation cross-license

for components.”

B. Option 2

The improvement period would not be extended. In this case, the upfront fee would 

be $3.3 million (the territory for the base station would be limited to Japan). These 

revisions would also include the Respondent’s standard “no compensation crosslicense for components.”

(Sa 12, Sa 154-1 and 154-2)

(20) On September 29, 2000, Panasonic Mobile expressed its opinions to the Respondent

on the history of negotiations to date for the License Agreement, stating that the 

explanation regarding the effect of the Spin-Off is confusing to Panasonic Mobile, and 

expressed concerns regarding the time limit imposed by the Respondent with their 

suggestion that the fixed fee to be collected at the execution of the agreement would be 

doubled if Panasonic Mobile did not enter into the License Agreement for the 3G Mobile 

Wireless Communications by September 30, 2000, even though it would require 

significant time for Panasonic Mobile to evaluate the list of patent numbers received from 

the Respondent on September 21, 2000. [Panasonic Mobile] also requested that the 

Respondent expand the scope of the current License Agreement for subscriber units to 

also cover the licenses for the Base Stations and testing device.

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 114 of 134
[Translation]

111

 Panasonic Mobile also indicated that while it was still considering the two proposals 

presented by the Respondent on September 21, 2000, it believes that a draft agreement 

expanding the improvement period as indicated in “Option 1” would be the better solution 

for both parties.

 With respect to the provision requiring Panasonic Mobile to grant license to the 

Respondent for its patents as requested by the Respondent, Panasonic Mobile responded 

that it cannot accept a situation where the Respondent or the SpinCo would sell 

application specific integrated circuits to customers, and enable those customers to use 

the patents developed by Panasonic Mobile, and that such an arrangement between the 

Respondent and Panasonic Mobile is unfair and would create serious difficulties in

conducting transactions with other companies. Panasonic Mobile also commented that it 

understood that this issue was appropriately resolved at the meeting held on February 18, 

2000 when the Respondent suggested that Panasonic Mobile make a pledge that it will 

assume non-assertion obligations towards the Respondent as an alternative plan for the 

provision requiring the Respondent to grant license for its patents. (Sa 159-1, Sa 159-2)

(21) On October 2, 2000, the Respondent told Panasonic Mobile that the Respondent’s 

position has changed since the meeting of February 18, 2000 concerning the provision 

requiring Panasonic Mobile to grant license for its patents and suggested that they hold a 

meeting again to discuss the revision of the Original Agreement and licenses for the Base 

Stations and testing device.

(22) At the meetings held between the parties on October 18 and 19, 2000, Panasonic 

Mobile demanded explanation from the Respondent on its position, pointing out that the 

Respondent keeps changing its proposal each time in their communication.

 To this, the Respondent stated, “We have a right to change our proposal because the 

business environment changes,” or that “Nothing was decided at the meeting held in 

February,” and refused to reduce the royalty requested by Panasonic Mobile by stating, 

“The Respondent does not make various decisions based on evaluation of patents.”

 As a compromising proposal with respect to the provision requiring Panasonic Mobile 

to grant license for its patents, instead of that provision, ,Panasonic Mobile proposed with 

respect to the “Components” that are the subject products, that on condition that the 

subject parts be limited to “Components” that are specific to the CDMA standards 

(“Specific to CAI”), Panasonic Mobile will accept non-assertion obligation barring it 

from assertion of its IPR against the Respondent and its customers that purchased the 

“Components” from the Respondent for the IPR held by it. (Sa 12, Sa 161)

 Meanwhile, the Respondent proposed an arrangement where if the Respondent’s

customer asserts any rights against Panasonic Mobile, then Panasonic Mobile may assert 

its rights against such the Respondent’s customer.

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[Translation]

112

(23) On October 23, 2000, the Respondent presented Panasonic Mobile with a revised draft 

of the Basic Agreement and the Original Agreement (hereinafter collectively referred to 

as the “October 23, 2000 Drafts”) and requested that Panasonic Mobile sign the Basic 

Agreement by October 31, 2000.

 The Basic Agreement presented by the Respondent stipulated as agreed matters that the 

parties shall negotiate in good faith to sign the revised agreement which is substantially 

the same as the October 23, 2000 Drafts by November 30, 2000, and that the revised 

agreement shall not include a provision that changes the Royalty Rate under the Original 

Agreement, that the revised agreement shall include a provision substantially the same as 

the conditions of “Non-Assertion Provision against the Respondent, etc.” (Article 8.1) in 

the October 23, 2000 Drafts, and that the parties shall continue to hold discussions in good 

faith with regard to further amendment of the agreement after execution of the revised 

agreement, provided that the Respondent shall not be obligated to agree to a revision of

the Royalty Rate.

 Furthermore, while the October 23, 2000 Drafts stipulated that Panasonic Mobile shall 

not assert its “Pledge Patents” against the Respondent and its successors, and against the 

customer’s “CDMA Multi-Mode Products” that incorporate the “Components” purchased 

from the Respondent and its successors, there were no restrictions on the CDMA 

standards in relation to the definition of the “Components” discussed at the meetings held 

on October 18 and 19, 2000. It was also set forth that the “Pledge Patents” include the 

patents that were applied for and issued by the end of the improvement period and the 

pending patent applications, and in addition, it was agreed that Panasonic Mobile’s 

“Pledge Patents” that are the subjects of the non-assertion provision also include patents 

invented by the employees, etc. of Panasonic Mobile even if the ownership of those 

patents was transferred to the parent company, Panasonic. Furthermore, the drafts also 

stipulated that Panasonic Mobile’s non-assertion provision shall survive as long as the 

Respondent’s customer does not assert its IPRs to Panasonic Mobile pursuant to the 

“Pledge Patents.”

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[Translation]

113

(24) On October 26, 2000, Panasonic Mobile contacted the Respondent and pointed out that 

the October 23, 2000 Drafts contain proposals which greatly deviate from the 

Respondent’s proposal made on October 18 and 19, 2000, and that Panasonic Mobile 

requires time to the consider the October 23, 2000 Drafts.

(25) On November 14, 2000, Panasonic Mobile contacted the Respondent and once again 

conveyed its serious concern towards the Royalty Rate imposed by the Respondent, but 

expressed understanding of the Respondent’s situation that it cannot comply with the 

request for change of the Royalty Rate which would result in adversely affecting its entire 

licensing program, notified them that it will agree to withdrawing its request for a 

reduction of the Royalty Rate on condition that the Respondent represents that other 

companies are not given more preferential treatment than Panasonic Mobile on the 

Royalty Rate, and sent a revised draft license agreement (the “November 14, 2000 

Revisions”).

 The November 14, 2000 Revisions included revisions such as limiting the 

“Components” that are subject to the non-assertion provision to ASIC (application 

specific integrated circuits) to implement the CDMA technology and to ASIC, etc. that 

processes CDMA signals for use in subscriber units, the addition of a provision that the 

Respondent shall not assert its IPRs when Panasonic Mobile or Panasonic manufactures 

and sells, etc. the “Components,” and exempting US$500,000 from the fixed fee to be

collected at the execution of the agreement that extends of the improvement period. 

(Sa 12, Sa 164-1, Sa 164-2)

(26) On November 21, 2000, the Respondent responded to Panasonic Mobile concerning 

the November 14, 2000 Revisions, stating that it cannot accept a reduction of the fixed 

fee to be collected at the execution of the agreement and the Respondent’s non-assertion

pledge concerning Panasonic Mobile’s sale of the “Components,” and sent draft revisions 

to the November 14, 2000 Revisions.

 The above draft revisions from the Respondent revised the definition of

“Components” by changing the limitation of “CDMA” proposed by Panasonic Mobile to 

“wireless communications,” making components to be used in communications under the 

GSM standard, which is a 2G wireless communications standard, to be included in the 

“Components,” and included that Panasonic Mobile would assume a non-assertion

obligation towards the Respondent and the Respondent’s customers for the manufacture

and sale, etc. of such “Components.” 

(Sa 165-1, Sa 165-2)

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[Translation]

114

(27) On January 15, 2001, Qualcomm Japan Kabushiki Kaisha notified Panasonic Mobile 

that Panasonic Mobile’s commencement of shipment of the Base Stations to NTT 

Docomo will result in a patent dispute if it persisted. 

(Sa 12)

(28) On January 16, 2001, Panasonic Mobile questioned the Respondent, stating that 

regardless of the most-favored provision stipulated in the Original Agreement, there is a 

suspicion that the Respondent has granted a Chinese company a royalty rate that is more 

advantageous than that which was extended to Panasonic Mobile.

 In response, on the same day, the Respondent responded to Panasonic Mobile’s 

question concerning the royalty rate to a Chinese company, and that the Respondent

wishes to promptly execute a license agreement for the 3G Mobile Wireless 

Communications to enable Panasonic Mobile to commence shipment of the Base Stations 

that conform to the CDMA standards.

(29) On March 28, 2001, Panasonic Mobile executed the License Agreement with the 

Respondent.

 The main contents of the No-Compensation License Provisions, etc. in the License 

Agreement are as set forth in the attached chart, and they specifically provide as follows: 

(i) The subject TEIPRs include conceived inventions, creations, or other form of rights 

relating to the resulting IPRs developed by the employees or representatives of Panasonic 

Mobile whether in whole or in part, regardless of whether those TEIPRs are held by 

Panasonic Mobile, or shall be transferred to Panasonic or to an affiliate of Panasonic 

Mobile or Panasonic; (ii) the “Components” shall be limited to the components that are 

designed to implement the CDMA technology and components that are involved in the 

signal processing circuit for wireless communication signals, but shall exclude batteries, 

displays, key boards, antenna or parts for which the main purpose is to save battery 

consumption; (iii) with respect to the customer’s parts that are subject to the NonAssertion Provision against the Respondent, etc. (the right granted to the Respondent’s 

customer), those “Components” shall include the components that are designed to 

implement the CDMA technology and components relating to the signal processing circuit 

for wireless communication signals (above (ii)), and with respect to the latter components, 

among the wireless communication signals, these shall be further limited to the 

components relating to the signal processing circuit for CDMA wireless communication; 

(iv) Panasonic Mobile shall have the right to sue the Respondent’s customers for patent 

infringement for combining the Respondent’s chip with a third party’s products, 

regardless of whether or not the patent in question is included in the cross-license 

provision, etc. granted to the Respondent; and that (v) Panasonic Mobile’s pledge not to 

assert its IPRs towards the Respondent’s customers shall survive only when the customer 

does not asserts its own TEIPRs and CEIPRs with respect to Panasonic Mobile’s CDMA 

Subscriber Units, etc. products, or when Panasonic Mobile has not first asserted its patents 

after the lapse of the improvement period towards the Respondent’s customers, that the 

customer does not assert its patents after the lapse of the improvement period towards 

Panasonic Mobile’s CDMA Subscriber Units, etc. product. 

(Sa 70-2, Sa 70-4, Shin 50-70-2, Shin 51-70-2, Shin 51-70-2-2, Shin 428)

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[Translation]

115

(30)As stated in above 1(19), the Respondent publicly announced on July 24, 2001 the 

withdrawal of its plans for spin-off of its semiconductor business.

3. Toshiba

(1) On July 12, 1995, Toshiba executed a license agreement for 2G Subscriber Units with 

the Respondent.

(2) On August 26, 1999, the Respondent gave an explanation to Toshiba on the license 

agreement for the 3G Subscriber Units.

(3) On March 24, 2000, Toshiba asserted to the Respondent that Toshiba had made 

significant technical contributions to the Respondent, gave concrete explanations

concerning the list of patents held by or currently being applied for by Toshiba and its 

achievement on the number of Subscriber Units sold, indicated that the Royalty Rate 

stipulated in the license agreement for the 2G Subscriber Units has become outdated, and 

requested a reduction of the Royalty Rate and the fixed fee to be collected at the execution 

of the agreement for the license agreement for the 3G Subscriber Units. 

(Sa 199, Sa 152-2)

(4) On May 10, 2000, the Respondent indicated to Toshiba that the structure of the 

Respondent’s Royalty Rate does not impede the development of the CDMA industry and 

that there are many business operators that consent to this kind of industry-standard rate 

with respect to the license for the 3G Subscriber Units, and notified Toshiba that it might 

consider adjusting the fixed fee to be collected at the execution of the agreement if before 

the end of June 2000. 

(Sa 199, Shin 153)

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[Translation]

116

(5) On June 21, 2000, Toshiba requested that the Respondent reduce the fixed fee to be

collected at the execution of the agreement by US$500,000, and the Respondent accepted 

this reduction.

(6) On June 23, 2000, Toshiba requested that the Respondent give them an opportunity to 

hold discussions again concerning the Royalty Rate after execution of the license 

agreement for the 3G Subscriber Units, and executed the License Agreement on June 26, 

2000.

4. Mitsubishi Electric

(1) On February 22, 1995, Mitsubishi Electric executed the license agreement for the 2G 

Subscriber Units with the Respondent. This agreement stipulates a provision requiring 

Mitsubishi Electric to grant the Respondent with licenses to its patents, a non-assertion

provision against the Respondent’s customers, and a Non-Assertion Provision against the 

Respondent’s Licensees. However, the patents subject to the above provisions granting

patent licenses were limited to the TEIPRs.

(2) At the meeting held on August 26, 1999, the Respondent proposed to Mitsubishi 

Electric to execute a license agreement for the 3G Mobile Wireless Communications. The 

Respondent explained the strategy and situation of IPRs for the 3G Mobile Wireless 

Communications Standards, and presented license terms such as to expand the scope of 

subject patents on the basis of the license agreement for the 2G Mobile Wireless 

Communication to enable the development, manufacture, and sale of the products that 

conform to the 3G Mobile Wireless Communications Standards, to make no change to the 

Royalty Rate, and to require the payment of a fixed fee to be collected at the execution of 

the agreement.

(3) On February 3, 2000, the Respondent notified Mitsubishi Electric that the Respondent

could not guarantee that the license terms proposed by the Respondent at the meeting held 

on August 26, 1999 would be effective even after March 26, 2000, and that the 

Respondent reserved the right to increase the sum depending on market conditions. Also, 

on February 10, 2000, the Respondent notified Mitsubishi Electric that if Mitsubishi 

Electric executes the agreement by March 25, 2000, the payment of the fixed fee to be

collected at the execution of the agreement may be deferred for several months and be 

paid in installments.

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[Translation]

117

(4) On March 17, 2000, Mitsubishi Electric notified the Respondent that the Royalty Rate 

proposed by the Respondent was not commercially feasible in the 3G communication 

industry and was unreasonably high, and that it could not accept the Respondent’s license 

terms for the license agreement for the 3G Mobile Wireless Communications, and that 

because the Respondent had not given a clear explanation on the relationship between the 

patents held by the Respondent and the 3G Mobile Wireless Communications Standards, 

it could not decide whether it was necessary to obtain licenses from the Respondent.

(5) On April 7, 2000, the Respondent asserted to Mitsubishi Electric, showing the URL of 

the ITU web page that describes the list of patents relating to the 3G Mobile Wireless 

Communications Standards that the Respondent notified to ARIB, that it could be proven 

that the Respondent’s patents are valid and essential by the fact that numerous 

international telecommunication manufacturers revised their license agreement for the 2G 

Mobile Wireless Communications and executed a license agreement for the 3G Mobile 

Wireless Communications. 

(Sa 127-1 and Sa 127-2)

(6) On June 2, 2000, the Respondent sent to Mitsubishi Electric a draft license agreement 

for the 3G Mobile Wireless Communications.

 In the above draft agreement, while the patents subject to the provision requiring 

Mitsubishi Electric to grant licenses for its patents were expanded to include the TEIPRs 

and CEIPRs, the Royalty Rate was not reduced as requested by Mitsubishi Electric. The 

Respondent also presented a list of business operators that it claimed to have executed 

license agreements with for the 3G Mobile Wireless Communications, and asserted that 

those business operators recognized the value of the Respondent’s portfolio of IPRs and 

accepted the Royalty Rate for the 3G products that is the same as for the 2G products. 

Furthermore, the Respondent pressed Mitsubishi Electric to immediately send its 

comments to the Respondent if it is interested in executing the license agreement for the 

3G Mobile Wireless Communications, and stated that if Mitsubishi Electric executed the 

license agreement for the 3G Mobile Wireless Communications by the end of the same 

month, the Respondent might consider reducing the fixed fee to be collected at the 

execution of the agreement.

(7) On August 9, 2000, the Respondent contacted Mitsubishi Electric and explained that 

the Respondent intended to spin-off its business for the manufacture and sale, etc. of 

semiconductor integrated circuits to a separate entity called SpinCo, that the Respondent

would be transferring part of the patents for the CDMA Mobile Wireless Communications 

held by it to SpinCo, and that after SpinCo completes its public offering of shares, it might

become necessary to execute a separate license agreement also with SpinCo, and that in 

that case, the license terms might change from the terms when executing the agreement 

before SpinCo’s public offering, but that if the agreement were to be executed before 

SpinCo’s public offering, it would suffice to execute the agreement only with the 

Respondent, and presented the draft agreement to Mitsubishi Electric.

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[Translation]

118

(8) On August 11, 2000, the Respondent notified Mitsubishi Electric that if they executed

an agreement before the public offering of SpinCo’s shares, the Respondent could 

guarantee the granting of a license to Mitsubishi Electric with just one agreement for the 

patents held by the Respondent and the patents held by the Respondent to be transferred 

to SpinCo, but that it was uncertain how the form of licensing or the license fee would be 

after the public offering of SpinCo’s shares, also stating that there would be little or no 

need for the Respondent to receive a cross-license from Mitsubishi Electric after the spinoff of the Respondent’s semiconductor business.

(9) On August 31, 2000, the Respondent provided Mitsubishi Electric with an overview of 

plans for the spin-off of the Respondent’s semiconductor business and the form of 

licensing after the spin-off, and explained that the Respondent would no longer require 

receiving licenses for most of the IPRs held by Mitsubishi Electric after the spin-off, but

that on the other hand, it would be necessary to expand the current license agreement in 

order for Mitsubishi Electric to receive license from the Respondent for important patents 

that the Respondent applied for after July 26, 1995 for the W-CDMA system and to use 

those patents, stating that if Mitsubishi Electric did not execute the license agreement for 

the 3G Mobile Wireless Communications by September 30, 2000, the Respondent would

charge from October 1, 2000 a fixed fee to be collected at the execution of the agreement

would increase to double from US$2,500,000 to US$5,000,000 for the license to

Subscriber Units and the fixed fee to be collected at the execution of the agreement would 

increase to double from US$5,000,000 to US$10,000,000 for the license for the Base 

Stations, pressing Mitsubishi Electric to execute the license agreement for the 3G Mobile 

Wireless Communications by September 30, 2000, and presenting a revised version of the 

license agreement for the 3G Mobile Wireless Communications reflecting the above 

increased amounts of the fixed fees collected at the execution of the agreements.

(10) On September 12, 2000, the Respondent explained to Mitsubishi Electric its spin-off

plan and the changes that would be made to the license policy following the spin-off.

 Mitsubishi Electric asserted that the Respondent’s Royalty Rate was unjustly high but 

the Respondent explained that the Respondent’s products were its patents and the Royalty 

Rate was reasonable. 

(Sa 133)

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[Translation]

119

(11) On September 18, 2000, Mitsubishi Electric notified the Respondent that the 

Respondent’s suggestion to increase the fixed fee to be collected at the execution of the 

agreement by double if Mitsubishi Electric did not execute the license agreement for the 

3G Mobile Wireless Communications by September 30, 2000 at the current stage in which

Mitsubishi Electric does not manufacture and sell 3G Subscriber Units and when there 

has not occurred any patent infringement could only be viewed as unreasonable pressure 

by the Respondent towards Mitsubishi Electric and that it was unacceptable to 

straightforwardly accept the Respondent’s offer, and requested that the Respondent

provide information concerning the patents that are truly essential to implement the 3G 

Mobile Communications Standards among the patents and patents currently being applied 

for by the Respondent and the contract terms if only licenses to those essential patents 

were to be received because Mitsubishi Electric must confirm all of the elements of the 

license agreement for the 3G Mobile Wireless Communications before executing this 

agreement.

(12) On September 21, 2000, the Respondent responded to Mitsubishi Electric that 

excluding the overlaps in the patents applied for in each country, the list of patents held 

by the Respondent includes approximately 110 independent patents and patents in the 

process of application, and because the standard concerning the CDMA Mobile Wireless 

Communications is not fixed yet, it is too soon to delete any of the above patents or patents 

in process of application from the list of the Respondent’s essential patents, and that even 

if the subjects of the licenses are for both TEIPRs and CEIPRs, or only TEIPRs, the 

Royalty Rate and the fixed fee to be collected at the execution of the agreement will not 

change, and that even if the subjects of licenses are only limited to patents and excludes 

know-how, the Respondent has no intentions of reducing the Royalty Rate.

(13) On September 29, 2000, Mitsubishi Electric requested that the Respondent extend the 

effective period of the currently proposed fixed fee to be collected at the execution of the 

agreement until October 31, 2000 and the Respondent agreed.

(14) On October 30, 2000, Mitsubishi Electric requested of the Respondent a grace period

of one year until execution of the agreement in exchange for Mitsubishi Electric’s

immediately paying the currently proposed fixed fee to be collected at the execution of 

the agreement of US$2,500,000 but the Respondent refused and notified Mitsubishi 

Electric that unless Mitsubishi Electric responds by the deadline of the already extended 

period, the Respondent will increase the fixed fee to be collected at the execution of the 

agreement by double as of November 1, 2000.

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[Translation]

120

(15) Because Mitsubishi Electric did not respond by the deadline, on November 1, 2000, the 

Respondent, from concern that Mitsubishi Electric misunderstood the Respondent’s 

intentions and that consequently it would be required to pay unnecessary sums, pressed 

Mitsubishi Electric to consider executing the license agreement for the 3G Mobile 

Wireless Communications stating that it was the only major DMSHs that was in such a 

situation. (Sa 141-1, Sa 141-2)

(16) On November 2, 2000, Mitsubishi Electric indicated that the Royalty Rate proposed by 

the Respondent was outrageously high compared to other standards and requested a

reduction of the Royalty Rate.

(17) On November 3, 2000, the Respondent notified Mitsubishi Electric that CDMA is the 

de facto the standard for the 3G Mobile Wireless Communications Standards and that if 

Mitsubishi Electric intended to participate in 3G Mobile Wireless Communications, then 

it would be necessary for it to expand the scope of its licenses for the W-CDMA system 

and the CDMA 2000 system. It also indicated that Mitsubishi Electric was the only major 

DMSHs that had not executed the license agreement for 3G Mobile Wireless 

Communications with the Respondent, and because the deadline for the increase of the 

fixed fee to be collected at the execution of the agreement which was set for October 31, 

2000 had lapsed, the fixed fee to be collected at the execution of the agreement would be 

increased from US$2,500,000 to US$5,000,000, and, furthermore, that if NTT Docomo 

commenced commercial services for the 3G Mobile Wireless Communications Standards, 

then the Respondent might again change the license terms. On the basis of the above, the 

Respondent proposed that if Mitsubishi Electric signed the license agreement for the 3G 

Mobile Wireless Communications Standards by November 10, 2000, then the Respondent

would retroactively apply the contract terms it proposed to Mitsubishi Electric that were 

set to be effective only until October 31, 2000. (Sa 141-1, Sa 141-2)

(18) On November 14, 2000, Mitsubishi Electric concretely asserted to the Respondent that 

Mitsubishi Electric had important patents for the cryptographic technology included in 

the 3G Mobile Wireless Communications Standards and the MPEG4 technology and 

demanded the Respondent revise the license terms to take into account the portfolio of 

IPRs held by the Respondent and Mitsubishi Electric but the Respondent refused. 

Mitsubishi Electric also indicated that it believed that the license agreement for the 3G 

Mobile Wireless Communication would create issues under the AMA but the Respondent

denied this. (Sa 13, Sa 293, Shin 122)

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[Translation]

121

(19) On November 30, 2000, Mitsubishi Electric executed the license agreement for the 3G 

Subscriber Units and executed the License Agreement for the 3G Subscriber Units with 

the Respondent on September 30, 2000 which was the deadline for negotiations initially 

set by the Respondent.

(20) On March 30, 2001, Mitsubishi Electric executed the License Agreement for the 3G 

Base Stations with the Respondent.

(21) Thereafter, as indicated in 1(19) above, the Respondent publicly announced on July 24, 

2001 the withdrawal of its plans for spinning off its semiconductor business.

5. Fujitsu

(1) Fujitsu entered into the license agreement for 2G Subscriber Units on July 24, 1995 

and the license agreement for 2G Base Stations on September 11, 1995.

 The license agreement for 2G Subscriber Units and the license agreement for 2G Base 

Stations included a provision to license the patents owned by Fujitsu and a Non-Assertion 

Provision against the Licensees. The provision to license the above patents in the license 

agreement for 2G mobile wireless communications was applicable to both TEIPRs and 

CEIPRs, and granted licenses to the Respondent for Subscriber Units, Base Stations and 

their components, namely, the manufacture, sales, etc. of semiconductor integrated 

circuits, etc.

(2) The Respondent proposed to Fujitsu on August 28, 1999, that both parties enter into a 

license agreement for 3G mobile wireless communications. Upon making the proposal, 

the Respondent explained its strategy and the status of its IPRs concerning 3G mobile 

wireless communications, and presented licensing terms that were based on their license 

agreement for 2G mobile communications, with the scope of applicable patents being

expanded and the royalty rate remaining unchanged, adding certain amounts of upfront 

fees to be collected, and stating that the Non-Assertion Provision against the Licensees of 

the Respondent cannot be forced to be entered into and that there were licensees that 

decided not to include said provision in their license agreements.

 In response, Fujitsu requested an adjustment of the royalty rates on the grounds that, 

not only the Respondent, but also other multiple business enterprises including Fujitsu 

owned patents for 3G Mobile Wireless Communications Standards.

 However, the Respondent refused to make an adjustment of the royalty rates on the 

grounds that, concerning 3G Mobile Wireless Communications Standards, it was 

unreasonable that the DMSHs that did not accept the Respondent’s claim that 

CDMA2000 system should be adopted, and instead promoted W-CDMA system, which 

was not technically superior, requests a reduction of royalty rates, and that the Respondent

did not have a reason to accept such a request.

(Sa 167)

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[Translation]

122

(3) The Respondent notified Fujitsu on February 3, 2000 that it was not guaranteed that 

the license terms presented by the Respondent on August 27, 1999 would remain valid as

of March 26, 2000 forward, that the Respondent reserved its right to increase the royalties 

in accordance with market conditions, and requested Fujitsu to immediately notify the 

Respondent if Fujitsu was interested in entering into the license agreement concerning 3G 

mobile wireless communications.

(4) The Respondent notified Fujitsu on February 10, 2000 that if Fujitsu entered into the 

agreement by March 26, 2000, the amount of upfront fees to be paid upon execution of 

the agreement could be postponed for several months and split into installments. ( Sa 169-

1 and Sa 169-2)

(5) Fujitsu responded to the Respondent on March 24, 2000 that it was pointed out in 

internal discussions at Fujitsu that an important point to consider was that not only the 

Respondent but many business enterprises (including Fujitsu) were believed to own 

patents essential to 3G Mobile Wireless Communications Standards, and requested that 

the Respondent make the license agreement mutually satisfactory to both parties. (Sa 170-

1 and Sa 170-2)

(6) The Respondent presented Fujitsu on June 2, 2000 the draft license agreement 

concerning 3G mobile wireless communications.

 In the draft license agreement, the Royalty Rate provided in the license agreement for 

2G mobile wireless communications, which Fujitsu requested to be reduced, was not 

adjusted.

(7) The Respondent explained to Fujitsu in their meeting on August 11, 2000 its decision 

to spin off its business of manufacturing, sales, etc. of semiconductor integrated circuits, 

etc. to a separate company called SpinCo, that part of the patents concerning CDMA 

Mobile Wireless Communications Standards owned by the Respondent would be 

transferred to SpinCo, and that therefore, there was the possibility that the license terms 

could be changed thereafter. The Respondent further explained that the Respondent could

take responsibility for the licensing terms only if Fujitsu signed the license agreement 

concerning 3G mobile wireless communications before the public offering of shares of 

SpinCo, and presented a draft agreement based on the establishment of SpinCo. (Sa 58, 

Sa 172 through Sa 174-2)

 Fujitsu requested that the Respondent adjust the royalty rates, etc. again on the grounds 

that multiple business enterprises including Fujitsu also owned IPRs relating to 3G 

Mobile Wireless Communications Standards and the situation is different from that of the 

license agreements for 2G mobile wireless communications in which the Respondent was 

probably the only holder of the IPRs, and that while in the license agreement for 2G 

mobile wireless communications, patents as well as know-how were licensed, in the 

license agreement for 3G mobile wireless communications, know-how does not need to 

be licensed.

 However, the Respondent strongly rejected making any changes to the Royalty Rates, 

etc.

(Sa 58, Sa 172)

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[Translation]

123

(8) The Respondent notified Fujitsu again on August 12, 2000 that, prior to the public 

offering of shares of SpinCo, the Respondent guaranteed that the patents owned by the 

Respondent and the patents transferred to SpinCo are licensed to Fujitsu by a single 

agreement, but that after the public offering of shares of SpinCo, it was not clear as to 

what the form of licensing or fees, etc. would be, that after the completion of the spin-off 

of its semiconductor business, the Respondent would have little or no need to receive a

cross-license from Fujitsu, etc. (Sa 175-1 and Sa 175-2)

(9) The Respondent gave Fujitsu on August 31, 2000 an overview of the spin-off plan of 

its semiconductor business and licensing forms after the spin-off, etc. and notified Fujitsu 

that the Respondent will have little need to be cross-licensed by Fujitsu after the spin-off, 

but that on the other hand, in order to make important patents applied for on or after July 

26, 1995 including the patents concerning the W-CDMA system owned by the 

Respondent available to Fujitsu, Fujitsu needed to expand the current license agreement, 

etc. and that if Fujitsu does not enter into the license agreement for 3G mobile wireless 

communications by September 30, 2000, the amount of upfront fees to be paid upon 

conclusion of the agreement will be doubled from $2.5 million to $5 million for the license 

for subscriber units and from $5 million to $10 million for the license for base stations, 

respectively, and thereby urged Fujitsu to enter into the license agreement for 3G mobile 

wireless communications by September 30, 2000. (Sa 176-1 and Sa 176-2)

(10) The Respondent presented to Fujitsu on September 8, 2000 a draft license agreement 

for 3G mobile wireless communications that added a provision that, as of October 1, 2000, 

the amount of upfront fees to be paid upon execution of the agreement shall be doubled. 

(Sa 177-1 and 2, Sa 178-1 and 2)

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[Translation]

124

(11) Subsequently, after several communications including meetings, Fujitsu entered into 

the License Agreement with the Respondent on September 27, 2000.

 Fujitsu requested that the Respondent (1) limit the scope of “Components” covered by 

the license to the same extent as those of the license agreement for 2G mobile wireless 

communications and (2) split the upfront fees to be paid upon conclusion of the agreement 

into two installments.

 In response to these Fujitsu requests, in the License Agreements, (1) the definition of 

“Components” was limited to the definition of “components” in other normal license 

agreements “that uses at least one mode of operation related to CDMA applications” and 

excluded four kinds of products from the definition of "Components," those being devices 

for processing optical signals, SAW filters, dielectric filters, and liquid crystal displays, 

and (2) a provision was added to split the payment of upfront fees into two installments.

(Sa 197)

(12) The Respondent announced, as stated in 1 (19) above, on July 24, 2001, its withdrawal 

of the spin-off plan of its semiconductor business. 

End

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 128 of 134
[Translation]

125

Attachment

List of provisions, etc. ordered to be abolished under the CDO

No. DMSHs Subject of 

License, etc. IPRs

NoCompensation 

License 

Provisions, etc.

NonAssertion 

Provision 

against the 

Respondent, 

etc.

NonAssertion 

Provision 

against the 

Licensees

Expiry date of Improvement Period

License Agreement 

(Effective Date)

Amendment thereof 

(Effective Date)

1

Sanyo Electric 

Co., Ltd.

Subscriber 

Units and 

Components

Technical Yes - Yes

January 1, 2002 

(June 30, 2000)

Indefinite (October 8, 

2003)

Commercial Yes - -

January 1, 2004 

(October 8, 2003)

2

Panasonic 

Mobile 

Communications 

Co., Ltd.

Subscriber 

Units and 

Components

Technical

Yes

(Components 

are only for 

those used in 

Subscriber 

Units)

Yes

(Components 

only)

-

January 1, 2002 

(March 28, 2001)

-

Commercial -

Yes

(Components 

only)

-

3

Mitsubishi 

Electronic

Subscriber 

Units and 

Components

Technical Yes Yes Yes

January 1, 2002 

(September 30, 

2000)

-

Commercial

Yes

(Components 

only)

- -

Base 

Stations and 

Components

Technical Yes - Yes

Indefinite (March 

30, 2001)

-

Commercial Yes - -

March 30, 2001 

(March 30, 2001)

-

4 NEC Corporation

Subscriber 

Units and 

Components

Technical Yes - -

January 1, 2002 

(October 31, 2000)

-

Commercial -

Yes 

(Components 

only)

-

Base 

Stations and 

Components

Technical Yes - -

January 1, 2002 

(October 31, 2000)

-

Commercial -

Yes 

(Components 

only)

-

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 129 of 134
[Translation]

126

No. DMSHs Subject of 

License, etc. IPRs

NoCompensation 

License 

Provisions, etc.

NonAssertion 

Provision 

against the 

Respondent, 

etc.

NonAssertion 

Provision 

against the 

Licensees

Expiry date of Improvement Period

License Agreement 

(Effective Date)

Amendment thereof 

(Effective Date)

5 Hitachi, Ltd.

Subscriber 

Units and 

Components

Technical Yes - -

Indefinite for 

“patents owned by 

IID (Hitachi’s 

Information Image 

Media Department) 

and “patents 

sublicensed by 

other departments.”

For other patents, 

September 12, 1997 

(September 12, 

1997)

-

Commercial Yes - -

January 1, 2000

(September 12, 

1997)

-

Base 

Stations and 

Components

Technical Yes - -

Indefinite for 

“patents owned by 

HTD (Hitachi’s 

Information 

Communication 

Department) and 

“patents sublicensed 

by other 

departments.” For 

other patents, 

December 5, 1996 

(December 5, 1996)

-

Commercial Yes - -

Earlier of 5 years 

from “the first 

manufacturing date”

or 7 years from the 

provision of 

“manufacturing and 

test technology 

information”

(March 12, 1997)

-

6 Fujitsu Limited

Subscriber 

Units and 

Components

Technical Yes - Yes January 1, 2002 

(September 27, 

2000)

-

Commercial Yes - - -

Base 

Stations and 

Components

Technical Yes - -

January 1, 2002 

(September 27, 

2000)

-

Commercial Yes - - -

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 130 of 134
[Translation]

127

No. DMSHs Subject of 

License, etc. IPRs

NoCompensation 

License 

Provisions, etc.

NonAssertion 

Provision 

against the 

Respondent, 

etc.

NonAssertion 

Provision 

against the 

Licensees

Expiry date of Improvement Period

License Agreement 

(Effective Date)

Amendment thereof 

(Effective Date)

7

Sharp 

Corporation

Subscriber 

Units and 

Components

Technical Yes - Yes

Indefinite (April 30, 

1997 or Approval 

Date by the 

Japanese 

Government, 

whichever comes 

later)

-

Commercial Yes - -

January 1, 2001 

(September 22, 

2000)

-

8

Casio 

Computer, 

Co., Ltd.

Subscriber 

Units and 

Components

Technical Yes - Yes

Indefinite (March 

24, 1998)

-

Commercial Yes - -

January 1, 2000 

(March 24, 1998)

-

9

Kyocera 

Corporation

Subscriber 

Units and 

Components

Technical Yes - Yes

Indefinite (August 

31, 1996)

-

Commercial Yes - -

January 1, 2002 

(September 29, 

2000)

-

10

Toshiba 

Corporation

Subscriber 

Units and 

Components

Technical Yes - Yes December 31, 2001 

(June 26, 2000)

December 31, 2002 

(November 12, 2002) Commercial Yes - -

11

Kenwood 

Corporation

Subscriber 

Units and 

Components

Technical Yes - Yes

Indefinite (June 28, 

1998)

-

Commercial Yes - -

January 1, 2002 

(November 30, 

2000)

-

12

Alps 

Electronic 

Co., Ltd.

Subscriber 

Units and 

Components

Technical Yes - Yes January 1, 2002 

(November 20, 

2001)

-

Commercial Yes - -

13

Seiko 

Instruments 

Inc.

Subscriber 

Units and 

Components

Technical Yes - Yes

Indefinite (January 

3, 2000)

-

Commercial Yes - -

June 10, 2003 (June 

10, 2003

October 1, 2007 

(October 1, 2007)

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 131 of 134
[Translation]

128

No. DMSHs Subject of 

License, etc. IPRs

NoCompensation 

License 

Provisions, etc.

NonAssertion 

Provision 

against the 

Respondent, 

etc.

NonAssertion 

Provision 

against the 

Licensees

Expiry date of Improvement Period

License Agreement 

(Effective Date)

Amendment thereof 

(Effective Date)

14

Denso 

Corporation

Subscriber 

Units and 

Components

Technical Yes - Yes

Indefinite (August 

9, 2002)

-

Commercial Yes - -

August 9, 2002 

(August 9, 2002)

(Definition of the terms used in this table)

Subscriber Units: CDMA Subscriber Units

Base Stations: CDMA Base Stations

Components: CDMA Components

Technical: TEIPRs

Commercial: CEIPRs

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 132 of 134
[Translation]

129

This is a certified copy.

March 13, 2019

Secretariat of the Japan Fair Trade Commission [seal]

Official of the Cabinet Office, Kinya Enomoto [seal]

Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 133 of 134
Case 5:17-cv-00220-LHK Document 1480-1 Filed 03/28/19 Page 134 of 134