Judge Gilstrap recently denied accused infringer LG’s motion for summary judgment that alleged standard essential patents (“SEPs”) were not willfully infringed, letting that issue go to the jury;  if the jury finds willful infringement, then the court may decide whether and to what extent to enhance damages based on such willful infringement.  An important procedural point is that Judge Gilstrap did not rule that there was willful infringement in this case; rather, under the permissive summary judgment standard, he ruled that there was sufficient evidence to let the jury decide the issue.  He did rule as a matter of law, however, that there is no special rule for SEPs that precludes finding willful infringement or enhancing damages, and  he left the door open to consider policy arguments about SEPs subject to FRAND commitments when exercising discretion whether to enhance damages.


Patent owner Core Wireless sued LG in 2014 for infringing patents alleged to be essential to mobile communication standards such as GSM, GPRS, UMTS and LTE.    LG denied that the patents were infringed or essential to those standards.  Prior to suit, Core had at least one in-person meeting with LG concerning the patents.  Core also had provided LG claim charts (it is not clear whether that was before or after the lawsuit was filed).  Core also asserted that, in a deposition, an LG representative admitted that the accused LG phones contain the standard-compliant features alleged to infringe the patents.

LG brought a summary judgment motion on the issue of willful infringement arguing, among other things, that “enhanced damages based on willfulness are in effect punitive and thus inappropriate in the context of standard-essential patents where infringement is an expected part of the standard setting model.”


Judge Gilstrap ruled that there were substantial issues of material fact whether the alleged infringement was willful, because a reasonable jury could decide that the accused infringer acted willfully.  He also ruled that whether the patents were indeed standard essential patents does not change that determination.  As a threshold issue, because the accused infringer disputed whether the patents are essential to the standard, the argument premised on no willful infringement for SEPs relies on a disputed factual issue.  Further, even if the patents are SEPs, Judge Gilstrap ruled that there was no reason SEPs cannot be willfully infringed and damages enhanced based thereon.

Judge Gilstrap divided the issue into (1) a jury determining whether the SEP is willfully infringed and (2) whether and to what extent the court would enhance damages based on such willful infringement.  On the first point, the accused infringer cited no authority that a jury could not determine whether an SEP was willfully infringed.  Rather, the accused infringer focused on the second point, arguing that enhanced damages were not appropriate for SEPs where the patent owner committed to license the SEPs on FRAND terms.  The accused infringer also argued that “enhanced damages amount to punitive damages and that the primary rationales for awarding punitive damages (such as to deter concealed infringement) do not exist in the standard-essential patent context.”

Judge Gilstrap found the enhancement argument premature regarding the instant issue of whether a jury may determine willful infringement in the first instance, because a jury can make the willfulness determination and only then would arguments about no enhancement be considered when the court exercises its discretion of whether and to what extent to enhance damages.  He also ruled that willful infringement issues may exists in the SEP context, stating:

Moreover, it is not evident that concerns about concealed infringement are always absent in standard-essential patent cases.    For example, Core contends that LG initially denied that its accused products practice the UL DTX and UL DRX features of 3GPP, but that LG’s corporate representative later admitted LG’s products do implement  these features.  A factfinder could credit this evidence and conclude that LG willfully or wrongfully took steps to conceal infringement.”

Judge Gilstrap further found that the Supreme Court’s Halo decision (see our June 13, 2016 post) on preserving discretion to enhance damages counsels against a bright line rule as to SEPs, stating:

Finally, in light of the strong emphasis that Halo placed on preserving a court’s discretion to enhance damages, it would be inappropriate to create a bright line rule forbidding enhanced damages merely because the asserted patents are standard-essential.

Accordingly, Judge Gilstrap ruled that genuine issues of material fact requires putting the issue of willful infringement before the jury to determine.

Judge Payne recently denied  defendant LG’s motion to exclude damages expert testimony on alleged standard essential patents (SEPs) where LG challenged the experts opinion (1) because he did not start with a royalty-rate that is then adjusted  by applying Georgia-Pacific factors and (2) because he failed to apportion value to the patented feature given his reliance on the end product price.  The patents-in-suit are alleged to be essential to the GSM, UMTS/HSPA and LTE cellular standards, but the parties disagreed whether the patents are SEPs and other patents-in-suit are not alleged to be SEPs.

The decision sheds some incremental insight on the entire market value rule (EMVR) that concerns when one can use the end product as the royalty base.  The court considered it a rule of evidence for U.S. jury trials to avoid jury confusion and found that the expert properly considered the end product price to assess profitability of the accused device, but otherwise did not rely on the end product as a royalty base.  He ruled that the expert may rely on that end product price in his analysis, but he cannot “publish” (i.e., disclose) that end product price to the jury given the EMVR’s “important evidentiary principle” that “care must be taken to avoid misleading the jury by placing undue emphasis on the value of the entire product” and concern that “diclosure of the end product’s total revenue cannot help but skew the damages horizon for the jury, regardless of the contribution of the patented component to this revenue.”

Royalty Rates and Georgia-Pacific

LG first challenged the damages expert’s opinion because he “fail[ed] to link [Georgia-Pacific] factors to any royalty rate calculation” or “state that any value is used as a starting point.”  Judge Payne ruled that the Georgia-Pacific analysis is a flexible one for which the expert provided a sufficient detailed analysis:

… [The damages expert] performs a detailed economic analysis under each Georgia-Pacific factor, describing the evidence he considered (or elected not to consider) and his reasons for doing so.  The Federal Circuit has “never described Georgia-Pacific factors as a talisman for royalty rate calculations” and has stated it is not necessarily correct to “resort to the factors to justify urging an increase or a decrease in a royalty calculation.”  In other words, Georgia-Pacific analysis is a flexible one.  There is no legal requirement that an expert begin with a particular “starting point” and then use the fifteen factors to nudge the royalty up or down.  Here, [the damages expert] frames his economic analysis around the Georgia-Pacific factors and offers his royalty rate opinions as a conclusion, having considered the applicability (or inapplicability) of each factor.  In doing so, he spells out the economics principles and methods on which he relies. [quoting Ericsson, Inc. v. D-Link Sys., 773. F.3d 1201 (Fed. Cir. 2014)]

Entire Market Value Rule (EMVR) Apportionment

LG also challenged the damages expert’s opinion for using the entire value of the accused devices without apportioning the marginal value of the patented features to those devices.  But Judge Payne found that the expert was not using the entire value of the device as a royalty base, but for estimating the profit margins of the devices when applying  Georgia-Pacific factor 8 on profitability of the accused device and “as a check to determine whether his calculated royalty rate is fair and reasonable in the FRAND context.”  Judge Payne ruled this was permissible, because “[p]rofitability is a relevant factor in a FRAND damages analysis, and [the damages expert] does not attempt to base his damages calculation on the entire value of any accused product.”

Nonetheless, Judge Payne ruled that the damages expert could not “publish the entire revenue or profit of an accused device to the jury” based on “an important evidentiary principle” of the EMVR for avoiding jury confusion:

The admissibility of these opinions under Rule 702 does not, however, imply that it would be proper for [the damages expert] to publish the entire revenue or profit of an accused device to the jury at trial.  There is an “‘important evidentiary principle’ that ‘care must be taken to avoid misleading the jury by placing undue emphasis on the value of the entire product.’ … disclosure of the end product’s total revenue ‘cannot help but skew the damages horizon from the jury, regardless of the contribution of the patented component to this revenue.  While it is appropriate for [the damages expert] to use entire revenue and profit figures to calculate profit margins in his expert report, it may be inappropriate as an evidentiary matter for him to present these figures to the jury.” [citing CSIRO v. Cisco Sys., 809 F.3d 1295, 1302 (Fed. Cir. 2015) ]

The U.S. International Trade Commission (ITC) recently released the public version of its decision in an investigation of whether Arista infringes Cisco patents, rejecting Arista’s defense and public interest arguments that the patents allegedly cover a de facto standard and are subject to a FRAND obligation.   Arista’s defense was based on Cisco’s submission to IETF of a request for comments document (RFC 5517), which stated it was not a standard, along with a commitment by Cisco to license patents on FRAND terms IF (1) RFC 5517 was adopted as a standard AND (2) the patents are essential to practice such standard.  The ITC rejected Arista’s de facto standard defense because, among other things, there was no evidence that RFC 5517 was adopted as an industry standard or that the patents-in-suit covered RFC 5517, both of which were preconditions under Cisco’s commitment to IETF before triggering a FRAND obligation.


In December 2015, Cisco Systems, Inc. (Cisco) filed a complaint alleging that certain network devices (switches) imported by Arista Networks, Inc. (Arista) infringed several Cisco patents directed to computer networks.  Arista raised several equitable defenses based, in part, on allegations that Cisco submitted a request for comments document RFC 5517 to IETF and promoted RFC 5517 to the public generally as an “informal standard” for private virtual local area networks (PVLANs) for which Cisco would not assert its patents or would license on fair, reasonable and non-discriminatory (FRAND) terms based on Cisco’s IPR disclosures to IETF.   Judge Shaw’s Initial Determination (PUBLIC) rejected this “de facto standard” defense, which was raised based on equitable theories of equitable estoppel, implied license, waiver, patent misuse and laches.

Equitable Estoppel

Judge Shaw rejected Arista’s equitable estoppel argument, which required Arista to “prove by a preponderance of the evidence that (1) Cisco, through misleading conduct, led Arista to reasonably believe that Cisco did not intend to enforce its patents against Arista; (2) Arista relied on that conduct; and (3) due to its reliance, Arista would be materially prejudiced if Cisco were permitted to proceed with its charge of infringement.”  Judge Shaw found that, in generally considering estoppel, there was no misleading conduct by Cisco, because it had taken affirmative steps to assert its patents against others after learning of infringing activities and, in this case, Cisco sued Arista about seven months after learning of Arista’s infringement.

Judge Shaw also found that Cisco’s actions had not led Arista to believe that Cisco would not assert its patents, stating:

[T]he evidence fails to establish that encouraging adoption of a product in the industry creates any licensing obligation for patents related to that product.  Evidence  …. shows that RFC 5517 is not a standard and was never submitted to any standard setting organization for adoption.  Specifically, each published version of RFC 5517 states that it is an informational submission and not standards-track.  Moreover, Cisco’s intellectual property rights disclosure related to RFC 5517 states that a license would be required to practice any related patents unless (1) the technology were adopted as an IETF standard, and (2) the patents were necessary to the adoption of the standard.  Inasmuch as neither of these conditions were satisfied, Arista could not reasonably believe based on RFC 5517 that Cisco intended to refrain from enforcing its intellectual property rights.

Judge Shaw also found there was no reasonable reliance by Arista to support an equitable estoppel defense.  The basis for that finding is heavily redacted, leaving the conclusion that there “was no express or implied communication or relationship between Cisco and Arista that could have led Arista into a false sense of security, and any reliance under the circumstances would be unreasonable.”

Judge Shaw further found that Arista had not shown prejudice based on a “change of economic position.”  Arista argued that it had made substantial investments in the products and developed a substantial user base.  But Judge Shaw found there was no evidence that “Arista would have taken different actions had it known about Cisco’s patents, such as decreasing its expenditures.”

Implied License

Judge Shaw rejected Arista’s implied license defense.  He explained that the main difference between implied license and equitable estoppel is that “implied license looks for an affirmative grant of consent or permission to make, use, or sell: i.e., a license.”  Thus, Arista was required to show that “Cisco engaged in language or conduct allowing Arista to properly infer that Cisco consented to the use of Cisco’s patents, and that Arista acted upon that consent.”  But Arista made no such showing, as discussed above for the equitable estoppel defense.


For similar reasons, Judge Shaw rejected Arista’s waiver defense, which is the “intentional relinquishment or abandonment of a known right.”  Judge Shaw explained the waiver defense in the standards setting context as follows:

To support a finding of implied waiver in the standard setting organization context, the accused must show by clear and convincing evidence that [the patentee’s] conduct was so inconsistent with an intent to enforce its rights as to induce a reasonable belief that such right has been relinquished.  This can be shown by proving that the patentee breached a duty of disclosure to the standard setting organization. [citing Hynix Semiconductor Inc. v. Rambus, Inc., 645 F.3d 1336, 1348 (Fed. Cir. 2011)].

In this case, Cisco’s IPR disclosure “explicitly states that a licensing obligation arose only if the technology were adopted as a standard, which never occurred.”  Thus, “[a]ny reliance Arista placed on the assumption that PVLAN technology was an industry standard subject to SSO obligations was not reasonable.”

Patent Misuse

Judge Shaw rejected Arista’s patent misuse argument, which requires a showing that the patent owner “impermissibly broade[ned] the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects.”  Arista argued that Cisco had done so here “by asserting its patents against Arista without offering” a FRAND license.  But Judge Shaw found that the evidentiary record shows that “Cisco has no obligation to license its patent on FRAND terms, because it made no such contractual undertaking.”


Judge Shaw rejected Arista’s laches defense, which required Arista to prove that: “(1) Cisco delayed in bringing an infringement lawsuit for an unreasonable and inexcusable length of time from when it knew or reasonably should have known of its infringement claim against the accused infringer [Arista]; and (2) the delay caused material prejudice to the defendant [Arista].”   A six year delay raises a presumption of laches, which can be rebutted by showing the delay was reasonable or the defendant was not prejudiced.  The delay period starts when the patent owner has actual or constructive knowledge of the defendant’s infringement.

In this case, Cisco sued Arista within seven months of learning of the infringement.  Further, as with equitable estoppel, Arista had now shown material prejudice by any delay.

Full Commission Decision

The full Commission decided to review Judge Shaw’s Initial Determination, and requested that the parties provide comments on several areas, including those concerning Arista’s de facto standard defenses:

10.  Please discuss whether the “materially prejudiced” requirement has been satisfied here for purposes of laches and equitable estoppel. …


16.  With respect to the public interest factors, please discuss the facts in the record pertaining to the following: (1) whether RFC 5517 is a de facto industry standard; (2) whether the ‘592 and ‘145 patents are essential to an industry standard; (3) whether licensing obligations apply to RFC 5517; (4) whether Cisco complied with any licensing obligations with respect to an industry standard; and (5) whether patent hold-up and/or patent hold-out have been demonstrated in the record of this investigation.  See Respondent Arista’s Public Interest Submission Under 210.50(a) at 4-5 (march 17, 2016).  Provide an analysis as to how these issues relate to the statutory public interest factors of Section 337(d) and (f), 19 U.S.C. § 1337(d), (f).

17.  For purposes of the analysis of the statutory public interest factors, describe in detail the specific course of conduct on the part of Cisco, or other factors, that would support a finding that F/RAND commitments have arisen with respect to the ‘592 and ‘145 patents here.  How does the RFC 5517 document factor into the analysis since it specifically states that what is described with respect tot he ‘592 and ‘145 patents is not a standard?  Arista argues that Cisco “never offered Arista a chance to license this de facto standard used by Cisco’s other networking competitors.”  Respondent Arista’s Public Interest Submission Under 201.50(a) at 5.  Describe in detail any attempts that Arista made to license the ‘592 an ‘145 patents from Cisco.  Please describe Cisco’s response to these attempts.

The Commission reviewed Arista’s de facto standard defenses under its public interest analysis–i..e, whether the public interest precludes granting exclusionary relief– which de facto standard defense was the only public interest that Arista raised.  Arista admitted that RFC 5517 “is not a de jure standard,” but argued Cisco’s actions  regarding RFC 5517 “should be found to be a de facto standard and that the PVLAN patents are essential.”

The Commission noted Cisco testimony indicating that “the intent of RFC 5517 was not to have others adopt PVLAN, but if they did, that they could see how the technology should behave.”  Further, although Cisco’s competitors have PVLAN functionality, there is “no evidence that they adopted or relied on RFC 5517 or the PVLAN patents” and competitors “are not required to practice the PVLAN patents or RFC 5517 because they are not part of a formal standard.”  Thus, “[t]he mere fact that others in the industry offer PVLAN functionality, without more, does not demonstrate that they practice RFC 5517, the PVLAN patents, or that PVLAN is a de facto standard.”  RFC 5517 is not a de facto standard “without further action by Cisco to encourage others to adopt RFC 5517 or evidence that the industry has adopted RFC 5517 as a standard.”

The Commission also found that there was no evidence that patent hold-up has occurred or “is likely to occur”, stating:

In particular, there is nothing on the record demonstrating the existence of an industry standard or that Cisco had an obligation to offer licenses with respect to the PVLAN patents on a fair, reasonable and non-discriminatory basis.  Consequently, there are no public interest concerns barring the issuance of a remedy in this investigation.

In context, the statement indicates that, for patent holdup to occur in the standard-setting context,  both a standard and FRAND obligation must exist, but are not all that is required to establish holdup.

Judge Payne recently denied a request to proceed with all of the parties’ alleged FRAND-obligated standard essential patents in the same case, disappointing counterclaimants who had wanted to resolve together the single controversy over each of the parties’ standard essential patents.  Huawei brought suit asserting patents alleged to be essential to 3GPP LTE standards and subject to a FRAND obligation.  Nokia filed a counterclaim against Huawei on patents that also were alleged to be essential to 3GPP LTE standards and subject to a FRAND obligation.  Judge Payne decided that it would be more efficient to proceed with the Huawei and Nokia patents in their own separate cases, rather than together.

Nokia raised three arguments why all of the parties’ patents should proceed in the same case, rather than separately:

  1. Severing the claims “would require eight jury trials to resolve a single controversy between these two parties over essential patents.”
  2. Both parties’ patents “cover similar technology because both ‘relate to the 3GPP LTE standards.”
  3. Both parties’ patents “share the common issue of being FRAND-encumbered.”

Judge Payne found that the patents do not share similar technology.  For example, one Nokia patent covers allocating downlink and uplink resources between a base station and mobile device.  In contrast, a Huawei patent concerns billing mobile device customers for data usage.  Thus, “[a] fact-finder’s understanding of one patent will not inform her understanding of the other patent.”  This finding, therefore, rejected Nokia’s first and second arguments.

Judge Payne also found that there may not be commonality in the FRAND issues for each patent, stating that “[d]amages assessments in FRAND cases raise highly patent-specific issues because in FRAND cases the focus is on apportioning-out the value of the patent from the standard.”  He further indicated that FRAND cases may “de-emphasize the importance of shared facts such as facts about the parties,” explaining:

For example, the Federal Circuit has held that in FRAND cases, Georgia-Pacific factor 4 is not relevant.  Factor 4 addresses a “licensor’s established policy and marketing program to maintain his patent monopoly by not licensing others to use the invention.”  But, as the Federal Circuit has noted, this is irrelevant in FRAND cases because “patent monopolies” are not allowed under FRAND.  See Ericsson, 773 F.3d at 1230.  Thus, at least one shared fact is unimportant in FRAND cases and a fact-finder will not benefit from general testimony about a party’s patent licensing policy.  See also Ericsson, 773 F.3d at 1230-31 (“[F]actor 5—‘[t]he commercial relationship between the licensor and licensee’—is irrelevant because Ericsson must offer licenses at a non-discriminatory rate.”). [citing Ericsson, Inc. v. D-Link Sys., 773 F.3d 1201 (Fed. Cir. 2014)]

The decision here should be considered in the context of its procedural posture–i.e., Judge Payne has broad discretion to control his docket and his rationale need not be perfect, just sufficient in exercising his discretion in this particular case.  For example, some may take issue with the statement that “a fact-finder will not benefit from general testimony about a party’s patent licensing policy” if that were extended to how a party licenses its FRAND-encumbered SEPs to similarly situated licensee’s, which may be relevant to whether a proposed royalty is reasonable or non-discriminatory.

This case also provides another example where a party was disappointed when denied the opportunity to have cross-licensing of SEPs considered in assessing and committing to a court-determined FRAND royalty.  For example, Judge Crabb dismissed Apple’s FRAND case against Motorola because Apple would not commit to be bound by a FRAND-royalty determination in that case for Motorola’s SEPs given, among other things, Apple’s desire to consider the value of its own SEPs in any ultimate cross-licensing deal with Motorola. (see our Jan. 7, 2013 post and Apple’s filing of Oct. 31, 2012 in that case).  Judge Selna recently denied Ericsson’s motion to adjudicate a FRAND royalty-rate based on a cross-license of both Ericsson’s and TCL’s FRAND-encumbered patents, thus limiting the case to adjudicating only a FRAND-based royalty on Ericsson’s FRAND-encumbered patents (see Order of Nov. 6, 2015).  This approach may further distinguish litigated FRAND rates from real-world bilaterally negotiated FRAND licenses where cross-licensing is common and often contemplated by a standard setting organization’s IPR policies, such as permissible reciprocity provisions in a FRAND commitment. (see also our Dec. 5, 2014 Ericsson v. D-Link post that notes potential disconnect between (a) acceptable real-world licensing with royalties based on end products and (b) litigation using the smallest-salable patent practicing unit evidentiary rule in some jury trials where royalty is based on a component of the end product).

Today, in The Medicines Co. v. Hospira, the Federal Circuit en banc unanimously ruled that “a contract manufacturer’s sale to the inventor of manufacturing services where neither title to the embodiments nor the right to market the same passes to the supplier does not constitute an invalidating sale under § 102(b).”

This case provides a good review of the on-sale bar and circumstances that may or may not constitute a sale that would trigger it.  The decision is based on § 102(b) as it existed before amendment in 2011 under the America Invents Act (AIA); but the decision may guide applying the on-sale bar under AIA § 102(a)(1) to patents that are subject to the amended provision–i.e., patents’ whose claims have an effective filing date on or after March 16, 2013.


The Medicine Company (MedCo) owns patents directed to product and product-by-process claims for batches of an improved drug.  MedCo does not own facilities to make drugs itself, but contracts with  a third-party supplier Ben Venue Laboratories (Ben Venue) to make the drugs.  Prior to inventing the improved drug, MedCo had Ben Venue make batches over a period of time and tweaked the process along the way until coming up with the patented improved drug.

The patents-in-suit were filed on July 27, 2008, and, thus, have an on sale bar critical date of July 27, 2007–i.e., a sale of the invention prior to the critical date would invalidate the patent claims.  In 2006, before the critical date, MedCo had paid its supplier Ben Venue to make three batches of the improved drug.  The supplier completed making the three batches of the improved drug before the critical date.  MedCo paid the supplier $347,500 for making the three batches, which batches had a market value well over $20 million.  The batches were placed in quarantine with MedCo’s distributor Integrated Commercialization Solutions (ICS) pending FDA approval.  MedCo did not release the three batches from quarantine and make them available for sale until August 2007, which was after the July 2007 critical date.

The district court ruled that there was no commercial sale that would trigger the on-sale bar prior to the critical date, because the transaction between patent owner MedCo and its supplier Ben Venue were sales of contract manufacturing services, not the improved drug; rather, the title to the manufactured druges always resided with patent owner MedCo prior to the critical date.  On appeal to the Federal Circuit, the original three-judge panel held that the on sale bar did apply, because the patent owner commercially exploited the invention before the critical date even though no title was transferred.

En Banc Decision

The full en banc Federal Circuit reviewed the history of the on-sale bar, including the vague totality of the circumstances test that the Federal Circuit had applied before that test was rejected by the Supreme Court’s Pfaff decision.  The current Pfaff standard applies the on-sale bar when, before the critical date, the claimed invention (1) was the subject of a commercial offer for sale; and (2) was ready for patenting.  The Pfaff case itself focused on the second prong, ruling that an invention is “ready for patenting” in at least two ways: (1) the invention was reduced to practice or (2) drawings or other descriptions of the invention are sufficiently specific to enable a person of ordinary skill to practice the invention.

The instant case focuses on the first prong of the Pfaff inquiry: whether the invention was the subject of a commercial sale or offer for sale.  The Federal Circuit applies its own law to this inquiry using general contract law principles.  The Federal Circuit may look to the Uniform Commercial Code (UCC) in assessing whether communications rise to the level of a commercial offer for sale.  The activity must be a “sale” in the commercial law sense where a “sale is a contract between parties to give and to pass rights of property for consideration which the buyer pays or promises to pay the seller for the thing bought or sold.”

The en banc Court ruled that the transaction between patent owner MedCo and supplier Ben Venue was not a commercial sale that would trigger the on-sale bar.  The en banc Court summarized its rationale as follows:

[W]e first clarify that the mere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not constitute a “commercial sale” of the invention.  We … clarify that “stockpiling” by the purchaser of manufacturing services is not improper commercialization under § 102(b). … [C]ommercial benefit–even to both parties in a transaction–is not enough to trigger the on-sale bar of § 102(b); the transaction must be one in which the product is “on sale” in the sense that it is “commercially marketed.”  There are, broadly speaking, three reasons for our judgment in this case: (1) only manufacturing services were sold to the inventor–the invention was not; (2) the inventor maintained control of the invention, as shown by the retention of title to the embodiments and the absence of any authorization to [the supplier] Ben Venue to sell the product to others; and (3) “stockpiling,” standing alone, does not trigger the on-sale bar.

In this case, the patent claims were product claims or product-by-process claims where, for validity purposes, the “invention” is the product.  The supplier Ben Venue sold contract manufacturing services, not the patented products.  Factors that led the court to this conclusion include:

  • The supplier acted more like “laboratory hands” to reduce the invention to practice for an inventor with no manufacturing capabilities itself.
  • The suppliers invoices stated they were a “Charge to manufacture” the improved drug.
  • The supplier was paid only 1% of the market value of the products made –i.e., about $350,000 for product worth well over $20 million.
  • Title to the manufactured drugs did not change hands, but remained with the patent owner MedCo, and the supplier Ben Benue was not free to use or sell the product or deliver them to anyone other than MedCo.
  • The confidential nature of the transaction.

The Court noted that it looks to the UCC for guidance and the UCC indicates that a “sale” involves “the passing of title from the seller to the buyer for a price.”  While this is not a bright line rule, the absence of a title transfer is significant “because, in most instances, that fact indicates an absence of commercial marketing of the product by the inventor.”  But there could be instances (not present in this case) where a product could be “on sale” without a transfer of title, such as “commercially exploit[ing] a newly invented machine by charging others a fee to use it without transferring title to it” such that “use of the invention is on-sale for a price.”

The Court also cautioned that there was no blanket “supplier exception” to the on-sale bar, stating:

While the fact that a transaction is between a supplier and inventor is an important indicator that the transaction is not a commercial sale, understood as such in the commercial marketplace, it is not alone determinative.  Where the supplier has title to the patented product or process, the supplier receives blanket authority to market the product or disclose the process for manufacturing the product to others, or the transaction is a sale of product at full market value, even a transfer of product to the inventor may constitute a commercial sale under § 102(b).  The focus must be on the commercial character of the transaction, not solely on the identity of the participants.

Because the Court found there was no commercial sale to trigger the on-sale bar, it declined to address whether the case would have come within the experimental use exception to the on-sale bar.  The Federal Circuit en banc court then remanded the case back to the original Federal Circuit three-judge panel to address other issues that remain on appeal.

Today, the U.S. Supreme Court decided to review the Federal Circuit’s ruling of infringement under 35 U.S § 271(f)(1) based on supplying from the United States a component of a patented invention.  This case may provide the Supreme Court’s view of whether and to what extent a single component may be “a substantial portion of the components of a patented invention” under § 271(f)(1).

The text of 35 U.S.C. § 271(f)(1) at issue here, which is directed to U.S. activity that leads to a combination of a patented invention abroad, states:

“Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.” [35 U.S.C. § 271(f)(1)]

In this case, the Tautz patent claims a DNA processing kit that includes: (1) a mixture of primers; (2) a polymerizing enzyme (such as Taq polymerase; (3) nucleotides for forming replicated stand of DNA; (4) a buffer solution and (5) control DNA.  The accused infringer LifeTech sells genetic testing kits that include a primer mix, a PCR reaction mix, a buffer solution, control DNA, and a polymerase (Taq), which is necessary for PCR amplification.  LifeTech makes the Taq polymerase in the U.S., which it then ships to LifeTech’s U.K. facilities abroad to be included in genetic testing kits assembled abroad and sold throughout the world.  A jury found that LifeTech  infringed the Tautz patent under 35 U.S.C. § 271f)(1).  The district court set aside that portion of the jury verdict, ruling that § 271(f)(1) liability requires providing more than one component.

On appeal, LifeTech argued that there was no infringement under § 271(f)(1) based on, among other things, (1) an argument that the statute requires supplying more than a single “component”, but that one must supply “components” and (2) supplying the single Taq component did not constitute supplying “a substantial portion of the components of a patented invention.”  The Federal Circuit disagreed, and ruled that substantial evidence supports the jury’s infringement finding, stating:

Claim 42 of the Tautz patent recites five components: a primer mix, a polymerizing enzyme (such as Taq polymerase), nucleotides, a buffer solution, and control DNA.  LifeTech’s domestic arm supplies the Taq polymerase to its facility in the United Kingdom, which both manufactures the remaining four components and assembles all the components into the accused STR kits.  Taq polymerase is an enzyme used to amplify the DNA sequences in order to obtain enough replicate sample for testing.  Without Taq polymerase, the genetic testing kit recited in the Tautz patent would be inoperable because no PCR could occur. LifeTech’s own witness admitted that the Taq polymerase is one of the “main” and “major” components of the accused kits.  In short, there is evidence in the record to support the jury’s finding that a polymerase such as Taq is a “substantial portion” of the patented invention. [Promega v. Life Tech, 773 F.3d 1338, 1356 (Fed. Cir. 2014)]

The Supreme Court today granted review of this portion of the Federal Circuit’s decision, limiting review to the second question presented in the certiorari petition:

2.  Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.

The Supreme Court did not grant certiorari on the first question presented in the petition, which concerned whether LifeTech’s supplying a component made in the U.S. to LifeTech’s facilities abroad could constitute active inducement under § 271(1)(f)–i.e., whether a single entity can actively induce itself.

Today the Supreme Court issued its awaited Cuozzo decision and gave strong deference to the U.S. Patent & Trademark Office (“Patent Office”) power (1) to make an unappealable determination to institute inter partes review (IPR) of an issued patent and (2) to make both procedural and substantive rules governing the IPR process, including what standard the Patent Office wants to use when construing patent claims in an IPR proceeding.  The Court’s ruling on the specific Patent Office IPR regulations at issue here was generally expected.  The broader impact of the decision may be the Court’s indication of how much power Congress gave the Patent Office to regulate IPRs.


In 2004, Cuozzo was granted a patent directed to a speedometer that shows when a driver is exceeding the speed limit.  In 2012, Garmin filed a petition seeking inter partes review (IPR) of the issued patent claims.  The Patent Office granted inter partes review of claim 17 based on Garmin’s arguments that Claim 17 would have been obvious based on prior art.  The Patent Office also granted review of Claims 10 and 14 on the same grounds even though Garmin had not expressly raised that challenge as to those claims.  The Patent Office reasoned that, because Claim 17 depended from Claim 14 that depended on Claim 10, the request for review of those claims was inherent in the request to review their dependent Claim 17.

The Patent Office later ruled that all three claims were invalid based on Garmin’s obviousness challenge where the Patent Office construed the claims under the broadest reasonable interpretation (BRI) standard that the Patent Office also applies when examining non-issued claims in original patent applications.  The Patent Office had denied Cuozzo’s motion to amend the claims to avoid the prior art, because the Patent Office ruled such amendment would not avoid the invalidity grounds raised.

Cuozzo appealed the Patent Office’s decision to the Federal Circuit.  Cuozzo argued that the Patent Office exceeded its statutory authority in granting inter partes review of Claims 10 and 14, because they were not identified in Garmin’s IPR petition as required by 35 U.S.C. §212(a)(3) –i.e.,. the IPR petition must state “with particularlity” the grounds for challenging the patent claims.  The Federal Circuit, however, ruled that the Patent Office’s decision to institute the IPR was “nonappealable” under 35 U.S.C. §314(d).

Cuozzo also argued that the Patent Office erred in applying the broadest reasonable interpretation (BRI) standard in construing the claims during the IPR, rather than the potentially narrower claim construction standard used by district courts when litigating patent invalidity and infringement.  The Federal Circuit, however, ruled that the Patent Office was operating within its rulemaking authority when it decided to use the BRI standard in IPR proceedings.

The Decision

The Supreme Court affirmed the Federal Circuit’s ruling on both counts.

First, the Supreme Court ruled that the plain language of the statute provides that the Patent Office decision to institute an IPR is unappealable and there is no basis for deviating from that langauge here.  The non-appealability provision of §314(d) states: “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”  The Court cautioned, however, that the lack of judicial review applies to routine cases and there may be instances, such as constitutional questions, that may warrant judicial review:

[W]e emphasize that our interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.  This means that we need not, and do not, decide the precise effects of §314(d) [non-appealability statute] on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond “this section” [i.e., the IPR statute].  Thus, … we do not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under §112” in inter partes review.  Such “shenanigans” may be properly reviewable in the context of §319 and under the Administrative Procedure Act, which enables reviewing courts to “set aside agency action” that is “contrary to constitutional rights,” “in excess of statutory jurisdiction,” or “arbitrary [and] capricious.”

By contrast, where a patent holder merely challenges the Patent Office’s “determin[ation] that the information presented in the petition … shows that there is a reasonable likelihood” of success “with respect to at least 1 of the claims challenged,” §314(a), or where a patent holder grounds its claim in a statute closely related to that decision to institute inter partes review, §314(d) bard judicial review.

The Supreme Court’s decision thus does provides some leeway and guidance for future attempts to appeal Patent Office decisions to institute an IPR.

Second, the Supreme Court ruled that Congress granted the Patent Office power to set both procedural and substantive rules governing inter partes review under 35 U.S.C. §316(a)(4), which states that the Patent Office has the authority to issue “regulations … establishing and governing inter partes review under this chapter.”  The IPR statute does not direct the Patent Office to use a particular claim construction standard.  In such instances of ambiguity or a “gap” in the statute, the court typically interprets a statute as “granting the agency leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute.”  The Court ruled that the Patent Office’s use of the BRI standard in IPR proceedings was reasonable.  The Court did not decide whether that was the most reasonable alternative, only that it was reasonable and Congress gave the Patent Office power to chose what standard to apply among reasonable alternatives:

Having concluded that the Patent Office’s regulation, selecting the broadest reasonable construction standard, is reasonable in light of the rationales described above, we do not decide whether there is a better alternative as a matter of policy.  That is a question that Congress left to the particular expertise of the Patent Office.

The Supreme Court’s ruling today, therefore, may spur interested parties to approach the Patent Office or Congress to consider a different claim construction standard for IPRs now that the decision of what standard to use has been taken out of the courts’ hands.

Today, the Supreme Court issued an opinion that replaces the Federal Circuit’s strict Seagate test for enhanced patent damages with a test that is easier for patent owners to meet.  Relying extensively on the Court’s recent Octane and Highmark decisions that created an easier standard to receive attorney fees in exceptional patent cases, the Supreme Court ruled as follows:

  1. Eliminated Seagate’s objective recklessness prong (that avoided an accused infringer’s subjective belief) and focused on a subjective basis for enhancing damages given an infringer’s egregious conduct in the particular circumstances of the case, which behavior goes beyond what is found in a typical patent case.
  2. Lowered the patent owner’s burden of proof from the “clear and convincing evidence” standard to the lower “preponderance of the evidence” standard generally applied to infringement.
  3. Adopted a simple “abuse of discretion” standard of review that requires the Federal Circuit to defer more to the district court’s decision whether to enhance damages.

Judge Breyer’s concurring opinion explains his understanding of today’s decision and the limits on enhancing damages.  He sought to avoid the perception that the decision reverts back to pre-Seagate law where costly opinions of counsel were sought upon simply receiving notice of a patent and much litigation centered around such opinions and waiving privilege by relying on them.

Below is a summary of the decision.  This includes at the end a verbatim (minus citations) quote of the Court’s historical discussion of the enhancement statute, because the Court repeatedly pointed to that specific discussion as providing guidance for enhancing damages in the future.


The Seagate Regime for Enhanced Damages

In 2007, the Federal Circuit’s Seagate decision set the standard for awarding enhanced damages under 35 U.S.C. § 284 based on a showing that patent infringement was willful using a two-part test that the patent owner must prove by clear and convincing evidence.  The Seagate test has an objective prong that first must be established, followed by a subjective prong.

Under the first objective prong, the patent owner must show that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent; importantly, this prong is determined without regard to the accused infringer’s state of mind.  This “objective recklessness” prong could be defeated if the infringer defending the case raised a “substantial question” about whether the patent was valid or infringed.

Under the second subjective prong, the patent owner must show that the infringer either knew about the risk of infringement or the risk was so obvious that the infringer should have known of it.

Under the Seagate regime, the Federal Circuit on appeal would apply three different standards of review to the district court’s application of the Seagate test:  (1) the first objective prong was reviewed de novo (i.e., without any deference to the district court’s decision on this prong); (2) the second subjective prong was reviewed for substantial evidence (i.e., with some deference to the district court’s decision if it was reasonable based on the evidence even if a different decision reasonably could have been made); and (3) the ultimate decision whether to enhance damages was reviewed for whether the district court abused its discretion (i.e., very deferential to the district court’s decision).  This overall Seagate scheme was part of the Federal Circuit’s effort to address expenses and problems that arose under a pure subjective standard, such as side-litigation on the accused infringer’s state of mind, opinions of counsel and waiver of privilege based on reliance on same.

The Two Separate Patent Cases Under Review

The instant decision involves appeals from two separate cases.  The first case involves Halo Electronics (Halo), which is an electronic component supplier that owns patents directed to transformers that are mounted on printed circuit boards.  Halo sent Pulse Electronics (Pulse) two letters offering to license the patents.  Pulse continued to sell accused infringing components, but decided not to take a license because one of its engineers concluded that the Halo patents were invalid.  Halo sued Pulse for patent infringement.  The jury found that Halo infringed the patent and there was a high probability such infringement was willful.  But the district court declined to enhance damages because Pulse’s defenses at trial wernot objectively baseless or a sham and, thus, the first Seagate prong was not met.

The second case under review involves Stryker and Zimmer who compete in the market for orthopedic pulsed lavage devices, which are a combination spray gun and suction tube for cleaning tissue during surgery.  In 2010, Stryker sued Zimmer for patent infringement and a jury found that Zimmer willful infringed Stryker’s patents.  The district court trebled damages based on evidence that Zimmer copied Stryker’s products and accepted the risk of legal consequences given its high-risk/high reward competition strategy.  On appeal, the Federal Circuit vacated the enhanced damages award because Zimmer had asserted “reasonable defenses.”

Supreme Court Decision

The Supreme Court started with the language of the enhanced damages statute, which simply states as follows:

the court may increase damages up to three times the amount found or assessed.  35 U.S.C. § 284

That language provides no specific guidance.  Although the Patent Act of 1783 originally “mandated treble damages in any successful infringement suit,” the statute was changed to be discretionary and for over 180 years enhancement was reserved as a punitive or vindictive sanction  “not to be meted out in a typical infringement case.”  Generally, discretionary enhancement awards are “for egregious cases of culpable behavior.”  The Court stated that, although the Federal Circuit’s Seagate test recognizes this, that test is “unduly rigid” and “can have the effect of insulating some of the worst patent infringers” from enhanced damages.

No “Objective Recklessness” Prong

The Supreme Court found Seagate’s first objective recklessness prong was problematic, because it could shield “many of the most culpable offenders.”  Similar to the Court’s decision in Octane Fitness (concerning attorney fee awards in exceptional cases), “‘subjective bad faith’ alone could ‘sufficiently set itself apart from mine-run cases to warrant a fee award”  and damages should be enhanced “regardless whether the infringement was objectively reckless, the Supreme Court stating:

The Seagate test aggravates the problem by making dispositive the ability of the infringer to muster a reasonable (even though unsuccessful) defense at the infringement trial.  The existence of such a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.  Under that standard, someone who plunders a patent–infringing it without any reason to suppose his conduct is arguably defensible–can nevertheless escape any comeuppance under §284 solely on the strength of his attorney’s ingenuity.

Culpability should be measured by what the actor knew at the time of the challenged conduct, not by “facts that the defendant neither knew or had reason to know at the time he acted.”  Rather, the court should take into account the particular circumstances and exercise its discretion “in a manner free from the inelastic constraints of the Seagate test.”  Further, “[c]onsistent with nearly two centuries of enhanced damages under patent law … such punishment should generally be reserved for egregious cases typified by willful conduct.”  The Court later further emphasized that enhanced damages should not be awarded “in garden-variety cases.”

No “Clear And Convincing Evidence” Burden of Proof

As in Octane Fitness, the Supreme Court also rejected Seagate’s requirement that enhanced damages be proved under the high “clear and convincing evidence” standard:

The Seagate test is also inconsistent with §284 because it requires clear and convincing evidence to prove recklessness.  On this point Octane Fitness is again instructive.  There too the Federal Circuit had adopted a clear and convincing standard of proof, for awards of attorney’s fees under §285 of the Patent Act.  Because that provision supplied no basis for imposing such a heightened standard of proof, we rejected it.  We do so here as well.  Like §285, §284 “imposes no specific evidentiary burden, much less such a high one.”  And the fact that Congress expressly erected a higher standard of proof elsewhere in the Patent Act, see 35 U.S.C. §273(b), not in §284, is telling.  Furthermore, nothing in historical practice supports a heightened standard.  As we explained in Octane Fitness, “patent-infringement litigation has always been governed by a preponderance of the evidence standard.”  Enhanced damages are no exception.

Abuse of Discretion Standard of Review

Again following its Octane Fitness/Highmark rulings for attorneys fees in exceptional cases, the Supreme Court eschewed the Federal Circuit’s tripartite scheme of appellate review.  Rather, the district court’s decision on enhancing damages should be reviewed simply for abuse of discretion.  The Supreme Court explained that applying the limits learned from almost two centuries of case law should address concerns that courts may too readily use their discretion to award enhanced damages:

That [abuse of discretion] standard allows for review of district court decisions informed by “the considerations we have identified.”  Octane Fitness, 572 U.S., at __.  The appellate review framework adopted by the Federal Circuit reflects a concern that district courts may award enhanced damages too readily, and distort the balance between the protection of patent rights and the interest in technological innovation.  Nearly two centuries of exercising discretion in awarding enhanced damages in patent cases, however, has given substance to the notion that there are limits to that discretion.  The Federal Circuit should review such exercises of discretion in light of the longstanding considerations we have identified as having guided both Congress and the courts.

The Court, in conclusion, reemphasized that the discretion to enhance damages should be guided by nearly two centuries of patent law on the issue, “limiting the award of enhanced damages to egregious cases of misconduct beyond typical infringement.

Justice Breyer Concurrence

Justice Breyer (joined by Justices Kennedy and Alito), wrote a concurrence to explain his understanding of the decision.  His concurrence seeks to ensure that prior problems the Seagate standard sought to resolve will not arise following the instant decision.  He made three primary points.

First, enhanced damages should not be awarded “simply because the evidence shows that the infringer knew about the patent and nothing more.” (emphasis in original).  Rather, enhanced damages “are generally appropriate … only for egregious cases” such as deliberate or wanton conduct. (emphasis in original).  Thus, “intentional or knowing” infringement “may” warrant enhancement, but the Court’s decision does not mean that such conduct “must” require enhancement.

Second, opinions of counsel of non-infringement may not be necessary to avoid enhanced damages.  The patent statute precludes using the absence of such an opinion to prove willful infringement (see 35 U.S.C. §298).  Expensive opinions of counsel may not be necessary under the circumstances of a particular case:

It may well be expensive to obtain an opinion of counsel.  Such costs can prevent an innovator from getting a small business up and running.  At the same time, an owner of a small firm, or a scientist, engineer, or technician working there, might, without being “wanton” or “reckless,” reasonably determine that its product does not infringe a particular patent, or that that patent is probably invalid.  I do not say that a lawyer’s informed opinion would be unhelpful.  To the contrary, consulting counsel may help draw the line between infringing and noninfringing uses.  But on the other side of the equation lie the costs and the consequent risk of discouraging lawful innovation.  Congress has thus left it to the potential infringer to decide whether to consult counsel–without the threat of treble damages influencing that decision.  That is, Congress has determined that where both “advice of counsel” and “increased damages” are at issue, insisting upon the legal game is not worth the candle.

Third, enhanced damages should not be used to compensate the patent owner for infringement costs or litigation expenses.

Justice Breyer acknowledged concerns about patent assertion entities that might use the threat of treble damages to extract unwarranted settlements.  He counsels that courts, therefore, should be “careful” in applying enhanced damages “to ensure that they only target cases of egregious conduct.”

Finally, Justice Breyer indicated that the Federal Circuit might apply a lighter abuse of discretion standard than typical given its experience in patent law, stating:

[I]n applying [the abuse of discretion standard], the Federal Circuit may take advantage of its own experience and expertise in patent law.  Whether, for example, an infringer truly had “no doubts about [the] validity” of a patent may require an assessment of the reasonableness of a defense that may be apparent from the face of that patent.  And any error [by the district court] on such a question would be an abuse of discretion.

Supreme Court’s Historical Analysis of Enhanced Damages

The following is a verbatim recitation of the Supreme Court opinion’s historical analysis of enhanced damages except that citations are omitted (to shorten it).  We provide this here given the importance that the Court’s decision gives to its historical discussion in guiding future enhancement decisions.


Enhanced damages are as old as U.S. patent law.  The Patent Act of 1793 mandated treble damages in any successful infringement suit.  In the Patent Act of 1836, however, Congress changed course and made enhanced damages discretionary, specifying that “it shall be in the power of the court to render judgment for any sum above the amount found by [the] verdict … not exceeding three times the amount thereof, according to the circumstances of the case.”  In construing that new provision, this Court explained that the change was prompted by the “injustice” of subjecting a “defendant who acted in ignorance or good faith” to the same treatment as the “wanton and malicious pirate.”  There “is no good reason,” we observed, “why taking a man’s property in an invention should be trebly punished, while the measure of damages as to other property is single and actual damages.  But “where the injury is wanton or malicious, a jury may inflict vindictive or exemplary damages, not to recompense the plaintiff, but to punish the defendant.”

The Court followed the same approach in other decisions applying the 1836 Act, finding enhanced damages appropriate, for instance, “where the wrong [had] been done, under aggravated circumstances,” but not where the defendant “appeared in truth to be ignorant of the existence of the patent right, and did not intend any infringement.”

In 1870, Congress amended the Patent Act, but preserved district court discretion to award up to treble damages “according to the circumstances of the case.”  We continued to describe enhanced damages as “vindictive or punitive,” which the court may “inflict” when “the circumstances of the case appear to require it.  At the same time, we reiterated that there was no basis for increased damages where “[t]here is no pretence of any wanton and wilful breach” and “nothing that suggests punitive damages, or that shows wherein the defendant was damnified other than by the loss of the profits which the plaintiff received.”

Courts of Appeals likewise characterized enhanced damages as justified where the infringer acted deliberately or willfully.

Some early decisions did suggest that enhanced damages might serve to compensate patentees as well as to punish infringers.  Such statements, however, were not for the ages, in part because the merger of law and equity removed certain procedural obstacles to full compensation absent enhancement.  In the main, moreover, the references to compensation concerned costs attendant to litigation.   That concern dissipated with the enactment in 1952 of 35 U.S.C. § 285, which authorized district courts to award reasonable attorney’s fees to prevailing parties in “exceptional cases” under the Patent Act.

It is against this backdrop that Congress, in the 1952 codification of the Patent Act, enacted §284.  “The stated purpose” of the 1952 revision “was merely reorganization in language to clarify the statement of the statutes.”  This Court accordingly described §284–consistent with the history of enhanced damages under the Patent Act–as providing that “punitive or ‘increased’ damages” could be recovered “in a case of willful or bad-faith infringement.”


Yesterday, Judge Andrews in the District of Delaware issued an Order that denied InterDigital’s motion to dismiss Microsoft’s Complaint that alleged violation of antitrust laws based on InterDigital’s enforcement of patents alleged to be essential to 3G and 4G cellular ETSI standards and subject to commitments to license on fair, reasonable and non-discriminatory (“FRAND”) terms.  At this early procedural stage of the case, the issue was not whether Microsoft would prevail in the case or whether the allegations in the Complaint were true; rather, at this initial case stage Judge Andrews considered whether Microsoft had stated “plausible” claims against InterDigital upon which relief could be granted if what Microsoft alleged in the Complaint was true when viewing the Complaint in a light most favorable to Microsoft.  He decided that was the case and is allowing the case to proceed.  This ruling itself is not necessarily important as a precedential matter given the relatively low threshold for surviving a motion to dismiss and inability to challenge the factual assertions, but this will be an interesting case to follow as it matures because it is one of the few contemporary instances of a U.S. court considering the application of competition law to standard essential patents (“SEPs”) with sophisticated parties on both sides of the issue.


Following is a summary of the Complaint and briefing on the motion to dismiss, which can help put into context the relatively brief decision by the court.

Microsoft’s Complaint

In August 2015, Microsoft filed a Complaint against InterDigital in the District of Delaware federal court alleging that InterDigital’s “abusive licensing practices and unlawful monopolization in the relevant markets for third-generation (‘3G’) and fourth-generation (‘4G’) cellular technologies” violated Section 2 of the Sherman Act, including allegations that InterDigital made “false promises to make its technologies available” on FRAND terms.  Microsoft alleged that InterDigital’s “patents … have market power because they cover technology mandated by the standards.”  Microsoft alleged that InterDigital falsely promised to license its patents on FRAND terms “so that other members of the SSO [standing setting organization] would include InterDigital technologies in the standards”, and led the SSO to exclude alternative technologies in the standard.  Microsoft then listed nine ways it alleges that InterDigital has “exploited its unlawfully acquired power against Microsoft”:

  • refused to honor the obligation to license its patents on FRANd terms;
  • demanded excessive and discriminatory royalties from companies that sell 3G and 4G devices;
  • tied access to its U.S. patents to its foreign patents along with the requirement that licensees pay royalties on worldwide sales;
  • tied access to its SEPs to licensing of its admittedly non-essential patents;
  • transferred hundreds of SEPs to a controlled entity in order to “double dip” in its royalty demands;
  • misappropriated technical information submitted by other standards members so that it could obtain patents in its name and accordingly profit from technologies created by others;
  • discriminated in its pricing demands against Microsoft based on Microsoft’s smaller market share relative to Microsoft’s competitors;
  • tied access to its SEPs and any proposed license terms for them to prospective licensee’s agreement to enter mandatory non-disclosure terms while refusing to disclose license terms provided to Microsoft’s competitors in order to hide InterDigital’s discriminatory pricing; and
  • pursued baseless infringement actions and baseless demands for injunctive relief and exclusion orders designed to increase Microsoft’s costs and thereby coerce Microsoft to capitulate to InterDigital’s unreasonable, non-FRAND demands.

No Intent To Exclude. Microsoft alleges wrongdoing because InterDigital “spen[t] millions of dollars on litigation solely seeking exclusion of Microsoft products” even though InterDigital “concedes that it has no interest in actually excluding anything”; rather, Microsoft alleges that InterDigital was just looking for licensing negotiation leverage.

Relevant Market.  Microsoft alleges that InterDigital has “monopoly power” in the relevant markets and “is the sole supplier in those markets, has excluded all competition, and has the power to charge supra-competitive prices and is in fact doing so.”  Microsoft defines the relevant market, for purpose of its antitrust claim, to be “the markets for technologies covered by the InterDigital patents issued in the United States and elsewhere that are essential, or are alleged to be essential, to the 3G and 4G cellular standards … together with all other alternative technologies to the InterDigital patents that could have been used in the cellular standards.”  Microsoft alleges broadly that “Once ETSI adopts technology for a cellular standard, the owner of each essential patent used in that standard obtains monopoly power in a relevant technology market.”  Microsoft asserts that the relevant market “can … be identified from InterDigital’s licensing declarations to ETSI.”  Microsoft alleges that there were “companies with technology capable of performing the same or equivalent functions which could have been adopted by ETSI” or “could have been used in alternative cellular standards that were foreclosed” when ETSI adopted a standard with InterDigital’s technologies. Microsoft alleges that ETSI’s intellectual property rights (“IPR”) would have required it to cease work on the Standard “if InterDigital had been truthful about its unwilingness to license on FRAND terms and conditions” and that, “but for InterDigital’s deception, alternate technologies would have been adopted by ETSI or no particular technology would have been specified.”

Microsoft alleges that, by “manipulat[ing] the standards-setting process,” InterDigital “now purports to control more than 1000 of the more than 40,000 patents that have been declared to be essential to the 3G UMTS standard and more than 800 of the 60,000 patents that have been declared to be essential to the 4G LTE standard.”  Microsoft alleges this allowed InterDigital to exclude alternative technologies “and unlawfully acquire[] market power” as “the sole supplier in the Relevant Technology Markets,” creating “high or insurmountable barriers to entry” into those markets.

Licensing Demands.  Microsoft alleges that InterDigital seeks supra-competitive royalties based on “an arbitrary percentage of the overall price of the cellular devices” that sell for hundreds of dollars, rather than being based on “chip components that implement the Standards” that sell for “just a few dollars.”  Microsoft further alleges that InterDigital’s royalty demands have created a “royalty stacking” problem, particularly given “hundreds of other entities [that] own thousands of patents declared essential to the Standards.”  Microsoft alleges royalty-stacking was further compounded by InterDigital creating new licensing entities and assigning them some of the relevant SEPs, thus adding another SEP owner seeking royalties.  Microsoft further alleges abuse by InterDigital seeking to license together its SEPs and non-SEPs, both domestic and foreign, rather than licensing “the few purported SEPs that it has asserted in litigation.”  In that regard, Microsoft alleges that InterDigital turned-down multi-million dollar checks that were tendered as royalty payments for U.S. sales–but not foreign sales–based on the royalty rate InterDigital had been seeking for worldwide sales.  Microsoft also alleges abuse of monopoly power by having volume discounts that “unfairly discriminates against Microsoft and other newer, lower-volume entrants in the cellular device industry.”  Further, Microsoft alleges that InterDigital transferred “hundreds” of patents to another licensing entity without reducing the licensing demand for its patent portfolio that no longer included those transferred patents, even though InterDigital previously licensed Microsoft’s competitors without charging more when those patents were part of InterDigital’s portfolio.

Non-Disclosure Agreements in Licensing Negotiations.  Microsoft alleges that InterDigital abused its monopoly power by  requiring all prospective licensees to “keep secret InterDigital’s licensing proposals” and by “refus[ing] to disclose the terms on which it has made its SEPs available to the competitors of would-be licensees.”  Microsoft asserts that “[t]ransparency in licensing of SEPs would, in contrast, enable prospective licensees to assess more effectively InterDigital’s non-compliance with its FRAND commitments.”

Harm To Competition.  Microsoft alleges that InterDigital’s conduct has harmed competition in the relevant market a number of ways:

  • excluded alternative technologies in the ETSI standards
  • obscured costs of including patented technologies in the Standard
  • prevented Microsoft from obtaining access to necessary technology on reasonable and non-discriminatory terms
  • customers, such as Microsoft, faced higher costs than they would have in a competitive market
  • transfer of patents to another entity added to cost for accessing the cellular technologies
  • consumers harmed by higher prices, reduced innovation and more limited choice for standard-compliant products and complementary cellular technologies
  • litigation fees and costs for avoiding supra-competitive licensing terms
  • uncertainty as to risk of an exclusion order from U.S. International Trace Commission (“ITC”) proceedings, threatening to erode customer loyalty, brand recognition and customer goodwill, and increasing Microsoft’s sales costs

Relief Sought.  The relief sought by Microsoft includes:

  • Patents that were declared essential should be rendered unenforceable
  • any agreements involving those patents (presumeably prior licenses with anyone) should be voided
  • Treble damages
  • An injunction that (1) “mak[es] available” to Microsoft in a non-confidential license on court-determined FRAND terms, (2) discloses to Microsoft the terms that InterDigital has licensed or offered to license it SEPs ,(3) bars InterDigital from taking any steps to enforce any ITC exclusion orders against Microsoft on an SEP; and (4) requires InterDigital to “re-assign any declared SEPs that it has assigned to controlled entities” (presumeably re-assing back to InterDigital so they are back in the same portfolio).

InterDigital’s Motion To Dismiss

In October 2015, InterDigital filed a Motion to Dismiss and Strike Microsoft’s Complaint.  InterDigital discussed the history of negotiations at issue, which originally involved negotiations with Nokia starting in 2005 and continued after Microsoft’s acquisition of Nokia’s mobile phone business in 2014.  InterDigital states that Nokia (and then Microsoft) refused to enter a license, even after all administrative law judges in three separate ITC investigations “rejected Nokia’s and Microsoft’s assertions that InterDigital failed to comply with FRAND commitments” and “Microsoft was determined by [one] ALJ to be an unwilling licensee who refuses to take a license.” (see our July 30, 2013 post re 337-TA-800;  July 2, 2014 post re 337-TA-868 and May 12, 2015 post re 337-TA-613). InterDigital suggests that, given the timing of this Complaint around the same time an ITC decision was due, Microsoft filed the complaint “simply as a tactic to gain leverage in the event of an adverse ITC decision.”  InterDigital further noted that this same district court already had dismissed similar allegations by Microsoft in prior and still pending (but stayed) lawsuits between the parties.

No Alleged Market Power. InterDigital argues that Microsoft failed to allege the requisite market power in a relevant market as required for a violation of Section 2 of the Sherman Act.  Rather, Microsoft alleges market power based on “each essential patent” used in the standard, but “nowhere asserts that InterDigital has an essential patent.”  The closest Microsoft comes are InterDigital declarations to ANSI, but those declarations merely state that InterDigital has patents that “may be or become essential.”  Microsoft’s failure to plead this essential element requires dismissing the Complaint.

No Exclusionary Conduct. Further, InterDigital argues that Microsoft failed to allege the required exclusionary conduct.  Microsoft’s alleges exclusion of alternative technologies that ETSI could have adopted in the standard, but does not identify any such alternative technology.  This too requires dismissing the Complaint.

Fraud Not Pled With Particularity.  InterDigital also argues that Microsoft failed to plead the alleged fraudulent acts underlying the antitrust claim with the particularity required to plead fraud.   For example, Microsoft alleged no facts to support its conclusory allegation that InterDigital “had a fraudulent intent because it knew at the time it made ETSI declarations that it had no intention of licensing on FRAND terms.”  Such conclusory allegations do not sufficiently plead fraud.

Noerr-Pennington Immunity.  InterDigital argued that the Noerr-Pennington Doctrine provides immunity from the alleged antitrust claim based on actions take to enforce patents.   This stems from the U.S. Constitution First Amendment right to petition the government for redress of grievances, such as filing lawsuits in the courts.  This First Amendment rights extends not only to the lawsuit itself, but activity “reasonably and normally attendant upon effective litigation” such as threats of litigation, pre-suit demand letters and settlement offers.  But Microsoft’s allegations are premised on litigations and threats of litigation, which are afforded Noerr-Pennington immunity.  There are only narrow exceptions to this immunity, such as “sham litigation”, which must be pled with particularity.  But Microsoft has not done so here.

For example, Microsoft pled no allegation that the 613 ITC investigation was objectively baseless when it was filed in 2007, and a mere ultimate lack of success on the merits is not grounds to find the litigation “objectively baseless.”  Further, Microsoft’s assertion that baseless lawsuits could coerce “capitulation to … abusive licensing demands” is “not plausible” because “there is no reason for a defendant to agree to an unfavorable settlement of a baseless lawsuit in which it is certain to prevail”–e.g., Microsoft did not explain how it, being a multi-billion dollar company, could be coerced by the “comparatively minor expenses of lawsuits” and Microsoft did not allege that it actually was coerced into taking a license (it took no license).  The risk of “patent holdup” could not exist for “sham litigation”, but “could only arise where the patent owner can assert at least a colorable, non-baseless patent lawsuit” and such non-baseless lawsuits have Noerr-Pennington immunity.

Further, InterDigital argues that Microsoft has not sufficiently alleged a Walker Process antitrust claim exempt from Noerr-Pennington immunity based on fraudulent procurement of a patent.  Microsoft alleged that InterDigital engineers participating in the SSO process sought and obtained a patent based on inventions actually made and disclosed by others during the SSO process.  But Microsoft did not plead that with specificity, only conclusory allegations.  Further, if Microsoft could show that its allegations were true, then no exclusion order or injunction could be obtained on the patent and there would be no “hold up”.  Further, Microsoft has not pled the other elements required for an antitrust violation based on the alleged fraudulently obtained patent.

InterDigital argued that First Amendment protection under Noerr-Pennington is particularly important here to protect the patent owner’s right to exclude that is fundamental to the patent right.  That right is enforced by “Courts serv[ing] a gatekeeping function that ensures that no purported ‘patent hold-up’ can occur … because any defenses to exclusionary relief based on FRAND obligations will be considered and adjudicated” before the court would grant any exclusionary relief.

No Alleged Causal Injury-In-Fact.  InterDigital argued that “Microsoft fails to allege an injury that it suffered caused by InterDigital’s alleged anticompetitive actions.”  Microsoft did not allege that it actually ever paid any alleged unreasonably high or discriminatory royalties.  Quit the opposite, because Microsoft has continued to sell 3G/4G devices without paying royalties while Microsoft’s competitors paid royalties.  The closest Microsoft gets to alleging actual harm is its litigation costs, but a complaint on such harm is barred by the Noerr-Pennington doctrine.

Strike Prayers for Relief.  InterDigital argues that Microsoft’s far-reaching request for relief should be stricken.  Microsoft has no standing to have thousands of patents declared unenforceable or have third-party contracts voided.  Microsoft also has not alleged sufficient facts to show a concrete dispute that all the SEPs are unenforceable or all contracts should be voided.  Further, Microsoft should not be allowed to rifle through confidential licensing agreements with Microsoft’s competitors–Microsoft itself has asserted that its licensing agreements are “highly sensitive and cannot be disclosed to competitors.”  Further, InterDigital argues that the statute of limitations precludes relief for any injury arising more than 4 years before the Complaint was filed.

Microsoft’s Opposition

In December, Microsoft filed its Opposition to the motion to dismiss, arguing that its allegations are similar to controlling Third Circuit precedent (where the Delaware court resides) in Broadcom v. Qualcomm, 501 F.3d 297 (3d Cir. 2007).

Monopoly Power.  Microsoft argues that it has sufficiently pled market power.    Microsoft’s claim is based upon a false FRAND commitment that does not require “alleging the essentiality of specific patents.”  Further, the Complaint does allege that the standards “include technologies over which [InterDigital] claims to have patents.”  In the Broadcom case, the Third Circuit did not require that the “patents were essential”, but only that the defendant patent owner “claimed them to be.”

Exclusionary Conduct.  Microsoft alleged exclusionary conduct and did not need to identify specific alternative technologies that were excluded from the standard based on InterDigital’s conduct.  Rather, the Third Circuit in Broadcom found adequate an allegation that, but for the false FRAND commitment, ETSI would not have selected the patented technology “even if that technology was the only candidate.”  Microsoft specifically alleges that, absent the anticompetitive conduct, ETSI would have adopted a different standard “or no standard at all.”

Sufficient Pleading of Fraud.  Microsoft argues that it meets the specificity requirement for pleading fraud by pleading “date, place or time”, which is what it did in identifying the patents subject to the FRAND commitment, to whom the commitment was made and when the commitments were made.  Further, it was sufficient for Microsoft to allege generally, rather than with specific facts, that InterDigital knew its FRAND commitment was false at the time the commitment was made.

Noerr-Pennington Not Applicable.  Microsoft argues that its complaint did not rely solely on litigation conduct.  Rather, it relied on false statements that led to InterDigital’s patented technology being adopted into the standard and then abusing the monopoly power so obtained by seeking high royalties, tying U.S. patents to foreign patents and non-SEPs.  InterDigital’s litigation conduct–even if  in good faith– could then be considered as part of the overall anticompetitive scheme.

Further, Microsoft argues its allegations are that the”FRAND commitments were intended to guarantee that [InterDigital] would not attempt to prevent implementers from using its patented technology by seeking injunctions, but would instead proffer licenses on FRAND terms, which [InterDigital] has not done.”  Microsoft argues that this is consistent with judicial and regulatory statements that FRAND commitments “foreclose the pursuit of injunctive relief except in circumstances where an implementer is unwilling or unable to take a license on FRAND terms.”    Microsoft had tendered royalty payments for InterDigital’s “U.S. sales”, but InterDigital declined.

Microsoft also argues that InterDigital’s litigations fell under the “sham exception” to Noer-Pennington.   Under Third Circuit law, a more flexible standard is used “when dealing with a pattern of petitioning,” where the issue is not if any one action has merit, but whether the litigations were brought under “a policy of starting legal proceedings without regard to the merits and for the purpose of injuring a market rival.”  Here, Microsoft alleges bad faith is shown by InterDigital filing ITC actions that can only aware exclusionary relief even though InterDigital has said that the goal was not to get exclusionary relief; rather, Microsoft alleges the goal was to get leverage to get high royalty rates from Microsoft continuing to practice the invention (not excluding Microsoft from practicing the invention).  Further questions about the litigation arise because Microsoft prevailed in the ITC cases, the ALJ statements were dicta not binding on the court and were rendered moot by subsequent full ITC Commission review.

Microsoft Alleged Injury.  Microsoft argues that it need not have actually “capitulated” to non-FRAND demands, but it was sufficient that such harm was “threatened”.  Microsoft also argues injury-in-fact because it “has been denied the ability to obtain a license to [InterDigital’s] SEPs on FRAND terms, which negatively affects its competitive position” and Microsoft has borne litigation expenses.  Further, the statute of limitations do not apply because the alleged misconduct falls under the continuing violation doctrine.

Prayers for Relief.  Microsoft argues its pled prayer for relief is sufficient, particularly at this early stage.

InterDigital’s Reply

No Alleged Market Power.  InterDigital replied that Microsoft’s allegations are missing what was required in the Third Circuit Broadcom case on which Microsoft relies.  That case required an allegation that “the defendant possesses standards-essential patents that the SSO included in the standard in reliance on a FRAND commitment.” [emphasis in original].  Thus, “[p]atents that were not included in a standard cannot, of course, even theoretically have market power based on standardization.”  Rather than alleging that such patents actually exist, Microsoft alleges the different, insufficient point that InterDigital “claims to have patents” covering the standard.  Further, the InterDigital declarations on which Microsoft relies only show that InterDigital believed it had patents that “may be” or “may become” essential, not that they were essential  In the Broadcom case, the plaintiff did specifically allege that the patent owner “induc[ed] the relevant SDOs to adopt 3G standards that incorporate [the patent owner’s] patents as an essential element.”  This missing link in this case–i.e., not alleged to actually be essential to the standard–is fatal to Microsoft’s claims.

No Alleged Exclusionary Conduct.  InterDigital argued that Microsoft wrongly asserts that there need not be alternative technology that the SSO would have adopt into the standard absent the misrepresentation.  Microsoft’s allegation that ETSI rules require it to “cease” standard development if no FRAND commitment is made omits the rest of the rule, which outlines a discretionary procedure that permits the SSO to adopt patented technology without a FRAND commitment when there is no alternative.

Insufficient Fraud Pleading.  InterDigital argues that Motorola did not sufficiently plead fraud, because it did not identify which patents were subject to false declarations.  This is particularly troublesome given the important condition precedent that the FRAND commitment is made only “to the extent the IPRs disclosed … are or become, and remain ESSENTIAL.”  Patents not included in the standard and, hence, not essential, are not subject to the FRAND commitment.

Noerr-Pennington Immunity Applies.  InterDigital argues that Microsoft’s allegations that are not directly premised on litigation are at least premised on litigation enforcement related activity, such as its licensing demands.  This litigating-related activity is protected by Noerr-Pennington.  Further, “if the alleged ‘false FRAND promise’ … was part of a scheme to allow … enforc[ment] of patents” at non-FRAND rates, than it is not “separate and distinct” from the patent enforcement conduct.

InterDigital argues that the FRAND commitment did not preclude seeking injunctive relief–indeed, the commitments “do not mention injunctions, much less express any intention whatsoever to forego the right to sue for injunctive relief.”  Further, Federal Circuit law, not Third Circuit law, should apply to the issue whether enforcing a patent can strip a patent owner of Noerr-Pennington immunity, and Microsoft’s pleadings do not meet the stricter standard that the Federal Circuit has indicated it would apply.

No Injury-In-Fact.  InterDigital argued that Microsoft has not shown how any supposed “threat” of harm that plausibly could have been realized.  Nokia/Microsoft refused to pay royalties for nearly a decade and Microsoft has not alleged that it has changed its products to avoid InterDigital’s patents.

Judge Andrew’s’ Decision

Judge Andrews generally observed that “it is difficult to discern any material differences between Microsoft’s complaint and the complaint which the Third Circuit found sufficient in Broadcom.”  He then walked through the analysis.

Monopoly Power.  Judge Andrews concluded, without explanation, that the Complaint’s allegations “are sufficient to show monopoly power” after citing the following allegations:

The complaint defines the relevant markets as “the markets for technologies covered by the InterDigital patents … that are essential, or alleged to be essential, to the 3G and 4G cellular standards …, together with all other alternative technologies to the InterDigital patents that could have been use in the cellular standards.”  This “technology was not interchangeable with or substitutable for other technologies and adherents to the [relevant] standard have become locked in.”  [InterDigital] “had the power to extract supracompetitive prices, it possessed a dominant market share, and the market had entry barriers.” [internal citations omitted]

Anticompetitive Conduct.  Judge Andrews next addressed anticompetitive conduct, finding that was sufficiently pled after citing allegations from the Complaint without further explanation:

The complaint alleges that [InterDigital] made an “intentional false promise that [it] would license its … technology on FRAND terms, on which promise [ETSI] relied in choosing the … technology for inclusion in the” relevant standards.  This conduct “induced” ETSI to adopt a technology “that they would not have considered absent a FRAND commitment.”  Following the incorporation of its technology, the complaint alleges, [InterDigital] refused to comply with its FRAND licensing obligations.

Injury.  Judge Andrews stated that “Microsoft must plead more than injury to itself”, but “must show that [InterDigital’s] conduct harms competition.”  He found this issue “entwined” with the Noerr-Pennington issues.  He found that Microsoft’s alleged injury went beyond just InterDigital seeking to enforce its patents and the attorneys fees /litigation costs attendant with that.  Rather, Microsoft’s alleged harm further includes other harm:

[Allegations that InterDigital’s] wrongful conduct “prevented Microsoft from obtaining access to necessary technology” in the relevant markets; that “there is a substantial threat that Microsoft will be forced to capitulate to InterDigital’s supra-competitive licensing demands;” that “the artificial imposition of higher costs on Microsoft threatens further loss of market share, as does the threat of an exclusion order;” that the “downstream market” is injured in the form of “higher prices, reduced innovation, and more limited choice[s] … for such Standard-compliant products;” that “an exclusion order creates uncertainty as to Microsoft’s line of cellular devices,” which “threaten[s] to erode customer loyalty, brand recognition, and customer goodwill;” and that Microsoft “is threatened with additional harm in the form of the loss of customers and potential customers, the loss of product image and goodwill, and other irreparable harm to its line of cellular devices.”

Judge Andrews found this allegation sufficient to allege harm.    In doing so, he quotes favorably from a treatise that states “if the antitrust violation is intentional deception of the standard-setting organization, the fact that one of the ways that causes harm is that the patentee sues adopters and seeks an injunction shouldn’t defeat the antitrust claim based on conduct before the standard-setting organization.” (quoting Herbert Hovenkamp et al., IP and Antitrust § 35.5b2 (2d ed. Supp. 2013)).

Judge Andrews then considered whether the litigation-related conduct could be considered.  He noted that courts have reached different conclusions on whether litigation may be included as part of a scheme to violate antitrust law.  He ruled that Federal Circuit law, not regional circuit law, applies to this issue.  But the Federal Circuit has not decided the issue.  Another district court had ruled that the Federal Circuit “would choose a middle ground ‘causal connection’ test.” (quoting Hynix Semiconductor v. Rambus, 527 F. Supp. 2d, 1084, 1095-97 (N.D. Cal. 2007)).  That standard is as follows:

“[B]efore otherwise protected litigation can be part of an ‘anticompetitive scheme’ claim, the court must first find that the other aspects of the scheme independently produce anticompetitive harms,” and upon so concluding, “the court should ask whether the accused patent litigation was causally connected to these anticompetitive harms.”

Having already found that the other conduct states an antitrust claim, Judge Andrews concluded there was a causal connection to the litigation-related conduct where the litigation “to enforce [InterDigital’s] purported SEPs are part of the way in which [InterDigital] accomplishes its alleged anticompetitive scheme,” stating that “[t]he entire scheme ‘is ineffective without the threat of litigation.'”

Fraud Pleading Standard.  Judge Andrews ruled that Microsoft’s allegations must meet the fraud pleading standard that requires specificity.  But he found the allegations were sufficient because InterDigital’s declarations to ETSI attached to the Complaint showed the “date, place or time” of the fraud by identifying “when the false FRAND declarations were made, by whom and for which patents.”

Prayer for Relief.  Judge Andrews found that the statute of limitations did not bar relief for conduct prior to four years ago, because “the complaint alleges misrepresentations that occurred [after the four-year period], and that [InterDigital] is engaged in an ongoing scheme that has resulted in continuing injury.”  He also declined to exercise his discretion to strike the various other requests for relief because that’s “an extreme measure”, there was “no value” in granting the motion now and striking the claims now would be “premature.”

Based on the foregoing, Judge Andrews denied InterDigital’s motion to dismiss, which allows the case to continue proceeding at this early stage.

You will soon see a new and improved Essential Patent Blog.  Let us know if there are features about the blog you would like to see, change or omit.  One of the blog features under review is our “Resources” section where we list scholarly papers, articles and other resources dealing with standard essential patents.  We want to update that list of resources.  So please let us know if you have a paper or other resources that would warrant posting as a “Resource”.

For example, we just added papers submitted for an AIPLA presentation a few weeks ago on litigating standard essential patents at the U.S. International Trade Commission (ITC), where we discussed the ITC as a unique agency and unique procedural issues in litigating SEPs at the ITC.

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