The U.S. Department of Justice (DOJ) recently issues a business review letter (BRL) and press release concerning a proposed patent pool of patents owned by universities called the University Technology Licensing Program (UTLP) in response to UTLP’s BRL request of August 14, 2020.  The UTLP pool is not intended to have standard essential patents (SEPs), but has provisions in the event that a patent in the pool is found to be an SEP.  This business review letter provides incremental insight into DOJ’s competition law distinctions between SEP patent pools and non-SEP patent pools.

We do a quick summary of it below, but (as always) recommend that you read the BRL itself if you need to make decisions based on it.  Some incremental insights from this BRL with the distinction between SEP and non-SEP patent pools from a competition law point of view include:

  • Competition law is particularly concerned with pooling together substitute patents (e.g., pooling together patents covering mutually exclusive, competing technologies), but a pool of standard essential patents do not raise that concern because such patent pools would have only complementary patents (e.g., patents on technologies that may be used together, which generally is the case for patents essential to the same standard).
  • A licensee can pick-and-chose patents to license from a pool of non-SEPs, but cannot for a pool of SEPs because a license is required for all the SEPs (else patents in the pool are not essential to the standard after all).
  • Price flexibility based on the number of patents in a non-SEP patent pool that one licenses is helpful because–unlike with a pool of SEPs–not all implementers will require access to every patent in that pool so discounts for licensing more patents provides incentives to use the technology and has transaction efficiencies.
  • Competition concerns might be raised when sharing royalty distribution among all members of a pool of non-SEPs in which not all patents may be licensed (because not all licensees may use all the patented technology), but those concerns do not arise with SEP patent pools in which the entire SEP pool must be licensed (because licensees need a license to all patents that are essential to the standard).
  • Making the patent pool of non-SEPs the exclusive entity to obtain a license to any patents in that pool was not a concern here given other circumstances, but it may be a concern for an SEP patent pool, which is why such SEP pools typically allow the patent owners to independently license there SEPs if not licensed through the SEP pool.

As we stated with other DOJ business review letters, this letter is limited to whether DOJ currently perceives any competition law issues with the proposed business plan and does not represent an endorsement that a business plan is substantively better than other approaches.  Thus, this business review letter’s conclusion is limited to finding that the “UTLP is unlikely to harm competition” so DOJ has “no present intention to challenge the program.”  DOJ also stressed that this letter is limited to the particular type patent pools of universities that have unique issues in enforcing their patents in this particular technological area of physical sciences. Continue Reading DOJ Business Review Letter of University Tech. Licensing Program for Non-SEPs

Yesterday, Judge Gilstrap of the Eastern Division of Texas issued a preliminary injunction Order (an anti-antisuit-injunction or, more properly, an anti-interference injunction) designed to allow both the instant U.S. case filed by Ericsson and a parallel case filed by Samsung in China concerning contractual FRAND dispute on SEPs to proceed in parallel without either case interfering with the other.

This is an interesting procedural issue that we will see increased activity about as national courts from different countries seek to balance international comity–i.e., deference to the sovereignty and jurisdictional independence of another country–with enforcing national rights when parties in global disputes forum shop to file suits in perceived favorable countries.  An important undertone in this case was that the China court’s procedure when enjoining Ericsson from enforcing its SEPs anywhere else in the world did not have the timely notice and opportunity for the sued party to respond that is provided and expected in U.S. courts.  Further, Judge Gilstrap sought to limit interference with the China action and its procedures.  For example, he did not preclude Samsung from proceeding in the China action or require Samsung to timely serve Ericsson documents filed in China (which is not provided for in the China court’s procedures).   But he did Order that Samsung indemnify Ericsson if Ericsson is subject to any fines in the China action based on Ericsson proceeding in the instant U.S. case.

It will be interesting to see whether and to what extent the China court responds to Judge Gilstrap’s order, his effort to minimize interference with the China Action, and his statement that “Without hesitation this Court equally insists that it be permitted to adjudicate the issues raised here pursuant to its own legitimate jurisdiction and without interference.”

Continue Reading Judge Gilstrap Preliminarily Enjoins Samsung From Using Parallel Chinese Case To Interfere With U.S. Case (Ericsson v. Samsung)

Last week, on July 28, the U.S. Department of Justice (DOJ) Antitrust Division issued a press release and business review letter (BRL) based on Avanci’s request for a BRL on Avanci’s proposed joint patent-licensing pool (the Platform) to license patent claims of 5G cellular wireless standard essential patents (SEPs) of several patent owners for use in automobile vehicles (vehicles) (to later be expanded to a pool for Internet of Things (IoT) devices) and then distribute royalties among those patent owners.  A BRL provides DOJs views on whether a business model raises any competition law concerns–e.g., is the business model pro-competitive or anti-competitive–so that the business may proceed with some assurance that its activities will not violate competition laws.  The focus of the BRL is competition law and does not endorse one way or another the merits or value of a business model.  DOJ concludes that “Avanci’s proposed 5G Platform is unlikely to harm competition” and DOJ “has no present intention to challenge the Platform.”  Below is a summary of Avanci’s request and DOJs BRL in response. Continue Reading DOJ issues business review letter on Avanci SEP Pool licensing

On May 5, 2020, Germany’s highest court, the Federal Court of Justice (GFCJ), made a provisional (tentative) ruling at the hearing in Sisvel’s SEP case against Haier, determining that Sisvel had not abused a dominant market position and Haier – as the implementer – had failed to comply with its FRAND obligations in the way that it handled licensing negotiations with SEP-owner Sisvel.

The GFCJ not not yet issued its final written decision, so we’ve done our best to summarize key points from various accounts of the May 5 hearing.  So consider this post more as issue spotting with proper skepticism and understanding that the final decision may be different from what was said at the hearing.  We encourage readers to keep an eye out for the Court’s final ruling, and we will provide an update once we receive an English version of the final decision (we will give a shout-out to the first person to send us an English version of the final decision).

Following the May 5 ruling, Sisvel on May 15 filed patent infringement suits against Tesla, Dell, Honeywell, HMD Global, TCL, BLU Products, CradlePoint, OnePlus, Tinno Mobile, Sun Cupid Technology, Verifone, and Xirgo in the District of Delaware, asserting patents previously assigned to Nokia, BlackBerry, LG, and Thomson Licensing and declared essential to 3G and 4G/LTE wireless standards. Sisvel had filed cases against BLU, Dell, Honeywell, Tesla and Xirgo last June. Continue Reading Germany’s highest court tentatively rules that infringer hold-out violated its obligations to negotiate a FRAND license (Sisvel v. Haier)

Yesterday, InterDigital announced that it signed “a multi-year, worldwide, non-exclusive, royalty bearing patent license agreement” with Huawei, bringing an end to the companies’ SEP litigation in China and the U.K. over FRAND terms for InterDigital patents essential to 3G, 4G, and 5G wireless telecommunication standards. InterDigital’s press release states the new agreement “covers certain of Huawei’s products and certain of InterDigital’s essential patents” and that the companies have agreed to dismiss all pending litigation between them.  

In addition to resolving a significant overhang that the dispute posed to InterDigital’s licensing business, we anticipate the Huawei agreement could feature prominently in InterDigital’s defense against Lenovo’s newly filed antitrust claims, particularly those predicated on an alleged failure to license its patents on FRAND terms (see our April 28, 2020 post). Quoting InterDigital President and CEO William Merritt, the press release may preview the tone of InterDigital’s response in the Lenovo case by noting that the Huawei agreement “underscores the fairness and flexibility of our licensing approach, including our rate and portfolio transparency, which set an industry standard.”   Continue Reading InterDigital pens SEP license agreement with Huawei as Lenovo Dispute escalates

On April 7, 2020, the U.S. International Trade Commission issued its Notice of Opinion in Investigation No. 337-TA-1089, essentially reversing Chief Administrative Law Judge (“ALJ”) Bullock’s Initial Determination and declining to issue remedial orders blocking SK Hynix products from the sale in or import to the U.S. The ITC found that no remedy was warranted, as patent owner Netlist (complainant) failed to establish that Korean-based SK Hynix infringed the asserted patents and failed to meet the technical prong of the ITC’s domestic industry requirement. A redacted Public Version of Commission Opinion of the Commission Opinion was posted April 21, 2020 

The ITC did not address standard essential patent issues beyond finding that ALJ Bullock erred in ruling that the JEDEC Patent Policy was unenforceable because the terms “reasonable” and “nondiscriminatory” were too ambiguous under New York law: 

[T]he Commission has determined to reverse the ALJ’s findings that the ‘907 patent is essential to a JEDEC standard and that the JEDEC Patent Policy is unenforceable, has determined to affirm the ALJ’s finding that the ‘623 patent is not shown to be essential to a JEDEC standard, and has determined to vacate all other finding relating to obligations to license on reasonable and nondiscrimatory terms.  Continue Reading ITC avoids SEP FRAND issues by finding patents not infringed (Netlist v. Hynix, 337-TA-1089)

On April 9, 2020, Lenovo and Motorola Mobility filed a Complaint against InterDigital in the District of Delaware alleging InterDigital violated U.S. antitrust law and contractual FRAND commitments by its standard setting participation and licensing practices related to 3G and 4G standard essential patents (SEPs). The Complaint is the most recent development in a larger patent dispute between the companies and alleges that InterDigital has engaged in a multi-pronged scheme, through a combination of agreements with its competitors and fraudulent promises, to unlawfully acquire, maintain, and exploit such market or hold-up power arising solely from the alleged essentiality of patents it contends have been incorporated into the Cellular Standards.  

A short background and summary of the Complaint is included below.  Continue Reading Lenovo, Motorola file antitrust claims against InterDigital’s standards setting participation and patent licensing practice (Lenovo v. InterDigital)

On April 3, 2020, Judge Selna issued an Order in the TCL v. Ericsson case upon remand from the Federal Circuit, teeing the matter up for a jury trial on all liability and FRAND issues in the case to be heard at the same time Continue Reading Judge Selna will hold jury trial on all SEP issues on remand (TCL v. Ericsson)

On March 2, 2020, Judge Gilstrap issued an Order granting-in-part Apple’s motion to dismiss a declaratory judgment claim by Optis to the extent the claim related to FRAND commitments for foreign standard essential patents (SEPs).   But he maintained the action as to FRAND commitments for U.S. patents.  This decision may be part of a trend for U.S. courts respecting comity with other countries by limiting disputes over SEPs and FRAND commitments to U.S. patents in the absence of consent by both parties to adjudicate issues concerning foreign SEPs. Continue Reading Judge Gilstrap dismisses foreign SEP FRAND claims in global SEP feud, but maintains claims on US SEPs (Optic Wireless v. Apple)

On February 18, 2020, ALJ McNamara issued an Initial Determination on Violation in INVT SPE’s ITC case against Respondents Apple, HTC, and ZTE, finding INVT SPE failed to show a violation of Section 337 of the Tariff Act of 1930. The ALJ found no asserted claims were infringed, no claims were invalid, there was no requisite domestic industry, and, of particular interest to our readers, that none of the asserted patents are essential to 3G or LTE standards.  

On April 3, ALJ McNamara issued a Recommendation on the Public Interest and Remedy, which is confidential.  We expect a public version of that ruling in the coming weeks.  Even though ALJ McNamara ruled that the patents were not essential nor infringed, the ITC procedural rules require in all cases that the ALJ also issue a recommendation on public interest and remedy because the decision will be reviewed by the full ITC Commission, which could disagree with the ALJ on infringement and address the public interest/remedy issues.  Under the current schedule, the ITC has until May 18, 2020 to determine whether to review ALJ McNamara’s decision.  The ITC is soliciting public comments due by May 5 regarding the impact on the public interest from an exclusion or cease-and-desist order on 3G and LTE enabled devices at issue.

Continue Reading Judge McNamara finds INVT patents are not essential, will issue comments on FRAND commitments (INVT v. Apple, 337-TA-1138)