In early January, InterDigital filed a Section 337 complaint in the U.S. International Trade Commission against Huawei, Nokia, Samsung, and ZTE, accusing those companies’ 3G/4G-compliant smartphones and tablets of infringing several InterDigital patents (this is now ITC Inv. No. 337-TA-868).  Because the ITC cannot award monetary relief, it’s common for complainants to also file corresponding infringement actions in district court, which InterDigital did here in the District of Delaware.  In order to relieve ITC respondents from the burden of litigating in multiple venues simultaneously, 28 U.S.C. § 1659 allows respondents to seek a mandatory stay of the district court action pending the outcome of the ITC case.  Generally, respondents seek such a stay.  But here, neither Huawei nor ZTE have sought a stay — in fact, they have asked the Delaware district court to expedite discovery on FRAND issues.  It’s an interesting strategic move in which they leverage recent guidance from government agencies and other pending litigation, and it’s a strategy that (if successful) may be followed by many more ITC respondents in the future.

InterDigital’s complaints in the district court actions were filed on January 2, 2013.  Huawei filed its answer on January 24, and asserted numerous FRAND-related defenses and counterclaims, including patent misuse, implied license, unenforceability, unclean hands, breach of contract, equitable estoppel, waiver (of injunctive relief), and a declaratory judgment as to the appropriate FRAND terms from InterDigital’s patents (along with a decree that InterDigital has failed to offer Huawei a FRAND license).  A week later, ZTE filed its own answer and asserted many of the same FRAND-related defenses and counterclaims.

In the meantime, on January 29, Huawei sent a letter to the court, asking that the Rule 16 scheduling conference be conducting in-person and notifying the court of Huawei’s intention to submit a scheduling order that “provides for a prompt resolution of the FRAND dispute early in the case.”  According to Huawei, because InterDigital asserted only standard-essential patents and is bound to license them on FRAND terms, resolution of the FRAND issues would moot infringement claims and other issues.  Huawei’s letter cited the recent DOJ/USPTO statement on the assertion of standard-essential patents, as well as the Google-FTC settlement where Google agreed to forego seeking injunctive relief for SEPs.  Similarly, Huawei noted that in the Microsoft-Motorola case, Judge James L. Robart decided to decide Microsoft’s RAND-based claims first, prior to the parties’ respective patent infringement claims.  But Judge Richard G. Andrews decided to wait to hold the Rule 16 scheduling conference until the other ITC respondents were ready to proceed in their respective district court actions.

So, on February 11, both Huawei and ZTE filed motions asking the court to move forward with the FRAND issues on an expedited basis (Huawei Brief / ZTE Brief).  While the parties filed separate motions (because the cases are not consolidated), the gist is largely the same — InterDigital has failed to offer a FRAND license, it’s improper for InterDigital to seek injunctive relief without first offering a FRAND license, and the district courts — not the ITC — is the proper venue to adjudicate what constitutes FRAND terms.  In the motions, both parties appear to unconditionally commit to taking a FRAND license to InterDigital’s patents, claiming that the resulting FRAND license would then moot all of the infringement issues in the district court and ITC cases (the lack of such a commitment being an important factor, you may recall, in Judge Crabb’s decision to dismiss’s Apple’s claims against Motorola).

Huawei includes a couple of additional interesting nuggets in its motion, noting that is planning to move the ITC to stay Inv. No. 337-TA-868 pending determination of FRAND terms and conditions, and also that it may seek an order from the District of Delaware halting the ITC proceedings.  Presently, both of these avenues appear to be long shots.  Given the ITC’s statutory mandate for promptly resolving cases, unless the Commission issues some new standard-essential patent-related guidelines in its upcoming Final Determination in the Samsung-Apple Section 337 case (337-TA-794), the ITC is not likely to stay the case.  And the strategy of seeking an injunction to halt the ITC proceedings was likewise tried unsuccessfully by Apple in its RAND/antitrust case against Motorola in the Western District of Wisconsin.

InterDigital will no doubt oppose Huawei and ZTE’s motions.  But if Huawei and ZTE’s efforts are successful, their strategy could provide a roadmap for parties that are sued in the ITC over FRAND-pledged standard-essential patents.