On Friday we posted about the Answers filed by the respondents in In the Matter Certain Wireless Devices with 3G and/or 4G Capabilities and Components Thereof (Inv. No. 337-TA-868) — the case better known as InterDigital’s ITC action against Huawei, Nokia, Samsung, and ZTE. And we’ve previously discussed how Huawei and ZTE are currently seeking an expedited determination of FRAND terms in Delaware district court, where they also expalined that they would seek to stay the ITC action. Today, Huawei and ZTE’s motion to stay the ITC investigation hit the docket (it was actually filed on Friday). Huawei and ZTE seek to halt the ITC investigation pending (1) the outcome of Inv. No. 337-TA-800 (involving the same parties and some of the same patents); and (2) a determination in Delaware of the terms of a FRAND license to InterDigital’s patents.
The main thrust of Huawei and ZTE’s motion is that InterDigital’s efforts to obtain an exclusion order on its FRAND-encumbered essential patents represent a violation of its FRAND obligation. Huawei and ZTE assert that
[T]here has been a sea change in the way that federal
district courts and governmental agencies view the commitment to license patents on FRAND terms. In the last year alone, the Department of Justice, the Federal Trade
Commission, the Patent and Trademark Office, the United States Court of Appeals for the Ninth Circuit, the United States District Court for the Northern District of Illinois, and the United States District Court for the Western District of Wisconsin have all uniformly concluded that seeking an exclusion order against a party willing to pay FRAND compensation is violative of a patentee’s FRAND commitment.
Huawei and ZTE make it clear that they believe the proper forum for InterDigital’s claims is not the ITC (which cannot award money damages, only exclusionary relief), but a U.S. district court.
As they did in their motions to expedite discovery in Delaware, here Huawei and ZTE heavily rely on the recent FTC/Google consent decree, which established a process for determining FRAND terms before a party (Google/Motorola Mobility) could properly seek an injunction for infringement of standard-essential patents. While the FTC/Google consent decree is clearly not binding on other parties (such as InterDigital), the implication from Huawei and ZTE’s motion is that the ITC should consider its reasoning. (In fact, the ITC is required by 19 U.S.C. § 1337(b)(2) to consult with the FTC during its investigations.) Huawei and ZTE also cite the recent joint DOJ/USPTO statement on SEPs, as well as rulings by Judge Posner (in Apple-Motorola) and the 9th Circuit (in Microsoft-Motorola), as evidence that seeking an exclusion order for SEPs is allegedly improper.
It’s often pointed out that due in part to the ITC’s statutory mandate to complete Section 337 actions “at the earliest practicable time,” stays of ITC investigations are hard to come by (except in cases where both parties are seeking a stay, often pending settlement). The ITC generally considers five factors: (1) the status of the discovery and the hearing date; (2) whether the stay will simplify issues; (3) undue prejudice to a party; (4) status of parallel actions; and (5) judicial efficiency.
Here, Huawei and ZTE claim that for the following reasons, each of these factors is satisfied:
- Discovery/Hearing Status: No documents have been produced, and the procedural schedule has not been set.
- Simplication of Issues: A license on FRAND terms will provide grounds for termination of the investigation altogether; overlap of patents in -800 case will simplify claim construction and domestic industry issues
- Undue Prejudice: Minimal if any prejudice, because InterDigital would be compensated with FRAND license.
- Parallel Actions: The hearing in the -800 case recently concluded.
- Judicial Efficiency: A stay would eliminate issues that would need to be decided otherwise, conserving resources.
InterDigital is almost certain to oppose the stay. And as we’ve noted before, if Huawei and ZTE are successful, this could provide a roadmap for others in how to defend standard-essential patent infringement allegations at the ITC.