Earlier this week we noted that Huawei and ZTE have asked the ITC to stay its investigation into InterDigital’s complaint of 3G/4G standard-essential patent infringement. This was done in part because Huawei and ZTE have requested that the District Court of Delaware to expedite a determination of a FRAND rate for InterDigital’s patents. Yesterday, InterDigital filed virtually identical opposition briefs in both cases (Opp. to Huawei / Opp. to ZTE), in which it urged the court to deny the motions — arguing that it is improper for Huawei and ZTE “to seek a purely hypothetical and advisory opinion in the form of an expedited ‘FRAND rate’ determination” while still maintaining an ability to refuse to pay in the event the patents are later found invalid or non-essential/not infringed. This is an interesting issue surrounding FRAND licensing that has been the topic of much debate lately.
In its oppositions, InterDigital stresses the broad discretion of the court to decline to expedite a portion of the case, arguing that Huawei/ZTE have failed to demonstrate “good cause” for expedition. InterDigital claims that Huawei/ZTE cite no case law supporting the assertion that FRAND license issues should be decided before patent infringement issuing, arguing that this is akin to saying damages should be determined before infringement in a regular infringement case, and that it would not actually streamline any issues. As InterDigital states:
Determining a “FRAND rate” for a license would not streamline or obviate anything, because Huawei and ZTE would then proceed to challenge the validity and infringement of the patents-in-suit in order to avoid license payments. Moreover, because FRAND obligations are only applicable to essential patents (i.e., patents necessarily infringed in practicing a standard), it will be necessary to establish essentiality (which is intertwined with infringement) in determining whether FRAND commitments even exist as to the patents in suit.
InterDigital also discounts Huawei/ZTE’s heavy reliance on the provisions of the FTC-Google consent decree, noting that “an administrative consent decree is not law” and arguing that “the Google/Motorola situation is inapposite in a number of ways.” (Note that the FTC-Google consent decree expressly affords a potential FRAND licensee the ability to dispute validity, infringement, or essentiality.)
InterDigital heavily relies on Rembrandt Techs. v. Harris Corp., a 2009 Delaware Superior court case concerning RAND obligations surrounding ATSC digital television standards. The parties in Rembrandt were also involved in a federal patent infringement case involving some ATSC-related patents. The Delaware Superior Court ultimately stayed the RAND case pending resolution of claim construction in the infringement case, in part because claim construction would inform the issue of ATSC-essentiality of the patents. InterDigital also cites Judge Crabb’s decision to dismiss Apple’s FRAND claims in Apple v. Motorola Mobility once she determined on the eve of trial that Apple was not truly a willing licensee as evidence weighing against a stay here.
According to InterDigital, rather than expediting and bifurcating the FRAND issues in this case, it would actually be more reasonable for the court to stay or dismiss them. InterDigital notes that it plans to file a motion to dismiss the counterclaims at some point in the future, and gives a preview of some of its reasoning for its claims that the FRAND counterclaims are unripe or legally flawed.
In the meantime, Judge Richard G. Andrews also granted InterDigital’s motion for an extension of time (until March 20) to file an answer to the counterclaims in both cases — although it looks like InterDigital will be filing a motion to dismiss instead.