As many of you are aware, a non-practicing entity named Innovatio IP Ventures has been engaged in a widespread licensing and litigation campaign over WiFi-related patents that were formerly owned by Broadcom. As a result, Innovatio has become embroiled in litigation with several suppliers of WiFi-compliant devices (Cisco, Motorola Solutions, Netgear) in the Northern District of Illinois. A few weeks ago, we noted that a debate had arisen in that case over the “essentiality” of certain asserted patents. The presiding judge ordered briefing on the issue, and Innovatio filed its “Essentiality Brief” a couple weeks ago — asserting that not all of its asserted claims were essential or covered by IEEE RAND obligations. This past Friday, the WiFi Suppliers filed their response to Innovatio’s Essentiality Brief. The WiFi Suppliers accuse Innovatio of misconstruing both the IEEE Patent Policy and the relevant RAND licensing Letters of Assurance in an attempt to avoid its RAND obligations.
[2013.05.10 Defendants’ Brief re Essentiality of Patent Claims]
We alluded in our last post on this matter that issues of patent “essentiality” — and therefore, the scope of corresponding RAND obligations — are likely to become a more common issue in standard-essential patent litigation. The WiFi Suppliers’ responsive brief demonstrates why.
The WiFi Suppliers offer several reasons why Innovatio is bound to license all of its asserted patents and claims on RAND terms. First, they argue that while Innovatio does not explicitly reference the 802.11 standard in many of its infringement contentions, Innovatio is actually implictly basing its infringement theories on compliance with the standard. They also argue that notwithstanding the IEEE Patent Policy’s focus on patent claims with respect to the RAND obligations, the prior owners of Innovatio’s patents committed to license full patents — not just claims — on RAND terms. The WiFi Suppliers further argue that even where Innovatio’s infringement claims may not be directed to portions of the 802.11 standard, these claims are still directed to features for which “there was no commercially and technically feasible non-infringing alternative” at the time of standard’s approval. As explained below, this last point is an issue that could be of paramount importance for future cases.
Technical or Commercial Essentiality
The WiFi Suppliers accuse Innovatio of narrowly reading the IEEE Patent Policy in a way that would eviscerate RAND obligations and allow Innovatio to engage in patent hold-up based on non-inventive technology. (The portion of the brief dealing with the issue runs from pp. 13-18.) According to the WiFi Suppliers, many of Innovatio’s “non-essential” infringement contentions include various claim elements directed to portions of the standard, and then merely add another, non-essential (but well-known and necessary) element — such as a processor, central processing unit, or keyboard. (Recall our example of adding electricity to an essential patent claim from our last post.) The WiFi Suppliers argue that the use of processors and keyboards, among other technology, was commercially and technically essential to implementing the 802.11 standard in many devices at the time of its adoption — and as such, these fall under the IEEE’s definition of an “Essential Patent Claim.”
The WiFi Suppliers argue that Innovatio should not be permitted to avoid its RAND obligations for these claims, just by adding these elements to its infringement theories — otherwise, “a patent holder could too easily avoid its RAND obligations by simply prosecuting continuation patents with dependent and other claims on non-inventive features or functions that have nothing to do with the actual invention of the patent and which are necessary to create a compliant implementation.” (They also claim that this is consistent with the well-developed principles of implied license, but this is not a point of focus — perhaps because RAND obligations themselves are generally not viewed as licenses, but commitments to license.) The WiFi Suppliers argue — citing Judge Robart — that in crafting its infringement theories in such a way to attempt to avoid its RAND obligations, Innovatio is actually violating the duty of good faith and fair dealing inherent in all RAND licensing obligations.
Buried in footnote 10 on page 11 of the WiFi Suppliers’ brief are a few sentences on an issue that also warrants mentioning — the burden of proof in establishing the existence of a RAND obligation. In its Essentiality Brief, Innovatio argued that the WiFi Suppliers, as defendants, have the burden of proving both essentiality and the existence of a FRAND obligation. But the WiFi suppliers contest this, asserting that:
To the contrary, Innovatio bears the burden on this issue: as the party bound by RAND, Innovatio bears the burden of establishing entitlement to carve out particular patents (or claims) from its RAND obligations. Moreover, Innovatio bears the burden of proof with respect to damages, including with respect to its effort to establish that it is entitled to non-RAND damages with respect to certain claims.
The WiFi Suppliers appear to be arguing that once Innovatio accused 802.11-compliant products for infringement, it became Innovatio’s burden to prove that 802.11-related RAND obligations for the asserted patents did not apply. The outcome of this issue could be particularly important for future cases — traditionally, parties have generally argued (see, e.g., here and here) that the burden of proof on RAND issues, as with all affirmative defenses, rests on the defendants. (Note that was the case in Microsoft-Motorola, as well — Judge Robart faulted Motorola for not providing evidence of the essentiality of certain patents, even though Microsoft was not disputing the essentiality of those patents.)