On Friday, U.S. International Trade Commission Administrative Law Judge David P. Shaw issued a Notice of Initial Determination in In the Matter of Certain Wireless Devices with 3G Capabilities and Components Thereof, Inv. No. 337-TA-800.  This investigation was originally instituted nearly two years ago based on a complaint filed by InterDigital against Huawei, Nokia, ZTE, and LG, in which InterDigital accused the companies of infringing several InterDigital patents alleged to be essential to various 3G cellular communications standards.  The evidentiary hearing was held in January 2013, and the case involves the intersection of a two issues that have drawn a lot of attention lately — the assertion of standard-essential patents at the ITC (and what if any relevance FRAND licensing obligations have to the proceedings), as well as patent infringement cases brought by non-practicing entities (InterDigital is an NPE that has been deemed a “patent troll” by some, while others take a more favorable view of the company’s activities).

So far, it appears that InterDigital’s SEP infringement assertions have failed (at least for now).  While the public version of ALJ Shaw’s Initial Determination won’t become available for at least a few weeks, Friday’s Notice indicates that ALJ Shaw found no violations of Section 337 with respect to any of the seven remaining asserted patents.  For six of the patents, ALJ Shaw concluded that Nokia/Huawei/ZTE do not infringe any of the asserted claims (implicitly meaning that these patents are not actually 3G standard-essential).  But for one patent — U.S. Patent No. 7,616,970 — ALJ Shaw found certain claims to be infringed, but also invalid in light of prior art references.  (Many of the patent claims found not to be infringed were also deemed invalid, as well).

It’s not all bad news for InterDigital, though.  First, it’s called an “initial determination” for a reason — InterDigital can petition for Commission review, and the full Commission can (and often does) review and overrule the ALJ’s initial findings.  The recent Samsung-Apple investigation (337-TA-794), where the ALJ originally found no violation of Section 337, but was overruled by the Commission and an exclusion order issued, is a good example of this.  Second, ALJ Shaw concluded that Nokia/Huawei/ZTE failed to prevail on any of their equitable or FRAND-related defenses (the reasoning for which we look forward to seeing in a public version of the ID).  Finally, ALJ Shaw found that InterDigital satisfied the ITC’s “domestic industry” requirement as to all of the asserted patents — a requirement that the ITC may be making harder for NPEs to satisfy.

We should note that this Initial Determination only applies to Nokia, Huawei, and ZTE, as LG had previously been terminated from the investigation — a ruling that was recently reversed by the Federal Circuit.  But the issue of patent validity isn’t party-specific, of course, and given that InterDigital’s infringement allegations were based on compliance with standards, there should be a substantial amount of overlap there as well.  (And as Florian Mueller notes, some of these patents have also been asserted against Samsung in a separate ITC action.)  Based on this overlap, it wouldn’t be altogether surprising to see if Huawei/Nokia/ZTE try to ask the Commission to delay its review of ALJ Shaw’s order until he resolves the issues between InterDigital and LG.  We’ll have to see.

Once we get a look at the full public version of the ID, we’ll be sure to update you on any interesting SEP-related nuggets.  Also in the next 2-3 weeks, ALJ Shaw will also issue his Recommended Determination on remedy and bonding, concerning what remedy (if any) he recommends the ITC issue if it were to ultimately overrule him and find a violation of Section 337.  In the aftermath of the Commission’s exclusion order in Inv. No. 337-TA-794, it will be interesting to see if ALJ Shaw recommends that an exclusion order issue in this case.