A couple weeks ago, we noted that Ericsson had submitted a Notice of New Authority in its ITC case against Samsung (Inv. No. 337-TA-862) concerning the USTR’s recent disapproval of the exclusion order in ITC Inv. No. 337-TA-794. In this Notice of New Authority, Ericsson requested that presiding Administrative Law Judge David P. Shaw make an express determination of the appropriate FRAND royalty rate for Ericsson’s SEPs ,and condition entry of any exclusion order on whether Samsung accepted or rejected this ITC-determined FRAND royalty rate. Today, Samsung responded to Ericsson’s notice, telling the ITC that the USTR’s disapproval actually shows that Ericsson should drop its SEP-related claims from the ITC case and instead proceed in district court.
Samsung argues that the USTR’s disapproval in the -794 case demonstrates that exclusion orders on FRAND standard-essential patents should only be entered against clearly unwilling licensees — and that because “Samsung has negotiated in good faith, made reasonable FRAND offers, proposed arbitration [to determine FRAND terms], and never stayed the co-pending district court case containing the same patents-in-suit as an alternative forum for resolution,” this shows that Samsung is a willing licensee. Samsung claims that essentially, the “only real dispute” between Ericsson and Samsung is the issue (and amount) of FRAND royalties — and that because Samsung is a willing licensee, this issue should be resolved in district court (or arbitration), not before the Commission
While the USTR’s disapproval letter did note that the ITC is well-positioned to make factual findings on FRAND issues, Samsung claims that Ericsson’s request for a FRAND determination here is unworkable, untimely, and improper as beyond the ITC’s authority. First, Samsung asserts that contrary to what was stated in Ericsson’s Notice of New Authority, the parties have not developed an extensive record that would the ALJ or the ITC to make a FRAND determination for at least four different SEP portfolios (2G, 3G, 4G cellular standards, and the IEEE 802.11 Wi-Fi standard). Samsung notes that Ericsson claims to have have hundreds more SEPs in addition to those at trial, and that any FRAND determination would likewise have to include a separate evaluation of a cross-license to Samsung’s SEPs. According to Samsung, not only have the parties not yet presented evidence on all of these issues, but discovery in the case is now closed, making Ericsson’s request untimely.
Lastly, Samsung argues that in any event, the ITC is a creature of statute, and determination of a portfolio-wide FRAND royalty is not among them — arguing that “no defense and no public policy concerns identified by the USTR require or authorize resolution of the price term in a private cross-licensing dispute between Ericsson and Samsung as part of the Commission’s Section 337 Investigation.” Again, Samsung argues that the parties’ real dispute over licensing terms should be litigated in district court or resolved through biding, neutral arbitration. Samsung closes by telling the Commission and ALJ Shaw that in light of the USTR’s veto, Ericsson should drop its FRAND-pledged SEPs from the case.