A few weeks ago we summarized the opening comments filed by respondent Realtek in the International Trade Commission (ITC) investigation of whether Realtek and Funai infringe complainant LSI’s alleged 802.11 and H.264 standard essential patents (SEPs). The ITC is currently reviewing the ALJ’s initial determination of non-infringement of LSI’s SEPs and rejection of Realtek and Funai’s RAND-based defenses.  To assist in its review, the ITC requested comments on various issues, including RAND obligations, the history of license negotiations among the parties, other licenses for the patents-in-suit, and industry practice for licensing similar technologies.

In response to LSI’s initial comments, Realtek filed comments responding to LSI’s arguments on the merits as well as comments on the issues of public interest, remedy and bond.  Realtek’s publicly available comments on the merits do not address any material SEP issues.  The SEP issues addressed in Realtek’s comments on public interest, remedy and bond are summarized below.

RAND Obligations/History of Negotiations:  Realtek argues that LSI mischaracterizes its IEEE commitments “as merely agreeing to ‘negotiate in good faith with potential licensees’”, which, according to LSI, requires “nothing more than making any offer to Realtek, no matter how unreasonable and discriminatory.”  Realtek contends that LSI’s commitments to the IEEE “impose a much higher burden than” LSI suggests.

According to Realtek, LSI’s summary of the license negotiations between the parties is factually incorrect, although much of this discussion is redacted. What can be gleaned from the comments is that LSI apparently made an offer, but “then stalled Realtek’s attempts to negotiate by making empty promises and refusing to provide information that Realtek requested in a timely manner.”

Realtek’s Lawsuits Against LSI:  Realtek asserts that the lawsuits it filed against LSI have “no relevance to whether or not Realtek was willing to negotiate in good faith.”  “[A]s the history of negotiations show, Realtek initiated the license discussions in 2012 and has continued to try to negotiate with [LSI], despite [LSI’s] constant efforts to derail those discussions.”

Injunctive Relief/Exclusion Order:  Realtek admits that “neither [LSI’s] letters of assurance nor the IEEE bylaws explicitly preclude [LSI] from seeking injunctive relief.” However, citing to several cases, Realtek argues that “[c]ourts have consistently found that seeking injunctive relief is inconsistent with RAND commitments, particularly when the patent holder had not even made a license proposal.” According to Realtek, LSI “cites no authority to the contrary.”

Realtek then argues that LSI took a contrary position when LSI was a respondent in an ITC proceeding brought by Rambus wherein Rambus sought an exclusion order. In that proceeding, “LSI argued that ‘injunctive relief is antithetical to [Rambus’] promises’” to European antitrust officials that Rambus would accept royalties for the use of the patents at issue.

Finally, Realtek argues that, contrary to LSI’s assertions, Realtek never took the position that “an exclusion order is categorically barred because [LSI] declared [its] patents standard essential.” “Realtek’s position from Day 1 has been that an exclusion order against Realtek is against the public interest because [LSI has] repeatedly violated their RAND obligations.” “Realtek’s position is entirely consistent with the position of all governmental and international agencies who have issued an opinion on this important issue.”