Earlier this week, the U.S. International Trade Commission (“ITC”) issued its public opinion in an investigation where the respondent Carsem raised standard-setting obligation defenses by alleging that a patent asserted by Amkor covered a standard set by the Joint Electron Device Engineering Counsel (“JEDEC”).  The ITC rejected Carsem’s FRAND-related equitable and legal estoppel defenses as well as public interests arguments and entered a limited exclusion order because, among other things, Carsem had not shown that the asserted patent was essential to practicing the JEDEC standard.

Equitable Estoppel Defense.  Carsem argued that equitable estoppel bars Amkor from enforcing the patent-in-suit because Amkor failed to disclose the patent to JEDEC.  Specifically, Carsem argued that (1) Amkor failed to disclose the patent when introducing its MO-220 standard proposal to JEDEC ; (2) Carsem relied on Amkor’s representations when voting on the MO-220 and MO-229 standards and designing the accused products to comply with the standards; and (3) Carsem is materially prejudiced by Amkor now seeking to enforce the patents.  Relying on the Federal Circuit’s 2003 decision in Rambus v. Infineon, which also concerned duty to disclose patents in JEDEC standard setting, the ALJ ruled that Carsem must present “clear and convincing evidence that there is a reasonable expectation that the [JEDEC] standard cannot be practiced without a license under the undisclosed [patent] claims”–in other words, show that the patent is essential to the standard.  Further, the duty is based on “the scope of the claimed invention that would cover any [JEDEC] standard” because “to hold otherwise would contradict the record of evidence and render the JEDEC disclosure unbounded”, quoting the Federal Circuit’s Rambus decision:

Under such an amorphous duty, any patent or application having a vague relationship to the standard would have to be disclosed.  JEDEC members would be required to disclose improvement patents, implementation patents, and patents directed to the testing of standard-compliant devices–even though the standard itself could be practiced without licenses under such patents.
[T]his duty encompassed any patent or application with claims that a competitor or other JEDEC member reasonably would construe to cover the standardized technology.  This does not require a formal infringement analysis.  Members are not required to perform a limitation-by-limitation comparison or conduct an equivalents analysis.  Rather, the disclosure duty operates when a reasonable competitor would not expect to practice the standard without a license to practice the undisclosed claims.  Stated another way, there must be some reasonable expectation that a license is needed to implement the standard.  By the same token, the disclosure duty does not arise for a claim that recites individual liitations directed to a feature of the JEDEC standard …

The ALJ rejected Carsem’s expert testimony on whether the patent covered the JEDEC MO-220 and 229 standards because (1) it was based on claim constructions not adopted by the ALJ and (2) was “of a general nature and does not make reference to particular claim terms in specific patents.”  Thus, Carsem had not established that the JEDEC standards “can only be complied with by using the claims in Amkor’s [patents].”  Accordingly, Carsem had not established the Carsem violated a duty to disclose on which the equitable estoppel defense relies.  The ITC affirmed the ALJ’s findings and ruling.

Legal Estoppel Defense.  Carsem argued that Amkor’s obligations to JEDEC required Carsem to license the patent-in-suit on fair, reasonable and non-discriminatory (“FRAND”) terms, but Amkor failed to offer FRAND terms consistent with offers made to other actual and prospective licensees.  The ITC ruled that the equitable estoppel ruling leads to the same result on the legal estoppel defense, because Carsem failed to show that the patent was “standard essential” so as to raise the FRAND obligation.  The ITC  noted that Carsem’s letter to JEDEC concerning the parent patent and related applications was “conditional on its face” in stating that such patents/applications “may apply to this registration.  If the current issued patent or later patents resulting from related applications do apply, Amkor Technology intends to comply with the JEDEC Patent Policy and License under reasonable terms and conditions that are demonstrably free of any unfair discrimination. [emphasis in original].”

Limited Exclusion Order.  The ITC also rejected Carsem’s argument that its allegation that the patent-in-suit covered the JEDEC standard precludes granting exclusionary relief, because Carsem had not shown that the patent was indeed standard essential:

The record, however, shows that the ‘277 patent is not essential to the practice of the JEDEC MO-220 and MO-229 standards, and also shows that Amkor has not breached any obligations to JEDEC.

The ITC considered the SEP allegation as part of its “public interest” query for granting exclusionary relief.  It resolved the issue, however, consistent with its determination of Carsem’s affirmative defenses in finding that the patent was not shown to be standard essential.  This led Commissioner Aranoff to give additional views that SEP-related defenses typically should not be considered separately for both affirmative defenses and the public interest query; principles of finality counsel resolving those arguments in the affirmative defense liability stage that, if successful, would mean no liability and hence no remedy.

The procedural issue in considering SEP allegations in the exclusionary relief stage no doubt stems from the U.S. Trade Representive’s disapproving the ITC’s granting exclusionary relief last year against Apple’s iPhones found to infringe Samsung’s patent alleged to be essential to a standard (see our Aug. 3, 2013 post).  In that investigation, the ITC entered an exclusion order where Apple had not presented evidence of whether Samsung’s patent covered the standard, what Samsung’s standard setting obligations would be, etc.–standard essential patent defenses did not appear to have been litigated in the investigation.  The U.S. Trade Representative nonetheless disapproved the exclusion order and instructed the ITC in future matters to take affirmative steps–even if the parties have not–to consider relevant standard essential patent issues, thus implying something beyond an accused infringer’s affirmative defense obligations.