Yet another high-profile SEP case settled earlier this week, with InterDigital announcing that it has reached a licensing deal with Samsung. Similar to the InterDigital’s recent settlement with Huawei, the Samsung settlement brings to a close ongoing litigation in Delaware’s District Court and before the ITC (Inv. No. 337-TA-868) involving InterDigital’s assertion of 3G/4G cellular standard-essential patents. Having settled with Samsung and Huawei, InterDigital continues to litigate the FRAND issues raised by these patents with Nokia and ZTE.
InterDigital initiated this round of SEP litigation against Samsung, Nokia, and ZTE in January 2013, first filing suit in the District of Delaware and then initiating a corresponding ITC action against the phone manufacturers in February 2013. As you may recall from our February 2013 post, the respondents asserted several FRAND-specific defenses in addition to customary patent infringement defenses. Whereas Huawei, Nokia, and ZTE asserted defenses of patent misuse, implied license, unclean hands, breach of contract, and equitable/promissory estoppel generally arising from InterDigital’s SSO activities and FRAND obligations, Samsung had taken a slightly different approach due primarily to its own attempts to procure exclusion orders on FRAND-pledged standard-essential patents in Inv. No. 337-TA-794 (against Apple) and Inv. No. 337-TA-866 (against Ericsson) and in Japan (see our May 21, 2014 post on how Samsung’s efforts at injunctive relief played out before the Japanese High Court).
Instead of arguing that a party undertaking a FRAND promise waives all rights to an exclusion order in the ITC, Samsung alleged that FRAND obligations and related defenses should be evaluated on a case by case basis and that here, InterDigital violated its FRAND obligations. Samsung also took the position that it was willing to renew a prior license with InterDigital on FRAND terms, but that InterDigital has refused to do so. Samsung had previously entered into a royalty-bearing license with InterDigital in 2008, following resolution of a patent dispute involving Samsung’s 2G and 3G productss incorporating the WCDMA and CDMA2000 standards, which was reported to extend through 2012.
Huawei settled-out of this round of InterDigital infringement actions earlier this year, leaving Samsung, Nokia, and ZTE to defend both the district court and ITC cases. As discussed in our May 30 post, Judge Andrews recently dismissed Nokia and ZTE’s FRAND counterclaims in the Delaware action and the ALJ’s initial determination in the ITC case is scheduled to issue later this month.
According to InterDigital, the resulting license with Samsung resolves all pending patent litigation between the companies and covers Samsung’s 3G and 4G products as well as certain future generations of wireless products. InterDigital’s press release quotes its President and Chief Executive Officer, William J. Merritt, as saying the newly minted agreement with Samsung demonstrates “how our longstanding patent licensing framework and process can lead to effective, productive discussions and eventual resolution on fair and reasonable terms.” Although the specific terms of the settlement are not public, there is speculation that the deal may involve quarterly payments in the tens-of-millions dollar range from Samsung in exchange for a license to InterDigital’s wireless patents. Following the announcement, InterDigital issued updated financial information, indicating recurring revenue was expected to increase by $17-$23 million per quarter beyond previous estimates until 2017. A company representative has indicated that not all of the additional revenue is attributable directly to the agreement with Samsung.