This week, Innovatio IP Ventures, LLP filed three new patent infringement cases in the Northern District of Illinois against Realtek Semiconductor Corporation, Marvell Semiconductor, Inc. and Media USA, Inc., manufacturers of WiFi chips. The complaints are identical, save for the defendants’ names and accused products.
Innovatio alleges that the WiFi chips made and sold by each defendant comply with the Institute of Electrical and Electronics Engineers (IEEE) 802.11 WiFi standard and also infringe Innovatio patent claims held to be essential to that standard by Judge Holderman in the In re Innovatio case. Innovatio alleges further that it offered each defendant a license at the 10 cent per-chip RAND royalty rate set by Judge Holderman , but, to date, none of them have accepted the license offer. As a result, defendants’ WiFi chips are unlicensed, and Innovatio brought suit for infringement.
Below, we summarize the history of the In re Innovatio case, Judge Holderman’s rulings therein, and Innovatio’s three new cases.
Background of In re Innovatio
On February 28, 2011, Broadcom Corporation assigned 31 U.S. patents to Innovatio. Prior to assigning them, however, Broadcom and two other prior owners submitted letters of assurance to the IEEE, promising to license patents essential to the 802.11 standard on either reasonable and non-discriminatory (RAND) terms or royalty-free.
After acquiring these patents, Innovatio sent letters to thousands of entities — including restaurants, coffee shops, hotels, and grocery stores — claiming that the patents were essential to the 802.11 standard and alleging infringement of same. Innovatio sought royalties reportedly in the range of $2500-3000 from each outlet for a license to the patents. Innovatio also began filing patent infringement suits in a variety of federal courts against entities that did not take a license. During this same time, at least five major suppliers of WiFi equipment filed declaratory judgment actions against Innovatio seeking declarations of invalidity and non-infringement of Innovatio’s patents. The Joint Panel on Multi-District Litigation (JPML) consolidated these actions for pretrial proceedings before Judge Holderman in the Northern District of Illinois under the case caption In re Innovatio IP Ventures, LLC Patent Litigation.
As we previously reported, Judge Holderman ruled that all of Innovatio’s asserted claims in nineteen (19) of its patetns were essential to the 802.11 standard and Innovatio was required to license them on RAND terms based on the prior assurances to IEEE.
Thereafter, the parties agreed to a bench trial on the issue of damages in order to assess prospects for early settlement before incurring the expense of a liability trial. Judge Holderman held a six-day bench trial to determine the RAND rate to be applied to manufacturers of WiFi equipment. Judge Holderman did not consider the RAND rate that should be applied to users of WiFi equipment.
After the trial concluded, Judge Holderman issued a lenghty RAND Ruling holding that the appropriate royalty base is the WiFi chip, “the small module that provides Wi-Fi capability to electronic devices in which it is inserted.” Judge Holderman further ruled that the RAND rate to be paid by manufacturers of WiFi equipment for practicing claims in Innovatio’s patents that are essential to the 802.11 standard is “9.56 cents for each Wi-Fi chip used or sold by the Manufacturers in the United States.” This amount is much lower than the $4 to $40 royalty that Innovatio was seeking at trial on each end-product using the WiFi chips.
Aftermath of the RAND Decision and Innovatio’s New Complaints
After the RAND decision issued, SonicWall, Motorola and Cisco — three of the five major WiFi equipment manufacturers involved in the suit — settled with Innovatio. The other two, HP and Netgear, thereafter settled as well.
Innovatio’s new complaints allege that Realtek, Marvell and Mediatek are selling WiFi chips that infringe claims held to be essential in thirteen (13) of the nineteen (19) patents that were the subject of Judge Holderman’s essentiality ruling. According to Innovatio, Judge Holderman ruled that “the use of all such claims are necessary to create a compliant implementation of either mandatory or optional portions of the normative clauses of the standard.”
Innovatio also quotes Judge Holderman’s RAND ruling, wherein he concluded that “all of the instructions to the various devices mentioned in the claims of Innovatio’s patents that operate Wi-Fi are included on the chip.” All three complaints also tout the court’s conclusion regarding the importance of Innovatio’s patents to the 802.11 standard.
Realtek, Marvel and Mediatek are all alleged to be making, offering for sale, selling or importing “802.11-compliant products used in connection with local area networks.” Each company’s respective offerings are alleged to “include 802.11-chips as described in [Judge Holderman’s] Essentiality Ruling and RAND Ruling.”
Innovatio alleges that, in October and November 2013, it offered Realtek, Marvel and Mediatek a license to its standard essential patent claims “for any compliant implementation of the 802.11 standard at the $.0956 per chip rate set by” Judge Holderman. Innovatio claims further that it thereafter communicated with representatives from each defendant or its outside counsel regarding the license offer. “Despite the parties’ communications, they have not made any meaningful progress toward negotiating a license agreement; nor has [any defendant] applied for, or otherwise requested, a license to Innovatio’s Standard Essential Claims.”
Each of Innovatio’s complaints assert causes of action for direct infringement, induced infringement and contributory infringement of the thirteen (13) patents that were the subject of Judge Holderman’s ruling on essentiality. Innovatio does not expressly plead which claims are essential and infringed by claim number, even though Judge Holderman’s essentiality ruling identified, by number, each claim that was concluded to be essential to the 802.11 standard. Instead, for each asserted patent, Innovatio alleges infringement of any claim that “is necessary to create compliant implementations of mandatory or optional portions of the 802.11 standard.”
Innovatio’s prayer for relief is not expressly limited to recouping the ten cents per-chip RAND royalty for past sales of allegedly infringing chips. Rather, the prayer for relief requests that each defendant “account for damages sustained by Innovatio as a result of [defendant’s] infringement of the Patents-in-suit to the extent, and for such infringement as Innovatio elects to recover” from each defendant, “including both pre- and post-judgment interest and costs as fixed by this Court under 35 U.S.C. § 284.” Innovatio does not affirmatively plead a request for injunctive relief.
On Wednesday, Innovatio filed notices in the Realtek, Marvell and MediaTek cases informing the court that the cases were related to the pending In re Innovatio MDL proceeding. Each notice stated that a prior order in the MDL proceeding “provides in relevant part that ‘[a]ny tag-along actions later filed in, removed to, or transferred to this Court will be consolidated automatically with this action.” On Thursday, the Executive Committee entered an order directing the Clerk of the Court to reassign all three cases to Judge Holderman.