Today, the Ninth Circuit issues an Order that stays Judge Koh’s injunction entered in the FTC v. Qualcomm case in order to maintain the status quo so that the Ninth Circuit can decide whether Judge Koh’s “order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act”, which is not decided by this Order but “is a matter for another day.”

We provide a summary of the ruling below and, as always, recommend reading the 7-page Order for yourself (see link in first sentence above).   The Ninth Circuit has not decided the substantive issues–that will be done on “another day”–but did indicate that Qualcomm had raised meritorious arguments that (1) Qualcomm was not required to license its SEPs to rival chip suppliers and (2) Qualcomm could assess royalties on its SEPs on a per-handset basis (rather than based on modem chip component of the handset).

As far as next steps, the parties and interested amicus on all sides of the issue are preparing briefing on an expedited schedule in preparation for a hearing at the Ninth Circuit in January 2020.
Continue Reading

And the dance has officially begun in the U.S. inter-governmental dispute about applying competition law to the technical standard setting process between the U.S. Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) and we all have an invitation to the brawl.  DOJ filed an Amicus Brief that supports Qualcomm’s request that the Ninth

Last week, Judge Gilstrap ruled that Ericsson’s end-product-based “offers to HTC–$2.50 or 1% with a $1 floor and a $4 cap per 4G device–were fair, reasonable and non-discriminatory.”  Judge Gilstrap found that the comparable licenses presented by Ericsson to be “the best market-based evidence” of the value of Ericsson’s standard essential patents (SEPs) and that “the market evidence, in the form of comparable licenses, has failed to embrace HTC’s preferred SSPPU [smallest salable patent-practicing unit] methodology.”    He noted that there was no evidence that industry licenses are negotiated based on the cost of a baseband chip (the alleged smallest saleable patent practicing unit or SSPPU) and evidence showed that the value of SEPs can exceed the value of the chip, which price does not include the cost if that intellectual property.  This SEP cases is one of the closest to capturing what actually happens in the licensing market with FRAND-committed SEPS, rather than generating new litigation-based theories on valuing SEPs (e.g., top-down analysis).  This decision also is at odds in many respects with the decision by Judge Selna in the TCL v. Ericsson case that currently is on appeal at the Federal Circuit (see our Jan. 3, 2018 post summarizing that decision).
Continue Reading

Yesterday, Judge Koh of the U.S. District Court Northern District of California entered a Judgment following the January 2019 trial based on her Findings of Fact and Conclusions of Law that Qualcomm violated the Federal Trade Commission Act.  This is a lengthy, 233 page decision and we will provide a summary soon, but provide now

Last week, the U.S. Federal Trade Commission (FTC) Staff filed a response that attacks the U.S. Department of Justice (DOJ) Statement of Interest in the FTC v. Qualcomm case. (See May 3, 2019 post on DOJ Statement of Interest).  FTC Staff stated that it did not request the DOJ filing, which FTC Staff called untimely.  FTC Staff also indicated that the focus of DOJ’s Statement of Interest–the need for briefing and an evidentiary hearing on remedy–was misplaced because evidence of remedy already has been considered and the trial court already decided not to consider remedy separately.  And FTC Staff disagrees with DOJ’s view of the law.

The FTC Staff position is not unexpected given the differing views of the role of competition law with standard essential patents between the FTC Staff’s position (which was set when this case was filed as a parting-shot in the last few days of the old administration) and the current DOJ administration.  That FTC Staff would take off the gloves so soon and start exchanging public, adversarial blows with its sibling agency is a bit unexpected.  But, of course, they may argue that DOJ drew first blood in filing the Statement of Interest. 
Continue Reading

Today, the U.S. Department of Justice (DOJ) filed a Statement of Interest of the United States of America in the Federal Trade Commission’s (FTC) antitrust lawsuit against Qualcomm about standard essential patent licensing.  DOJ does not currently take a position on the merits of the FTC’s liability claim against Qualcomm that is awaiting decision by the district court following a January trial, but is making the court aware that there should be separate briefing and an evidentiary hearing on remedy if the court finds that Qualcomm is liable.  This is a very interesting development with implications beyond the instant case with much reading between the lines–and the good stuff buried in footnotes–as to what is to come.  Somewhat like the first 10 minutes of last week’s Game of Thrones episode “The Long Night” where warriors lined-up for some kind of battle to happen but it was not clear what exactly that would be.
Continue Reading

A jury recently found that Huawei willfully infringed four patents owned by PanOptis alleged to be essential to mobile cellular standards and subject to a FRAND commitment as well as a fifth patent related to the H.264 video compression standard but was not subject to a FRAND commitment.   The jury awarded a reasonable royalty of $7.7 million for the single patent without a FRAND commitment, which was almost three times higher than the combined royalty awarded for the four FRAND-committed SEPs of $2.8 million.  But it is not clear at this point whether that difference is due to the FRAND-commitment or to the relative value of the patented technologies to the infringing products.

Prior to trial, the court also showed judicial restraint by limiting the case to determination of FRAND commitments on U.S. patents as a matter of U.S. law and not opining on FRAND commitments for foreign patents under foreign law.  For example, the court refused to enjoin a Chinese antitrust action based on alleged FRAND violations for related Chinese SEPs.  And the court refused to include in this case a determination of whether there was infringement of related foreign SEPs and whether licensing offers on those foreign SEPs complied with the FRAND commitment under foreign law.

The next steps in this case involves the court holding a bench trial (i.e., trial before the judge, not a jury) on whether PanOptis licensing offers complied with its FRAND commitments.  Further, the parties will file the usual post-trial motions that may challenge the jury verdict and ultimate bench trial ruling.  Those further filings may provide more insight into the case.  So stay tuned.
Continue Reading

Today the Federal Circuit (Renya, Bryson and Hughes) ruled that implied waiver may apply where the prior owner of a U.S. patent had a duty to disclose a related foreign patent application to ETSI even though ETSI had rejected that prior patent owner’s proposed contribution to the standard.  This decision provides insight into several areas, including:

  • Applying the equitable doctrine of implied waiver to the duty to disclose intellectual property rights (IPR) to standard setting bodies.  Among other things, the decision indicates that there may not be a requirement to show reliance on the implied waiver.
  • The importance of looking to the specific standard setting body’s IPR Policy at issue and providing evidence for interpreting that policy.
  • The difference between disclosing patents that “may be” essential to the standard and a FRAND commitment that arises because the patent “actually is” essential to the standard.
  • Failure to disclose is not a “gotcha’” defense; rather, you must show that the patent owner obtained some unfair advantage by its misconduct in not disclosing the patent.

As with many decisions, this case is fairly case-specific as far as interpretation of the ETSI IPR Policy.  Only the  patent challenger (Apple) provided testimony on interpretation of the ETSI Policy without any rebuttal evidence beyond the language of the IPR Policy itself.  The Federal Circuit indicated that its decision was based on the specific record evidence–and lack of evidence–before it.
Continue Reading

Magistrate Judge K. Nicole Mitchell of the Eastern District of Texas recently denied patent owner Cellular Communications Equipment LLC (“Cellular” or “CCE”) motion for summary judgment that its asserted patents were not essential to a cellular standard, ruling that there was a factual dispute based on statements made by patent owner Cellular during the litigation.  This case illustrates problems in loosely referring to standard essential patents generically as patents relevant to a standard or erroneously stating that a patent was “declared essential.”  Declarations that patent owners submit to standard setting bodies typically do not declare that patents are essential to the standard, but identify patents that may be essential to the standard and what licensing terms, if any, they would offer if the patent actually is essential.  A patent is not actually a “standard essential patent” or “SEP” unless it is “essential” to the standard under the standard setting body’s intellectual property rights (IPR) policy.

Further, this case illustrates that,  just because a patent is infringed by one way of implementing the standard does not mean that the patent covers every way to implement the standard and, thus, may be “essential” and subject to a standard-setting licensing commitment.

In sum, for convenience, speakers, writers and parties may loosely talk about a patent or patent portfolio as being SEP(s) as a short-hand for patents that were declared potentially an SEP.  But, when making statements on which a court, agency or other decisions may rely, it may be helpful to be more precise or provide a caveat that the term SEP is being used as a short-hand and does not mean that a patent actually is essential to the standard.
Continue Reading