As a reminder that standard essential patent issues go beyond information technology, last week SawStop LLC sued manufacturers of table saws alleging that they conspired to convince Underwriters Laboratories, Inc. (“UL”) to not adopt SawStop’s patented table saw safety technology into UL standard 987 (Stationary and Fixed Electric Tools) and to adopt a different technology that required SawStop to alter its design.

SawStop alleges that it patented a saw blade safety feature that places an electrical current on the blade to allow distinguishing between the blade cutting through wood or cutting through someone’s finger, stopping the blade if the latter is detected.  SawStop alleges that it offered to license this technology to other saw manufacturers, but they did not want to adopt the technology given cost considerations.  The UL standard 987 applicable to table saws is overseen by UL Standards Technical Panel 745 alleged to “consist[] primarily of manufacturers and individuals with connections to manufacturers.”  SawStop alleges that the manufacturers convinced UL to not adopt SawStops patented technology, but to adopt a saw safety guard technology that required SawStop to incur expenses to redesign its saws.  SawStop thus filed this lawsuit alleging various unfair competition claims.

This is an interesting case because it reminds us that standards are all around us and not limited to information technology.  It also is a unique example of a patent owner bringing suit because its technology was not adopted by an industry standard setting organization.  Another such case is one brought in 2011 by TruePosition that sued manufacturers and standard setting organizations Third Generation Partnership Project (3GPP) and European Telecommunications Standards Insitute (ETSI) alleging that they conspired to not adopt into mobile phone standards certain location-based technology patented by TruePosition (TruePosition, Inc. v. Ericsson, et al., Case No. 2:11-cv-04574 (E.D. Pa)).  The TruePosition case is in the discovery stage with summary judgment deadline set for Dec. 2014 and trial set for Aug. 2015.

Back in August, we reported on a series of four patent suits filed in the Southern District of Florida by a group of MPEG LA MPEG-2 patent-pool-licensors targeting television manufacturers Craig Electronics, Curtis International, Motorola, and ViewSonic.  The litigation now appears to be settled with respect to all parties except for ViewSonic, whose case was recently transferred to the Central District of California.

By way of background, Mitsubishi, Philips, General Electric, Thomson Licensing, Panasonic, and Sony, filed four separate infringement actions in July 2013 against the television manufacturers on a group of patents related to MPEG-2 video compression standards.  The plaintiffs acknowledged the patents were subject to FRAND commitments and sought only monetary damages from the defendants, who were alleged to have previously been offered licenses by plaintiffs.  These actions were filed shortly after a different group of MPEG LA licensors accused Curtis International and others of infringing certain ATSC-essential digital television patents.

The case against Motorola was dismissed pursuant to stipulation earlier this year on January 6, Curtis was dismissed on January 22, and notice of settlement was filed in the suit against Craig on Friday, February 21.  The litigation against ViewSonic appears to be moving forward, after ViewSonic’s succeeded in having the action transferred to the Central District of California earlier this month.

Last week the U.S. International Trade Commission issued the public version  of its decision last December that no valid claim of Interdigital’s 3G patents was infringed by Huawei, Nokia or ZTE and reserving ruling on other issues, such as on RAND obligations (see our Dec. 23,2013 post).  The ITC also gave its Federal Register notice of its decision earlier this month to grant InterDigital’s motion to voluntarily  terminate the investigation against the remaining respondent LG to avoid simultaneously  litigating that case in the ITC while InterDigital was appealing the decision as to the other respondents (see our Jan. 13, 2014 post about InterDigital’s voluntary termination after remand from Federal Circuit).

So we may not know for a year or more–pending InterDigital’s appeal–whether the SSO-obligation issues will be considered in this litigation.  Those issues may be mooted if the Federal Circuit affirms the ITC’s ruling that no valid patent claim is infringed.

Today, in an  en banc decision in  Lighting Ballast Control LLC v. Philips Electronics, No. 2012-1014, a divided Federal Circuit maintained the Cybor de novo appellate review of claim construction standard — i.e., no required deference to  the district court’s decision — because there was insufficient reasons to depart from it under stare decisis — i.e., the legal principle to standby prior decisions absent good reasons to depart from them.

Judge Newman’s Majority Decision.  The majority decision was authored by Judge Newman and joined by Judges Lourie, Dyk, Prost, Moore and Taranto.  The decision lumped the various amicus positions on the claim construction standard into three general alternatives:

  • Clear Error Review — A “first view” that Cybor was wrong and the Federal Circuit should review the district court’s entire claim construction decision for “clear error” that defers to the district court’s decision.
  • Clearly Erroneous Review of Facts — A “second view” that Cybor was wrong, that claim construction is a mixed question of fact and law, and the Federal Circuit should review the district court’s underlying factual decisions under “clearly erroneous” standard that defers to the district court’s decisions on underlying facts.
  • Plenary Review — A “third view” that Cybor was correct and the Federal Circuit should provide no deference to the district court’s decision.

Weighing the different views, the majority decided to keep the Cybor de novo review standard, stating:

[W]e apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law.  After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims.  The totality of experience has confirmed that Cybor is an effective implementation of Markman II, and that the criteria for departure from stare decisis are not met here.

Judge Lourie’s Concurrence.  Judge Lourie authored a separate concurring decision to provide additional reasons “why retaining Cybor is wise.”  Cutting back on claim construction from a pure legal issue to one with facts would undermine the Supreme Court’s decision that claim construction is an issue for the court, not the jury.  Further, Congress created the Federal Circuit to provide national uniformity to patent law, which counsels against “fractionation of the process.”  Further more, claim construction does not typically involve assessing historical facts, but primarily involves reviewing the patent’s written intrinsic record and the Federal Circuit “is quite as able to do that as any district court, sometimes better.”  In any event, the “no deference” standard does not mean the Federal Circuit actually ignores the district court’s decision–whatever rubric is used to describe the standard–because deference to the district court is given from a practical point of view:

[T]he “no deference” language is simply established legal jargon for a holding that, having reviewed the record, we disagree.  It has been stated in some amicus briefs before the court that there are truly factual issues involved in claim construction, particularly what a claim term meant to one skilled in the art at a particular time, and that such a determination should be given deference.  But we should not complicate the law and change our precedent for such a situation.  This court should rarely overturn a district court’s claim construction on a finding of that nature. …

[U]ltimately it should not matter whether claim construction has a factual component to which formal deference attaches or not.  If, as I believe we should, and do, give proper informal deference to the work of judges of a subordinate tribunal, then we will or should affirm when affirmance is appropriate.  If, on the other hand, we were to apply a more formal clearly erroneous standard, judgments of subordinate courts are still not unreviewable.  If we were to find that the so-called factual component, based on our review of the intrinsic record, has been determined incorrectly, clearly we could find it to be incorrect even with a clearly erroneous standard.  Thus, this is an argument that should not much matter.

 Judge O’Malley’s Dissent.  Judge O’Malley authored a dissenting opinion joined by Judges Rader, Reyna and Wallach.  A key concern is that construing the claims of a patent requires “resolv[ing] questions of fact” and Rule 52(a)(g) requires “that, on appeal, all “‘findings of fact … must not be set aside unless clearly erroneous.'”  Further, stare decisis is not a sufficient reason to retain Cybor given the criticism’s and debates over it — “Cybor repeatedly has been criticized as poorly reasoned” including debates among the Federal Circuit judges themselves.  Further, the Cybor decision “ignor[es] numerous instances where the [Supreme] Court acknowledged that claim construction can present factual questions,” and the Supreme Court’s decision that the court is better off deciding claim construction is not the same as saying that decision does not involve questions of fact. 

Further, the primary interests served by stare decisis actually supports “departing” from Cybor:

Preserving the stability of the law and protecting the public’s ability to “rel[y] on judicial decisions” are the central interests furthered by stare decisis.  By withholding deference to district court’s findings of claim construction facts, however, the interests of stability and predictability are disserved. … Indeed, our resistance to changing Cybor is directly contrary to the purposes of Rule 52(a)(6): to promote stability in the judicial system by (1) avoiding undermining the legitimacy of district courts and (2) preventing unnecessary appeals by discouraging appellate retrial of factual issues.

 Further, the prospect that Cybor creates “uniformity” is  questionable, because the Federal Circuit’s claim construction decisions show that “there is no guarantee that panels of this court will construe like claims in a like manner, even when in the same patent.”

In summary, the dissent agrees that the judge (not a jury) decides claim construction, but claim construction involves resolving questions of fact and “Rule 52(a) requires us to defer to those findings unless they are clearly erroneous.”

On Friday, the U.S. Department of Justice (“DOJ”) announced that it was closing its investigation into Samsung’s use of standard essential patents, which investigation had “focused on Samsung’s attempts to use its SEPs to obtain exclusion orders from the [ITC] relating to certain iPhone and iPad models.”  DOJ stated that further investigation was no longer needed given U.S. Trade Representative Michael Froman’s disapproval last year of an exclusion order in the ITC’s investigation of Apple’s infringement of Samsung’s SEPs (see our Aug. 3, 2013 post).

Samsung’s Proactive European Proposal.  DOJ states that its “Antitrust Division has worked closely and consulted frequently with its colleagues at the European Commission,” which raises the question whether DOJ took comfort in Samsung’s recent European activities.   Recall that the European Commission is considering Samsung’s proactive proposal  in response to a competition investigation that, during the next five years, Samsung would not seek injunctive relief within the European Economic Area (EEA) on SEPs in the field of mobile communications against companies that agree to a particular framework for determining fair, reasonable and non-discriminatory (FRAND) licensing terms either by agreement, by court determination or by arbitration (see our Oct. 18, 2013 post).  Samsung made this proposal on Sep. 27, 2013, several weeks after USTR Froman’s Aug. 3, 2013  disapproval of the exclusion order Samsung was awarded against Apple.  Further, Samsung’s proposal to the European Commission is similar to the consent decree entered between the U.S. Federal Trade Commission and Google/Motorola to settle an investigation about Motorola’s assertion of SEPs (see our July 24, 2013 post).

Samsung’s Cross-Licensing.  In addition to the European activity, Samsung recently entered into cross-license agreements with at least Google and Cisco.  Perhaps recent successful cross-licensing of Samsung’s patents by sophisticated companies through bilateral negotiations gave DOJ further comfort in ending its investigation.

Yesterday Cisco and Innovatio filed an Agreed Motion to Dismiss with Prejudice based on settlement of their litigation involving Innovatio WiFi standard essential patents.  Cisco’s Mark Chandler issued a statement indicating that the case settled for $2.7 million, or about 3.2 cents for 85 million devices even though Judge Holderman ruled that a RAND royalty would be about 10 cents per unit and Innovatio reportedly sought over $2,000 per location from each coffee shop, hotel or other end-user of the WiFi devices.  The settlement covers Cisco and all users of Cisco WiFi equipment.  It will be interesting to see if Cisco’s success here will also translate to its similar action against Rockstar–another non-practicing, non-innovating patent monetization entity asserting alleged standard essential patents against end-users of Cisco equipment (cable operators) (see our Feb. 3, 2014 post).

Recall that Motorola and SonicWall also settled with Innovatio following Judge Holderman’s RAND ruling (see our Jan. 2, 2014 post).  And a recent status conference filing indicates that remaining parties may be finalizing settlements with Innovatio. 

The settlements may keep Judge Holderman’s RAND analysis on the books without appellate review, leaving Judge Robart’s RAND analysis in Microsoft v. Motorola to be the first and only pending appeal for appellate guidance on a detailed RAND royalty rate methodology–a question remains whether that review will be by the Federal Circuit or Ninth Circuit (see our Dec. 16, 2013 post).  We say only appellate review of a “detailed RAND royalty rate methodology” because the Ericsson v. D-Link appeal pending before the Federal Circuit does involve review of a jury verdict damages award on Ericsson RAND-obligated WiFi patents–the jury awarded 15-cents per device for three WiFI SEPs where Ericsson had asked for 50-cents per device for all of its WiFi SEPs.  But the black-box nature of that jury verdict may not provide as good a vehicle for appellate guidance on a detailed RAND royalty-rate methodology as presented in Judge Robart’s detailed opinion (see our Aug. 7, 2013 post on Judge Davis’ review of the Ericsson v. D-Link jury verdict as well as our Dec. 23, 2013 and Jan. 7, 2014 posts on some of the appeal amicus filings).

In the midst of ongoing litigation against Nokia and HTC abroad, German patent monetization firm IPCom’s claim of patent infringement against Apple will be heard before Germany’s Mannheim Regional Court next Tuesday, February 11 (see our Januray 2013 post for some additional information on how patent litigation and RAND issues are handled in Germany).  IPCom is seeking upwards of $2 billion in damages.

The litigation involves a standard-essential wireless patent covering a technology that prioritizes emergency calls placed on overloaded wireless communication networks.  Interestingly, the claimed technology is not only deemed essential to UMTS and LTE wireless standards, but implementation of the technology is required by law.  Despite a joint effort by Apple, Nokia, HTC, and Vodafone to have the patent declared invalid, the European Patent Office issued a decision last month upholding the validity of the patent, albeit narrowed in scope.  The $2 billion sought by IPCom allegedly covers only German sales and the company has yet to indicate whether additional suits would be filed in other jurisdictions.

IPCom GmbH is a German patent holding company founded in 2007 by Bernhard Fohwitter, a former patent attorney for Robert Bosch GmbH.  IPCom apparently purchased the asserted patent from Bosch in 2007 and is reported to own close to 1,200 patents developed by  Bosch and Hitachi Ltd.  Over the past several years, IPCom has successfully litigated a number of patent cases before the Mannheim Regional Court, which has heard more wireless patent cases than any jurisdiction worldwide.

IPCom spokesman Alistair Hammond has said that the company has existing licensing agreements in place with a number of unidentified smartphone manufacturers, asserting that last year carrier Deutsche Telekom AG paid IPCom a three-digit million euro sum as part of such an agreement.

Last week, Apple filed its brief as an intervenor in the Federal Circuit appeal involving Samsung’s stymied ITC case against Apple (Inv. No. 337-TA-794).  Arguing the ITC’s finding of no violation should be affirmed with respect to the one patent-at-issue, Apple’s brief raised a number of SEP issues involving Samsung’s involvement with the IETF and the availability of injunctive relief to the holder of declared SEPs.

By way of quick background, the present appeal arises from the ITC action that Samsung filed against Apple in 2011.  At trial, ALJ Gildea found no violation of the four patents-at-issue in the case.  Reviewing the ALJ’s Initial Determination, the Commission found a violation with respect to one patent — U.S. Patent No. 7,706,348.  The ITC determined an exclusion order should issue, but the exclusion order was disapproved on public interest grounds by the President through the USTR.  Samsung subsequently appealed the ITC’s determination with respect to another patent-at-issue, No. 7,486,644, which generally covers transmissions that mobile devices receive from mobile base stations over certain types of control channels.

In its appeal brief, Apple argues the ITC’s finding that no Section 337 violation occurred should be upheld for reasons generally related to noninfringement, inequitable conduct, patent unenforceability, and patent exhaustion.  With respect to SEP issues, Apple’s brief asserts the ‘644 patent is unenforceable due to standards-setting violations and that, even if successful on appeal, Samsung is ultimately not entitled to injunctive relief because the ‘644 patent is subject to FRAND-commitments.

Apple argues that the ‘644 inventors violated ETSI’s IPR Policy by not disclosing that the claimed technology might be essential to the UMTS proposal before the proposal was adopted.  Apple recites that after filing patent applications on patterns used in control channel transmissions, the inventors of the ‘644 patent encouraged the standards body to adopt one of the claimed patterns and that Samsung did not disclose the pertinent patent applications until one year after the standard at issue was finalized.  Citing Federal Circuit precedent, Apple argues that Samsung’s SSO conduct renders the ‘644 patent unenforceable  against  UMTS implementers, including Apple.

Apple further argues that Samsung cannot secure an exclusionary remedy for infringement of a patent declared to be standards-essential.  Making use of the USTR’s decision disapproving the ITC’s prior exclusion order for the FRAND-committed ‘348 patent, Apple argues that remand to the ITC would be futile, particularly where the USTR terminated the Commission’s investigation for the ’348 patent, citing “substantial concerns … about the potential harms that can result from owners of standards-essential patents (‘SEPs’) who have made a voluntary commitment to offer to license SEPs on terms that are fair, reasonable, and non-discriminatory (‘FRAND’).”  Apple argues that because Samsung previously declared the ‘644 patent as essential to the UMTS standard, Samsung limited its own potential infringement remedy to a reasonable royalty and is now obligated to license the ‘644 patent on FRAND terms.

As these arguments have caused quite a stir at the ITC, it will be interesting to see how the Federal Circuit handles Apple’s arguments regarding the availability of an exclusionary remedy for standard-essential patents.

On Friday, Jan. 31, 2014, Cisco filed an answer-counterclaim in D. Del. against Rockstar in response to the complaint filed against Cisco by Rockstar’s subsidiary Bockstar (see our Jan. 2, 2014 post).  Cisco’s counterclaim includes a declaratory judgment action based on Rockstar’s assertion of patents against cable operators that purchase Cisco equipment, including cable operators involved in separate suits with Rockstar (see our Jan. 2, 2014 post and Jan. 21, 2014 post).

Recall that last week Arris also filed a complaint against Rockstar based on Rockstar’s assertion of standard essential patents against cable operators, including some of those identified in Cisco’s counterclaim (see our Jan. 31, 2014 post).  Unlike Arris’ action or prior action filed by some cable operators, Cisco’s counterclaim does not include an unfair competition action against Rockstar and its subsidiaries.

Also recall that Cisco and other equipment manufacturers filed the declaratory judgment actions against Innovatio based on Innovatio’s assertion of alleged WiFi standard essential patents against end-users of their equipment (e.g., hotels and coffee shops).  That action so far led to a RAND-royalty determination by Judge Holderman considered favorable to Cisco (see our Oct. 3 2013 post) and is still pending to consider Cisco’s non-infringement and validity challenges against those patents.

You will soon see a fresh new look and feel to the Essential Patent Blog and some enhanced content.  For example, we will start adding specific pages for significant SEP patent litigations that we have been following to provide an easier way for you to get a summary of the litigation, including past key events, upcoming events and key filings and decisions.

We will start transitioning to the new design today and — if the technology gremlins are kind — we will have no downtime. The process includes porting-over our existing email subscriber list, so current subscribers should check to ensure they are still getting emails after the transition.  Rather than our current practice of sending an email to subscribers each time we make a new post, we intend to send only one email in the morning for all new posts from the prior day (if any).  We also will provide ways to get real-time notice of new postings, such as the blog’s new Twitter account “@essentialpatent”.

So thanks for your support so far, will appreciate your patience as we address whatever issues may arise during or after the transition, and look forward to seeing you on the other side …