Back in June, we alerted you to a jury verdict handed down in a patent case in the Eastern District of Texas, where the jury awarded Ericsson several million dollars as compensation for infringement of several of its 802.11-essential patents by several manufacturers of WiFi-compliant products and components.  At the time, we noted that the jury only addressed issue of validity, infringement, and damages, with SEP-specific issues being potentially left for presiding Judge Leonard Davis to decide.  (In fact, the court held a bench trial on RAND issues on June 12).  The parties filed post-trial motions for judgment as a matter of law on several issues, and yesterday, Judge Davis issued a lengthy Memorandum Opinion and Order broadly upholding the jury’s verdict.

[13.08.06 (Dkt 615) Ericsson v. D-Link Order on Post-Trial Motions]

As we suspected, some RAND obligation-related issues reared their heads — but Judge Davis rejected the defendants’ RAND-based arguments and defenses.  In doing so, he made some statements that might be construed as a marked departure from the route taken by Judge Robart in the Microsoft-Motorola case.  After the jump, we’ll take a look at what Judge Davis concluded with respect to Ericsson’s RAND obligations.

Continue Reading Rebutting Judge Robart? E.D. Tex. Judge Leonard Davis upholds jury damages award on WiFi SEPs, dismisses RAND-related issues (Ericsson v. D-Link)

The world of standard-essential patent litigation has seen some significant upheaval over the past few months, particularly with the Microsoft-Motorola RAND-setting ruling and the ITC’s exclusion order in Samsung-Apple (and the USTR’s subsequent veto).  Today there will be a complimentary webinar in conjunction with the American Intellectual Property Law Association’s (AIPLA) Standards & Open Source Committee, during which panelists will address these decisions and offer some unique and valuable perspectives on the cases.  We hope you’ll tune in and join us.

The webinar is titled “Practical Considerations & Industry Perspectives in Applying Recent FRAND Rulings,” will take place on from 12:30pm to 1:30pm EDT (9:30-10:30am PDT).  The panel of esteemed experts will include:

  • David Long, Partner at Dow Lohnes PLLC and Co-Founder of The Essential Patent Blog
  • Deanna Tanner Okun, Partner at Adduci, Mastriani & Schaumberg LLP and Former ITC Chairman
  • Mark Snyder, Vice President, Corporate Litigation, Qualcomm Incorporated
  • Gil Ohana, Senior Director, Antitrust and Competition, Cisco Systems

The main focus of this hour-long webinar and Q&A will be on the practical takeaways from Judge Robart’s RAND-setting opinion in Microsoft v. Motorola, and the ITC’s decision and USTR’s disapproval of the exclusion order in Samsung v. Apple (Inv. No. 337-TA-794).  The panelists will discuss the substance of these decisions, and will delve into the real-world implications that these rulings may have in the standard-essential patent licensing arena – including how the outcome of these cases could affect the future actions and incentives of both patent licensors and licensees.

If you can join us later today, please reserve your webinar seat — and we’ll see you in a few hours.

Yesterday, we covered some of the wide-ranging reaction to U.S. Trade Representative Michael Froman’s decision to veto the ITC’s exclusion order in Inv. No. 337-TA-794.  One recurring theme was the question of what this ruling might mean for other SEP-related Section 337 cases that are currently at the ITC (or may be brought in the future).  It’s a very good question — one without a clear answer.

Some of this lack of clarity appears to stem from Ambassador Froman’s letter announcing his decision.  The letter clearly states that exclusion orders may be available as a remedy for FRAND-encumbered SEPs in some circumstances, so this does not appear to represent a complete bar on SEP cases at the ITC.  The letter concludes with a statement that the decision is “not … a criticism of the Commission’s decision or analysis” (although there plainly seems to be something he disagrees with).  He also notes that while that while Apple and Samsung vigorously dispute the FRAND-related facts of this case, “it is beyond the scope of this policy review to revisit the Commission’s analysis or its findings based on its record.”  Nevertheless, Ambassador Froman states that he decided to disapprove of the remedy issued by the ITC based upon his review of the various FRAND-related policy considerations as they relate to the effect on competitive conditions in the U.S. economy and the effect on U.S. consumers.  The question many are asking is, what could the ITC (and/or Samsung) have done differently to avoid this disapproval?

The penultimate paragraph appears to provide some guidance for the Commission in evaluating FRAND issues in current and future cases.  Here, the USTR calls for the ITC to:

  1. Examine thoroughly and on its own initiative (emphasis added) the public interest issues presented at the outset of its proceeding and when determining whether a particular remedy is in the public interest; and
  2. Seek proactively to have the parties develop a comprehensive factual record related to these issues in the proceedings before the ALJ and during the formal remedy phase of the investigation, including information on the standards-essential nature of the patent at issue (if contested by the patent holder) and the presence or absence of patent hold-up or reverse hold-up (i.e., licensee “hold-out”).

The USTR notes that the Commission should endeavor to “make explicit findings on these issues to the maximum extent possible,” and that he will look for these elements in future policy reviews of decisions made in FRAND-encumbered SEP cases.  And it seems that the USTR is placing the burden squarely on the ITC itself to bring up these issues sua sponte, even if the parties haven’t fully addressed them for whatever reason.  In the future, we may see more public interest fact-finding in FRAND-related Section 337 proceedings delegated to the ALJs, so that a more robust record can be developed.  But for those investigations involving SEPs in which a Initial Determination has already been made, such as the pending cases involving InterDigital (337-TA-800) and LSI/Agere (337-TA-837), this may spur the Commission to solicit significant amounts of FRAND-related information in connection with its review of the ID.

Those of you who are familiar with the -794 case involving Samsung and Apple may be wondering, didn’t the Commission also ask for intense public interest briefing on FRAND issues there as well?  It certainly did — but apparently, its factual findings on these issues were not enough to satisfy the USTR.  As you may recall, the Commission found that Apple should be the party bearing the burden of proof with respect to the FRAND-related defenses, including showing that the patent was actually essential (and therefore subject to the FRAND obligation).  But the Commission found that even after all of the parties’ briefing, there were still disputed issues about whether the patent was actually essential to the standard.  This is one issue where the USTR now seems to be requiring a particular finding regarding essentiality or non-essentiality.

But note that the Commission (beginning at p. 52 of its opinion) also considered in the alternative the merits of Apple’s FRAND defense — assuming (1) that the patent at issue was essential to the standard, (2) the FRAND obligation applied, and (3) that the FRAND obligation was legally enforceable.  In doing this alternative analysis, the ITC analyzed the history of the Samsung-Apple negotiations, finding that Apple did not prove that Samsung failed to negotiate in good faith for a FRAND license.  As to the issues of patent hold-up and reverse hold-up, the Commission found (on pp. 62-63) that Apple may have been engaged in reverse hold-up, while it noted (on p. 66) that “Samsung can hardly be accused of patent hold-up when it has licensed its declared-essential patents…to more than 30 companies.”

It seems at least arguable that the Commission in the -794 case did address the issues cited by Ambassador Froman, at least to some extent.  But perhaps the ITC’s analysis was not thorough, comprehensive, and explicit enough, and its assignment of the burden of proof on FRAND issues to Apple seems to have not been well-received by the USTR (although assigning the FRAND burden to the accused infringer was long the practice of the ITC and continues to be the case in district courts).

This in and of itself raises an interesting question — could Samsung now ask the Commission to make further, more detailed findings of fact relating to the FRAND issues in the -794 case, in an attempt to satisfy the standards set forth in Ambassador Froman’s disapproval letter?  It may not be out of the question — the disapproval only relates to the exclusionary relief already issued by the ITC, and doesn’t categorically bar any future potential relief.  In prior cases involving Presidential disapproval of ITC exclusion orders, the ITC has in fact issued modified exclusion orders after the inital exclusionary relief was vetoed.

But regardless of what eventually happens with the -794 case, it will be interesting to see how these FRAND issues play out in pending and future cases, and whether some would-be litigants simply choose to litigate in district courts rather than meet the seemingly ever-increasing bar (and attendant expenses) for getting an ITC exclusion order on FRAND-encumbered patents.

Even though it was released on a Saturday, U.S. Trade Representative Michael Froman’s disapproval of the exclusion and cease & desist orders in ITC Inv. No. 337-TA-794 has understandably generated a lot of chatter in industry and the patent world.  Many are hailing the decision, while others disagree with the veto and/or believe it should be more clear, and still others simply are asking questions about what effects the veto may have.  We thought it’d be useful to give a sampling of some the reactions to the ruling here:

First, the parties:

  • Apple: “We applaud the administration for standing up for innovation in this landmark case.  Samsung was wrong to abuse the patent system in this way.” (Apple spokesman Kristen Huguet, via Bloomberg)
  • Samsung said it was “disappointed” with the USTR’s veto, because “the ITC’s decision correctly recognized that Samsung has been negotiating a license in good faith and that Apple remains unwilling to take a license.” (Samsung spokesman Nam Ki Yung, also via Bloomberg)

And of course, many non-parties weighed in through news interviews, the blogosphere, and the Twitterverse:

  • In Fortune magazine, Philip Elmer-Dewitt argues that ITC Commissioner Dean Pinkert’s dissent from the decision to issue an exclusion order showed the USTR why he should veto the ITC’s decision. He says that the ITC “blew it by ignoring” the dissent when issued its exclusion order. (via Fortune)
  • But Ron Cass, former Vice-Chairman of the ITC and current head of Cass & Associates, said the ruling would “come to be seen as a mistake – it undermines protection for intellectual property.” (via Financial Times)
  • Florian Mueller of FOSS Patents called the decision a “victory for consumers and fair competition” and speculated that the decision may lead some SEP holders (such as InterDigital) to withdraw pending SEP-related ITC complaints.
  • The Ministry of Trade, Industry, and Energy of the Republic of (South) Korea “expresse[d] concerns over the negative effect the decision by the US Trade Representative will have on the protection of patents held by Samsung Electronics.” (via The UK Register)
  • Jorge Contreras, Professor at American University’s Washington College of Law, said that he agreed with the decision to overturn the ban, which in his mind, belonged in the district courts, not the ITC: “It’s completely redundant,” he said. “These are disputes that should be heard in the court.” (via Bloomberg)
  • Manny Schecter, Chief Patent Counsel of IBM, took issue with the USTR’s basis for his decision, tweeting that an “explanation that ‘after…consultations…I have decided’ is simply not adequate.”
  • Simon Lester, a trade policy analyst at the Cato Institute, wondered whether the USTR’s decision was “just flagant protectionism'”?
  • Perhaps thinking along a similar vein on whether the USTR’s decision might cause other countries to act in a similar manner, the Computer & Communications Industry Association posed the question: “how will this play out in the rest of the world?”
  • And Managing Intellectual Property magazine queried: “Will this [the USTR’s veto] have long-term effect on FRAND negotiations?”

Would you like to hear what some others — including a former ITC Chairman and in-house counsel at Cisco and Qualcomm — think about the USTR’s veto, and whether this case and the Microsoft-Motorola case might have long-term effects on FRAND-encumbered SEP licensing negotiations?  Then you should register for and attend our webinar this coming Wednesday at 12:30pm.

Today, U.S. Trade Representative (USTR) Michael Froman issued his long-anticipated decision regarding the U.S. International Trade Commission’s exclusion order in ITC Inv. No. 337-TA-794 involving Samsung and Apple.  And as you may have heard by now, the verdict is…

The exclusion order has been “disapproved of” — i.e., overturned, vetoed, not going to go into effect.

Ambassador Froman’s letter to ITC Chairman Irving Williamson informing the ITC of the disapproval states that the decision does not represent an endorsement or criticism of the Commission’s analysis, but is instead based on policy considerations as they relate to the enforcement of standard-essential patents, competitive conditions in the U.S. economy, and effects on U.S. consumers.  (Although, as we’ve noted previously, the issue of whether the patent was actually essential to the standard at issue — i.e, an SEP — was not actually resolved by the Commission).  The USTR did note that there may be cases in which an exclusion order is an appropriate remedy for infringement of a FRAND-encumbered SEP, that he is looking forward to development of appellate case law on this issue (for instance, perhaps in the Apple-Motorola Fed Circuit appeal), and that FRAND-encumbered SEP holders could seek monetary damages in court.  But all of that is probably of little consolation right now for Samsung; Ambassador Froman’s decision is the final word on this case — under current Federal Circuit law, his disapproval of the exclusion order is not appealable.

Although the letter announcing the decision is short, there’s obviously a lot to take away from a decision of this nature — which, as we’ve noted before, hasn’t happened in over 25 years.  We’ll be back tomorrow or Monday with a follow-up post doing a deeper dive into this case.  And we are also sponsoring a webinar this coming Wednesday, during which this Samsung-Apple case will certainly be a hot topic of discussion.

As we told you last week, there will be a free upcoming webinar in conjunction with the AIPLA Standards and Open Source Committee.  The webinar will feature a panel of attorneys and industry professionals discussing the consequences that may stem from decisions in some recent standard-essential patent cases of note, including the RAND breach of contract dispute between Microsoft and Motorola and the controversial ITC Section 337 case involving Samsung and Apple.

Titled “Practical Considerations & Industry Perspectives in Applying Recent FRAND Rulings,” the webinar will take place on Wednesday, August 7 from 12:30pm to 1:30pm EDT.  The panel will feature a diverse mix of attorneys and experienced industry professionals, including:

  • David Long, Partner at Dow Lohnes PLLC and Co-Founder of The Essential Patent Blog
  • Deanna Tanner Okun, Partner at Adduci, Mastriani & Schaumberg LLP and Former ITC Chairman
  • Mark Snyder, Vice President, Corporate Litigation, Qualcomm Incorporated
  • Gil Ohana, Senior Director, Antitrust and Competition, Cisco Systems
  • Matt Rizzolo, Associate at Dow Lohnes PLLC and Co-Founder of The Essential Patent Blog

This hour-long webinar and Q&A will focus on practical takeaways from recent FRAND-related decisions by Judge Robart in Microsoft v. Motorola and the ITC decision in Samsung v. Apple.  Panelists will discuss the substance of these decisions, and will delve into the real-world implications that these rulings may have in the standard-essential patent licensing arena – including the effects these cases may have on the future actions and incentives of both patent licensors and licensees, as well as on potential participants in the standard-setting process.

We hope you can join us on August 7 for this complimentary webinar.  Space is limited, so please reserve your seat as soon as possible.

Back in June, we alerted you to a number of infringement suits brought by licensors to the MPEG LA ATSC patent pool in the Southern District of Florida, targeting several television  manufacturers — ViewSonic, Craig Electronics, and Curtis International.  Yesterday, a different group of MPEG LA licensors filed suit on patents related to a different MPEG LA patent pool (relating the MPEG-2 video compression standard), but most of the defendants include those targeted in the earlier suits.  This could raise speculation that MPEG LA (through its licensees) is becoming more apt to bring enforcement actions to “encourage” technology companies to become licensees to its various patent pools.

The plaintiffs in the new suits include Mitsubishi, Philips, General Electric, Thomson Licensing, Panasonic, and Sony, each of whom are licensors to the MPEG LA MPEG-2 Patent Pool.  They have filed the following complaints:

The plaintiffs allege that that the defendants’ MPEG-2 compliant products, such as television and set-top boxes, infringe several of their patents.  The patents-in-suit include the following:

  • U.S. Pat. No. 5,606,539: “Method and apparatus for encoding and decoding an audio and/or video signal, and a record.” (Assigned to Philips)
  • U.S. Pat. No. 7,376,184: “High-efficiency encoder and video information recording/reproducing apparatus” (Assigned to Mitsubishi)
  • U.S. Pat. No. 5,784,107: “Method and apparatus for picture coding and method and apparatus for picture decoding” (Assigned to Panasonic)
  • U.S. Pat. No. 6,097,759: “Image signal coding system” (Assigned to Mitsubishi)
  • U.S. Pat. No. 5,481,553: “Methods and apparatus for preventing rounding errors when transform coefficients representing a motion picture signal.” (Assigned to Sony)
  • U.S. Pat. No. 5,459,789: “Packet TV program component detector” (Assigned to Thomson)
  • U.S. Pat. No. 5,491,516: “Field elimination apparatus for a video compression/decompression system” (Assigned to GE)

The plaintiffs acknowledge that they have committed to license these patents on FRAND terms and are not seeking an injunction, but instead seek damages adequate to compensate for infringement — as well as treble damages for willfulness and attorneys’ fees and costs under Section 285.  The complaints state that each of the defendants has been previously offered a license to the patents through MPEG LA (and that Motorola was in fact a prior licensee and licensor of the MPEG LA MPEG-2 pool), but that none of the defendants has accepted a the license offers.

One last interesting note to point out about these new cases — the MPEG LA licensor plaintiffs are represented by attorneys at Proskauer Rose, which is the same law firm that MPEG LA uses as patent counsel and to determine whether its licensors’ patents are essential.

Earlier this week, the ITC issued the public version of ALJ David P. Shaw’s Initial Determination finding no violation of Section 337 in in In the Matter of Certain Wireless Devices with 3G Capabilities and Components Thereof, Inv. No. 337-TA-800 — the ITC’s investigation into InterDigital’s accusations that Huawei, Nokia, and ZTE infringed several 3G-essential InterDigital patents.  But even when no Section 337 violation is found, the ALJ must still issue his recommendations on remedy and bonding (the amount an infringer must pay to continue to import infringing devices during the Presidential review period) to the Commission.  The public version of the ALJ’s Recommendation Determination (RD) is now available.

[337-TA-800 Recommended Determination on Remedy & Bonding (PUBLIC)]

ALJ Shaw recommends that — in the event the Commission overturns his findings and concludes that there has been a violation of Section 337 — the Commission issue a limited exclusion order prohibiting the Respondents from importing the infringing products into the United States.  The ALJ also recommends that the Commission issue a cease and desist order against certain of the Respondents, Nokia, Inc. and Huawei Device USA, who maintain commercially significant inventories of accused products in the United States.  But even if the Commission finds a 337 violation, the ALJ does not recommend that the Respondents be required to pay a bond, because InterDigital stipulated that it would not seek a bond in the case.

Because InterDigital’s infringement allegations implicate ETSI/ITU 3G wireless standards and InterDigital’s patents are (at least allegedly) subject to FRAND obligations, the Respondents had argued that an exclusion order should not issue — or should at least be delayed until a FRAND determination is made in the parallel district court case.  But ALJ Shaw rejects these arguments, noting that he addressed the FRAND defenses in his Initial Determination and concluded that Respondents failed to prevail on any of these defenses.  He also notes that while FRAND may be related to public interest considerations, the issue of public interest is generally reserved for the Commission and was not delegated to the ALJ in this investigation.  Therefore, any FRAND-related public interest considerations will have to be evaluated separately by the full Commission (who, as we learned in the Samsung-Apple investigation, may order significant briefing on the issue).

The sprawling patent infringement action in the Northern District of Illinois involving Innovatio IP Ventures is often in the headlines not because it involves standard-essential patents, but because it involves (in part) patent infringement claims brought by a non-practicing entity (Innovatio) against “end users” (coffee shops, hotels, restaurants, etc.).  But last Friday, Judge James F. Holderman issued a ruling that may be the first of its kind for a district court — a ruling addressing the “essentiality” of patent claims, separate and apart from the issue of infringement.  If you’re not familiar with this case (and even if you are), bear with us — we’ll try to explain just why this ruling is so “essential” (sorry).

[2013.07.26 (Dkt 851) Order re Essentiality]

Warning — this is going to be a long post.

Continue Reading Judge issues “essential” first-of-its-kind ruling, finding all of Innovatio’s WiFi-related patent claims to be 802.11-essential (and subject to RAND obligations)

Today, we attended a hearing held on Capitol Hill by the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights regarding standard-essential patents.  The hearing, titled “Standard Essential Patent Disputes and Antitrust Law,” featured testimony from four witnesses from diverse SEP-related backgrounds.

  • A. Douglas Melamed, Senior Vice President & General Counsel, Intel Corp.
  • Donald J. Rosenberg, Executive Vice President & General Counsel, Qualcomm
  • Suzanne Munck, Chief Counsel for Intellectual Property & Deputy Director of the Office of Policy Planning, Federal Trade Commission
  • John D. Kulick, Ph.D., Chair of the Standards Association Board, The Institute of Electrical & Electronics Engineers (IEEE)

You can click on the respective witnesses’s names above to read their prepared testimony, and if you’d like to check out the webcast of the full hearing (which featured some lively Q&A), you can do so here.

Many of the Senators who attended asked some very interesting and pointed questions of the witnesses, delving into issues such as the use of standard-essential patents at the International Trade Commission, the role that Congress and regulatory agencies can play in the SEP arena, the effect that FRAND violations and related disputes may have on consumers, whether the ownership of SEPs by non-practicing, non-innovating patent assertion entities (PAEs) upsets the usual standard-setting paradigm, and even whether FRAND abuses are a substantial problem at all.

On this latter point in particular, the back and forth between Messrs. Rosenberg (of Qualcomm) and Melamed (of Intel) was especially interesting.  The GC of Qualcomm told the Senators that FRAND abuse and the problem of “patent hold-up” is largely theoretical, (and anecdotal at most), with a very small few bad apples attracting all of the attention.  He urged the lawmakers to proceed with caution, because in his view, the FRAND framework is working great — for example, he pointed to the widespread availability of standards-based products such as smartphones at relatively low cost.

Mr. Melamed, the Intel GC, disputed that all is well on the FRAND front, discussing some recent litigations over SEPs involving both Intel and other standards implementers.  He argued that injunctive relief should not be available against “willing licensees” (of course, the issue of who is a “willing licensee” is often itself in dispute), claiming that treble damages for willful infringement as well as the potential for fee shifting would be enough to deter unscrupulous implementers from “holding out” and refusing to take an SEP license.

Suzanne Munck from the FTC had an extended colloquy with Chairman Amy Klobuchar (D-MN), discussing the FTC’s role in various SEP-related cases and Ms. Munck’s views on standard-essential patent disputes.  Ms. Munck stated that she believed FRAND abuses were not just theoretical, citing the recent FTC investigations involving Google/Motorola Mobility and Robert Bosch.  She also asserted that SEP disputes did have the potential to result in higher prices for consumers, and that a good way to keep an SEP holder’s “hold-up” leverage in check is to require a third party to make an independent determination of FRAND terms before the threat of injunctive relief can come into effect (a position highly consistent — not surprisingly — with the FTC-Google consent decree).

And Dr. Kulick, testifying in his capacity as the head of the IEEE-SA Standards Board (although he is also a Siemens employee), told the Senators that the IEEE and other SSOs are working with various patent offices to help create more robust prior art searching and improve patent quality.  In one interesting exchange, Dr. Kulick was asked directly by Sen. Chris Coons (D-DE) about whether the IEEE planned to include a “no injunctions” clause in its IPR policy.  Dr. Kulick responded by noting that the IEEE hasn’t adopted a policy or position on the availability of injunctive relief, but that potential revisions to the IPR policy are being considered.  He also explained that the IPR policy revision process would be transparent and open to all stakeholders, so this is certainly something to look for in the future.

Chairman Klobuchar closed the hearing by stating that she believed there are clear issues in the SEP arena, and that she hoped SSOs would act to address these issues — but also that if the SSOs would not or could not do so, the FTC, DOJ, and/or Congress may step in.  She also hinted at potential future legislation that would clarify the standard to get exclusion orders at the International Trade Commission (perhaps unifying it with the eBay standard using for injunctions in district court — a recent Obama administration proposal).

That’s just a brief, high-level look at some of the exchanges todays — the full hearing lasted for about 90 minutes, so check out the webcast if you’re interested (and you have time).  The record for the hearing will be kept open for two weeks, so there’s the potential for additional statements and written Q&A to be filed.  Sen. Patrick Leahy (D-VT), who did not attend the hearing, already submitted a statement.  We’ll try to keep you posted on any others that may come filtering in.