A month ago, we alerted you to ALJ David P. Shaw’s Initial Determination finding no violation of Section 337 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.  Yesterday, the ITC finally released the public version of the ~450 page Initial Determination.

[337-TA-800 Initial Determination (PUBLIC)]

As we noted in our post on the parties’ respective petitions for review, while the ALJ found no infringement of any valid patent claims (and therefore no violation of Section 337), he did address the Respondents’ FRAND-related defenses — and made some interesting findings.  After the jump, we’ll take a quick look at these findings, which begin on page 417 of the Initial Determination.

Continue Reading ITC releases public version of ALJ’s Initial Determination in InterDigital 3G patent case (Inv. No. 337-TA-800)

Last week, we noted that the Federal Circuit will hold a September 11 oral argument in Apple and Motorola’s appeals of Judge Posner’s June 2012 decision to dismiss the parties’ competing infringement suits.  The “Posner appeal” will provide the Federal Circuit with the opportunity to weigh in on SEP issues in a patent infringement context, such as how the FRAND framework may constrain damages, and whether a party with a FRAND commitment can ever satisfy the eBay standard for an injunction.  But this appeal is not the only one involving Apple, Motorola, and FRAND/SEP issues that is pending before the Federal Circuit.

Also last week, Apple filed its opening brief in this other Federal Circuit appeal — the appeal of Judge Barbara Crabb’s November 2012 decision to dismiss Apple’s FRAND-related breach of contract suit on the eve of trial (after, at least in Judge Crabb’s eyes, Apple failed to commit to entering into a FRAND license at the rate she might set — see this link for a brief refresher on the details of this particular case).  The case before Judge Crabb (and consequently, this appeal) is more like Microsoft’s original complaint in the Microsoft-Motorola case, as opposed to the case before Judge Posner — there are no infringement claims, only claims brought by Apple that relate to Motorola’s alleged violation of its FRAND commitments (breach of contract, antitrust, etc.).  Apple frames the issues in this appeal as follows:

  1. Apple provided evidence that Motorola violated § 2 of the Sherman Act by making deceptive FRAND commitments and by failing to timely disclose its intellectual property. The Noerr-Pennington doctrine immunizes a party from antitrust liability only where the challenged conduct is the petitioning of a government entity. Did the district court err in holding that Apple’s antitrust claim was barred by the Noerr-Pennington doctrine?
  2. Apple would not commit to accept a license offer from Motorola without knowing the price. Did the district court err by dismissing Apple’s contract claims on that basis, where Apple had no contractual obligation to accept any offer from Motorola?
  3. Apple asserted three declaratory judgment claims that would have settled uncertainty regarding Motorola’s patent rights and obligations. Did the district court err in refusing to adjudicate those claims?
  4. Does this Court have exclusive appellate jurisdiction over this appeal because the suit encompasses declaratory judgment claims relating to Motorola’s patent suit?

According to Apple, the answer to each of these questions is a resounding yes.  After the jump, we’ll take a look at Apple’s brief in a bit more detail. Continue Reading Apple files opening appellate brief in second Motorola/FRAND-related Federal Circuit appeal

About a month ago, Administrative Law Judge David Shaw issued a Notice of Initial Determination in ITC Inv. No. 337-TA-800, concluding that InterDigital failed to prove that Respondents Huawei, Nokia, and ZTE infringed any valid patent claims that InterDigital asserted as essential to 3G cellular standards (several claims of one patent were found infringed, but invalid).  ALJ Shaw also found that the Respondents had failed to prove that InterDigital violated its FRAND obligations.  The public version of the Initial Determination has yet to issue, but the parties recently filed public versions of their respective petitions for review of the ALJ’s decision.  These petitions provide some insight into the FRAND-related issues in the case, so we thought they warranted a quick Friday post.

InterDigital, not surprisingly, asks the full Commission to reverse most of ALJ Shaw’s decisions on infringement and invalidity.  But InterDigital also notes that it mostly agrees with the ALJ’s conclusion that InterDigital complied with its FRAND obligations, and that its prior license offers to the Respondents were not improperly discriminatory.

On the other hand, the Respondents don’t want the ITC to review the ALJ’s findings with respect to invalidity and infringement (although as is customary, they ask the Commission to “contingently” review certain issues if necessary).  But not all of the Respondents’ petition concerns issues for review as a contingency — Huawei, Nokia, and ZTE affirmatively ask the ITC to overrule ALJ’s Shaw’s finding that InterDigital satisfied the ITC’s domestic industry requirement through its portfolio licensing activities, and also want the Commission to vacate the ALJ’s FRAND-related findings.

We’ll focus here on the FRAND issues, which are addressed starting on page 88 of the Respondents’ petition.  Citing actions and statements by the FTC and the DOJ, the Respondents urge the ITC to now adopt a policy that until a FRAND determination has been made by a neutral third party, it is improper for a FRAND patent holder to seek exclusionary relief at the ITC against a “willing” licensee.  Not surprisingly, the Respondents cite the FTC-Google settlement order as providing a “fair and balanced” procedure.

The Respondents also take issue with the ALJ’s apparent determinations that a FRAND obligation is simply an accord de principe — an obligation to negotiate in good faith toward reaching a license agreement — and that InterDigital complied with this obligation.  The Respondents claim that conclusions reached by Judge Robart in Microsoft-Motorola and Judge Posner in Apple-Motorola regarding FRAND obligations hold to the contrary.  But even so, the Respondents argue that InterDigital actually acted in bad faith by obstructing and delaying efforts by the Respondents to have the Delaware district court determine a FRAND royalty rate.  The Respondents further argue that InterDigital acted in bad faith by improperly demanding a worldwide license to its entire patent portfolio, while the the Respondents had requested a FRAND license to only the patents-in-suit here.  Lastly, the Respondents claim that InterDigital’s prior license offers impermissibly discriminate against each of the Respondents in violation of its FRAND obligations (although these sections are redacted, so we don’t know the details of these offers).

The public version of the ID should become available any day now, so stay tuned…have a great weekend!

The recent decisions in the Microsoft-Motorola district court case and the Samsung-Apple ITC investigation (No. 337-TA-794) promise to have far-reaching consequences for those in industries that deal with standard-essential patents.  We at the Essential Patent Blog thought it would be helpful to have a panel of seasoned experts discuss the import of these decisions.  To that end, Dow Lohnes PLLC is sponsoring a complimentary webinar in conjunction with the American Intellectual Property Law Association’s (AIPLA) Standards & Open Source Committee.

The webinar is titled “Practical Considerations & Industry Perspectives in Applying Recent FRAND Rulings,” and will take place on Wednesday, August 7 from 12:30pm to 1:30pm EDT.  The panel 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
  • 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 how the outcome of these cases could affect the future actions and incentives of both patent licensors and licensees.

We hope you can join us on August 7 (and did we mention that it’s free?).  Space is limited, so reserve your webinar seat now!

CapitolPatent assertions by non-practicing entities have been garnering much of the patent-related attention on Capitol Hill, but standard-essential patents are also in the mix.  Next week, the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights is scheduled to have a hearing on “Standard Essential Patent Disputes and Antitrust Law.”  The hearing is scheduled to take place on Tuesday, July 30 at 10:00am, in Room 226 of the Dirksen Senate Office Building, and subcommittee Chairman Amy Klobuchar (D-MN) will preside.

The prepared testimony of the witnesses is not available yet, but some of the issues likely to be addressed may include the FTC’s recent consent decree with Google, the potential antitrust implications of exclusionary relief as a remedy for standard-essential patent infringement (such as in the recent Samsung-Apple ITC decision), and maybe even antitrust concerns raised by SEP acquisitions by non-practicing entities.  The witnesses scheduled to testify include a mix of industry, government, and SSO professionals, including:

  • 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)

If you find yourself in the DC area and want to attend, make sure you get there a couple hours early, as this hearing is likely to draw quite a crowd.  Fortunately, the hearing will also be webcast from the Senate Judiciary’s web site.  We’ll be watching, and will check in after the hearing with any notable quotes or issues raised.

FTCToday, the Federal Trade Commission announced that it has approved a modified final order that settles its investigation into Motorola Mobility’s alleged anti-competitive practices surrounding its standard-essential patent licensing and enforcement program (for more background, see our original post on the case).  Here’s the Commission’s final decision and order, as well as a final version of the complaint:

FTC-Google FINAL DECISION & ORDER (C-4410)

FTC-Google FINAL COMPLAINT (C-4410)

You may recall that the proposed settlement and order was announced back in January.  The FTC noted that it received 25 public comments on the proposed order (many of which we’ve covered before here and here), and that in light of these comments, the FTC made certain “technical modifications” to some provisions in the order.  In a letter to the public commenters, the FTC explained the reasoning behind several provisions included in the final order, along with the modifications it made.

Some interesting notes and clarifications from the FTC’s letter include the following:

  • The FTC decided to remove the count from the complaint that alleged that Google “engaged in unfair or deceptive acts or practices,” although it indicated that its decision to do so was limited to the facts of this particular case — not all SEP-related investigations.
  • The FTC rejected the concern that barring the ability to seek injunctive relief during the appeal of the FRAND determination would delay the resolution of licensing disputes, noting that fairness dictates that implementers be able to appeal FRAND determinations without facing the threat of injunction relief (as long as they have committed to be bound by the final FRAND determination).
  • Addressing fairly widespread concerns that its actions violate the Noerr-Pennington doctrine, the FTC found these without merit, arguing that it is simply requiring Google and Motorola to keep its FRAND promises — which the FTC concludes precludes seeking an injunction against a “willing licensee.”  (Notably, the FTC cited the decisions by Judge Robart and Judge Posner as support.)
  • The FTC kept in the order the “defensive use” exception, which allows Google/Motorola to seek injunctive relief for SEP infringement if it  is facing a threat of injunction based on its own alleged SEP infringement.  The FTC found that despite concerns by commenters that this was too broad and could allow for gamemanship, the provision was appropriate tailored and consistent with the goals of the order.
  • Importantly, the FTC order does not require Google/Motorola to withdraw all pending legal claims for SEP-related injunctive relief (for instance, in the Apple-Motorola Federal Circuit appeal of Judge Posner’s decision).  However, the FTC noted that the order does prohibit Motorola/Google from enforcing any injunctive relief that it may win in pending litigations unless it first complies with the provisions of the order.

As for the modifications made to the order, they were largely minor (and made with Google’s consent, which was required).  The FTC made some clarifying and technical changes to the definitions, and also slightly altered the required arbitration procedure.  The FTC also changed a provision that would have required Google/Motorola to respond to inquiries from potential licensee with an offer to license, instead now only requiring that Google/Motorola timely respond (but that the content of the response need not include an instant offer to license, but may be dictated by the circumstances).

The final vote was 2-1-1, with Commission Maureen Olhausen dissenting and Commissioner Josh Wright recused.

CAFC

  • Yesterday, the U.S. Court of Appeals for the Federal Circuit affirmed a jury verdict invalidating a University of California patent that had been asserted by a non-practicing entity, Eolas, against dozens of companies based on their use of “interactive” features on the World Wide Web.  More on this case from Joe Mullin at ArsTechnica.
  • As noted by Jason Rantanen at Patently-O, the Federal Circuit Advisory Council just released a model order addressing limitations on excess asserted claims and prior art in patent litigations.  The orders seeks to provide district courts with a roadmap for narrowing the issues in patent cases and reducing litigation costs for the parties, and follows a 2011 Federal Circuit Advisory Council model order addressing e-discovery issues.
  • Court watchers and readers of this blog might be particularly interested in a couple of upcoming oral arguments taking place at the Federal Circuit over the next month and a half:
    • On August 9, the court will hear oral argument in appeal no. 13-1129, which is the Apple’s appeal of Judge Lucy Koh’s decision not to impose a permanent injunction on Samsung for infringement of several Apple patents, in part because Apple failed to establish a “causal nexus” between Samsung’s infringement and any irreparable harm to Apple.
    • And on September 11, oral argument is scheduled in appeal no. 12-1548, which is the appeal of Judge Posner’s decision to dismiss both Apple’s and Motorola’s dueling claims for damages and injunctions in a Northern District of Illinois infringement case.  The standard-essential patent-related portion of this oral argument should be especially interesting, as the judges may be posing questions on the appropriate methodology for calculating a RAND royalty and whether injunctive relief may be obtained as a remedy for infringement of a RAND-pledged SEP.
  • Lastly, congratulations to Todd Hughes, the Deputy Director of the Commercial Litigation Branch of the Civil Division at the Department of Justice who was nominated earlier this year by President Obama to become a Federal Circuit judge.  Last week, Mr. Hughes’ nomination was approved by the Senate Judiciary Committee, and his nomination now proceeds to the full Senate for a confirmation vote. (via Blog of Legal Times)

Yesterday, Administrative Law Judge David P. Shaw issued a Notice of Initial Determination in In the Matter of Certain Audiovisual Components and Products Containing Same (No. 337-TA-837), an ITC Section 337 investigation based on an infringement complaint brought by LSI and Agere against Funai, Realtek, and Mediatek (who had previously settled out of the case).  LSI and Agere accused the respondents of infringing four patents, including three that were allegedly standard-essential: two relating to the IEEE 802.11 Wi-Fi standard, and 1 relating to the ITU-T H.264 standard.  In fact, you may recall that the two 802.11 patents at issue were the subject of a recent district court order that purported to prevent LSI and Agere from enforcing any exclusionary relief that it might win at the ITC.

But barring a decision by the full Commission to overturn ALJ Shaw, we won’t have to worry about the potential effect of that district court order — ALJ Shaw has concluded that neither Realtek nor Funai infringe any of the 802.11 or H.264 patents at issue in the case.  At this point, it’s not clear whether ALJ Shaw concluded that the patents were not truly standard-essential, or whether he found non-infringement based on some other reason (e.g., the patents may be “essential” to only an optional, non-implemented portion of the standards).  Within 30 days, a public version of the full Initial Determination should issue, so we should get some insight into ALJ Shaw’s reasoning for his decision.

It wasn’t all bad news for LSI and Agere, though.  ALJ Shaw did find a violation of Section 337 based on Funai’s infringement of a non-standard-essential patent relating to memory and data storage technology.  He also concluded that LSI and Agere satisfied the domestic industry requirement for all asserted patents, the respondents failed to prove that any asserted claims were invalid, and further noted that the respondents did not prevail on any equitable or RAND-defense.  (Again, we’ll check back in once we see a public version of the initial determination.)

This is the second time in the last few weeks that a standard-essential patent holder has received an unfavorable initial determination from the ITC on standard-essential patents (at least for the infringement issues).  But stay tuned to this case and the parties’ post-ID briefing — as we saw with the Samsung-Apple case, the Commission can and often does overrule the administrative law judges’ initial findings.

Back in January, we alerted you to a patent infringement case brought in the U.S. International Trade Commission by Acacia Research subsidiary Adaptix.  Adaptix accused Ericsson of infringing U.S. Pat. No. 6,870,808, which Adaptix asserted to be essential to the ETSI 4G Long-Term Evolution (LTE) wireless standard.  The ITC later instituted the investigation as In the Matter of Certain Wireless Communications Base Stations and Components Thereof, Inv. No. 337-TA-871.  Recently, there was a new development in this case that we thought was worth noting.

Although the ‘808 patent is allegedly standard-essential, it originally seemed that FRAND licensing obligations might not come into play.   As we noted in our original post on the case, Adaptix asserted that because it had not participated in the development of the LTE standard, the ‘808 patent was not subject to any FRAND licensing obligations.  Ericsson at first didn’t raise any FRAND-related defenses in its response to the complaint, but recently asked Administrative Law Judge Theodore Essex to allow it to amend its response to the complaint to add a defense based on “Breach of FRAND obligations (breach of contract, estoppel, patent misuse, unclean hands).”  Earlier this month (in a ruling that just became public this week), ALJ Essex denied Ericsson’s motion.

[337-TA-871 Order Denying Motion to Amend Answer (PUBLIC VERSION)]

Ericsson’s theory of a breach of FRAND obligations here is a novel one.  Ericsson alleges that Samsung, who apparently has a license with Adaptix to practice the ‘808 patent in compliance with the LTE standard, was a participant in ETSI’s development of the LTE standard.  Ericsson alleges that through the agreement with Adaptix, Samsung was aware that the ‘808 patent was LTE-essential, but failed to disclose this fact to ETSI — allegedly in breach of the ETSI IPR Policy.  According to Ericsson, because Samsung breached its FRAND obligations concerning Adaptix’s patent, Adaptix should now be estopped from enforcing that patent.

ALJ Essex did not agree, finding that Ericsson’s proposed amendment was not supported by good cause, would not facilitate the resolution of the investigation, and may prejudice Adaptix.  For one, he found fault with the timing of the motion, because the investigation is nearing the close of fact discovery — and FRAND issues have the potential to involve extensive discovery.  ALJ Essex also noted that all of the relevant evidence Ericsson needed to assert this defense in the first place — the Adaptix-Samsung license agreement — was attached to Adaptix’s original complaint.  Additionally, ALJ Essex found that Ericsson failed to demonstrate that there was any legal support for its “complex and novel defense” that imputed an unrelated third-party’s (Samsung) alleged breach of a FRAND obligation to the patent owner (Adaptix).

This decision can still be reviewed by the full Commission, so FRAND issues are not necessarily out of the question for this investigation.  However this turns out, Ericsson’s attempt to raise FRAND issues here is a great example of just how much this whole area continues to be in flux.

Earlier this week, we caught up on summary judgment motions filed by both Microsoft and Motorola in advance of next month’s breach of contract jury trial, set to take place in Seattle.  Yesterday, both parties filed reply briefs in support of these motions:

These briefly mostly set out to rebut arguments offered in the responsive briefs (linked to in our prior post), so we won’t get too much into the weeds here — Microsoft says Motorola’s motion should fail, and Motorola argues that Microsoft isn’t entitled to summary judgment.  But that being said, Microsoft’s brief raises one issue that we thought warranted mentioning.

As noted by Florian Mueller of FOSS Patents, footnote 1 of the brief notes that Motorola is moving in Germany for an accounting of past damages related to two German H.264-essential patents that Microsoft was found to have infringed.  Both Florian and Microsoft contend that this is improper and disregards Judge Robart’s ruling that set a worldwide RAND rate for all of Motorola’s H.264-essential patents.  One possibility for Motorola’s action is that Motorola may expect Judge Robart to be reversed on appeal, which would nullify the H.264 RAND rate and necessitate a damages claim for Motorola to recover any royalties.

Additionally — and this is an open question — there may be differences between a RAND royalty calculated in a breach of contract action (the W.D. Wash. case) and RAND-constrained damages calculated in a patent infringement action.  This is because in an infringement damages context, the patent is presumed to be both valid and infringed, and Judge Robart’s RAND ruling discounted the RAND rate because no determinations on validity and infringement (i.e., essentiality) had been made.  As pointed out in a recent presentation by Professor Thomas F. Cotter (author of the excellent Comparative Patent Remedies blog), this difference means that there’s a plausible argument to be made that RAND royalties determined in a breach of contract action would be lower than those determined in an infringement action.

The parties’ summary judgment motions are noted for July 31; it’s probable (but not clear) that Judge Robart will hold oral argument.  If so, we’ll have to see if Judge Robart rules from the bench or if he waits to issue a written opinion in advance of the jury trial.