An issue that often comes up in standard-essential patent litigation is “essentiality” — whether the asserted claims are actually necessary to practice the technological standard that forms the basis of the infringement allegations.  This is important for at least two reasons: first, because if the claim is not actually necessary to practice the standard, an implementer could (at least theoretically) design around the patent to create a non-infringing implementation of the standard; and second, because the RAND obligations set forth in the patent policies of many SSOs are often limited only to truly “essential” patent claims.

This issue of essentiality has come to the forefront in the ongoing multidistrict litigation between non-practicing entity Innovatio and several WiFi suppliers (Cisco, Motorola Solutions, and Netgear).  You may recall that Innovatio, in winning (in part) a motion to dismiss some unfair competition and RICO claims, had argued that many of the asserted claims are not actually “Essential Patent Claims” as defined by the IEEE — and therefore cannot be subject to any existing RAND obligation.  Earlier this month, the court ordered the parties to meet and confer and submit a joint statement regarding disputes over whether, based on Innovatio’s infringement contentions, the asserted claims of Innovatio’s patents are actually essential to the IEEE 802.11 wireless networking standard.  Yesterday, the parties submitted their stipulation regarding the essentiality of Innvatio’s asserted patent claims. Continue Reading Innovatio, WiFi suppliers clash over over “essentiality” of Innovatio 802.11 patents

Earlier this month we covered InterDigital’s efforts to dismiss Huawei and ZTE’s FRAND counterclaims, which were asserted against InterDigital in litigations in the U.S. District Court in Delaware.  Yesterday, InterDigital filed another motion to dismiss FRAND-related counterclaims in a different Delaware district court litigation — this time, InterDigital seeks to have Nokia’s FRAND counterclaims dismissed:

[InterDigital April 22, 2013 Motion to Dismiss]

Much of InterDigital’s motion covers the same ground as its motions filed in the Huawei/ZTE cases, so we won’t bother going into too much detail here.  In short, InterDigital claims that Nokia’s FRAND-related counterclaims are compulsory counterclaims that should have been brought in an earlier action involving InterDigital and Nokia (and notes that in a separate action in the Southern District of New York, some FRAND-related counterclaims have already been dismissed on this basis).  Furthermore, InterDigital argues that the declaratory judgment claims are not ripe and will result in the court issuing an advisory opinion, and that Nokia has failed to plead the existence of a contractual FRAND obligation.

One aspect of InterDigital’s motion differs from the Huawei/ZTE cases, though, and that’s because Nokia asserted claims for a violation of the California state Unfair Competition Law (UCL) in addition to its declaratory judgment and breach of contract claims.  InterDigital seeks dismissal of these claims as well, arguing that (1) neither company is incorporated or has its principal place of business in California; and (2) none of the conduct that allegedly gave rise to the violations — licensing negotiations and the filing of ITC complaints — took place in California.  Nokia argues that the UCL does not have extraterritorial effect.  Lastly, InterDigital argues that the relief sought by Nokia — which included attorneys’ fees expended in defending ITC actions and an injunction barring InterDigital from proceeding in the ITC — is not available under the UCL.  InterDigital asserts that UCL violations can only lead to restitution or injunctive relief, and that (1) attorneys’ fees are not resitutation; and (2) the claim for injunctive relief would be preempted by federal patent law.

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Big news today in the Microsoft-Motorola RAND breach of contract dispute taking place before the U.S. District Court for the Western District of Washington.  After the November 2012 bench trial and significant post-trial briefing between the parties on a variety of issues, we finally have an order from the court.  However, we will need to wait another week or so to actually see what’s in the order.

Today, presiding Judge James L. Robart issued the order that many who follow SEP issues have long been waiting for — an order that sets forth his view of what constitutes “reasonable and non-discriminatory” licensing terms for a Microsoft license to Motorola’s 802.11- and H.264-essential patent portfolios, as well as the appropriate methodology for calculating these RAND terms.  (Recall that Judge Robart previously stated that after the bench trial, he would determine a RAND royalty rate and/or range for Motorola’s patents).  Unfortunately, as you can see from the docket sheet screen shot below, the entirety of Judge Robart’s Findings of Fact and Conclusions of Law (Dkt. No. 673) is currently sealed, as it contains confidential information.

MS-Moto Dkt Report (4-19-2013)

According to a separate order also issued today, the parties have until 12:00pm (Pacific time) on Thursday, April 25 to file a proposed joint redacted version of the court’s finding of fact and conclusions of law.  Judge Robart clearly values the public’s right to information disclosed in court proceedings — in this order, he makes it clear to the parties that they should not over-redact, stating that only the portions necessary to protect confidential or proprietary information should be redacted.  He notes that under Ninth Circuit precedent, parties must have a “compelling reason” to prevent the public from accessing information disclosed in the court’s files.

Finally, Judge Robart scheduled a telephone conference for next Friday, April 26, at 9:00am Pacific time, during which the parties will present argument on any redactions over which there is disagreement.  At this time, the court will also rule on the propriety of the parties’ redactions.  So come next Friday afternoon, we will likely have access to the first district court precedent on how to determine RAND terms for a portfolio of standard-essential patents.  Check back here for an update.

Back in December 2012, the Federal Trade Commission and the Department of Justice held a joint workshop to explore the impact that patent assertion entities (PAEs — or non-practicing entities/NPEs) may be having on innovation, competition, and the U.S. economy.  The FTC and DOJ invited the public to submit comments for consideration by the agencies, even extending the deadline for submission until early April.  All in all, 68 separate submissions have been received and posted on the FTC/DOJ workshop’s site.

The commenters represent a wide variety of industries and interests, and express divergent viewpoints and positions about the effects of PAE activity.  Many comments focus on the newly-reintroduced SHIELD Act.  Given that the main focus of this blog is on standard-essential patent issues, we won’t even try to give a comprehensive rundown of all of the comments — we’ll leave the focus on non-practicing entities to others.  But several of the comments do express particular concern about the interplay between PAEs, standard-setting organizations and standard-essential patents.  After the jump, we’ll discuss some of these issues that are being flagged as troublesome.

Continue Reading Public comments on FTC/DOJ Patent Assertion Entity Workshop include worries that PAEs may “game the system” of standard-setting and RAND licensing

This afternoon, the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet held a hearing titled “Abusive Patent Litigation: The Issues Impacting American Competitiveness and Job Creation at the International Trade Commission and Beyond.”  This hearing comes on the heels of a broader hearing on abusive patent litigation held by the same committee two months ago, as well as a different hearing in July 2012 that generally addressed the ITC’s role in deciding patent disputes.  Several witnesses representing a variety of diverse backgrounds and interests testified today before the subcommittee, including:

  • Kevin Rhodes, VP and Chief IP Counsel for 3M Innovative Properties Co.
  • Jon Dudas, Former Director of the USPTO (and a member of the board of non-practicing entity MOSAID Technologies)
  • Prof. Colleen Chien of Santa Clara University
  • Russell Binns, Associate General Counsel for IP Law & Litigation at Avaya
  • Deanna Tanner Okun, Former Chairwoman of the ITC (and a partner at Adduci Mastriani & Schaumberg)
  • David Foster, Chairman of the Legislative Committee for the ITC Trial Lawyers Association (and a partner at Foster, Murphy, Altman & Nickel)

A link to the video webcast of the full hearing is available at the House Judiciary Committee’s website, along with PDFs of each witness’s prepared testimony.  Our friends at Patent Progress also live-tweeted the event — take a look at their Twitter feed @PatentProgress for their blow-by-blow account.

As we anticipated, while standard-essential patents were not the focus of this particular hearing, the issue of SEPs was indeed given some attention.  In his opening remarks, Congressman Melvin Watt noted concerns some have expressed about the potential for improper usage of standard-essential patents in seeking injunctive relief, and Congressman Ted Poe briefly quizzed Prof. Chien about the propriety of asserting standard-essential patents in the ITC. 

Continue Reading House Judiciary Subcommittee hearing on abusive patent litigation and the ITC focuses on non-practicing entities, litigation costs, and remedies

For those of you unfamiliar with the pace of litigation at the U.S. International Trade Commission, it is fast.  Just several days ago, we were writing about the comments on the public interest submitted in Inv. No. 337-TA-794 by Apple and Samsung, the ITC Staff, and several other interested non-parties.  Late last week, Apple, Samsung, and the ITC staff each submitted responses to these initial public interest comments.

Barring unexpected additional submissions from the parties (e.g., a notice of supplemental authority citing Judge Robart’s forthcoming ruling in the Microsoft-Motorola RAND case, which may come down any day), the briefing in this important ITC case should now be all wrapped up.  Now, the waiting game begins — the Commission has until May 31 decide whether it will issue an exclusion order barring Apple products, should it find that they infringe Samsung’s (alleged) 3G UMTS-essential patent(s) (although a ruling could, of course, come before then).

A round-up of and links to the recent responsive submissions, after the jump… Continue Reading Public interest briefing wraps up in Samsung-Apple ITC battle (337-TA-794) — parties now play the waiting game on exclusion orders and SEPs

  • A couple weeks back, we noted a bid by Cisco, Motorola Solutions, and NETGEAR to expedite an appeal of their unsuccessful unfair competition claims against non-practicing entity Innovatio IP Ventures LLC.  At a status hearing yesterday, however, Chief Judge James F. Holderman of the Northern District of Illinois denied the parties’ motion for entry of final judgment — so the WiFi suppliers will have to wait a bit longer to see if they can revive these claims.

  • Cisco, Motorola Solutions, and NETGEAR aren’t the only ones advocating using unfair competition/antitrust claims to fight NPEs.  Over at Patent Progress, Brendan Coffman proposes that the Federal Trade Commission utilize Section 6(b) of the FTC Act to conduct a study on the business models of non-practicing entities.  Google, BlackBerry, Red Hat, and Earthlink submitted joint comments to the FTC and DOJ that also encouraged a 6(b) study (as well as the use of other antitrust tools).  Links to the dozens of other comments submitted to the FTC and DOJ in response to their December 2012 Patent Assertion Entities Workshop — many of which call for increased antitrust scrutiny of NPEs — can be found here.
  • It’s not uncommon for universities to assert patent infringement claims against operating companies.  Recently, Carnegie Mellon won a $1B+ infringement verdict against Marvell Semiconductor.  It seems that at least one operating company has found an interesting way of fighting back.  In 2011, the University of Illinois sued Micron Technology for patent infringement over certain semiconductor-related patents.  As Patently-O’s Dennis Crouch explains, Micron has now told the University of Illinois Urbana-Champaign that it will no longer recruit UIUC students while Micron is being sued for patent infringement by the university.

Just like with cellular standards, the widespread use of the IEEE 802.11 wireless networking (“WiFi”) standard often makes WiFi-compliant devices easy targets for patent infringement lawsuits — particularly suits brought by non-practicing entities.  The most infamous of these NPEs targeting WiFi is probably Innovatio IP Ventures LLC, who has accused thousands of businesses of all shapes and sizes of infringing WiFi-related patents formerly owned by Broadcom.  But Innovatio’s not the only NPE out there asserting patents against WiFi.

Over the last few months, there have been some rumblings on the Internet about an entity named Wyncomm LLC that has been asserting that companies using WiFi-compliant devices infringe U.S. Patent No. 5,506,866, a patent titled “Side-channel communications in simultaneous voice and data transmission.”  Today, Wyncomm filed patent infringement complaints against a number of companies in the District Court for the District of Delaware, alleging that these companies infringe the ‘866 patent by making, using, selling, importing, and/or providing and causing to be used products that transmit information utilizing WiFi in which analog data is converted to voice or sound.  The companies Wyncomm has sued include at least Acer, Apple, ASUSTek, Blu Products, Bonac Innovation (also known as Mobiado), and Casio Computer, and is seeking damages to compensate Wyncomm for the defendants’ alleged infringement.

[UPDATE] Since we first posted this, Wyncomm has filed dozens of additional lawsuits in Delaware, accusing companies large and small of infringing the ‘866 patent.  Companies accused of infringement run the gamut of nearly every letter in the entire alphabet, and include Cyberpower Inc., Dell, Digital Storm-Hanaps Enterprises, Doghouse Systems, Equus Computer Systems, Inc., Falcon Northwest Computer Systems, France Telecom, Fujitsu, Giga-Byte Technology, Hewlett-Packard, HTC, InfoSonics, Jetta International, Koninklijke Philips, Lenovo, LG, Micro Electronics, Micromax Informatics, Motion Computing, Motorola Mobility, NEC, Nokia, Octagon Systems, OPPO Electronics, Origin PC, Panasonic, Pantech, PCLaptops LLC, Puget Systems, Rain Computers, Razer USA, Research In Motion, Sager Midern Computer, Sand Dune Ventures, Sharp, Silicon Mountain Memory, Socket Mobile, Stone Computer, System 76, Systemax, Thinkpenguin, Toshiba, Velocity Micro, ViewSonic, Vizio, and ZTE.  Given the diversity of locations of these companies (and the congestion of the Delaware district court’s docket), it wouldn’t be surprising to see a lot of motions to transfer venue. [/UPDATE]

It’s not surprising that Wyncomm filed suit now, considering the ‘866 patent expires in November of this year.  (This is also likely part of the reason why Wyncomm is only seeking damages for infringement, not an injunction).  The ‘866 patent was originally assigned to AT&T from the named inventors back in 1993 (in conjunction with the patent application), and, according to the USPTO assignment records, has changed hands a number of times since then.  After being sold by AT&T, it has been owned at various times by Paradyne (a former AT&T subsidiary) Zhone Technologies (who bought Paradyne), as well as by patent holding companies Patent Business Development LLC and Clearwater Innovations LLC.  Note that if Wyncomm’s infringement theory is that the ‘866 patent is essential to the IEEE 802.11 standard, any damages sought by Wyncomm in these cases may be limited to reasonable and non-discriminatory (“RAND”) royalties, as AT&T committed in 1995 to license its 802.11-essential patents on RAND terms.

 

(Note: the subject matter of this post is a bit off-topic for this blog, but with all of the attention being paid to non-meritorious patent lawsuits and potential solutions, we thought this warranted mentioning.)

Patent litigation, like most litigation in this country, is generally controlled by the “American Rule” — the general rule that each party pays its own litigation-related costs and attorneys’ fees.  This stands in contrast to the rules in other countries such as England, where the losing party generally pays the other’s attorneys’ fees.  There are exceptions to the American Rule in various jurisdictions and types of litigations, including the patent-related provision in 35 U.S.C. § 285.

Section 285 provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.”  However, it’s well-known that courts rarely award fees under Section 285 except in the most egregious circumstances (in fact, we recently posted a patent alert about a denial of fees).  Under current Federal Circuit precedent, cases are only deemed exceptional if there has been litigation misconduct or fraud in securing the patent, or if an infringer’s claim is both objectively baseless and brought in subjective bad faith.  See Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1308 (Fed. Cir. 2012).

In a recent petition for certiorari, Octane Fitness LLC has asked the U.S. Supreme Court to overturn this precedent and make it easier for prevailing patent infringement defendants to recover attorneys’ fees from infringement plaintiffs. Continue Reading Is Section 285’s “exceptional case” requirement too exceptionally hard to satisfy?