Today, the U.S. International Trade Commission (ITC) issued a Notice of Commission Final Determination  following its review of Administrative Law Judge (ALJ) Shaw’s September 2017 rulings concerning, among other things, three patents alleged to be essential to the Linear Tape Open (LTO) 7 standard (LTO-7). (see our Dec. 19, 2017 post summarizing ALJ Shaw’s decision).  Specifically, the ITC affirmed ALJ Shaw’s ruling that the ‘612, ‘106 and ‘805 patents are not essential to the LTO-7 Standard (with one caveat):

The Commission has determined to affirm with modification the Final ID’s finding that the asserted claims of the ‘612, 106, and ‘805 patents are not essential to the LTO-7 Standard.  In particular, with respect to the ‘106 patent, the Commission has determined not to reach the issue of whether the LTO-7 Standard requires a tape having a magnetic layer that contains an abrasive.  The Commission has determined to otherwise adopt the Final ID’s findings that the LTO-7 Standard does not require practice of the asserted claims of the ‘612, 106, and ‘805 Patents.  The Commission has determined not to reach any other issues concerning Sony’s essentiality defenses. [Notice at 5]

The last statement about not reaching any of Sony’s essentiality defenses presumably refers to Sony’s breach of contract, patent misuse, implied license, patent exhaustion, and waiver defenses, all of which were premised on the patent claims being essential to the LTO-7 standard.

The ITC further found that there was no violation of those patents, because they were not infringed or were invalid.  The ITC did decide there was a violation regarding another patent at issue in the investigation: the ‘891 Patent, which was not alleged to be essential to a standard.  The ITC issued a limited exclusion order and cease/desist order based on infringement of that ‘891 Patent.

The U.S. International Trade Commission (“ITC”) recently gave Notice that it will review some parts of the September 2017 Initial Determination and Recommended Determination on remedy by administrative law judge (“ALJ”) Shaw concerning patents alleged to be essential to the LTO Consortium’s  Linear Tape Open (“LTO”) standard for high-capacity, single-reel magnetic tape storage.

In September, ALJ Shaw found that the claims of one patent alleged to be essential to the LTO-7 Standard were valid and infringed, but that claims of two other alleged essential patents were not infringed.  He found that none of the asserted patent claims were essential to the LTO-7 Standard.  He also rejected Sony’s defenses that Fujifilm had breached an agreement with the LTO Consortium to license its essential patents to third-parties like Sony.  Based on those rulings, ALJ Shaw further recommended that a limited exclusion order should be entered and that Sony’s public interest arguments about the claims being essential to the LTO-7 standard did not require tailoring or curbing such an exclusion order.

The ITC full Commission has now decided to review part of ALJ Shaw’s liability determination, including issues about whether the alleged essential patents are infringed, valid or essential to the LTO-7 Standard.  Further, the Commission will consider the form of any exclusionary relief, including whether and to what extent public interests — such as Sony’s essentiality claim — counsel against or limit an exclusion order.  The parties and public may file initial written submissions on exclusionary relief and the public interest by December 27, 2017; reply written submissions must be filed by January 5, 2018.

We summarize  the decision below on the standard essential patent (“SEP”) issues.  We also discuss an Order Denying Preliminary Injunction entered a few weeks after ALJ Shaw’s decision here where Judge Gardephe in the Southern District of New York denied Sony’s motion to enjoin Fujifilm from continuing this ITC litigation.  Judge Gardephe’s decision provides more unredacted insight into the alleged LTO-7 licensing commitment at issue.  For example, Judge Gardephe’s decision indicates that the licensing commitment at issue was not a FRAND commitment, but apparently a commitment to enter nondiscriminatory licenses under Fujifilm’s standard licensing terms.  Further, the licensing commitment concerned essential patent claims, defined as claims “which must of necessity be practiced for compliance with the LTO7 Format.” Continue Reading ITC to consider ALJ’s decision and recommended exclusion order on alleged SEPs that ALJ found were not essential to the LTO-7 standard (337-TA-1012 Fujifilm v. Sony)