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)

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.

A couple weeks ago, we posted about an interesting pretrial damages ruling in a patent infringement case (actually, several cases) brought by non-practicing entity Wi-LAN against a number of standards-compliant device makers (Sony, Ericsson, Alcatel-Lucent, and HTC).  But yesterday, an Eastern District of Texas jury decided that the damages issue was irrelevant, finding that all of Wi-LAN asserted patent claims were not infringed and were also invalid.

[Wi-LAN Jury Verdict]

Wi-LAN had accused the defendants of infringing several patents by manufacturing and selling base stations and handsets that are compliant with the 3GPP High-Speed Packet data Access cellular standard (HSPA).  The jury apparently disagreed with Wi-LAN’s contention that these patents were actually essential to the HSPA standard, because it found that none of the defendants’ HSPA-compliant products infringed.  In addition, the jury found that each of the asserted claims were invalid, finding that the prior art both anticipated the claims and rendered them obvious.

It appears that SEP-specific issues such as duty of disclosure or RAND licensing obligations didn’t play a particular large role in this case (especially given that the jury didn’t end up awarding any damages).

Over the past few years, courts have begun cracking down on improper damages theories.  The Federal Circuit’s 2012 opinion in LaserDynamics v. Quanta is instructive on this point, noting that in the absence of evidence that the patented functionality is the source of the demand for the entire product, then damages must be based on the “smallest salable patent-practicing unit.”  This is an issue that has particular relevance to standard-essential patent litigation, as the functionality that allows for standards compliance is often implemented on a smaller chip within a larger consumer product device — think of a baseband chip within a smartphone, for instance.

In fact, this very issue just arose in a pending litigation (set to go to trial later this month in E.D. Tex.) brought by non-practicing entity Wi-LAN against Alcatel-Lucent, Ericsson, Sony Mobile Communications, and HTC, in which Wi-LAN accused the defendants of infringing several Wi-LAN patents by manufacturing and selling base stations and handsets that are compliant with the 3GPP High-Speed Packet data Access cellular standard (HSPA).  This past Friday, presiding Judge Leonard Davis granted in part a Daubert motion brought by Alcatel-Lucent, HTC, and Sony to exclude certain Wi-LAN expert testimony on damages.

[13.06.28 Wi-LAN v. Alcatel Lucent Daubert Order]

Wi-LAN’s expert, John C. Jarosz, had analyzed several existing Wi-LAN license agreements involving the patents-in-suit, and calculated a damages figure in the amount of a lump-sum royalty that was based on a reasonable royalty and a hypothetical negotiation between the parties.  But the court found that Mr. Jarosz did not tie the calculation of damages to the smallest saleable patent-practicing unit, instead using the price of the entire HSPA-compliant base station as a base without offering evidence that the patented features drove demand for the entire product.  The court noted that in fact, the base stations needed only an optional software upgrade and modem card to comply with the HSPA standard — and the patents-in-suit represent only a small portion of the overall HSPA standard.  As such, the court excluded Mr. Jarosz’s reasonable royalty calculations as being a violation of the Entire Market Value rule.  The court also rejected a “catch-all” statement by Mr. Jarosz that he had taken all the evidence into consideration in arriving at a final lump-sum royalty (based in part on a reasonably royalty), calling this “a poor substitute for the required analysis” that distinguishes between patented and unpatented features of an accused device.

The court did, however, allow for Wi-LAN to present an amended report by July 3, with subsequent (and expedited) depositions and rebuttal reports to follow if necessary.  Having expert damages testimony excluded can be crippling or even fatal to a patent owner’s case (as Apple and Motorola learned before Judge Posner last year), so you can bet that Wi-LAN’s expert is currently preparing a supplemental report.  We’ll keep you posted on any interesting trial and post-trial happenings in this case over the next few weeks.

This past Wednesday, the Blu-ray patent pool One-Blue, LLC and several of its licensors (Philips, Panasonic, Pioneer, and Sony) filed a patent infringement lawsuit in Delaware district court, accusing Imation Corp. of infringing several patents that are either essential or related to the Blu-ray Disc Assocation’s (BDA) Blu-ray standards.

[One-Blue v Imation Complaint]

Continue Reading Patent pool One-Blue and several licensors file suit against Imation over Blu-ray patents

On Friday, January 4, 2013, a non-practicing entity named Steelhead Licensing LLC filed a litany of SEP-related lawsuits in the United States District Court for the District of Delaware against various wireless device manufacturers and cellular carriers.  Each of the entities is accused of infringing a single, soon-to-expire (on Feb. 13) patent — U.S. Pat. No. 5,491,834, entitled “Mobile Radio Handover Initiation Determination.”

Continue Reading Steelhead Licensing LLC files suit claiming wireless equipment makers and cellular carriers infringe cellular-essential patent