Nokia's patent enforcement against HTC and ViewSonic progressing -- but not a slam dunk

Approximately thirteen months after filing patent infringement lawsuits against HTC, ViewSonic and BlackBerry (then named Research In Motion), Nokia has a settlement with BlackBerry and an injunction it is enforcing against HTC to show. That's a decent -- but not stellar -- result at this stage. It looks like this effort may be more of a marathon than a sprint, especially when considering that few industry players currently have a license to any of Nokia's non-standard-essential patents, sitting on the sidelines and watching how Nokia's assertions against HTC and ViewSonic play out.

At a Mannheim trial in March relating to two standard-essential patents (while HTC has a license to Nokia's SEPs, ViewSonic does not), ViewSonic appeared to be very close to settling. Its German counsel even called the court to suggest that the trial could be canceled. But no deal has happened yet, and one of the two SEP cases tried in March -- over EP0754395 on "location udpating for a packet-switched data service in a mobile communication system" -- was dismissed today as the court determined there was no infringement. Nokia issued the following comment on the Mannheim ruling:

"Nokia was one of the originators of the GPRS standard and this patent is one of Nokia's many contributions to that standard. This is a technically complex area and we respectfully disagree with the court's understanding. We will consider our options to correct this. We continue to call on Viewsonic to pay fair compensation for its use of Nokia’s standards essential patents and cease using Nokia's other innovations."

Even if Nokia had won that case, the impact of a ruling would have been limited: ViewSonic has exited the European smartphone market. The impact would mostly have been the cost implications of losing a case, and damages, the amount of which would have had to be determined subsequently. ViewSonic defended itself inexpensively. It didn't even bring any challenge to the validity of this patent, and it's the only defendant not to raise any FRAND defense against SEPs in all of the cases I've watched so far.

Subsequently to today's Mannheim ruling, a trial was held over Nokia's assertion of a patent against ViewSonic's distribution of the Google Play app store. A different chamber (panel) of the same court dismissed Nokia'a assertion of that patent against HTC in March. Today's trial was conducted by the Second Civil Chamber, which Judge Dr. Holger Kircher presides over, while the March ruling, following a December trial, was made by the Seventh Civil Chamber, whose president is Judge Andreas Voss ("Voß" in German), the world's number one wireless patents judge in terms of the number of cases handled.

I didn't attend the announcement and trial in Mannheim because I went to a couple of Nokia v. HTC hearings at the Munich I Regional Court. The Munich court holds a first hearing in each patent infringement action, at which it discusses claim construction and infringement issues on a very preliminary basis. The second hearing is then tantamount to a trial. Today's hearings were first hearings and related to patents Nokia previously asserted, in the same court, against BlackBerry:

• EP0804046 on a "method and apparatus for updating the software of a mobile terminal using the air interface" (allows users to receive calls while downloading software updates)

• EP1148681 on a "method for transferring resource information" (sending URLs from one device to another over different types of connections including NFC)

Judge Dr. Matthias Zigann outlined in his introductory remarks which concerns Nokia would have to address satisfactorily in order to prevail on these claims. Based on the original complaints and HTC's responses, but prior to Nokia's reply and a full trial (to be held in the fall), both cases would have to be dismissed for failure to prove infringement. In both cases Nokia has to overcome certain hurdles relating to claim construction and present evidence of infringement going beyond screenshots that show what happens from the end user's perspective but not what goes on inside the devices (for example, in what kind of memory downloaded files are stored).

Nokia can still prevail on one or both of these cases. First hearings are very preliminary, and Nokia can amend its infringement contentions and strengthen its claim construction arguments. But once again, this is no walk in the park.

While HTC recently said the value of Nokia's patent portfolio had been "greatly exaggerated", it told a UK court last year that it would no longer be able to sell smartphones in Germany if Nokia prevailed on certain patents-in-suit. The breadth and depth of Nokia's patent portfolio is recognized in the industry. But you can't sue over a portfolio of thousands of patents. You have to pick a few, or maybe a few dozen (Nokia is asserting 40 or more different patents against HTC), and then gain leverage in court. Nokia will get there, and settlements can always happen overnight (think of Apple and HTC), but this could still take a while. Nokia and HTC have been defending themselves jointly, in close collaboration, against IPCom, a patent monetization entity from Germany, for more than five years. I don't believe Nokia and HTC will still be suing each other five years down the road, but unless it gets decisive leverage in the near term, Nokia may have to file even more infringement actions and/or wait until the Düsseldorf Regional Court (which is statistically very plaintiff-friendly but slower than Mannheim and Munich), the England and Wales High Court, and the Karlsruhe and Munich appeals courts adjudge some of the key cases. Also, HTC is challenging Nokia's patents at the Bundespatentgericht (Federal Patent Court), and if infringement cases take long enough, nullity (invalidation) trials will also take place (though sometimes about two years after the infringement trials).

There will be more Nokia-HTC encounters in court in the weeks ahead. Next week a different chamber (panel) of the Munich I Regional Court will hold a trial on Nokia's assertion of a text message (SMS) sorting patent, and the ITC will commence its evidentiary hearing (trial) in the investigation of Nokia's complaint against HTC, involving among other things a tethering patent. In mid-June the second Nokia v. HTC case targeting Google's VP8 video codec will go to trial in Mannheim. And HTC's own assertions against Nokia (1, 2) in Mannheim and Munich will also go to trial soon in Munich and Mannheim.

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Apple says Samsung brought ITC complaint before making ANY licensing offer specific to its SEPs

In my post on Tuesday on the landmark California ruling enjoining an owner of standard-essential patents (SEPs) from enforcing an ITC exclusion order, I also discussed the implications of that decision in Apple's home district for the upcoming ITC decision on Samsung's complaint against Apple. In a filing made yesterday, which entered the public record today, Apple summarizes (in unusual detail) Judge Whyte's Realtek v. LSI/Agere decision and says the following about the parallels between the two disputes:

"The Realtek case is strikingly similar to the instant case. Samsung brought an ITC complaint before making any offer specific to its declared-essential patents, let alone a FRAND-compliant offer. Just as in Realtek, when Apple responded to the ITC complaint by requesting that Samsung provide FRAND terms for the specific asserted patents, Samsung responded by making a non-FRAND demand based on the total price of the accused Apple products--rather than the cost of the relevant accused components. Indeed, Samsung's conduct here is even more egregious--[redacted] In short, just as in Realtek, Samsung's pursuit of an ITC exclusion order directly conflicts with its FRAND commitments."

(no emphasis added)

The fact that LSI/Agere sought an injunction against Realtek before making any licensing offer with respect to the relevant version of the standard (some royalty demand concerning older versions had been made nine years earlier, with no negotiations in between) was key to Judge Whyte's decision. He determined that this attempt to seek to gain unfair leverage must be thwarted. The same could happen to Samsung, though the fact that this investigation has been going on for a long time without Apple seeking a preliminary injunction against Samsung's enforcement of a potential import ban would be an issue -- and I don't know whether Apple plans to trigger a FRAND determination action of the kind RealTek brought against LSI/Agere. But whatever the Northern District of California may or may not do for Apple in this context, the ITC sees that federal district courts consider such conduct abusive.

Apple's notice relates not only to the RealTek decision but also points to some of the positions taken and defenses raised by Samsung in its dispute with Ericsson. When Ericsson sued Samsung (after five years of patent peace following an earlier settlement) in November, I said from the beginning that this could help Apple because it would force Samsung to defend itself against SEPs. Apple now highlighted some of what Samsung wrote in its response to Ericsson's complaint.

With little more than a week to go (unless there is another extension, which is unlikely because the last one was rather long), the ITC keeps getting interesting and relevant input concerning this case and the overarching SEP-related issues in it, including letters from bipartisan groups of United States Senators and United States Representatives.

Here's Apple's May 22 filing:

13-05-22 Apple Notice of New Authority and Facts in ITC Inv. No. 337-TA-794

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Four Senators write to the ITC, raise SEP issues with a view to Samsung-Apple decision

When I reported yesterday on a May 10 letter from a bipartisan group of United States Representatives to the ITC concerning injunctive relief over FRAND-pledged standard-essential patents (SEPs) in connection with the investigation of Samsung's complaint against Apple, I had not yet seen a similar letter written by four United States Senators. There can be considerable delay between the sending of such letters and their appearance on the ITC's electronic document system. Today I saw on my Twitter feed this press release by Senator Mike Lee (R-Utah) on a May 21 letter to the ITC, in which Senator Lee and three of his colleagues (in total, two senators from either side of the aisle) reinforce concerns six senators (five Republicans and one Democrat) had raised about a year ago.

These are Senator Lee's co-signatories:

• Senator Amy Klobuchar (D-Minn.), Chairwoman of the Subcommittee on Antitrust, Competition Policy and Consumer Rights (Senator Lee is the Ranking Member of the same subcommittee)

• Senator Mark Begich (D-Alaska)

• Senator Jim Risch (R-Idaho), who had also signed last year's letter to the ITC (like Senator Lee)

Here's the Senators' May 21, 2013 letter (this post continues below the document):

ITC Letter on Standard Essential Patents by Senator Mike Lee

The letter seeks to dissuade the ITC from deciding in any way "that would enable or encourage companies to include their patented technology in a standard, commit to license included patents on FRAND terms, and then seek to secure an exclusion order despite a breach of that commitment". This position on injunctive relief being unavailable in light of a FRAND licensing commitment is consistent with Judge Posner's Apple v. Motorola ruling and the positions of various industry players and groups.

The ITC's Samsung-Apple decision, scheduled for May 31 and very likely to address SEP issues, will be read by a lot of influential people, not only but also on Capitol Hill.

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Bipartisan group of Congressmen stresses SEP concerns in letter to ITC ahead of Samsung-Apple ruling

Today a letter from the leaders (chairmen and ranking members) of the intellectual property and antitrust subcomittees of the House of Representatives, which is dated May 10, 2013, entered the electronic document system of the United States International Trade Commission (USITC, or just ITC). The letter is part of the public record in the investigation of Samsung's complaint against Apple, a final ruling on which is scheduled to come down on May 31 (next week's Friday) and will apparently have to address issues specific to the pursuit of exclusion orders over standard-essential patents (SEPs). The letter takes no position on the merits of this particular case, but "reiterates the prior request [made by the bipartisan leadership of the Committee on the Judiciary in June 2012] that the Commission carefully assess the substantial public interest considerations that exist with regards to this and other cases at the ITC in which SEPs are at issue".

These are the signatories:

• Subcommittee on Courts, Intellectual Property and the Internet:

  • Howard Coble (R-N.C.), Chairman

  • Melvin Watt (D-N.C.), Ranking Member

• Subcommittee on Regulatory Reform, Commercial and Antitrust Law:

  • Spencer Bachus (R-Ala.), Chairman

  • Steve Cohen (D-Tenn.), Ranking Member

Here's the letter along with the attached letter sent during the previous legislative term (this post continues below the document):

13-05-10 Letter to ITC on SEPs From House of Representatives Subcommittee Leaders

The ITC won't have forgotten about last year's letter from the Committee on the Judiciary, but in the meantime there have been elections and this is a reminder that the 113th Congress is still keeping an eye on these SEP issues. Should lawmakers feel that the ITC facilitates SEP abuse, they could always reform Section 337, the statute governing the ITC's intellectual property infringement investigations. There are already three other patent reform proposals in Congress (SHIELD Act, Patent Quality Improvement Act, and the End Anonymous Patents Act), but if need be, there can always be a fourth to deal with the ITC's jurisdiction over certain categories of cases.

This continued vigilance of Capitol Hill with respect to SEP issues in general and at the ITC in particular also makes it harder for other SEP-asserting ITC complainants such as InterDigital and Ericsson to obtain exclusion orders (import bans).

It will be very interesting to see next week what positions the ITC takes on SEP issues, even more so after a federal district judge in California just barred an ITC complainant from enforcing an exclusion order should he win one.

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Apple: 'unrestricted compulsory license' is not an adequate remedy for Samsung's infringement

Last Thursday Apple filed its reply brief in the appeal of Judge Koh's denial of a permanent injunction against Samsung despite a multiplicity of infringement findings by a California jury in August 2012. The reply brief finally became publicly available today.

Judge Koh's order came down approximately five months before this reply brief. Now that briefing is complete, a Federal Circuit hearing can take place in a matter of months. If anything can help Apple to convince Samsung to settle their world-spanning dispute on terms that protect Apple's interest in differentiation (with respect to the user experience as well as overall design), it's this appeal.

In this post I won't outline the key issues because I already did this in detail after Samsung's brief. I'll just highlight some key points of the reply brief. Here's the brief (this post continues below the document):

13-05-16 Apple Reply Brief in Appeal of Denial of Permanent Injunction Against Samsung

HEre are a few items I'd like to highlight:

• The key Supreme Court decision both parties reference over and over again is eBay v. MercExchange. It's not just the per curiam opinion that the parties are debating, but also Justice Kennedy's influential concurring opinion, which Samsung interprets as discouraging injunctions when smaller parts of the overall functionality of a complex product are at issue. Apple, however, says that Justice Kennedy's concurrence is limited to non-practicing entities and points to the Federal Circuit's Bosch v. Pylon ruling, which confirmed that eBay did away with the presumption of irreparable harm but nevertheless stressed the importance of the role of patents as exclusionary property rights. Apple quotes from Bosch that Justice Kennedy didn't mean to address "traditional cases, such as this, where the patentee and adjudged infringer both practice the patented technology". Indeed, in Bosch the Federal Circuit went on to describe Justice Kennedy's concurrence as "contrasting the relevant considerations in traditional patent infringement actions with certain cases arising now 'in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees,' '[w]hen the patented invention is but a small component of the product,' and those involving 'the burgeoning number of patents over business methods'". But Justice Kennedy's concurrence has frequently been understood to discourage injunctions over small components regardless of whether the patentee is an NPE.

• I've previously disagreed with how Judge Koh interpreted and weighted Apple's license agreements with IBM, Nokia and HTC in the Samsung case. If there's one area in her denial of the injunction in which I think she wasn't just being extremely conservative after the Federal Circuit's preliminary-injunction-related Apple v. Samsung decisions but got the strategic business implications wrong, it's how she concluded from the existence of those license agreements, without properly taking into account how they differ from the Apple-Samsung rivalry and the net effect of a de facto compulsory license (for example, HTC is not allowed to "clone" Apple's products), and the weight she afforded this. From the beginning I disagreed and expressed concern that this would discourage license deals. And this is precisely the context in which I believe Apple's reply brief makes the most compelling points. In its reply brief Apple warns that under these circumstances (absent a reversal) "litigants would face an enormous disincentive to settle patent litigation, because even offering a license could preclude an injunction in the future". It doesn't want to be "somehow forever barred from obtaining an order enjoining its primary direct competitor" only because of license deals that came with restrictions and resulted from rather different circumstances. With respect to Apple's design patents there isn't even any evidence of Apple ever having licensed them to anyone. I tend to agree with Applethat Judge Koh "treated this factor as dispositive of the adequacy of money damages".

  These three sentences are my favorite ones in Apple's reply brief:

  "The question is not whether Apple could be adequately compensated by a narrow, voluntary license to a non-competitor. Instead, the court must ask whether an unrestricted compulsory license to Apple's primary direct competitor is an adequate remedy. The answer to that question is clearly no."

• I keep referring to my previous post on this appeal because I had put so much effort into outlining the key issues there. One issue that Samsung stressed a lot is the existence of workarounds/designarounds. I think Apple could stress the implications of workarounds/designarounds even more than Samsung does. Apple agrees that injunctions shouldn't result in a ban of entire multi-feature products because of a few infringing features, and mentions the possibility of narrowly-tailored injunctions and "carefully constructed sunset provisions" (quoting from Broadcom v. Qualcomm, "which allowed the infringer twenty months to redesign its products to eliminate the infringing features before enforcing the injunction"). I hope that workarounds/designarounds will be a key topic of debate at the appellate hearing. If Apple makes headway and the Federal Circuit considers a remand, then the question of narrowly-tailored remedies and transitional periods is going to come up.

• Even after having read Apple's reply brief (twice) I'm unconvinced of suggestions that the "causal nexus" requirement is like an additional fifth factor to the four eBay factors and that it might only be relevant in connection with preliminary (not permanent) injunctions. Apple doesn't emphasize those claims in its reply brief. I do, however, concur with Apple that Judge Koh "treat[ed] the causal nexus requirement as a single dispositive factor", and that a patent holder prevailing on infringement and overcoming an invalidity defense is in a particularly strong position to insist on exclusivity (unless there are circumstances such as the ones relevant in standard-essential patent cases).

Earlier today I blogged about Apple's proposed amended infringement contentions in the second Calfiornia lawsuit with Samsung, accusing the Galaxy S4 of infringement of five of the patents-in-suit and the Google Now search app of infringement of two of those patents. Unless the question of access to injunctive relief is resolved by the Federal Circuit, Apple can prove infringement of many more U.S. patents and overcome Samsung's related invalidity defenses without ever obtaining the strategically most important remedy. Damages alone can't put this dispute to rest.

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Apple identifies certain patents allegedly infringed by Samsung Galaxy S4 and Google Now app

Last week Apple informed the court that it intended to amend its infringement contentions in the second California patent litigation with Samsung to target the Galaxy S4 (instead of some other product to be dropped from the list of accused devices). Apple has now filed the motion it announced, and it specifies five patents allegedly infringed by the S4 as well as two patents allegedly infringed by the Google Now search app. Here's the filing (this post continues below the document):

13-05-21 Apple Motion to Amend Infringement Contentions

The key passage concerning the S4 is this sentence and the related footnote:

"[...] Apple determined that the Galaxy S4 product practices many of the same claims already asserted by Apple, and that the Galaxy S4 practices those claims in the same way as the already-accused Samsung devices."

The related footnote alleges infringement by the S4 of the following five patents-in-suit:

• Two "Siri" patents on unified search:

  U.S. Patent No. 8,086,604 and U.S. Patent No. 6,847,959 on a "universal interface for retrieval of information in a computer system"

  Apple asserted the '604 patent in a preliminary injunction motion. The Federal Circuit reversed a preliminary injunction against the Galaxy Nexus and, in addition to equitable reasons, overturned Judge Koh's claim construction in a way that affects both "Siri" patents alike (for an excellent explanation of this claim construction issue, see Patently-O's post). Apple claims that the '604 and '959 patents are infringed even under the appeals court's construction.

• U.S. Patent No. 5,666,502 on a "graphical user interface using historical lists with field classes"

• U.S. Patent No. 5,946,647 on a "system and method for performing an action on a structure in computer-generated data" (which I dubbed the "data tapping" patent, a term many reporters have since adopted)

  Apple prevailed over HTC on this patent at the ITC. Apple claims that Android infringes this patent at the operating system level (the "linkify" library), as you can see in this infringement claim chart from the HTC case. Apple was enforcing an ITC import ban against HTC but ceased enforcement after a settlement (the parties stipulated to rescision of the exclusion order).

• U.S. Patent No. 7,761,414 on "asynchronous data synchronization amongst devices"

A recent claim construction decision by Judge Koh went very well for Apple. Three of the patents listed above -- the '502, '647 and '414 patents -- were addressed in that order and interpreted according to Apple's proposals.

In its original infringement contentions Apple asserted the '604 and '509 unified search patents against the Android Quick Search Box. Meanwhile Google has launched Google Now, and Apple wishes to update its infringement contentions accordingly.

Apple's motion does not mention the Galaxy S4 Google Edition, which Google announced at last week's Google I/O developer conference. Apple based its motion on units of the S4 that it purchased in local stores immediately after the product became available. It will presumably also purchase the Google Edition and analyze it at the earliest opportunity.

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Federal judge bars holder of standard-essential patents from enforcing ITC exclusion order

An unprecedented decision came down yesterday in the Northern District of California, where a federal judge granted an implementer of the IEEE 802.11 (WiFi, or WLAN) standard a preliminary injunction against enforcement of a potential ITC exclusion order based on standard-essential patents (SEPs). The implementer is RealTek Semiconductor; the patent holder is Agere, which was spun off of Lucent in 2000 and acquired by Taiwanese integrated circuit designer and supplier LSI, another party to this action, in 2001.

In a decision strongly inspired by Judge James Robart's anti-enforcement injunction (concerning a German SEP injunction) in Microsoft v. Motorola in Seattle and its affirmance by the United States Court of Appeals for the Ninth Circuit (this circuit also includes California), San Jose-based Senior District Judge Ronald Whyte granted a preliminary injunction based on a summary judgment finding in RealTek's favor on Realtek's allegation that LSI and Agere breached their FRAND licensing obligation by seeking an ITC exclusion order without previously offering a license on FRAND terms.

This is the first time for a United States district court to rule out the ITC's only remedy, at least in connection with SEPs. As I'll discuss further below, this also has implications for Apple's FRAND disputes, particularly with a view to the decision the ITC has scheduled for May 31 on Samsung's complaint against Apple. Here's Judge Whyte's landmark decision (this post continues below the document):

13-05-20 RealTek v. Agere Preliminary Injunction Against ITC Exclusion Order

The injunction binds LSI and Agere, which (unless they get this injunction lifted) cannot enforce or seek to enforce an exclusion order injunction pending a full FRAND trial, which will result in a rate-setting decision comparable to Judge Robart's recent Microsoft v. Motorola ruling. The ITC itself is free to continue its investigation. But if the ITC found in LSI and Agere's favor and granted "an exclusion order or injunctive relief" (the latter presumably referring to a cease-and-desist order, which the ITC can grant in addition to an import ban), the preliminary injunction would go into effect and LSI/Agere would face contempt sanctions in California should it actually enforce. Whether the ITC will continue the investigation under these circumstances or stay it (since the federal FRAND case, which RealTek brought in order to resolve its dispute with LSI and Agere over FRAND terms, is going to be dispositive of the whole dispute) remains to be seen. Absent a reversal of the injunction or the incredibly unlikely scenario of RealTek failing to take a license on court-determined terms, it would be a total waste of resources for the ITC to carry on with the investigation, but for institutional reasons it may decide to keep going anyway, anyhow.

LSI and Agere face a steep challenge with an appeal because the circumstances in this case are really extreme. While SEP holders like Samsung and Google's Motorola at least made formal licensing offers (even if lightyears outside of the FRAND ballpark), LSI and Agere prior to bringing an ITC complaint never made a formal licensing offer relating to the latest version of the relevant standard. They had made an offer (with an out-of-this-world 5% royalty demand) back in 2002 and 2003 with respect to the 802.11b standard, but nine years later simply sent RealTek a cease-and-desist order over the more recent versions of the standard (the most recent one is 802.11n, and LSI and Agere specifically claim to hold patents essential to 802.11e and 802.11g) and then filed an ITC complaint.

Two years ago, Judge Barbara Crabb in the Western District of Wisconsin had denied Apple a preliminary injunction against Motorola's pursuit of a SEP-based ITC exclusion order. And about a year ago, Microsoft was denied the kind of partial summary judgment (on breach of contract) RealTek just won. Judge Robart preferred to resolve the case step by step and set a FRAND rate (and range), which he did last month, prior to having a jury determine whether there's been a breach of contract, which will happen in August.

Even without a partial summary judgment ruling in Microsoft's favor on breach of contract, Judge Robart enjoined Motorola. In the Microsoft case it was key that the FRAND contract case had been brought in the United States approximately eight months before Motorola filed the related German lawsuits, and Motorola had offered, in a letter sent from Illinois to Washington State in 2010, a worldwide license covering its declared-essential H.264 and IEEE 802.11 patents, also listing the European counterparts of the relevant U.S. patents. In late November, after a rate-setting bench trial, Judge Robart dismissed Motorola's claim for SEP-based injunctive relief and simultaneously dissolved the preliminary injunction concerning enforcement in Germany, as he found that the summary judgment decision on injunctive relief was "in no way specific" to the U.S. patents at issue in that case, "so the dismissal of injunctive relief in [the summary judgment] order [took] the place of the court's prior anti-suit injunction that enjoined Motorola from enforcing an injunction in the German action". Judge Robart did not mention the ITC Xbox investigation in that decision, though there was a filing at some point in which Microsoft responded to a question by the judge about the status of the ITC proceedings. Google's Motorola withdrew all of its SEPs from that investigation, so the question of whether the summary judgment decision in Seattle also precluded Motorola from enforcing a SEP-based ITC import ban against Microsoft never had to be addressed. For diplomatic reasons ("comity of nations") it's actually harder for a court to bar enforcement of a foreign injunction, but there are also some interinstitutional considerations involved when district courts interfere, even if only indirectly by binding a party to a dispute, with an ITC investigation.

Considering the backing Judge Robart received from the Ninth Circuit in Microsoft v. Motorola, LSI and Agere face a reasonably steep challenge in persuading the same appeals court to reverse Judge Whyte's anti-enforcement injunction. Assuming that this preliminary injunction is upheld (or maybe never challenged, though this is less likely), patent holders facing similar requests in the future will definitely point to differences between their FRAND-related conduct and that of LSI/Agere. They will make prohibitive offers, which at least constitute offers in a formal sense, and they will make them with respect to the versions of the standard over which they seek -- and not too long before they seek -- an ITC import ban. The conduct of LSI/Agere described by Judge Whyte appears particularly outrageous and unsophisticated. But that doesn't mean this outlier will have been the last case in which a United States district court with a FRAND contract (and rate-setting) case before it precludes a patent holder from enforcing potential or actual ITC remedies. Companies that make blatantly unreasonable initial royalty demands may also lose a partial summary judgment decision over a breach-of-contract issue. Other judges may determine in other cases (with their unique circumstances) that they don't need a jury to make this kind of decision, or they may grant an expedited jury trial. If a district court arrives at a breach-of-contract finding before an ITC import ban enters into force, it can order a preliminary injunction of the kind Judge Whyte handed down yesterday. Some courts will do this, while others may decline to engage in a race with the ITC, as the United States District Court for the District of Delaware told Huawei and ZTE in a dispute with SEP-holding non-practicing entity InterDigital.

The ITC can't set FRAND rates and resolve contract disputes; it can merely grant or deny exclusion orders (and related cease-and-desist and bonding orders), and in that process it can adjudicate SEP-related defenses. Cases over FRAND-pledged SEPs really belong in the district courts except under the most egregious of circumstances (I could think of someone's refusal to pay a court-determined, non-appealable FRAND rate, or the importation of infringing goods from unidentifiable sources, which can only be stopped through seizure by customs officers), and Judge Whyte's ruling represents a major breakthrough in that regard.

Implications for the ITC investigation of Samsung's complaint against Apple

In mid-March the ITC postponed its final decision on Samsung's complaint against Apple once again, and the ruling date is now May 31 ( next week's Friday). When the extension was announced, the ITC also asked the parties and third-party stakeholders for input on various SEP-related questions. There were very strong indications that one Samsung SEP was found valid and infringed by Apple, and the ITC now has to think about remedies in light of FRAND. It came close to having to make similar decisions in other cases, but those were dismissed on their non-FRAND-specific merits, or settled. In the Samsung-Apple case the ITC will have to take a position on FRAND, and the breadth of its questions show that it's really trying to look at this hard from all angles. For institutional reasons the ITC probably won't want to deprive itself of jurisdiction over SEP infringement claims, but with more rulings of the kind Judge Whyte issued yesterday, that's what may inevitably happen over time.

Should the ITC grant Samsung an import ban, Apple could try to obtain a preliminary injunction against its enforcement. ITC import bans don't take effect for 60 days due to the Presidential Review period. Judge Lucy Koh is based in San Jose just like Judge Whyte. In December she declined to rule on Apple's FRAND defenses in the first federal Apple v. Samsung two-way lawsuit because she didn't see a need, given that Samsung had lost on the non-SEP-specific merits. She also denied Apple judgment as a matter of law on FRAND antitrust counter-counterclaims, but those aren't necessary to resolve the issue of injunctive relief. Should Samsung win an ITC import ban, then Apple's claim that it needed a ruling on its FRAND defenses for reasons transcending the California litigation would suddenly make a whole lot of sense. At the summer trial the court in California saw all the evidence and heard plenty of testimony concerning Samsung's original 2.4% royalty demand. There's enough in the record in the Northern District of California to determine quickly that Samsung isn't entitled to injunctive relief in any form, including that of an ITC exclusion and cease-and-desist order. Judge Koh has previously shown flexibility when new circumstances or new information warranted new decisions or modifications of previous plans.

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