Saturday, June 8, 2013

Samsung sides with 'patent troll' InterDigital against Nokia, Huawei and ZTE on case schedule

Samsung is the primary target of the patent infringement complaints filed by InterDigital, a non-practicing entity monetizing cellular standard-essential patents (SEPs), at the beginning of this year with the ITC and the United States District Court for the District of Delaware. Nokia, Huawei and ZTE are being sued as well, but in these particular actions, only Samsung has to defend itself against all patents-in-suit, while some of the assertions were brought against Nokia, Huawei and ZTE on earlier occasions. Also, Samsung is considerably larger than the other defendants. Conventional wisdom would thus suggest that Samsung would be particularly interested in defendants-friendly case management, but on FRAND issues it's actually closer to InterDigital than its fellow defendants (though I'm sure there is some coordination between all defendants concerning non-FRAND issues, i.e., infringement and validity).

I attribute Samsung's partial alignment with InterDigital to the fact that the Korean company has recently also become quite aggressive in its assertions of cellular SEPs against Apple and Ericsson (Ericsson's complaints, Samsung's version of the story; interestingly, several lawyers from Quinn Emanuel, the firm representing Samsung against Apple, have recently joined Samsung's legal team in the Ericsson dispute). Most importantly, Samsung has just won an ITC import ban against older iPhones and iPads (CNN Opinion op-ed, blog post on decision, blog post on preparations for enforcement).

By contrast, the other three defendants have a much better track record in FRAND matters:

Despite their international Chinese-Chinese conflict, Huawei and ZTE have been coordinating their defense against InterDigital quite closely. Among other things they jointly requested an expedited FRAND trial in the Delaware mirror case (mirroring the ITC investigation), which was denied because the district court declined to engage in a race with another litigation forum. To some degree the two Chinese companies have also been able to join forces with Nokia. For example, Nokia and Huawei leveled similar criticsm at certain aspects of InterDigital's tactics, and Nokia, Huawei and ZTE jointly asked the ITC to stay its investigation, which was denied. Samsung has also alleged that InterDigital's demands are not FRAND, but it's not particularly proactive on the FRAND front -- presumably because of its conflict of interests with a view to the dispute with Apple as well as the one with Ericsson.

So far, the division over FRAND issues between the Samsung and the other three defendants was reflected only by Samsung's non-participation in certain initiatives. Yesterday it became clearer than ever when all parties to this dispute (which in Delaware constitutes four separate cases, one per defendant, though they are all managed together by the judge) filed their proposed case schedules. There were two proposals -- one by plaintiff InterDigital and Samsung as the only defendant supporting it, and another one supported by the other three defendants. It's a scheduling proposal, not a brief on substantive issues, but it's quite telling that Samsung sides with a company that has been described as a patent troll (though I wish to point out that InterDigital conducts its own research and development). Instead of solidarity between all four defendants, there's solidarity here between the plaintiff and one defendant who in other disputes has the shoe on the other foot.

There are two key differences between the two schedules. Samsung and the "troll" propose one that culminates in a mind-2015 trial -- about a year after Nokia, Huawei and ZTE's proposal. That's because Nokia, Huawei and ZTE would like a decision in district court on all issues before the ITC does what it just did to Apple and orders a SEP-based import ban. Usually mirror lawsuits in federal court get stayed, but not here, where some defendants feel that the case in district court offers an opportunity to resolve certain issues, particularly FRAND issues, in more favorable ways. The other major difference is that Nokia, Huawei and ZTE proposal a "Trial on FRAND Counterclaims Only" (InterDigital is trying to get all FRAND counterclaims thrown out, but I believe it will at most get a limited part of them dismissed) to be held two months before the infringement trial, while the related column in InterDigital and Samsung's proposal just says "N.A.", which indicates they don't support bifurcation.

For as much as I support Nokia, Huawei and ZTE's FRAND counterclaims and defenses against InterDigital, I'm afraid the district court will once again decline to schedule its own case according to a parallel ITC investigation. The proposal doesn't say so, but the judge will figure it out like I did.

I generally don't think that it's a good idea to rush district court cases -- the solution is to bring about change concerning the ITC. It should have no jurisdiction at all over SEP cases if respondents can be sued in district court.

On the subject of InterDigital's SEP assertions let me quickly mention something I tweeted about on Friday: the United States Court of Appeals for the Federal Circuit has determined that the ITC erred in referring to arbitration certain assertions against LG (which InterDigital sought to add to an investigation against Nokia, Huawei and ZTE).

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