InterDigital Inc (IDCC)

[postyle]

Huawei Loses Bid to Bounce InterDigital Case at ITC
By Lisa Shuchman / The Litigation Daily
February 4, 2013

Regulators are increasingly blocking tech companies from seeking injunctions based on infringement of standards-essential patents (SEPs). The regulatory backlash raises an interesting question: Since the U.S. International Trade Commission can only offer injunctive relief to patent foes in the form of "exclusion orders" blocking importation, should it shutter its doors to complainants who say their standards-essential patents have been infringed?

The ITC answered that question with a "no" on Thursday. Over the objections of Huawei Technologies Co. Ltd., the quasi-judicial body agreed to hear claims by InterDigital LLC that Huawei and three other smartphone companies infringed its patents. Huawei's lawyers at Covington & Burling had argued that because InterDigital is requesting injunction relief for alleged infringement of SEPs, its claims should primarily be heard in U.S. district court, not the ITC.

On Jan. 2, InterDigital's lawyers at Latham & Watkins accused Huawei and three other smartphone makers--Huawei, Samsung Electronics Co. Ltd., Nokia Corporation, and ZTE Corporation--of infringing patents essential to wireless industry standards. InterDigital brought two similar complaints, one filed at the ITC and one filed in U.S. district court in Delaware. Under ITC rules, the agency's staff reviews the facts of every complaint and decides whether to open a case.

In a Jan. 28 letter to the ITC, Covington & Burling partner Sturgis Sobin argued that postponing the investigation would keep the ITC's policies consistent with those of the Federal Trade Commission, the Department of Justice, and the U.S. Patent and Trademark Office. These governmental agencies have in recent months expressed concern about the use of injunctive relief in cases involving SEPs, saying they are contrary to the public interest. SEPs must be licensed on FRAND (fair, reasonable and non-discriminatory) grounds. On Jan. 3, Google Inc. agreed reform its practice of seeking injunctions based on SEPs as part of its settlement with the FTC.

Covington also argued that, at a minimum, the ITC should stay the new complaint pending resolution of a similar suit InterDigital filed in 2011. That case is scheduled for trial later this year.

"A delay in institution of InterDigital's complaint will significantly conserve Commission and party resources, as well as permit the Commission to implement the recommendation of its sister agencies and federal district courts concerning exclusion orders applicable to FRAND-committed SEPs," Sobin wrote in the letter.

Huawei's attorneys said InterDigital, which is considered a non-practicing entity, has a history of opposing the setting of a royalty rate by the courts, as demonstrated in previous cases filed in the United States and in China. "Interdigital's actions make clear it was far more interested in exploiting the hold-up power of the ITC process than complying with its FRAND obligations," the letter said.

InterDigital objected to Huawei's arguments in a letter filed on January 29. The company's attorneys, Bert Reiser of Latham & Watkins, wrote that Huawei's arguments could be raised after the investigation begins, but should not delay it. "Huawei's letter…includes highly selectively citations of positions take by other federal agencies, such as the FTC, DOJ, and USPTO, in an effort to suggest that the ITC should not investigate. . . violations involving alleged standards-essential patents," he added. "But in fact, those agencies have stated that they do not disapprove of the ITC's issuance of exclusion orders in appropriate circumstances."

The ITC let the case go forward on Thursday, effectively rejecting Sobin's arguments. FOSS Patents blogger Florian Mueller, who first reported on Huawei's bid to say the InterDigital case, noted that the ITC could still decide to stay the case at a later date. "I also think that the Federal Trade Commission (FTC) and Department of Justice (DoJ) should consider supporting Huawei's proposed solution--FRAND determination in federal court--through letters to the ITC, preferably at the early stages of the investigation," he wrote.

The InterDigital case comes at a time when the ITC has increasingly become the favored venue for non-practicing entities, sometimes called "patent trolls." PatentlyO blogger Dennis Crouch recently wrote about that phenomenon here.

Reiser did not return a request for comment. Sobin had no immediate comment.