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Wednesday, May 22, 2013 3:49:14 PM
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Judge Bars Chipmaker From Seeking Injunction at ITC
By Jan Wolfe Contact All Articles
The Litigation Daily
May 21, 2013
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Expanding the backlash against companies that aggressively assert "standards-essential patents" against their rivals, U.S. District Judge Ronald Whyte in San Francisco has barred the chip designer LSI Corp. from pursuing injunctive relief against Realtek Semiconductor Corp. at the U.S. International Trade Commission.
In a 15-page summary judgment order, Whyte ruled that LSI breached its contractual duty to license its standards-essential patents on reasonable and nondiscriminatory, or RAND, terms when it brought the ITC case against Realtek last year. Whyte allowed LSI's ITC case to continue, but he blocked LSI from enforcing any relief it wins from the quasi-judicial agency.
In order to make their devices compatible, gadgetmakers have long tried to agree on industrywide technological standards. If a company's patented technology is incorporated into a standard, it pledges that it will make its patents available to competitors on RAND terms. LSI made such a pledge back in 2003, when its patents were incorporated into the Institute of Electronics Engineers' standard for wireless internet connectively known as "WLAN."
LSI's lawyers at Kilpatrick Townsend & Stockton brought an ITC case against Realtek in March 2012, alleging infringement of patents essential to the WLAN standard. The only kind of relief the ITC can offer is an import ban that prohibits infringing products from entering the U.S.
Realtek's lawyers at Reed Smith responded to the ITC by suing LSI and its subsidiary Agere Systems LLC for breach of contract in U.S. district court in San Francisco. "Instead of making any RAND offer to Realtek, defendants simply demanded that Realtek cease and desist from selling its Wi-Fi products and then initiated legal proceedings in the ITC to exclude Realtek's products from the United States," Realtek asserted. "Defendants thereby breached their contractual obligation to license the allegedly essential patents on RAND terms."
The Reed Smith lawyers sought an injunction barring LSI from enforcing any injunctive relief it wins from the ITC. Whyte granted the request on Monday, rejecting LSI's argument that Realtek's bid was premature because it can only point to speculative, future harm. By bringing an ITC case against Realtek without first making a licensing offer, LSI engaged in "improper" conduct "glaringly inconsistent with its RAND obligations," Whyte ruled.
"A lot of standards-essential patents are being enforced without regard for what was really bargained for during the standard-setting process," Reed Smith partner Steven Baik, who represents Realtek, said. Whyte's ruling is a "novel step" in a judicial crackdown on that behavior, Baik said.
David Sipiora of Kilpatrick, who represents LSI, didn't immediately respond to a request for comment.
Many tech companies, the most prominent among them Google Inc., have come under fire for alleged RAND patent abuse. As part of its January 2012 antitrust settlement with the U.S. Federal Trade Commission, Google agreed to stop seeking injunctive relief in court fights over standards-essential patents. Google subsidiary Motorola Mobility Inc., meanwhile, has so far failed miserably in its efforts to seek billions of dollars in licensing fees from rivals like Microsoft Corp. that allegedly infringed its standards-essential patents.
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