Replies to post #424254 on InterDigital Inc (IDCC)

[loophole73]

I agree. The all you can eat licensing program is for losers. If these idiots do not correct this for 5g. it is gross negligence.


MO
loop

[Paullee]

Patent Industry Nervous Over Chinese IP Competition
By Nadia Dreid

Law360 (February 12, 2019, 10:23 PM EST) -- China loomed large over the Inventing America Conference in Washington, D.C., Tuesday, where senators, patent attorneys and the director of the United States Patent and Trademark Office weighed in on how to handle China's rising profile as an intellectual property heavyweight.

USPTO Director Andrei Iancu told the crowd assembled in Covington & Burling's D.C. offices that the first step to avoid being scooped by China was building a "reliable, predictable" patent system.

"That is a minimum threshold requirement," Iancu said. "We have significant competition on our hands, and, on top of all that, they are not playing fair."

Sen. Chris Coons, D-Del., a proponent of patent reform, said that "several administrations in a row" promised to prioritize pushing back against Chinese IP theft, but those promises never came to fruition.

"Our challenge as a country is to really understand the scope and reach and intention and possible consequences of China's competition with the United States," Coons said. "And find ways to manage our competition that gets clarity about what are the rules of the road, what is the likelihood of China coming into compliance with basic fair trade and protections — and if not, to be clear what the consequences will be and sustain that across administrations."

Purported Chinese theft of U.S. intellectual property has been a spot of contention for years now, with the U.S. International Trade Commission finding in 2011 that American businesses lost $48 billion to IP theft.

That tension was ratcheted up in March when President Donald Trump escalated the United States' tariff quarrel with China by dumping hefty tariffs on $50 billion worth of Chinese goods in retaliation for Beijing's purposed abuse of American IP.

China has been rapidly developing its intellectual property infrastructure in recent years. Attorneys are fretting that if the United States doesn't shift its laws to make it easier for patent holders to keep their innovations from being invalidated and win injunctions against infringers, they will be giving China a leg up that may lead to innovators fleeing for greener pastures.

Jeff Moon, who heads up international trade and government affairs consulting firm China Moon Strategies LLC, said that one of the ways the U.S. can become better competitors is by getting a game plan.

China operates under a "top down" system, getting its objectives and resources from the government, Moon said. This means their inventing is more focused than the U.S. invention system, he said, which starts with individual companies or inventors and works "bottom up."

--Additional reporting by Alex Lawson. Editing by Jay Jackson Jr.

[Paullee]

InterDigital Says Antitrust Claim Is A Contract Row ‘At Most’
By Bryan Koenig

Law360 (February 26, 2019, 9:43 PM EST) -- InterDigital Inc. urged a California federal judge Monday to gut a lawsuit accusing it of violating antitrust law by seeking excessive royalties for standard-essential patents, arguing that charging higher prices by itself is a contract claim at best, not anti-competitive conduct.

The major patent licensing firm wants three claims dismissed from Swiss technology company U-blox AG’s six-claim complaint lodged at the beginning of January. If the antitrust and other claims are tossed, the developer of GPS systems and other wireless products would be left only with counts seeking declarations that U-blox doesn’t infringe two patents and a breach of contract allegation, which is what InterDigital says the antitrust claim boils down to anyway.

“U-blox’s Sherman Act claim does not adequately allege harm to competition. Rather, U-blox’s Complaint describes, at most, a contractual dispute, pursuant to which U-blox alleges that royalties sought by InterDigital are too high, allegedly in breach of a contractual FRAND commitment,” InterDigital said. (FRAND refers to the commitment holders of standard-essential patents to license that technology on fair, reasonable and nondiscriminatory terms.) “However, courts have rejected the premise that allegedly higher prices equate to harm to competition for purposes of an antitrust claim.”

U-blox claims that InterDigital is "exploiting its undue market power” over patents on technology needed to implement wireless standards such as 4G by seeking royalties many times higher than the patents are worth, in violation of the Sherman Act.

The case has drawn the attention of the U.S. Department of Justice’s Antitrust Division, which warned in a filing last month that the “troubling” and “extraordinary” antitrust allegations have no proper legal basis. The DOJ argued that U-blox is making the "troubling suggestion" that InterDigital’s attempts to collect royalties for its patents from U-blox customers are "improper or illegitimate."

Monday’s bid for a partial dismissal made no mention of the DOJ’s intervention and only passing reference to U.S. District Judge Cathy Ann Bencivengo’s Feb. 12 decision denying U-blox a preliminary injunction that would have blocked InterDigital from demanding that the plaintiff’s customers pay royalties, until the judge can set a proper royalties rate.

Instead, InterDigital focused on arguing that U-blox’s targeted causes of action should be tossed for failure to state a claim or are premature.

The antitrust allegation, according to InterDigital, cannot rely on a Third Circuit decision in Broadcom v. Qualcomm permitting Sherman Act accusations of false promises to license essential technology on FRAND terms. That decision is not binding on the Ninth Circuit “and has been subsequently criticized,” InterDigital said, arguing that Broadcom’s theory of patent owners using their intellectual property to force higher rates doesn’t “describe in any coherent manner how the competitive structure of the market is affected.”

Nor does U-blox allege the illegal anticompetitive conduct or harm — the plaintiff purportedly refused InterDigital’s royalty demands and hasn’t paid royalties since its license expired Dec. 31 — required to make a monopolization claim, InterDigital said, arguing that the plaintiff “mistakenly presumes that InterDigital has an antitrust duty to deal with U-blox.” In addition, InterDigital argued that U-blox had not adequately alleged any intent or actual fraud on the standard-setting body that elicited the FRAND commitment, the European Telecommunications Standards Institute.

“Although U-blox claims that the alleged ‘fraud’ consisted of making false FRAND declarations in order to induce ETSI to select InterDigital’s patented technology over other alternative technology, U-blox fails to identify which of the disclosed patents were selected over other viable alternatives, and also fails to identify what those alternatives were,” the defendant said.

Representatives for the parties did not immediately respond to requests for comment Tuesday.

On Monday, InterDigital also took aim at U-blox’s bid for promissory estoppel that would block the defendant from reneging on its FRAND promises. That claim, InterDigital said, comes from a licensing declaration governed by French law, but French law cannot be used for such claims.

“Numerous courts have rejected the exact claim raised by U-blox under the ETSI licensing declaration on the ground that promissory estoppel is unavailable as a matter of French law,” InterDigital said.

The final claim targeted Monday was U-blox’s bid for a declaratory judgment holding that InterDigital hasn’t offered licensing terms “conforming to applicable legal requirements,” which the defendant said should be rejected as sought too-soon or at least because U-blox faces no imminent harm and has other remedies available — InterDigital says it has offered to have the FRAND terms determined in binding arbitration.

While U-blox says it’s owed a license on 2G, 3G and 4G technology on FRAND terms, InterDigital argued that the plaintiff made the claim before pursuing “genuine, good faith efforts to negotiate a new license.”

According to InterDigital, U-blox has made “only the most cursory effort” to discuss new terms, consisting of just a single letter sent at the end of November and “drafted with notable carelessness, as reflected by several obvious errors therein.”

“U-blox’s hastily filed lawsuit, commenced at the very moment the license expired, does not give the Court an adequate record on which to assess the good faith of the parties’ license negotiations,” InterDigital said. “Particularly where a claim involves a party’s good faith course of conduct, a lawsuit filed before any meaningful record is developed is unlikely to be ripe.”

U-blox is represented by Stephen S. Korniczky, Martin Bader, Matthew W. Holder, Daniel L. Brown and Ryan P. Cunningham of Sheppard Mullin Richter & Hampton LLP.

InterDigital is represented by David Steuer, Michael Levin, Maura Rees and Lucy Yen of Wilson Sonsini Goodrich & Rosati PC.

The case is U-blox AG et al. v. InterDigital Inc. et al., case number 3:19-cv-00001, in the U.S. District Court for the Southern District of California.

--Additional reporting by Matt Bernardini and Ryan Davis. Editing by Peter Rozovsky.
For a reprint of this article, please contact [e-mail].

[Paullee]

I think I'll let the Dog explain this

District Court Denies FRAND Breach of Contract and Sherman Act Summary Judgment Motions by ASUS and InterDigital

By Joe Raffetto & Nicholas Rotz
February 28, 2019
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“The court’s rulings relating to breach of contract, most favorable licensees, and the Sherman Act are of particular interest for SEP licensing and illustrate how the legal landscape continues to evolve.”

In a decision published in redacted form, Judge Beth Labson Freeman of the Northern District of California denied ASUSTek Computer Inc.’s and ASUS Computer International’s (collectively, ASUS’s) motion for summary judgment that InterDigital, Inc.’s (InterDigital’s) standard essential patent (SEP) licensing practices breached its FRAND obligations. The court also granted-in-part and denied-in-part InterDigital’s motion for summary judgment, rejecting a request to dismiss ASUS’s Sherman Antitrust Act claim but granting summary judgment as to issues relating to judicial and promissory estoppel and as to a California competition law claim. ASUS Computer Int’l v. InterDigital, Inc., Case No. 5:15-cv-01716-BLF, ECF No. 367 (N.D. Cal. Jan. 29, 2018).

In 2008, ASUS and InterDigital entered into a patent license agreement (PLA). Under the PLA, InterDigital licensed certain SEPs to ASUS, including SEPs directed to the 2G and 3G cellular standards. Subsequently, around 2012, the parties began negotiations to extend the PLA to cover SEPs directed to the 4G cellular standard. These negotiations continued for several years, but no agreement was reached.

ASUS filed the present suit in April 2015, alleging violations of the Sherman Act, breach of contract related to InterDigital’s SEP licensing practices, and various violations of state competition law. However, the case was stayed in August 2015, while some of ASUS’s claims were sent to arbitration. The arbitration tribunal issued its decision in June 2016, finding many of the claims not arbitrable and returning the case to the district court for resolution.

In the district court case, InterDigital sought summary judgment on six issues, and was granted with respect to four:

ASUS was judicially estopped from arguing that the PLA was not FRAND-compliant when first executed;
ASUS could not invalidate the parties’ PLA on a theory that the agreement, even if FRAND when signed, became non-FRAND based on subsequent, more favorable licenses granted by InterDigital;
ASUS’s claim for promissory estoppel did not apply to the French law-governed ETSI FRAND commitments; and
ASUS’s claim under California’s unfair competition law was barred based on extraterritoriality.
Judge Freeman denied InterDigital’s motion on the two remaining issues—namely, as to ASUS’s Sherman Act claim and as to InterDigital’s argument that ASUS was issue precluded from raising a claim under the Delaware Consumer Fraud Act.

ASUS moved for summary judgment on only a single issue: that InterDigital breached its commitment to license its SEPs on FRAND terms. In rejecting this motion, the court found disputed issues of material fact, and commented that the Central District of California’s March 2018 TCL v. Ericsson decision (which ASUS relied on heavily in its motion) was not settled law and would not compel ASUS’s conclusion that InterDigital breached its FRAND commitment.

The court’s summary judgment ruling comes as the case is progressing toward a jury trial, presently scheduled for May 2019. Several of the issues addressed by the court’s ruling are fact-specific to the case, but the rulings relating to breach of contract, most favorable licensees, and the Sherman Act are of particular interest for SEP licensing and illustrate how the legal landscape continues to evolve.

ASUS’ “Most Favorable Licensee” Theory Rejected
The court held that ASUS was barred from arguing that the 2008 PLA was non-FRAND based on arguments ASUS had made during arbitration. This portion of the decision was substantially redacted, so the precise reasoning and facts are unclear. But the ruling highlights how arguments made during arbitration can have a substantial impact on related district court litigation.

Notably, ASUS had also argued that even if the PLA was FRAND when executed in 2008, it became non-FRAND when InterDigital subsequently licensed its SEPs to others at more favorable rates. ASUS contended that in doing so, InterDigital had discriminated among licensees. This argument seems to center on a theory that the FRAND obligation contains an inherent “most favorable licensee” (MFN) obligation, requiring reevaluation throughout the term of an agreement. InterDigital argued in response that the ETSI FRAND commitment does not contain an ongoing obligation to reevaluate and renegotiate a contract if it becomes non-FRAND. ASUS responded that InterDigital’s negotiations with ASUS demonstrated an acknowledgement of such an obligation.

Judge Freeman rejected ASUS’s arguments, concluding that the ETSI policy applicable to the PLA’s SEPs, as well as the text of the PLA itself, lacked an MFN obligation. The court observed, in particular, that earlier versions of the ETSI policy expressly included an MFN provision, but that such an obligation was absent from the operative 1994 version. Judge Freeman further noted that the parties’ experts, as well as the court in TCL v. Ericsson, reached the same conclusion. And as for InterDigital’s negotiations with ASUS, the court explained that these communications were simply a recognition that FRAND obligations apply to the 4G renegotiation of the PLA, rather than acquiescence to an ongoing obligation to reevaluate the original PLA.

InterDigital’s Motion for Summary Judgment on Sherman Act Claim Denied
The court held that genuine issues of material fact precluded summary judgment of ASUS’s claim that InterDigital engaged in unlawful monopolization in violation of Section 2 of the Sherman Act. InterDigital put forward three arguments in moving for summary judgment: (1) that ASUS failed to identify a relevant market, because ASUS only made general reference to lists of patents InterDigital disclosed to ETSI, without actually identifying specific patents to which monopoly power could be attributed; (2) even assuming that InterDigital possessed monopoly power in a relevant market, that ASUS put forward no evidence that InterDigital engaged in any conduct that harmed the competitive process or was anticompetitive in nature; and (3) InterDigital disputed ASUS’s claims of an “antitrust injury” (i.e., an “injury to competition in the market as a whole”), rather than injury to a competitor standing alone. The court rejected each of these arguments in turn.

On market definition, Judge Freeman explained that it was not necessary to define a relevant market by listing individual patents. Citing a Northern District of California opinion, Judge Freeman noted that, in the context of a standard setting organization (SSO), courts have allowed a relevant market to be defined in reference to the technologies that previously competed to perform functions covered by the purported essential patents, and that “technology markets” associated with the technology standard for which a defendant’s patents are declared “essential” may serve as “relevant markets.” Therefore, it was sufficient for ASUS to refer to the effect of InterDigital’s actions on “Cellular Technology Markets,” which ASUS’s expert defined to include “technologies covered by patents incorporated into the 2G, 3G, and 4G cellular standards by SSOs, together with all other technologies that SSOs could have used in alternative cellular standards to perform the same or reasonably interchangeable functionalities.”

In evaluating the anticompetitive conduct at issue, Judge Freeman agreed with ASUS’s argument that InterDigital’s purported misrepresentation of its intent to abide by FRAND commitments presented a triable issue of fact as to whether InterDigital engaged in anticompetitive conduct. Citing the Third Circuit’s 2007 decision in Broadcom v. Qualcomm, the court explained that, in the context of a standard setting environment, “a patent holder’s intentionally false promise to license essential proprietary technology on FRAND terms,” coupled with a “[SSO’s] reliance on that promise” and “subsequent breach of that promise” by the patent holder, is “actionable” under the Sherman Act. While acknowledging it was a “close call,” Judge Freeman found that the evidence ASUS presented regarding InterDigital’s declarations to ETSI could lead a trier of fact to conclude that InterDigital never intended to abide by its FRAND obligations.

Finally, the court held that a reasonable trier of fact could find that InterDigital’s conduct caused injury-in-fact to ASUS and created antitrust injury. Because a factual dispute existed as to whether InterDigital’s offer was FRAND, the court explained that InterDigital’s conduct could have caused harm to ASUS by forcing it to choose between licensing InterDigital’s 4G SEPs on non-FRAND terms or effectively being cut off from the technology. The court noted that “similar logic” applied with respect to antitrust injury, since the market as a whole could have been precluded from practicing alternative technologies due to the anticompetitive conduct being alleged (i.e., misrepresentation by InterDigital of its intent to abide by FRAND obligations).

ASUS’s Motion for Summary Judgment on FRAND Breach of Contract Claim Denied
As mentioned, ASUS had moved for summary judgment on the issue of whether InterDigital breached its FRAND obligation. One of ASUS’s central contentions in its motion was that InterDigital’s ongoing negotiations to expand the PLA to cover its 4G SEPs violated its ETSI FRAND obligations by engaging in discrimination among licensees. This portion of the decision contains many redactions, apparently regarding licensing terms and allegedly similarly situated licensees, but ASUS generally appears to argue that it is not being offered licensing terms similar to those offered to similarly situated companies. InterDigital emphasized in response that the ETSI FRAND inquiry is highly factual and subject to disputes as to similarly situated licensees and license comparison methodology, among other issues.

Judge Freeman denied ASUS’s motion based on the existence of several genuine issues of material fact, and explained her view that ASUS read too broadly the non-binding and unsettled reasoning of TCL v. Ericsson. As one example of disputed facts, she identified that many factors contribute to the similarly situated licensee inquiry, and that the parties have presented conflicting evidence as to the particular companies that are similarly situated to ASUS. She further cited testimony by InterDigital President and CEO, as well as assertions by ASUS, as factually disputed by the parties, the precise details of which were redacted.

As for TCL, Judge Freeman explained that ASUS’s reading of the decision overlooks its guidance that “[s]ales volume alone does not justify giving lower rates to otherwise similar firms.” TCL, 2017 WL 6611635, at *33 (emphasis added by Judge Freeman). She stressed that TCL does not hold that volume discounts are necessarily discriminatory—only that this alone is not a legitimate basis for such discounts. She declined to hold that partial reliance on sales volume for discounts were discriminatory, and she commented that TCL’s reasoning is, in any event, yet “non-binding” and “unsettled,” based on its pending appeal to the Federal Circuit.

http://www.ipwatchdog.com/2019/02/28/district-court-denies-asus-interdigital-summary-judgment-motions/id=106844/