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Chipmaker Drops Cell Tech Row In Calif., But Files Del. Suit
By Andrew Karpan · Law360
-- A Swiss chipmaker said Friday it was abandoning its efforts in a California federal court to use federal antitrust laws to argue that technology licensor InterDigital is demanding unfairly high royalty rates to license patents considered essential to 3G and 4G cellular tech standards.
Instead, the Zurich-based U-blox AG said it's going to the Delaware Court of Chancery to pursue what the company calls "a FRAND license lawsuit," in reference to an arrangement that contractually binds companies that own "standard essential patents" to negotiate licenses that are "fair, reasonable and nondiscriminatory."
A day before dropping the case in California on Friday, a new complaint from U-blox landed in the Chancery Court, according to supplemental information filed publicly with the court. The complaint was already assigned to Vice Chancellor Morgan T. Zurn, but was, itself, sealed.
"We proactively decided to move the case to the Delaware Court of Chancery," said U-blox co-founder Andreas Thiel in a press release circulated by his company, which added that he expected "the venue change to allow a much faster resolution of the issue."
The move comes, however, after U.S. District Judge Cathy Ann Bencivengo of the Southern District of California ruled Oct. 12 that because InterDigital "stated on the record at the motion to dismiss hearing that they have no intention of bringing an infringement claim against plaintiffs … there is no diversity jurisdiction, as plaintiffs and defendants are both citizens of Delaware."
"Therefore," Judge Bencivengo said, "the court does not believe it presently holds subject matter jurisdiction over this case."
This followed an earlier knock from Judge Bencivengo in August that threw out the antitrust suit from U-blox for failing to rise to the standard set over these kinds of lawsuits by the Ninth Circuit's 2020 decision in FTC v. Qualcomm, among other complaints.
U-blox, which makes microchips for wireless mobile devices, sued in California earlier this year in an effort to use the court to set what a fair licensing rate would be, and to issue an injunction "stopping InterDigital from wrongfully interfering with U-blox's customers and downstream manufacturers."
Much of the language in that lawsuit describing InterDigital's licensing practices had been largely identical to language in an older lawsuit that the same U-blox lawyers at Sheppard Mullin Richter & Hampton LLP filed against InterDigital in 2019. Those lawyers, however, do not appear listed on the supplemental information in the Delaware court filing; instead, it names the prominent Wilmington firm Potter Anderson & Corroon LLP.
Notably, the U.S. Department of Justice's Antitrust Division had quickly weighed in on that first lawsuit, telling the court that the agency planned to argue that the Swiss company's reading of antitrust laws would "unhelpfully distort licensing negotiations" and "risks undermining the incentives for innovation."
But the two companies settled later that year, before the agency's lawyers could file an official statement with the court arguing that U-blox's allegations didn't trigger their reading of antitrust law.
Lawyers for InterDigital did not immediately return a request for comment.
In the California case, U-blox was represented by Martin Bader, Ryan Patrick Cunningham, Stephen S. Korniczky, Ericka Jacobs Schulz and Mona Solouki of Sheppard Mullin Richter & Hampton LLP. In the Delaware case, U-blox is represented by Philip Rovner and Jonathan A. Choa of Potter Anderson & Corroon LLP.
In California, InterDigital was represented by Richard A. Kamprath, Nicholas Mathews, Blake Bailey, James H. Smith and Eliza Beeney of McKool Smith and James J. Yukevich and Nina J. Kim of Yukevich Cavanaugh LLP. Counsel information for InterDigital in the Delaware case wasn't available Friday.
The case in California federal court is U-blox AG et al. v. InterDigital Inc. et al., case number 3:23-cv-00002, in the U.S. District Court for the Southern District of California. The Delaware case is U-blox AG et al. v. InterDigital Inc. et al., case number 2023-1086, in the Court of Chancery of the State of Delaware.
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