Companies all over the world continue to use standard essential patents (SEPs) as an important part of their intellectual property strategy. In this article, we summarize recent development in SEP cases in U.S. district courts, the Patent Trial and Appeal Board (PTAB), and European courts.
Malikie Innovations Ltd. v. D-Link Corp. (E.D. Tex.)
In April 2024, Malikie filed a complaint against D-Link for infringement of four patents. Malikie alleges three of the asserted patents (U.S. Patent Nos. 8,583,980; 9,313,065; RE48,212) are essential to the IEEE 802.11 WiFi standards, and that D-Link's WiFi router devices infringe these patents because D-Link claims that these routers support 802.11 communications. Malikie, a non-practicing entity, acquired the asserted patents from BlackBerry Ltd. in a deal that included approximately 32,000 patent assets for $170M. In its infringement mapping, Malikie cites sections of 802.11 standards to show that elements of the asserted claims are practiced by D-Link's WiFi router devices.
Malikie alleges that it, and BlackBerry before it, offered D-Link an opportunity to license Malikie's SEP portfolio covering IEEE 802.11 standards, including the asserted patents, on fair, reasonable, and non-discriminatory (“FRAND”) terms on several occasions as early as October 2020 but D-Link did not engage in any license negotiations. Malikie also seeks enhanced damages and attorney's fees, alleging willful infringement by D-Link and exceptional case under 35 U.S.C. § 285.
It is worth noting that courts had previously set royalty rates for the same WiFi standards in Microsoft Corp. v. Motorola, Inc. and In re Innovatio IP Ventures. However, the court in Innovatio IP Ventures determined the royalty base as the smallest saleable unit – the WiFi chip – instead of the accused devices, as in Microsoft v Motorola. It remains to be seen whether the EDTX court will agree with this approach and limit the royalty base to the smallest saleable unit.
LG Electronics Inc. v. Pantech Wireless LLC (PTAB)
In April 2024, The PTAB granted institution of all five IPR petitions LG filed against patents owned by Pantech, determining that LG had demonstrated a reasonable likelihood that at least one of the challenged claims is invalid. Pantech initially filed an infringement suit in the EDTX against LG in September 2022, asserting seven patents in total. The five patents LG challenged in the PTAB (U.S. Patent Nos. 9,136,924; 9,854,545; 10,869,247; 9,313,809; 9,065,486) were alleged in the EDTX case as being essential to the 3G, 4G/LTE, and/or 5G wireless communication standards.
Notably, to challenge the validity of the alleged SEPs, LG utilized multiple 3GPP TS documents, including standard technical specifications, such as TS 36.213 and TS 36.211, and proposals submitted during the standards working group meetings. These technical documents from 3GPP telecommunication standards frequently prove to be effective prior art for claim elements not found in other prior art patents.
In arguing against institution, Pantech asserted the Fintiv factors favored a § 314 (a) discretional denial because the trial date in the district court action will precede the projected final written decision dates, and the parties have invested significant time and money in the district court action. The Board, however, declined to deny institution after LG submitted Sotera stipulations, agreeing that it would not pursue in the district court the same grounds of invalidity asserted in the Instituted IPRs, or any other ground that was raised or could have reasonably been raised in the IPRs. The Board's denial is consistent with USPTO Director Vidal's Memorandum in June 2022 addressing the application of Fintiv.
LG subsequently filed a motion to stay in the EDTX litigation pending the IPR decisions, and Pantech opposed LG's motion. A ruling has not yet issued on LG's motion.
Amazon.Com, Inc. and Amazon.Com Services LLC v. Nokia Technologies (PTAB)
In April 2024, Amazon filed four IPR petitions against Nokia patents, requesting review of three patents (U.S. Patent Nos. 7,724,818; 8,204,134; 10,536,714) that Nokia claims to be essential to the H.264 and H.265 video compression standards. In November 2023, Nokia had initiated two district court litigations and one ITC investigation against Amazon, alleging infringement of these patents.
For all four petitions, Amazon argued that discretionary denial under Fintiv is unwarranted because: 1) Fintiv does not apply to ITC investigations; and 2) no schedule had been entered for the two district court cases, so any trial would be expected to occur well after the final written decision deadline of the IPRs (likely October 2025).
Similar to the LG IPRs, Amazon also used technical documents submitted for JVT and VCEG meetings to challenge the validity of Nokia's patents. To prove the public availability of the standard documents, Amazon also filed declarations from members of the standard organizations describing the H. 264 standardization process and the public accessibility of JVT and VCEG documents. These recent IPR petitions and decisions underscore the important role of SSO (Standard-setting organization) documents (e.g., technical specifications, draft proposals, or meeting documents by the working groups) in challenging the validity of standard-essential patents. These technical documents serve as blueprints for the development and implementation of industry standards and often are critical for bridging the gaps between claims of SEPs and other prior art literature.
Panosonic Holdings Corp. v. Xiaomi Tech. Germany GmbH (UPC)
On 30 April 2024, the Mannheim Local Division of the UPC issued the first order regarding the production of third-party license agreements in the context of SEP litigation between Panasonic and Xiaomi (docket no.: UPC_CFI_ 219/2023, decision no.: ORD_14600/20241). The patent involved was EP 2 568 724, which claims a “radio communication device and radio communication method” allegedly relating to the 4G wireless standard. The plaintiff in the main infringement proceedings, Panasonic, requested an order allowing it to produce two license agreements it has in place with third parties. Panasonic intended to rely on these two license agreements for its reply brief but they were subject to confidentiality clauses. Panasonic also tried to contact the respective license partners prior to the request without success. The court granted the request.
The judge held that Rules 172(2) and 190 of the Rules of Procedure (RoP), which expressly deal with the production of evidence, do not apply in this case. A request pursuant to Rule 172(2) requires a “contested” fact, which is not relevant here since the agreements were going to be submitted for the first time. Rule 190 RoP, in turn, concerns the production of evidence in the control of the opposing party. But the judge concluded that the UPC-Agreement (UPCA) and RoP vested the court with extensive case-management powers to issue orders to effectively conduct the proceedings, so long as the orders do not impair the freedom of the parties to determine evidence for their case (Art. 43 UPCA) and are not arbitrary. In that context, the judge expressly mentioned the FRAND negotiation framework as established by the CJEU in the Huawei v ZTE decision which outlined various requirements the SEP owner must comply with prior to enforcing its SEP. Further, at this early stage of the proceedings, the disclosure of license agreements prevents a potential delay of proceedings, creates transparency, and might even foster a settlement between the parties. In that regard, the court also observed that consent from the contracting partners of the concerned license agreements was previously sought, and the third parties are able to participate in the proceedings if required. Ultimately, the court allowed Panasonic to redact passages of the concerned license agreements which were not relevant.
The present order shows that the UPC considers the negotiation framework of the Huawei v ZTE decision the applicable framework for FRAND license negotiations. Therefore, parties involved in SEP litigation before the UPC should ensure that existing license agreements with third parties are in accordance with established FRAND principles as they may be submitted in UPC litigation. Additionally, this order addressed the desire to enhance transparency in SEP negotiation proceedings.
Footnote
1. The Court issued identical orders in the parallel proceedings pending between the same parties regarding EP 3 096 315, which claims a “device and method for execution of Huffman coding” (UPC_CFI_ 218/2023, decision no.: ORD_14581/2024); EP 2 207 270, which claims a “wireless communication base station apparatus, and wireless communication mobile station apparatus and control channel allocation method” (docket no.: UPC_CFI_ 223/2023, decision no.: ORD_14603/2024), all allegedly relating to the 4G wireless standard.
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