Managing Intellectual Property
August.01.2012
In the years since eBay Inc. v. MercExchange substantially reduced the possibility of injunctive relief in district courts, the International Trade Commission (ITC) has become an even more popular forum for patent holders. While damages are not available, the ITC offers the possibility of injunctive relief in the form of exclusion orders. The ITC also offers other advantages. First, an ITC investigation is much quicker than almost all District Court litigations. One exception is the Eastern District of Virginia, which provides resolutions as fast as or faster than the ITC. Second, all ITC administrative law judges (ALJs) are experienced handling technical patent disputes. Finally, the recent enactment of the America Invents Act’s (AIA’s) new joinder rules, preventing patent holders from suing multiple parties in a single district court lawsuit merely because they allegedly infringe the same patent, does not apply to the ITC.
While ITC exclusion orders are available, they are not issued as a matter of right (i.e., not automatically). As one example, the ITC can deny issuing an exclusion order to protect the public interest.
One public interest factor that the ITC is considering more closely is whether an exclusion order should issue in investigations involving essential standard-setting patents. And, in particular, if and to what extent a member of Standards Setting Organization (SSOs) who makes a commitment to license standards-essential patents on reasonable and non-discriminatory terms (RAND) can seek exclusion orders at the ITC.
The Commission recently voted to review an initial determination and requested further briefing on issues related to Apple’s RAND defenses to an exclusion order. See Certain Wireless Communication Devices, Portable Music and Data Processing Devices, Computers and Components Thereof, Inv. No. 337-TA-745, Comm’n Decision to Review in Part, 77 Fed. Reg. 38826 (June 29, 2012). The Commission is considering the threshold question of whether a RAND obligation by itself precludes the issuance of an exclusion order. The Commission is also considering whether some distinct factual scenarios weigh for or against the issuance of an exclusion order. Those scenarios include when the patent owner refused to negotiate, or offer a license, with a respondent or any other party, on RAND terms. The commission is also interested in scenarios where a respondent refused the patent holder’s offer to license on RAND terms.
Interestingly, in a prior investigation, an ALJ rejected Microsoft’s argument that Motorola’s RAND obligation prohibited the issuance of an exclusion order under the theories of implied license and/or waiver. See Certain Gaming and Entertainment Consoles, Related Software, and Components Thereof, Inv. No. 337-TA-752, Initial Determination, at 292-295 (April 23, 2012). The ALJ refused to find that an exclusion order is unavailable merely because the patent is encumbered by a RAND obligation. Id. at 290.
These recent RAND defenses in the ITC have generated great interest throughout the U.S. legal community. The Federal Trade Commission, US Senators, and large corporations all submitted written positions and comments on RAND issues in response to the ITC’s recent focus on RAND.
RAND issues, however, are not specific to the ITC. Recently Judge Posner of the Seventh Circuit, sitting by designation in a district court, held that [F]RAND obligations foreclose the availability of an injunction under eBay. In so holding, Judge Posner reasoned a “[F]RAND royalty would provide all the relief to which [patentee] would be entitled if it proved infringement of the [] patent, and thus it is not entitled to an injunction.” Apple, Inc. v. Motorola Inc., 2012 U.S. Dist. LEXIS 89960 at *49-50 (N.D. Illinois, June 22, 2012).
As the ITC navigates through its position on RAND issues, respondents may be tempted to assert RAND defenses at the ITC to avoid potential exclusion orders. Raising RAND defenses at the ITC, however, may have some legal implications. For example, if a respondent raises a RAND defense at the ITC (i.e., admitting that a patent is essential to an established standard practiced by the accused product), it may lessen (or eliminate) the patentee’s burden to establish infringement and prove damages at the district court. Regardless, the ITC’s consideration and treatment of RAND issues is highly anticipated by patent litigators as it could possibly impact patent litigation on multiple levels.
By Christopher P. Broderick and Andrew Y. Yen
This article was originally published in Managing Intellectual Property in August 2012.