ITC Section 337 Update – October 4, 2013

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Commission Issues Notice Of Shutdown Of Investigative Activities – On October 1, 2013, the Commission issued a Notice that, as a result of the broader shutdown of the federal government, the Commission “will shut down its investigative activities for the duration of the absence of appropriation,” including investigations conducted under the authority of Section 337.  The Notice states that during the shutdown, all deadlines for investigative and pre-institution activities will be tolled, and that deadlines will be extended by a number of days commensurate with the duration of the shutdown.  The Notice further states that the Commission website and online services, as well as all telephone communication with Commission staff, will be unavailable during the shutdown. 

Samsung Seeks White House Disapproval Of ITC Smartphone Exclusion Order In 796 Investigation – On August 28, 2013, Samsung filed a Submission with U.S. Trade Representative (“USTR”) seeking the President’s disapproval of a limited exclusion order and cease and desist order issued by the Commission in Certain Electronic Digital Media Devices And Components Thereof, Inv. No. 337-TA-796.  The remedial orders issued by the Commission exclude certain Samsung smartphones that infringe Apple’s ‘949 “touch screen” patent and ‘501 patent directed to a receptacle switch for plug detection.  Samsung acknowledges that “the volume of products actually affected by the Commission’s orders is perhaps small” and that the Commission “found that Samsung’s design arounds were non-infringing, and expressly excluded them from the scope of the remedial orders.”  Nevertheless, Samsungargues that “the patents cover small, insignificant features of complex electronic devices” and that “the orders unfairly grant Apple a remedy well beyond the contribution of its inventions….”  Samsung contends that “USTR has a strong policy interest in assuring that the scope of any remedy is commensurate with the scope of the invention at issue.”  Samsung advocates that, in order to obtain injunctive relief, a Complainant should be subject to the same “causal nexus” standard  (see Apple Inc. v. Samsung Elecs. Co., Ltd., 695 F.3d 1370 (Fed. Cir. 2012)), and eBay factors applied by the U.S. District Courts.  Pursuant to 19 U.S.C. §1337(j), a Presidential decision, if any, is expected by October 10, 2013, subject to tolling in view of the government agency shut down. 

District Court Denies Motorola’s JMOL Motions To Overturn September 4, 2013 Jury Verdict Finding Breach Of FRAND Commitment – In a 29 page Order On Motions For Judgment As A Matter Of Law dated September 24, 2013, Judge James L. Robart in Case No. C10-1823JLR (W.D. Wash.) denied Motorola’s JMOL Motions to overturn the Jury Verdict that Motorola breached its FRAND commitment to IEEE and ITU by offering to license certain of its declared SEPs to Microsoft at an unreasonable royalty rate.   Microsoft filed the breach of contract action against Motorola based on Motorola’s two initial offer letters, each of which “offered a royalty rate of 2.25%” of the price of the end product (e.g., each Xbox 360, PC/laptop, smartphone, etc. . .) compliant with the 802.11 or H.264 Standards. At trial, Microsoft contended Motorola breached its FRAND obligations by, inter alia, offering its 802.11 and H.264 patents at a royalty rate that was not FRAND.  In denying Motorola’s JMOL Motions, the District Court found, inter alia, that Microsoft presented a “substantial amount of evidence” Motorola breached its duty of good faith and fair dealing in carrying out its contractual commitments to IEEE and ITU, including that “Motorola’s actions did not conform with industry custom and practice” and frustrated the purpose of the IEEE and ITU contracts through “hold up” and “royalty stacking.”  The District Court’s determination of a FRAND royalty rate and range can be found in Public Version of Findings of Fact and Conclusions of Law.

Federal Trade Commission Issues Notice And Request For Comment On Patent Assertion Entities – On September 30, 2013, the Federal Trade Commission (“FTC”) issued a Notice and request for comment advising that it is conducting a study under section 6(b) of the Federal Trade Commission Act, 15 U.S.C. § 46(b), on Patent Assertion Entity (“PAE”) activity in the wireless communications sector.  For purposes of the FTC’s notice, PAEs are “firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technology.”  The FTC plans to subpoena 25 PAEs and 15 manufacturing companies and other entities in order to gather information on patent acquisition, litigation, licensing agreements and practices, and costs and revenue from these activities.  PAEs who receive the subpoena will be required to supply information in response to sections A-H of the notice.  Manufacturing companies who receive the subpoena will be required to supply information in sections A-B and E-H of the notice.  The FTC also is seeking comments from interested parties and the public on the burden likely to be imposed by its proposed information requests.  Comments will be due within 60 days of the date of publication of the notice in the Federal Register, but publication of the notice and commencement of the study are postponed until the Government shutdown ends.