Patent Watch: InterDigital Commc'ns, Inc. v. Int'l Trade Comm'n

by BakerHostetler
Contact

"[A]n ITC order terminating an investigation on the basis of an arbitration agreement [is] an appealable final determination under 19 U.S.C. § 1337(c) [over which the Federal Circuit has] jurisdiction under 28 U.S.C. § 1295(a)(6)."

On June 7, 2013, in InterDigital Commc'ns, Inc. v. Int'l Trade Comm'n, the U.S. Court of Appeals for the Federal Circuit (Lourie, Bryson, Prost*) reversed and remanded the ITC order terminating the 19 U.S.C. § 1337 investigation in favor of arbitration because of a prior patent license agreement, which related to patents covering operations of 2G and 3G wireless communication devices, between InterDigital and LG that permitted the parties to submit to arbitration any disputes arising under the agreement. The Federal Circuit stated:

LG and the ITC argue that under the plain language of § 1337(c), there is no right to appeal an ITC order terminating an investigation on the basis of an arbitration agreement. They note that § 1337(c) provides a right to appeal "a final determination of the Commission under subsection (d), (e), (f), or (g)," and that the ITC terminated the investigation as to LG under the language added to subsection (c) [to] allow for termination "on the basis of an agreement between the private parties to the investigation, including an agreement to present the matter for arbitration." They view § 1337(c) as only permitting appeals of decisions made on the merits as to whether a violation of § 1337 has occurred. They conclude that the ITC's termination under subsection (c) is not a final determination under subsection (d), (e), (f), or (g) and thus is not appealable.

We find, however, that the reading of § 1337(c) urged by LG and the ITC, permitting appeals only of final decisions on the merits, is overly restrictive. . . . Their view of the statute also "disregards the general rule that judicial review will not be precluded on the sole ground that specific procedures for judicial review of a particular agency action are not spelled out in a statute." In addition, the language of § 1337(c) indicates that when Congress amended the statute to permit the ITC to terminate an investigation on the basis of "an agreement between the private parties to the investigation, including an agreement to present the matter for arbitration," it was envisioning a situation where the parties indisputably agreed to arbitrate -- not a situation like the present case, where there is a serious disagreement as to whether the dispute is subject to arbitration.

Because the ITC's order terminating the investigation in favor of arbitration was not a determination on the merits under § 1337(d), (e), (f), or (g), the pertinent question is whether the effect of the ITC's order is the equivalent of a final determination. . . . The ITC argues that . . . "the effect of the dismissal depends on the decision of the arbitrator." The ALJ terminated the investigation in favor of allowing an arbitrator to determine whether the dispute between InterDigital and LG is subject to arbitration. The ITC notes that "[i]f the arbitrator decides that the matter is not subject to the arbitration provision, InterDigital can reassert its complaint against LG before the Commission." In essence, the ITC's argument is that because InterDigital may be able to refile its complaint against LG at some point in the future, the order terminating the investigation is not "final."

We disagree. It is true that InterDigital may be able to bring its claims against LG in the ITC again in the future. On the other hand, it may not. Moreover, InterDigital contends (without contradiction from the other parties) that even if it ultimately succeeds in convincing the arbitrators that its claims against LG are not subject to arbitration, it will not be able to reopen the terminated investigation. Instead, it will have to file a new complaint. [And] InterDigital will have to await the outcome of the proceeding before the arbitrators to find out whether it can file a new complaint. Until the arbitrators determine whether InterDigital's claims are subject to arbitration, any new complaint InterDigital filed would also be terminated in favor of arbitration. In the meantime, LG may continue to import devices that allegedly infringe InterDigital's asserted patents. The order therefore has "the same operative effect, in terms of economic impact" as a final determination. . . . Accordingly, we hold that the order terminating the investigation as to LG was an appealable final determination under 19 U.S.C. § 1337(c) and that we therefore have jurisdiction under 28 U.S.C. § 1295(a)(6).

[T]he ALJ first determined "that the parties clearly and unmistakably intended to delegate the question of arbitrability to an arbitrator." The ALJ then turned to the question of whether LG's request for arbitration was "wholly groundless." The ALJ agreed with LG's position that the "wholly groundless" inquiry "does not extend to the merits of LG's license defense." The ALJ then found that LG's assertion of arbitrability was not wholly groundless . . . . As a result, the ALJ terminated the investigation as to LG. . . . In conducting the "wholly groundless" inquiry, the ALJ recited LG's arguments that (i) the Agreement expressly grants LG a license to the asserted patents, (ii) the license covers the products accused in this Investigation, and (iii) Section 2.1, the grant clause, survived the expiration of the Agreement. However, the ALJ failed to construe the provisions in the Agreement cited by LG to the limited extent necessary to assess whether its arguments were plausible. Instead, the ALJ simply concluded, "LG claims that it has a continuing license for the accused products under the terms of the Agreement, a dispute 'arising under' the Agreement." It was legal error for the ALJ to terminate the investigation without assessing whether LG's license defense was at least plausible.

If the ALJ had performed the proper analysis, he would have found that LG's license defense is not plausible. Rather, a cursory review of the relevant provisions in the Agreement confirms that LG no longer holds a license to InterDigital's patents for 3G products. [T]he result is unambiguous: the only surviving portion of the grant clause is that portion providing LG with a "fully paid-up" license for the life of InterDigital's patents for 2G products. There simply is no plausible argument that LG's license for 3G products survived the termination of the Agreement. Accordingly, LG's assertion of arbitrability was "wholly groundless." For the foregoing reasons, we reverse the ITC's order terminating the investigation as to LG and remand for further proceedings.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BakerHostetler | Attorney Advertising

Written by:

BakerHostetler
Contact
more
less

BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.