Recent standard essential patent developments in US courts

Hogan Lovells
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Hogan Lovells

Several recent developments in U.S. standard-essential patent litigation (SEP) provide insight into the evolving U.S. SEP landscape and how parties and courts shape parties’ obligations to negotiate licenses for SEPs on fair, reasonable, and nondiscriminatory (FRAND) terms.


First, in G+ Communications v. Samsung Electronics, Judge Gilstrap in the U.S. District Court for the Eastern District of Texas issued two recent rulings interpreting parties’ contractual obligations to the European ETSI standards-setting body immediately before a jury trial relating to infringement of 5G standard-essential patents.  The first ruling involved whether actions of the prior owner of the patents-in-suit, ZTE, when negotiating SEP licenses, were attributable to the current owner, G+.    Samsung argued because ZTE did not comply with its FRAND obligations when it owned the patents, G+ was in breach of its FRAND obligations.  The Court, interpreting French contract law, disagreed, holding that, under French law, G+ was not in privity with ZTE and thus was not liable for any breach of contract or duty committed by its predecessor.  The Court granted summary judgment to G+ and prevented Samsung from arguing G+ was in breach of its FRAND obligations.

In his second ruling, Judge Gilstrap again interpreted parties’ obligations to the ETSI under French law.  First, the Court held that, under French law, a party that failed to negotiate in good faith under FRAND terms (whether the patentee or accused infringer) was entitled to attorneys’ fees and litigation costs.  Second, the Court held that, under French law, parties’ FRAND obligations could be suspended under certain circumstances, like bad faith actions of a counterparty. 

As a result of these two decisions, G+ was permitted to argue to the jury that any failure to achieve a FRAND license was attributable to Samsung’s conduct, and that G+ was entitled to attorneys’ fees as a result.  After these decisions, a jury returned a finding in favor of G+ in the underlying patent infringement case, awarding G+ $67.5 million in damages for infringement.

The debate over the scope of parties’ FRAND obligations is likely to continue, as U.S. router manufacturer Netgear has recently sued Chinese telecom Huawei in the Northern District of California alleging RICO violations stemming from Huawei’s licensing practices and repeated patent lawsuits against Netgear in European and Chinese courts.  This case may provide opportunities to further clarify the scope and extent of parties’ obligations to license SEPs under FRAND terms.

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