Precedent-setting SEP enforcement injunction awarded in Wi-Fi dispute

Ruling expected to impact May 31 Apple versus Samsung ITC ruling

A ruling yesterday in the Northern District of California may have repercussions on the smartphone patent battles raging across the US court landscape. A federal judge granted a user of a standards-essential patent a preliminary injunction against enforcement of a possible US International Trade Commission (ITC) sales injunction. This decision by Senior District Judge Ronald Whyte is the first time a US district court is preventing the ITC's only option to combat patent infringers in conjunction with standards-essential patents.

The potential infringer is RealTek Semiconductor. The patent holder is Agere, owned by Taiwanese chipset designer and supplier LSI. Judge Whyte granted the preliminary injunction based on a summary judgment finding in RealTek's favor on the allegation that LSI and Agere breached the fair, reasonable, and non-discriminatory (FRAND) licensing obligation for standards-essential patent holders in seeking the ITC exclusion order without previously offering a license on FRAND terms. Agere's previous offer was five percent of the product sale price, generally not considered to be a fair licensing rate.

The injunction does not prevent the ITC from investigating the issue, but it does prevent Agere from enforcing the sales ban, pending a complete FRAND trial, which would result in a rate-setting order, making any injunction moot anyhow.

Future FRAND actions will be affected by the injunction. Rather than assuming a protective order is possible, patent owners will have to point out key differences between running cases and the RealTek/Agere case, and likely these differences will have to be pointed out before an ITC action is started.

Patent analyst Florian Mueller sees an immediate impact on the Apple versus Samsung ITC complaint, due to be ruled upon on May 31. He notes that "There were very strong indications that one Samsung SEP was found valid and infringed by Apple, and the ITC now has to think about remedies in light of FRAND. It came close to having to make similar decisions in other cases, but those were dismissed on their non-FRAND-specific merits, or settled. In the Samsung-Apple case the ITC will have to take a position on FRAND, and the breadth of its questions show that it's really trying to look at this hard from all angles. For institutional reasons the ITC probably won't want to deprive itself of jurisdiction over SEP infringement claims, but with more rulings of the kind Judge Whyte issued yesterday, that's what may inevitably happen over time."

Mueller also notes that Samsung's 2.4 percent patent license fee is expected to come into play with the ITC ruling. Given the high rate, Mueller believes that "There's enough in the record in the Northern District of California to determine quickly that Samsung isn't entitled to injunctive relief in any form, including that of an ITC exclusion and cease-and-desist order. "


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