decision not to grant Nokia's motion to terminate based on IDCC's FRAND. See part of motion filing below.
ARGUMENT
I. ORDER NO. 29 CONCERNS CONTROLLING QUESTIONS OF
LAW AND POLICY AS TOWHICH THERE ARE SUBSTANTIAL
GROUNDS FOR DIFFERENCE OF OPINION.
A. InterDigital’s FRAND Commitments are Inconsistent with Its
Request for Injunctive Relief.
As discussed in Nokia’s initial request to certify Order No. 29 for interlocutory
review by the Commission, the status of a patent holder’s FRAND commitments as
binding and enforceable agreements and the obligations created by those commitments
are issues that are currently being considered by courts and administrative agencies
across the United States as well as in international fora. In Order No. 29, ALJ Shaw
declined to terminate this Investigation as to Nokia based upon InterDigital’s FRAND
commitments because “Nokia has not cited any case in which a section 337 remedy was
foreclosed due to the existence of FRAND obligations; nor has Nokia relied on any court
case in which an injunction was denied or set aside due to the existence of FRAND
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obligations” (Order No. 29 at 3). The Northern District of Illinois recently issued just
such an order, dismissing a party’s claim for injunctive relief precisely because of the
existence of binding and enforceable FRAND obligations. In the face of such
contradictory authority, extraordinary circumstances are present which warrant
interlocutory review by the Commission. See Certain Network Interface Cards and
Access Points for Use in Direct Sequence Spread Spectrum Wireless Local Area
Networks and Products Containing Same, Inv. No. 337-TA-455, Order No. 28 at *3
(Aug. 17, 2011) (finding this prong of the interlocutory appeal review analysis satisfied
where a split of authority between several federal district courts existed).
In Apple, Inc. v. Motorola, Inc., No. 11-cv-8540, Opinion and Order of June 22,
2012 (N.D. Ill. June 22, 2012), Judge Posner, sitting by designation, dismissed
Motorola’s claim for injunctive relief based on the alleged infringement of a patent that
had been declared essential to the European Telecommunications Standards Institute
(“ETSI”). Judge Posner found that Motorola’s FRAND commitment was entirely
inconsistent with the relief sought, writing that:
I don’t see how, given FRAND, I would be justified in enjoining Apple
from infringing the ‘898 unless Apple refuses to pay a royalty that meets
the FRAND requirement. By committing to license its patents on FRAND
terms, Motorola committed to license the ‘898 to anyone willing to pay a
FRAND royalty and thus implicitly acknowledged that a royalty is
adequate compensation for a license to use that patent. How could it do
otherwise? How could it be permitted to enjoin Apple from using an
invention that it contends Apple must use if it wants to make a cell phone
with UMTS telecommunications capability – without which it would not
be a cell phone.
Id. at *18-19. Judge Posner also cited the Federal Trade Commission’s public interest
statement filed in the 745 investigation in support of his ruling, noting that the statement
“implies that injunctive relief is indeed unavailable for infringement of a patent governed
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by FRAND…This was said in the context of an exclusion order by the International
Trade Commission, but its logic embraces any claim to enjoin the sale of an infringing
product.” Id. at *19. Based on this reasoning, Judge Posner dismissed Motorola’s claim
for injunctive relief with prejudice.1 Judge Posner’s decision represents the clearest
judicial statement to date that a party’s FRAND obligations represent a binding and
enforceable agreement which is not consistent with a claim for injunctive relief where the
manufacturer is willing to pay a FRAND royalty for patents that are essential to a
standard, valid, and actually used by the manufacturer.2 As such, these FRAND
commitments qualify as “licensing or other agreement[s]” which may and should serve as
the basis for termination of an International Trade Commission investigation under 19
1 Judge Posner goes on to explain a “further objection” to Motorola’s injunctive
relief claim based on his consideration of the factors set forth in eBay Inc. v.
MercExchange, L.L.C., 547 U.S. 388, 391-92 (2006), but this analysis is separate from
his finding that Motorola’s FRAND commitments were not consistent with its claim for
an injunction. Apple, Inc. v. Motorola, Inc., No. 11-cv-8540, Opinion and Order of June
22, 2012 at *21 (N.D. Ill. June 22, 2012). Thus, Judge Posner first finds that Motorola’s
injunction claim is inconsistent with its enforceable FRAND obligations, and then goes
on to apply the eBay factors to both parties’ claims for injunctive relief.
2 InterDigital criticizes the FTC’s statement in its Opposition to Nokia’s Request to
Certify Order No. 29 for Interlocutory Review, arguing that the FTC’s analysis favors
patentees at the expense of patent holders because “[a]bsent the availability of injunctive
relief, patent owners are subject to ‘reverse hold up,’ where their sunk costs in R&D and
technology development cannot be recovered due to implementers who are emboldened
in avoiding or refusing to take licenses” (Opp. at 7). Judge Posner also explicitly rejected
this argument, finding that “[y]ou can’t obtain an injunction for a simple breach of
contract on the ground that you need the injunction to pressure the defendant to settle
your damages claim on terms more advantageous to you than if there were no such
pressure.” Apple, Inc. v. Motorola, Inc., No. 11-cv-8540, Opinion and Order of June 22,
2012 at *21 (N.D. Ill. June 22, 2012). See also Microsoft Corp. v. Motorola Inc., No. 10-
1823, Court’s Ruling at *6 (W.D. Wash. Apr. 11, 2012) (granting Microsoft’s motion for
a temporary restraining order preventing Motorola from enforcing injunctive relief
against Microsoft because even though Microsoft could defend against a German
injunction using the “Orange Book” procedure, “it would place Microsoft at the position
of a negotiation in Germany with the threat of an immediate injunction hanging over its
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C.F.R. § 210.21(a)(2), as such commitments are incompatible with the relief sought
before the Commission.
In Order No. 29, ALJ Shaw based his decision to deny Nokia’s motion to
terminate on the fact that no court case had been issued in which an injunction was
denied based on the existence of FRAND obligations (see Order No. 29 at 3). This is no
longer the case following Judge Posner’s opinion, and so this issue is uniquely ripe for
review by the Commission.
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