Upcoming decisions will reveal whether the ITC still welcomes standard essential patents


Financier Worldwide Magazine

September 2017 Issue

Standard essential patents are often some of the most valuable intellectual property (IP) companies own, yet there has been increasing uncertainty about the ability of patentees to obtain either injunctions against, or substantial royalties from, infringers of these patents in district court. In many disputes the accused infringers argue that patentees should not be able to obtain injunctive relief for infringement of standard essential patents or that the patentees are obligated to licence the patents to all askers on what are called ‘fair, reasonable, and non-discriminatory’ (FRAND) terms that are much lower than the patentee seeks. In the past, the US International Trade Commission (ITC), one of the premier venues for deciding patent disputes in the US, has made it clear that the owners of standard essential patents (SEPs) may still obtain relief at the ITC. Recent events have reinforced the ITC’s position, and the openness of the ITC to enforcing the rights of all patent holders, including those holding SEPs. Despite this openness, due to settlements and other factors, to date, no party has succeeded in obtaining an ITC exclusion order on a SEP. However, two ITC decisions issuing this autumn, and one issuing in 2018, may finally achieve this goal and will also be important indicators as to whether the ITC’s policies have remained unchanged.

The ITC has demonstrated that the owners of SEPs may obtain a remedy from infringement, through both explicit statements and through its actions. ITC officials, ranging from the full Commission to the judges and the Office of Unfair Import Investigations (the ITC office whose attorneys investigate intellectual property disputes), have all stated that SEPs should be treated no differently than other patents and if infringed, full relief should be awarded. In addition, the ITC has allowed numerous investigations to proceed despite the fact that SEPs were asserted.

All branches of the commission have made public statements strongly supporting the rights of the holders of SEPs to assert their patents at the ITC. In October 2016, in a notice from the full Commission in Certain Industrial Control System Software, Systems Using Same, and Components Thereof, Investigation 337-TA-1020, the ITC made a clear public statement that SEPs may be asserted at the ITC. In this investigation, the party accused of infringement asked the ITC to make an early determination on whether or not the asserted patents were standard, essential and subject to mandatory licensing obligations. The ITC declined this request, and said it would consider the issue of standard essentiality when it considered the other public interest issues in the case and would make no exceptions, due to the fact that the patents asserted were standard essential. By doing this, the ITC has made a clear statement that SEPs will be treated no differently than other patents asserted in ITC investigations. In doing so they reiterated that issues relating to SEPs essentiality do not preclude the ITC’s jurisdiction to issue exclusion orders directed against infringing products.

Other branches of the ITC have reiterated this statement. In ITC Investigation 337-TA-613 (Remand), Certain 3G Mobile Handsets and Components Thereof, the Commission’s own attorneys in the Office of Unfair Import Investigations submitted a brief explicitly addressing the question of whether or not the ITC should or could hear cases and issue exclusion orders on SEPs. The staff’s brief unequivocally stated that the Commission had the authority to hear cases involving SEPs and to order exclusion of products which infringed them, and recommended against the Commission implementing any policy to the contrary.

In the same case, one of the ITC’s administrative law judges, Judge Theodore Essex, issued an opinion supporting SEP owner rights. He ruled that in order to assert a SEP defence, the accused infringers must prove that the patents are SEPs, are burdened by an obligation to licence on FRAND terms and that the patentee violated its FRAND agreement and engaged in hold up. He stated that there must be actual evidence of hold-up, not just the possibility.

The same judge made an even stronger statement in favour of the rights of SEP owners in his opinion in Investigation 337-TA-868, Certain Wireless Devices with 3G and/or 4G Capabilities. In this case Judge Essex issued an opinion precluding the accused infringers from relying on a SEP defence when they failed to seek a licence before practicing the patent. In the opinion, he also ruled that there is no actual or threatened hold up in the investigation or the telecommunications industry. With respect to all SEPs generally, he stated that the idea that SEP owners should not be able to obtain ITC relief incentivises infringers to not take licences, even those offered on reasonable terms, that the fact that the owners declare the patents standard-essential does not mean they are actually essential to the standard, that must be adjudicated, and further that even if asserted patents are SEPs, it does not automatically follow that they are subject to FRAND terms, and the accused infringers must prove this as well.

The ITC has backed up its words with actions. Perhaps the case that makes it most clear that SEPs can be successfully asserted at the ITC is Investigation 337-TA-953, titled Certain Wireless Standard Compliant Electronic Devices, including Communication Devices and Tablet Computers. The name itself is telling, from the very beginning it was clear that the asserted patents were SEPs, and the allegations of infringement were based in part on the fact that the accused infringers practiced the technical standard to which the patents were essential. Knowing this, the ITC allowed the investigation to proceed, indicating that the fact that the patents were standard essential did not take infringement of them out of ITC jurisdiction or preclude the ITC from issuing relief.

This policy is nothing new; the ITC previously had allowed infringement determinations, based on practice of a standard to stand. In Investigation 337-TA-613, Certain 3G Mobile Handsets, the judge found that a limitation of the asserted patents was met by a portion of the standard. Though the Commission ultimately found no infringement, it did not overturn that part of the judge’s opinion and allowed it to stand. Similarly, a number of other ITC investigations, such as Investigations 337-TA-994, 337-TA-979 and 337-TA-1049, have proceeded, despite the fact that the accused infringers claimed that the patents are standard essential. Despite the ITC’s openness toward SEPs, to date, no owner of an SEP has successfully obtained an exclusion order from the ITC; the cases have all either settled or no infringement was found. However, there are multiple cases pending, two of which have opinions issuing very soon, which may change this.

In 337-TA-1012, titled Certain Magnetic Data Storage Tapes and Cartridges Containing the Same, the parties asked the judge to specifically rule on many issues regarding the alleged standard essential nature of the patents including whether two of the patents are standard essential. Further, the accused infringers have asked the judge to determine whether the patent holders are liable for breach of contract or patent misuse due to their assertion of SEPs, and whether or not the patentee has, by participating in the standards process, either waived its rights to injunctive relief or granted an implied licence to its patents. The trial was already held in this case and the judge’s decision is due to issue 1 September. Because the judge’s list of questions to be decided includes so many questions regarding SEPs and the policy regarding them, the opinion will be of great interest to those following this issue.

Investigation 337-TA-1023, titled Certain Memory Modules and Components Thereof, and Products Containing Same, also involved many issues relating to SEPs, including the interpretation of the relevant standard setting body’s policies, whether the patent owner was obligated to offer licences on FRAND terms and whether the licence terms offered by the patentee were discriminatory. The trial has already been held in this case as well, and the decision is expected in early October. The opinion will be written by Judge Essex, who issued the earlier decisions supporting the rights of SEP owners.

In ITC Investigation 3337-TA-1051, Certain LTE Wireless Communication Devices and Components Thereof, the patentee’s infringement allegations are based, in part, on the fact that the accused infringers practice a standard which their patents are essential to. The accused infringers have offered a SEP defence, alleging that because the patentee is a member of the European Telecommunications Standards Institute, the patentee was contractually obligated to licence its SEPs under fair, reasonable and non-discriminatory terms, but that the patentees had breached this duty by proposing royalty rates that far exceeded reasonableness in the settlement meetings. The judge’s decision in this case will not issue until May 2018.

These decisions, particularly those issuing this autumn, will be important signals with regard to whether, in a new political climate, the ITC will maintain its policy of not discriminating against the owners of SEPs.


Aarti Shah, Michael Renaud and James Wodarski are members at Mintz Levin. Ms Shah can be contacted on +1 (202) 434 7408 or by email: ashah@mintz.com. Mr Renaud can be contacted on +1 (617) 348 1870 or by email: mtrenaud@mintz.com. Mr Wodarski can be contacted on +1 (617) 348 1885 or by email: jwodarski@mintz.com.

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Aarti Shah, Michael Renaud and James Wodarski

Mintz Levin

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