Companies all over the world continue to use standard essential patents (SEPs) as an important part of their intellectual property strategy. In this article, we summarize recent SEP cases in U.S. district courts, the Patent Trial and Appeal Board (PTAB), and European courts.
Freedom Patents LLC v. Cisco Systems, Inc. (E.D. Tex.)
On June 14, 2024, Freedom Patents, a non-practicing entity, filed a complaint against Cisco for infringement of three patents (U.S. Patent Nos. 8,284,686, 8,374,096, 8,514,815). Freedom Patents acquired the asserted patents from Mitsubishi Electric Research Laboratories in 2022. Freedom Patents alleges that Cisco's WiFi routers infringe because they support 802.11ax communications, which are allegedly covered by the patents. On or about the same day Freedom Patents filed its complaint against Cisco, it also filed complaints in the same court asserting the same patents against ASUSTek, Hewlett Packard, LG, Micro-Star, Razer, Samsung, Sharp, Sony, T-mobile, Vantiva, and Lenovo.
While Freedom Patents relies on the 802.11ax standards for its infringement allegations, its complaint does not allege that the asserted patents are essential to them. Nor is there any statement in the complaint that the three patents are subject to a commitment to license them on fair, reasonable, and non-discriminatory (“FRAND”) terms. In other cases where the plaintiff did not allege the asserted patents are essential to a standard and subject to a FRAND commitment, courts have ruled that it is the defendant's burden to prove essentiality and a breach of a FRAND commitment. See 3G Licensing, S.A., v. BlackBerry Ltd., Case No. 17-82-LPS, Memorandum Opinion, 6 (September 29, 2020 D. Del); HTC Corp. v. Telefonaktiebolaget Ericsson, Case No. 6:18-CV-00243-JRG, Dkt No. 222, 1-3 (November 8, 2018 E.D. Tex.). Thus, if Cisco asserts any FRAND defenses, it likely would bear the burden of proving these patents are subject to a FRAND commitment.
Ericsson Inc. and Nokia of America Corporation v. Active Wireless Technologies LLC (PTAB)
On May 1, 2024, Ericsson Inc. and Nokia of America Corporation (collectively “Petitioners”) requested Inter Parte Review of US Patent No. 11,019,557. The '557 patent relates to acquiring periodically broadcast messages containing information about a wireless communication system, which are called system information blocks (SIBs).. Active Wireless asserted the '557 patent against Verizon and T-Mobile in the Eastern District of Texas, claiming it is infringed by base stations compliant with 5G standards. Petitioners have intervened in the district court proceedings because it is their products that are being accused of infringement.
For their invalidity arguments, Petitioners cited an earlier version of the 5G standard to explain the state of the art and to show that features claimed in the patent were already used in prior systems.
Petitioners did not construe any terms of the '557 patent in the Petition, even though some terms were proposed for claim construction in the district court litigation. Petitioners will sometimes adopt this approach in IPRs where the prior art discloses the same embodiments as described in the challenged patent because it simplifies the issues before the Board.
Amazon.Com, Inc. and Amazon.Com Services LLC v. Nokia Technologies (PTAB)
On May 10, 2024, Amazon filed two parallel IPR petitions (IPR2024-00847, IPR2024-00848) against Nokia, requesting review of U.S. Patent No. 7,532,808, which Nokia claims to be essential to the H.264 and H.265 video compression standards. Nokia is asserting the '808 patent against Amazon, its subsidiary Twitch, and Hewlett-Packard in the ITC and in the District of Delaware. Nokia previously asserted the '808 patent against Lenovo in the ITC and in the Eastern District of North Carolina in 2019-2020 and against Apple in 2016. All these earlier cases settled.
The first petition challenges 19 method claims, while the second petition challenges 21 apparatus claims. In its statement in support of its petitions, Amazon argued that parallel petitions are warranted because the '808 patent has 65 claims spanning more than 9 columns of patent text. Amazon explained that the 40 challenged claims concern complex subject matter in the form of encoding and decoding video sequences, predicted motion vectors, and coding vectors based on neighboring segment information. Further, although the two petitions rely on the same art and challenge claims having some limitations in common, Amazon noted they each rely on different disclosures from the prior art references.
Amazon's petitions rely on Applicant Admitted Prior Art (AAPA) in combination with prior art patents and the H. 263 standard (prior version of H. 264) in some of its grounds. Regarding AAPA, Amazon points to '808 patent's description of generic video coding systems in its specification.
According to an updated guidance memorandum on the treatment of AAPA during an IPR issued by the USPTO Director Katherine K. Vidal in June 2022, AAPA can be used to “(1) supply missing claim limitations that were generally known in the art prior to the invention (for pre-America Invents Act (AIA) patents) or the effective filing date of the claimed invention (for post-AIA patents); (2) support a motivation to combine particular disclosures; or (3) demonstrate the knowledge of the ordinarily-skilled artisan at the time of the invention (for pre-AIA patents) or the effective filing date of the claimed invention (for post-AIA patents) for any other purpose related to patentability.” However, it is “impermissible for a petition to challenge a patent relying on solely AAPA without also relying on a prior art patent or printed publication.”
Realizing that Patent Owner may challenge the propriety of its reliance on AAPA, Amazon presented an alternative ground not relying on AAPA. This is a good practice that keeps the petition alive even if the Board rejects the use of AAPA as the main basis for a given challenge.
AT&T Services Inc., T-Mobile USA, Inc., Cellco Partnership D/B/A Verizon Wireless, Ericsson Inc., and Nokia of America Corporation v. Innovative Sonic Limited and Celebrity IP, LLC (PTAB)
On May 31, 2024, AT&T Services Inc., T-Mobile USA, Inc., Cellco Partnership D/B/A Verizon Wireless, Ericsson Inc., and Nokia of America Corporation (“Petitioners”)filed an IPR petition challenging US Patent No. 9,736,883. Innovative Sonic Limited (“Innovative”) has alleged the '883 patent, which relates to handling inter-node connectivity in wireless communication, is essential for 5G communication in co-pending litigation against Petitioners in Eastern District Court of Texas.
In the petition, Petitioners presented two §102 anticipation grounds and two single-reference §103 obviousness grounds. Under the precedential PTAB decision in Penumbra, Inc. v. RapidPulse, Inc. (IPR2021-01466), an AIA patent (that is, a patent filed on or after the date the relevant America Invents Act provisions became effective on March 13, 2013) can rely on the filing date of its priority application without showing that at least one claim is supported by the priority application. But it is still required to show that the priority application describes the subject matter at issue. But pre-AIA patents are different. In Dynamic Drinkware, the Federal Circuit held that “a reference patent is only entitled to claim the benefit of the filing date of its provisional application if the disclosure of the provisional application provides support for the claims in the reference patent in compliance with § 112 ¶ 1.” Therefore, for pre-AIA patent references, a petitioner must demonstrate that (1) at least one claim of the reference is supported by its priority application, and (2) the specific subject matter relied upon as prior art is supported by the priority application. In this IPR, Petitioners relied on a pre-AIA patent, so they provided a Dynamic Drinkware analysis to show that it was entitled to the effective filing date of its provisional application.
Like the Ericsson et al. v. Active Wireless Technologies case above, Petitioners also cited 5G standard documents to explain the technical background related to the challenged patent. Technical submissions submitted in the standards meetings shape the development of the standards and form a prior art pool that often contain disclosures not found in other patent and printed publications. Here, Petitioners cited a technical submission from Samsung in a 3GPP meeting to show that certain features of the challenged patent were used in prior art systems.
Juniper Networks, Inc. v. Monarch Networking Solutions LLC (PTAB)
In May 2024, the PTAB granted institution for an IPR petition Juniper filed against U.S. Patent No. 8,693,369, owned by Monarch. Monarch initially filed an infringement suit in the Eastern District of Virginia against Juniper in May 2023, claiming the '369 patent is essential for MAP-E (Mapping of Address and Port using encapsulation), a mechanism for transporting IPv4 packets across an IPv6 network. The case was transferred to the Northern District of California in October 2023 and is currently stayed. The '369 patent is also being challenged by an Ex Parte Reexamination filed by third party Unified Patents LLC. The Patent Office granted the reexamination request in January 2024 and rejected all claims in a first office action issued in June 2024.
In its preliminary response, Monarch argued that institution should be denied pursuant to 35 U.S.C. 325(d) because one reference used in the IPR petition was also used in the co-pending Ex Parte Reexamination. However, at the time of the Board's institution decision in May 2024, the Patent Office hadn't issued any office action yet. Therefore, the Board found that it was premature to characterize the reexamination grounds as “previously presented,” or to evaluate whether the Office erred in a manner material to the patentability of challenged claims. The Board also noted that the reexamination proceeding did not involve a reference in the IPR proceeding that was critical to the question of obviousness.
It is important to carefully evaluate the timing for filing an Ex Parte Reexamination when an IPR petition is pending. The Patent Office has advised that “[t]he Board . . . may deny institution under 35 U.S.C. [§] 325(d) of a requested AIA trial proceeding if a parallel Office proceeding, for example, is in a more advanced stage and involves overlapping issues with the proposed AIA trial proceeding.” Notice Regarding Options for Amendments by Patent Owner Through Reissue or Reexamination During a Pending AIA Trial Proceeding, 84 Fed. Reg. 16,654, 16,657 (Apr. 22, 2019). Having different reference(s) addressing issues important to validity of the challenged patent also helps to avoid discretionary denial, which Juniper avoided here, even if other overlapping references are present.
Dolby v. Asus (UPC)
In patent infringement proceedings brought by Dolby International AB concerning EP 3 490 258, which claims a “method and recording medium storing coded image data”, the Defendants ASUS Computer GmbH, ASUSTEK (UK) LIMITED and ASUS FRANCE requested to restrict access to certain paragraphs of the statement of defence, arguing that those include business or trade secrets. Initially, the Local Division Düsseldorf restricted access to two named representatives of Dolby who were bound to secrecy. One month later, the court extended the access to Dolby and its legal representatives.
Dolby requested the court to determine that the two-month deadline for replying to the statement of defense and to the counterclaim for revocation (R. 29 (a) RoP) started only on the date access was extended to Dolby and in the alternative requested to extend the deadline. ASUS agreed to the requested extension. The court granted the extension but cautioned that an extension of deadlines should be granted only in exceptional circumstances (docket no.: UPC_CFI_ 456/2023, decision no.: ORD_35903/2024). The deadline for replying to the statement of defense and to the counterclaim for revocation runs from the date of service, even if an application for protection of confidential information (R. 262A RoP) has been made in relation to the statement of defense. The interests of the party affected by a request and/or an order for the protection of confidential information can be considered by extending the deadline for filing the reply.
The present order shows that an application for protection of confidential information limiting the access to confidential information can create an “exceptional circumstance” justifying an extension of deadlines, depending on its scope and timing.
Dolby International v. HP (UPC)
Dolby International AB filed a patent infringement action against HP Inc. and 14 European affiliated entities at the Local Division Düsseldorf. The patent in suit, EP 3 490 258, which claims a “method and recording medium storing coded image data,” is part of Dolby's HEVC-essential portfolio and was included in a patent pool administered by Access Advance LLC. With the statement of defense, the Defendants filed an application for protection of confidential information, R. 262A RoP, and the court restricted access to confidential information to specific employees of Dolby and its legal representatives.
Dolby contested the application for protection of confidential information, but only insofar as access to the confidential information must be granted to Access Advance as well. The Defendants objected, arguing that confidential information can be disclosed only to parties of the proceedings. To get access to the confidential information Access Advance filed an application to intervene in support of Dolby, R. 313 RoP.
The court found the application to intervene to be admissible (docket no.: UPC_CFI_ 457/2023, decision no.: ORD_37232/2024). A third party intervening in the proceedings must show it has a legal interest in the outcome of the action, R. 313.1 RoP. The court specified that a legal interest exists if the intervener has a direct and present interest in the issuance of the order or decision requested by the supported party. An interest merely relating to the causes of the action is not sufficient.
Applying these requirements, Access Advance demonstrated it has a sufficient legal interest in the outcome of the action, since it was entrusted by the Dolby with the licensing of the patent in suit and its HEVC-portfolio, with performing Dolby's FRAND obligations and with negotiating a pool license with the Defendant's group of companies. The Defendants alleged that Dolby has not fulfilled its FRAND obligations, arguing that the license offer of Access Advance is not FRAND. Access Advance therefore has a legal interest in the Defendants' FRAND objection being rejected.
The present order shows that a patent pool entrusted with the licensing of the patent in suit by the claimant in UPC infringement proceedings has a sufficient legal interest to intervene in the UPC infringement proceedings.
Panasonic v. Orope/Guangdong OPPO (UPC)
Panasonic Holdings Corporation filed a patent infringement action against OROPE Germany GmbH and Guangdong OPPO Mobile Telecommunications Corp. Ltd. at the Local Division Mannheim. The patent involved was EP 2 568 724, which claims a “radio communication device and radio communication method” allegedly relating to the 4G wireless standard.
On June 27, 2024, the court issued an order (docket no.: UPC_CFI_ 210/2023, decision no.: ORD_38680 /2024) informing the parties about the court's preliminary view on the case regarding claim construction, infringement, the counterclaim for revocation and the counterclaim to set a FRAND rate to structure the further proceedings. Regarding the counterclaim to set a FRAND rate, the court draws attention to the following issues that require further discussion:
- The court asked the Defendants to specify their request to order Panasonic to grant a FRAND license. The Defendants requested that the court determine a FRAND royalty rate as well as the relevant terms of a FRAND license agreement. But the request did not sufficiently indicate a serious intention of the Defendants to conclude a license agreement based on the FRAND royalty rate determined by the court. A request for just a declaratory judgment could lack the required legal interest.
- The court also questioned whether the Defendants' request to “explain the essential conditions of a FRAND license” should be considered a request for legal advice, which is not within the UPC's area of competence. The same applies to Panasonic's auxiliary request “to explain which license justifies the Defendant's infringing use of the patent in suit and which license rate per 3G/4G (multi-mode) device is fair, reasonable and non-discriminatory (FRAND)”.
- The court also asked to discuss the potential consequences for the counterclaim to set a FRAND rate in case the court considers the patent in suit to be not infringed or to be invalid, including the connection of the counterclaim to set a FRAND rate to further pending proceedings between the parties concerning other patents, in which no such counterclaim was filed.
- The court asked whether Defendants would still have a legal interest for the counterclaim to set a FRAND rate if the court considers the Defendants to be unwilling licensees.
- If the court considers the counterclaim to set a FRAND rate admissible, it needs to be addressed whether Claimant's auxiliary request to “declare that a license justifying Defendants' infringing uses of EP 2 568 724 is a worldwide license to Claimant's 3G and 4G (multi-mode) portfolio and that the royalty rate per 3G/4G (multi-mode) device offered by the Claimant is fair, reasonable and non-discriminatory” is admissible.
- Finally, the court asked Panasonic to explain the relationship between Panasonic's auxiliary request to order the Defendants to pay a certain license rate in case that the counterclaim to set a FRAND rate is granted and Panasonic's request for a declaration of liability for damages.
The present order shows that the UPC has not yet taken a final stance on a counterclaim to set a FRAND rate filed by the defendant in patent infringement proceedings concerning SEPs. Such a counterclaim raises many legal questions that still need to be answered by the UPC. We will follow these proceedings closely and defendants in patent infringement proceedings before the UPC should keep in mind the option to file a counterclaim to set a FRAND rate as part of their defense strategy.
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