Friday, June 07, 2013

InterDigital wins reversal in ITC case involving LG

In the precedential Interdigital v. ITC at the CAFC, the appellant Interdigital won a reversal:

The ITC terminated the
investigation in favor of arbitration on the basis of a prior
patent license agreement between InterDigital and LG
that permits the parties to submit to arbitration any
disputes arising under the agreement. We hold that the
ITC erred in terminating the investigation because there
is no plausible argument that the parties’ dispute in this
case arose under their patent license agreement. We
therefore reverse the ITC’s order terminating the investigation
as to LG
and remand to the ITC for further proceedings.

As to background

InterDigital and LG entered into a Wireless Patent
License Agreement (“Agreement”) in January 2006.1 In
the Agreement, InterDigital granted LG a license to
certain InterDigital patents with respect to devices capable
of wireless voice or data communications, including
devices designed to operate in accordance with secondgeneration
(“2G”) wireless standards (e.g., GSM, GPRS,
and EDGE) and devices designed to operate in accordance
with third-generation (“3G”) wireless standards (e.g.,
WCDMA and CDMA2000).

A footnote mentions some issues in confidentiality/redaction:

The Agreement is available at
2506107083/dex1082.htm. In their briefing, the parties
treated the Agreement as confidential and therefore
redacted substantial portions of their submissions. At
oral argument, the parties agreed to treat some material
in the Agreement as non-confidential and to re-file their
briefs with fewer redactions to facilitate the court’s issuance
of a public opinion. After oral argument, however,
counsel for InterDigital realized that InterDigital, with
LG’s permission, submitted the Agreement to the SEC in
a public 10-Q filing in 2006 and that the Agreement is
available in substantially unredacted form on the SEC’s
. The parties have re-filed their briefs with substantially
less material marked as confidential.

Relating to the issue before the ITC:

On January 20, 2012, LG moved to terminate the investigation,
arguing that its accused 3G products were
still covered by its license to InterDigital’s patents, and
that InterDigital’s infringement claim was subject to
arbitration because it arose under the Agreement.

Of appealability of ITC orders:

This court’s predecessor, the Court of Customs and
Patent Appeals, provided a framework for analyzing
whether an ITC order is appealable under § 1337(c). See
Import Motors, Ltd. v. U.S. Int’l Trade Comm’n, 530 F.2d
940 (C.C.P.A. 1976).6 In Import Motors, the court explained
that “[s]trictly interpreted,” the phrase “‘final
determination of the Commission under subsection (d) or
(e)’ [in § 1337(c)7] . . . refers to a final administrative
decision on the merits, excluding or refusing to exclude
articles from entry under subsection (d) or (e).” Id. at 944
(emphasis added). Despite this strict interpretation,
however, the court acknowledged that appealable orders
were not necessarily limited to final decisions on the
merits. More specifically, the court framed the inquiry as
whether an ITC “order is intrinsically a ‘final determination’
under § 337(c), as amended, and if it is not, whether
its effect upon appellants is the equivalent of a final
determination.” Id. The court reasoned that an order
terminating participation in ITC proceedings “could have
the same operative effect, in terms of economic impact” as
a final determination under subsections (d), (e), (f), or (g).
Id. at 945-46. “Substance, not form, must control.” Id.

In Block v. U.S. International Trade Commission, 777
F.2d 1568 (Fed. Cir. 1985), this court applied the framework
from Import Motors in an appeal from an ITC order
terminating an investigation as “abated” because the
patent claims that formed the basis for the alleged § 1337
violation were substantially amended during reexamination
proceedings in the United States Patent and Trademark

As to decisions by the CCPA, there is a footnote to South:

In South Corp. v. United States, 690 F.2d 1368,
1370 (Fed. Cir. 1982) (en banc), we adopted the decisions
of the Court of Customs and Patent Appeals as binding

Bottom line on jurisdiction: Accordingly, we hold that the order terminating the
investigation as to LG was an appealable final determination
under 19 U.S.C. § 1337(c) and that we therefore have
jurisdiction under 28 U.S.C. § 1295(a)(6).

Things went bad for LG:

InterDigital argues that the ALJ erred by failing to
assess the text of the parties’ Agreement to determine
whether LG’s assertion of arbitrability was “wholly
groundless.” We agree.


Nevertheless, the “wholly groundless” inquiry
“necessarily requires the courts to examine and, to a
limited extent, construe the underlying agreement.”
Dream Theater, 21 Cal. Rptr. 3d at 326.

The ALJ did not shine in the CAFC analysis:

If the ALJ had performed the proper analysis, he
would have found that LG’s license defense is not plausible.
Rather, a cursory review of the relevant provisions in
the Agreement confirms that LG no longer holds a license
to InterDigital’s patents for 3G products.


Reading these provisions together, the result is unambiguous:
the only surviving portion of the grant clause
is that portion providing LG with a “fully paid-up” license
for the life of InterDigital’s patents for 2G products.
There simply is no plausible argument that LG’s license
for 3G products survived the termination of the Agreement.
Accordingly, LG’s assertion of arbitrability was
“wholly groundless.”

Judge Lourie dissented:

I respectfully dissent from the majority’s decision to
reverse and remand the order of the U.S. International
Trade Commission (“ITC” or “Commission”) terminating
an investigation with respect to LG Electronics, Inc., LG
Electronics USA, Inc., and LG Electronics Mobilecomm
USA, Inc. (collectively “LG”). While I agree with the
majority that there is no plausible argument that LG
could prevail under its patent license agreement, and
hence that LG’s position is “wholly groundless,” I nonetheless
believe that we do not have jurisdiction to entertain
this appeal and would therefore dismiss.


19 U.S.C. § 1337(c) (emphasis added). In my opinion, that
language is clear: a termination due to an arbitrability
agreement is a termination “without . . . a determination.”
As it is not a determination, it is also not a “final determination.”
As none of the other appeal provisions of
section 337(c) apply, I believe we lack jurisdiction to hear
this appeal.


Post a Comment

<< Home