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Increasing Transparency and Reducing Transaction Costs in 5G SEP Licensing

The advent of 5G promises a new era of speed, throughput and bandwidth for cellular networks, however the world of telecommunications and licensing faces several challenges in preparation for its arrival. Although wireless technology has continued to evolve over the years, traditional SEP licensing models have seemingly been left behind and may no longer be adequate to address the needs of companies seeking to implement 5G into their products. As the Internet of Things becomes an increasingly integral part of products across market areas, more and more companies of all industries and sizes will need to invest in 5G technology to become part of the network.

The growing number of players and technology complexity involved with 5G has created an unprecedented need for simpler and more transparent frameworks for licensing, patent pools and standards that can be scaled across diverse market segments. Existing methods require significant investments of time, budget and technological and legal depth that no longer suit the broad array of companies that will be utilizing the new technology.

At Premier Cercle’s IP Tech Summit 2020, McDermott Partner Dr. Henrik Holzapfel was joined by a panel of experts from organizations at the forefront of 5G innovation. Click here to watch as they discuss these challenges and their vision for the future of licensing in the world of wireless connectivity.




Significant Third-Party Discovery Too Complex for ITC Early Disposition Program

The US International Trade Commission (ITC) denied a proposed respondent’s request to use the early disposition program to determine whether a complainant met the domestic industry requirement in a Section 337 investigation. The ITC concluded that the issues proposed for resolution were too complex to be decided within 100 days of institution because significant third-party discovery was likely necessary. Certain Video Processing Devices, Components Thereof, and Digital Smart Televisions Containing Same, Comm’n Order, USITC Inv. No. 337-TA-1222 (Oct. 14, 2020).

The early disposition program aims to limit unnecessary litigation and save time and resources for litigants and the ITC by resolving obvious and fatal deficiencies in a complainant’s case before the parties embark on a full Section 337 investigation. The program provides for an initial determination by the presiding administrative law judge within 100 days of institution on potentially dispositive issues. The administrative law judge may hold expedited hearings and stay discovery of any other issues during the pendency of the 100-day proceeding. The ITC has indicated that appropriate issues for resolution include domestic industry, importation, standing and patent subject matter eligibility.

Complainant DivX, LLC, a video software technology company, relied on its licensee’s assembly of smart TVs in the United States to satisfy the domestic industry requirement. Proposed respondent Realtek Semiconductor Corporation, a chipmaker for consumer electronics, argued that DivX would be unlikely to meet the domestic industry requirement because DivX’s licensee stopped identifying several of its products as “Assembled in the USA” to avoid deceiving consumers in connection with a petition filed before the Federal Trade Commission. Realtek also argued that DivX could not identify smart TVs as the domestic industry product for purposes of the economic prong and a different video processor product for purposes of the technical prong. Realtek sought to resolve these issues through the early disposition program, and DivX opposed. Although neither party raised the issue of third-party discovery, the ITC denied Realtek’s request because such discovery was likely necessary, making adjudication within 100 days impracticable.

Practice Note: The ITC places great emphasis on the expeditious adjudication of Section 337 investigations because of the ITC’s statutory mandate to complete them at the earliest practicable time. The early disposition program builds on that mandate and can provide an even speedier timeframe by streamlining and resolving dispositive issues within 100 days of institution. A proposed respondent should consider requesting early disposition for clear weaknesses in a complainant’s case where the issue to be decided is not complex and does not require significant discovery. While the ITC does not grant use of the early disposition program often, where it has done so, several cases have ended with withdrawal of the complaint or termination before a hearing.




One Claim Construction Error Is Enough to Trigger New Trial on Infringement

The US Court of Appeals for the Federal Circuit re-affirmed that incorrect construction of even a single claim element can be grounds for a new trial on infringement. Network-1 Technologies, Inc. v. Hewlett-Packard Company, Case Nos. 18-2338, -2339, -2395, -2396 (Fed. Cir. Sept. 24, 2020) (Prost, C.J.).

Network-1 Technologies sued Hewlett-Packard (HP) for patent infringement. HP defended on the grounds that the patent was invalid and that it did not infringe. The jury found the patent not infringed and invalid as obvious. Following post-trial motions, the district court denied Network-1’s request for a new trial on infringement but granted its motion for judgment as a matter of law (JMOL) on validity. The court found that HP should have been estopped from raising certain obviousness challenges as a consequence of certain obviousness challenges raised by a third party in a prior inter partes review (IPR) that were essentially the same as HP’s obviousness challenge here. Network-1 appealed the district court’s final judgment that HP did not infringe, arguing that the district court erred in its claim construction. HP cross-appealed on the issues of IPR estoppel under 35 USC § 315(e)(2) and invalidity because of a claim improperly broadened in re-examination.

On appeal, Network-1 contended that the district court erroneously construed the claim terms “main power source” and “low level current.” In order to prevail, Network-1 had to establish not only that at least one jury instruction on claim construction was legally erroneous, but that the error had prejudicial effect. Under Federal Circuit precedent, an incorrect claim construction that removes from the jury a basis on which it reasonably could have reached a different verdict can be an incorrect jury instruction. As the Court explained in Avid Tech. v. Harmonic (Fed. Cir. 2016), “[a]n erroneous claim construction on one element is harmless ‘only if a reasonable jury would have been required by the evidence to find non-infringement even without the error.’”

The Federal Circuit concluded that the district court correctly construed the term “low level current” but erred in its construction of “main power source” to exclude AC power sources on the basis of expert testimony that receipt of AC power by a network device would render it inoperable. The Court deemed this error for two reasons:

    • Even though the network device cannot receive AC power, the record established that “data nodes” or network switches were commonly used to convert AC power to DC power as needed to power the network device. Because nothing in the patent claims precluded the conversion of AC power to DC power, it was error for the district court to add such a limitation.
    • The district court erred by adding a limitation to the claims to carve out certain inoperable embodiments, in this case embodiments that do not convert AC to DC. The Federal Circuit has previously explained that it is improper to add limitations to a claim to exclude only certain inoperable embodiments (Cordis v. Medtronic (Fed. Cir. 2008)). Here, [...]

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Overcoming Heavy Burden Required to Succeed on Venue-Related Writ of Mandamus

Addressing a venue challenge, the US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus because the challenger did not demonstrate it had no adequate alternative means to obtain desired relief since meaningful review could occur after final judgment was entered. In re. Google, Case No. 20-144 (Fed. Cir. Sept. 18, 2020) (Reyna, J.).

Personalized Media Communications (PMC) sued Google in the Eastern District of Texas for infringement of six patents related to adaptive video streaming. PMC initially asserted venue was proper based on the presence of several Google Global Cache (GGC) servers at facilities owned by internet service providers (ISPs) located within the district. Google moved to dismiss for improper venue. While Google’s motion was pending, the Federal Circuit issued its decision in In re. Google, rejecting a venue argument asserted by a different plaintiff against Google that was also premised on the presence of GGC servers, and finding that a regular and established place of business requires the regular physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged place of business.

After the Federal Circuit’s decision, PMC asserted a different venue theory based on Google’s agreements with Communications Test Design (CTDI) to warehouse, refurbish, repair and ship hardware products, such as Google’s cellphones and speakers, from a CTDI facility located in the Eastern District of Texas. The district court agreed with PMC and denied Google’s motion, finding that CTDI was acting as Google’s agent and was conducting Google’s business from its facility. Google filed a petition for a writ of mandamus seeking to vacate the district court’s order.

The Federal Circuit denied Google’s petition. The Court explained that a party seeking a writ bears the heavy burden of demonstrating that it has no adequate alternative means to obtain the desired relief and that the right to issuance of the writ is clear and indisputable. Without providing an explanation, the Court found that although Google raised viable arguments based on the law of agency and the Court’s precedent, it was not satisfied that Google’s right to a writ was clear and indisputable. The Court concluded that Google can obtain meaningful review of the district court’s venue ruling after final judgment in the case.

Practice Note: The Federal Circuit was also concerned that the district court did not move more quickly to resolve Google’s venue challenge. Significant work in the case had already been done, and the trial date is currently set for November 2020. If the venue is later found to be improper, the case will be transferred and a new trial will occur.




Key Takeaways from MWE International Seminar Intellectual Property Session – January 2020

On January 21 and 22, 2020, the 8th annual McDermott International Seminars took place in Osaka and Tokyo. These seminars focused on cross-border M&A, GDPR, intellectual property, global enforcement and other key topics. Lawyers from McDermott’s US and European offices, including Washington, DC; Chicago; New York; Paris; London; Brussels; and Munich, discussed these topics with Japanese companies operating globally. During the International Seminars, the Intellectual Property team discussed insights around emerging technologies and intellectual property.

What follows are key takeaways from the IP session of the seminar. (See highlights from the full Seminar.)

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