By Jenna Greene, From The National Law Journal

Four tech companies argue the restriction could harm the public interest.

As the U.S. International Trade Commission considers banning the importation of some Nokia phones, four tech companies this week argued that doing so could harm the public interest. A coalition of research and development companies and a U.S. senator took the opposite tack, urging the agency to protect patent rights.

Nokia, now owned by Microsoft Corp., has been locked in an eight-year patent fight with InterDigital over technology used in third-generation, or 3G, mobile phones.

The case “raises an issue of exceptional importance,” wrote lawyers for Intel Corp., Cisco Systems Inc., Hewlett-Packard Co. and Dell Inc., who are not parties to the case. The attorneys, including a team from Gibson, Dunn & Crutcher for Intel, argue that granting an exclusion order to a company that owns patents essential to an industry standard could provide “leverage to demand excessive royalties.” They say such an order should only be available in exceptional circumstances.

Pushing back, the Innovation Alliance, which represents patent holders and is also not a party in the case, told the International Trade Commission on June 3 that the public interest favors the “protection and enforcement of valid and infringed intellectual property rights.”

Sen. Robert Casey Jr., a Pennsylvania Democrat, weighed in on the side of InterDigital Communications Corp., which has offices in his state. “Denying exclusionary relief in the face of valid and infringed intellectual property rights will encourage more infringing imports,” Casey wrote to the ITC.

InterDigital, represented by Latham & Watkins and Wilson Sonsini Goodrich & Rosati, designs and develops technology used in mobile devices, networks and services. It sued Nokia at the ITC in 2007, alleging that some of the company’s phones infringed two of its patents related to how mobile devices gain access to a cellular system.

In 2009, the commission ruled that Nokia did not infringe the patents. InterDigital appealed to the U.S. Court of Appeals for the Federal Circuit, which reversed the ITC and remanded the case in 2013.

Theodore Essex, an International Trade Commission administrative law judge, in April found that Nokia did in fact infringe InterDigital’s patents. His decision is now under review by the agency’s six politically appointed commissioners, who are expected to rule by Aug. 28.

What’s the remedy?

For the outside parties, what matters most is not whether Nokia phones infringed the patents, but what remedy should be available to InterDigital.

Cases at the ITC are brought under Section 337 of the Tariff Act of 1930, which does not provide for monetary penalties.

Instead, companies can win an exclusion order banning the importation of infringing goods. The question here is whether such an order is appropriate.

In part, that hangs on whether the patents cover technology that’s essential to comply with industrywide cellphone standards. Such essential patents are supposed to be licensed on “fair, reasonable and nondiscriminatory” terms, in this case because InterDigital is a member of the European Telecommunications Standards Institute. However, Essex found the evidence did not prove that the patents were definitely standard-essential.

Nokia owner Microsoft, which is represented by Sidley Austin, makes a two-part argument in response. First, the company says it did not infringe the patents, and that the only proof of infringement is that its phones complied with industry standards. But if that’s the case, then Microsoft said InterDigital failed to honor its obligation to license its inventions under fair and reasonable terms.

“A legitimate U.S. business should not face the risk of exclusion from U.S. markets solely on the basis of compliance with a standard,” Microsoft deputy general counsel David Howard wrote. InterDigital “is not entitled to eliminate competition among implementers’ products on the basis of features that are meant to be shared by all industry participants; that is what makes the features ‘standards.’ ”

Sidley partner Brian Nester in Washington did not immediately respond to a request for comment.

Intel, Cisco, Hewlett-Packard and Dell focused on the standard-essential question in their filing. They said the ITC should clarify that exclusion orders should be “generally unavailable” for essential patents if there’s an obligation to license the technology on a fair and reasonable basis. “Such a ruling is necessary to prevent the exploitation of the standard-derived market power,” they wrote.

InterDigital counsel David Steuer, a partner at Wilson Sonsini, argued that Essex got it right. The judge “properly found that respondents did not carry their burden to demonstrate the asserted patents are standards-essential patents. Nevertheless, even if the asserted patents were found to be [standards-essential patents], that alone would not warrant withholding an appropriate remedy,” he wrote. “There is no per se rule that patents subject to [fair and reasonable licensing] commitments cannot be asserted in the ITC.”

Steuer did not immediately respond to a request for comment.

IMAGE: A woman takes photos with the Nokia Lumia 1020 smartphone, featuring Nokia’s PureView 41 megapixel camera. Credit: Dirima/iStockphoto.com

 

For more on this story go to: http://www.nationallawjournal.com/id=1202728493166/Trade-Agency-Weighs-Banning-Import-of-Nokia-Phones#ixzz3cU0gRISa