Yesterday afternoon Administrative Law Judge (ALJ) Robert K. Rogers of the United States International Trade Commission (USITC, or just ITC) denied a motion to stay the investigation of InterDigital's January 2013 complaint until the United States District Court for the District of Delaware sets a FRAND rate for standard-essential patent (SEP) license agreements covering InterDigital's portfolio. Huawei and ZTE (China's leading telecommunications hardware makers) brought the motion last month. A few days later (on February 28) Nokia filed a (sealed) notice of joinder.
At this point the ALJ's order is sealed. But the headline of the decision appeared on the ITC's electronic document system today.
In this post (published yesterday) I explained the procedural maneuvering that is ongoing in this dispute: InterDigital wants to win an import ban from the ITC before Huawei and ZTE obtain a FRAND determination; Huawei and ZTE want the district court to pre-empt the ITC, which makes sense given that the ITC can't set a FRAND rate, but which would now require a federal court to schedule its own case according to what the ITC is doing.
I believe Nokia, Huawei and ZTE will ask the Commission (the six-member decision-making body at the top of the U.S. trade agency) to review the judge's denial. But the Commission is very reluctant to overrule judges at this stage of the proceedings (as Nokia just experienced in its dispute with HTC).
Assuming that the Commission backs Judge Rogers on this one, the Federal Trade Commission (FTC) faces a very serious problem. Its proposed consent order in the Google case envisions the withdrawal of injunction requests once a defendant asks a federal court for a FRAND determination -- and the FTC wanted its proposed deal with Google to be a model for other cases. Huawei and ZTE did just what the FTC's proposed Google decree would require defendants to do, but InterDigital keeps pursuing an exclusion order (which is exactly the behavior over which Google/Motorola were investigated) and the ITC, again assuming for now that the denial of the motion to stay will be affirmed, is unwilling to remove the threat of injunctive relief.
There are two ways in which the FTC can solve the problem: it can either convince the ITC to overrule Judge Rogers or it can present InterDigital with the choice of being investigated or stipulating to the stay that Nokia, Huawei and ZTE requested. If the FTC did neither of that and the ITC ordered an import ban (or came close to ordering one) before the Delaware-based court makes a FRAND determination, it would officially give up its hopes that the proposed Google deal could be of the slightest use to defendants in other SEP injunction cases. Furthermore, this would raise the question of whether U.S. government agencies (ITC and FTC) allow a US-based non-practicing entity to engage in hold-up against four foreign device makers (South Korea's Samsung, Finland's Nokia, and China's Huawei and ZTE).
Based on the current schedule, the evidentiary hearing (trial) in this ITC investigation would be held in December.
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