It almost appears to be a ritual in standard-essential patent (SEP) disputes that the patent holder faults the implementer for hold-out while the accusation flying in the other direction is hold-up. They can't both be right at the same time. On a case-by-case basis, I try to deduce from publicly available information which of the two is more likely in its right to blame the other side, also factoring in what I've previously learned about certain parties' behavior.
When Thales and Philips are the parties, I frankly have reservations concerning either one. Thales is pursuing an ill-conceived antitrust case in Munich over automotive SEP licensing. You can't blame a patent pool for offering a certain license but not another as long as it doesn't contractually prevent its licensors from entering into whatever bilateral license they wish to grant. As for Philips, I've clearly seen a pattern of hold-up from that organization in more than one context, and its positions on patent enforcement always seem oblivious to the fact that even Philips is still making products (though it's lost market share in some product categories and exited other segments, such as mobile phones).
The two companies are now entangled in an interesting cross-jurisdictional web of partly interdependent SEP cases:
Philips is seeking an exclusion order (import ban) from the ITC, with ALJ David Shaw's final initial determination due tomorrow, April 1. "Final" isn't "final-final": the truly final ITC determination is made by the Commission, the trade agency's top decision-making body, and even that one is appealable to the Federal Circuit.
Thales--along with its Gemalto and Cinterion subsidiaries--is not the only respondent to that ITC complaint, which also targeted (back in December 2020) Thales's competitors Telit, Quectel, CalAmp, Xirgo, and Laird.
The accused Thales products appear to be identity/security components used in various products, even including airplanes, and implement cellular standards, especially 3G and 4G.
There's a case in the United States District Court of Delaware where apparently both Thales and Philips agreed that the court should set a global FRAND rate for a license agreement between them. Thales says Philips should just let the Delaware court do its job instead of seeking leverage from the ITC in orer to unilaterally impose its preferred terms on Thales.
The Delaware court denied a Thales motion for a U.S.-internal antisuit injunction (an instrument of which some United States Senators are, or pretend to be, blissfully ignorant) that would bar Philips from enforcing a U.S. import ban. But Thales appealed that decision. The preliminary-injunction appeal has been fully briefed and will be heard in the coming months.
It's just laughable that ACT | The App(le) Association filed an amicus curiae brief in support of the appeal--as if small app developers cared about a U.S. import ban on telecommunications modules incorporated into airplanes and similar products. And three other Thales amici--Honda, Continental, and u-blox--first failed to file mandatory paper copies of their brief and then even their paper vesion was out of compliance with the appeals court's rules. But those stories don't mean that the appeal itself doesn't raise interesting questions. I haven't formed an opinion on the merits yet as I just downloaded the documents from the Federal Circuit docket this morning.
Either party would be interested in arbitration, but they disagree on the parameters, with Thales insisting on its rights under the ECJ's Huawei v. ZTE case law to challenge the essentiality and validity of Philips's declared-essential patents.
Meanwhile, Thales has become the third party--following in the footsteps of TCL and Xiaomi--to name the European Telecommunications Standards Institute (ETSI) as a co-defendant in a FRAND antitrust case primarily targeting Philips. Philips filed the original complaint with the Tribunal juidiciare de Paris and an ex parte motion for the seizure of documents from a French Philips patent licensing executive (Sophie Pasquier), along with (obviously unofficial) English translations, with the ITC in late December, arguing that this was an attack on the U.S. case (as the seized documents also include communication between Philips and its U.S. outside counsel in the Thales dispute) with the help of a foreign court--and which Philip characterizes as typical of a party engaging in hold-out.
For now, Thales is seeking €13.5 million from Philips--an antitrust damages claim based on U.S. litigation expenses. But the amount will go up should Philips actually obtain and enforce an ITC import ban. Thales criticizes ETSI for not having sanctioned Philips for its alleged FRAND breaches, and is seeking nominal damages (€1) from the standard-setting organization.
I haven't formed an opinion on the merits of the French case either, for the same reason that I have yet to fully understand the parties' arguments in the Federal Circuit.
For now, let me just show you Philips's 272-page filing with the ITC that includes documents from the French case and English translations thereof:
21-12-23 Philips Motion to ... by Florian Mueller
Share with other professionals via LinkedIn:
