ITC Poised To Address Viability Of RAND Defense In Section 337 Litigation

The U.S. International Trade Commission (ITC) recently indicated that it will finally address the issue of whether and to what extent members of Standards Setting Organizations (SSOs) who make commitments to license standards-essential patents on reasonable and non-discriminatory terms (RAND) may seek exclusion orders at the ITC.1

Motorola sued Apple for direct and infringement of method and apparatus claims. Motorola accused the full panoply of Apple's product line, including mobile phones, tablets, personal computing devices and other computer products. Among Apple's defenses were unenforceability through unclean hands.2 The gravamen of Apple's unclean-hands defense was the contention that Motorola failed to timely disclose one of the asserted patents to a European SSO.3 Apple pleaded RAND-related defenses in its answer to the complaint, but there is no publicly available pleading as to their disposition and they are not reflected in the initial determination.4 The Administrative Law Judge (ALJ) rejected Apple's unclean-hands defense in his initial determination.

The Commission voted to review the ALJ's initial determination.5 Several of the issues under review are typical: claim construction, validity, infringement and domestic industry. In addition, however, the Commission called for the parties to brief on RAND-related issues.

The Commission requested briefing on the theories in law, equity and public interest (19 U.S.C. § 337(d)(1)) that might preclude issuance of an exclusion order under various factual scenarios. These permutations included: where the record lacks evidence to support a RAND-based affirmative defense (e.g., equitable estoppel, implied license, waiver, etc.); whether the mere existence of a RAND obligation precludes issuance of an exclusion order; where a patent owner refused to offer a license to a named respondent in a Section 337 proceeding; where a patent owner has refused to offer a license on a RAND-obligated patent to some other entity, regardless of whether that entity is a named respondent in a Section 337 proceeding; where a patent owner has refused to negotiate a license on RAND terms with a named respondent; where a patent owner has refused to negotiate a license on RAND terms with some other entity, regardless of whether that entity is a named respondent; and where a patent owner who has offered a RAND license that the named respondent in a proceeding has rejected.6 The Commission also asked the parties...