The Court presiding over Wi-LAN’s patent infringement litigation against HTC and Exedea recently entered an order memorializing the court’s oral rulings on various pre-trial motions and disputes during a September 26, 2013 pre-trial hearing, including whether Wi-LAN’s alleged failure to offer a license on FRAND terms remained an issue in the case after defendants voluntarily withdrew their FRAND-related affirmative defense and counterclaim.
Wi-LAN’s Amended Complaint alleges that HTC is infringing Wi-LAN’s U.S. Patent No. RE37,802 by selling mobile handsets and other products compliant with the CDMA2000 standard and/or the IEEE 802.11 standards. Wi-LAN further alleges that HTC is infringing its U.S. Patent No. 5,282,222 by selling mobile handsets and other products compliant with the IEEE 802.11, IEEE 802.16, LTE and/or Bluetooth 3.0 standards.
In their Answer to the Amended Complaint, defendants asserted an affirmative defense that Wi-LAN breached its FRAND obligations by not offering defendants a license to Wi-LAN’s patents on fair, reasonable and non-discriminatory (FRAND) terms. Specifically, defendants asserted that “Wi-LAN has not…offered to HTC reasonable and nondiscriminatory royalty terms and rates that are proportionate to royalty terms and rates offered to similarly situated companies.” Defendants also asserted a counterclaim for a declaratory judgment that they were entitled to license Wi-LAN’s patents on FRAND terms.
But defendants later “voluntarily elected to drop their counterclaim and affirmative defense as to the issue of FRAND.” However, “the parties continue[d] to dispute the impact of such, namely whether Defendants may continue to assert FRAND as a non-affirmative defense in their reasonable royalty analysis or as a ‘business’ defense in the hypothetical negotiation scenario in response to Plaintiffs’ evidence on damages.” During the September 26, 2013 hearing and again in its written order, the court held that FRAND was no longer an issue in the case by virtue of defendants’ voluntary election:
“As announced on the record, the Court finds that Defendants have the affirmative burden of proof [to show breach of FRAND obligations and entitlement to a license on FRAND terms] and FRAND is not a purely defensive response to Plaintiff’s damages case. Accordingly, the Court finds that the issue of FRAND is an affirmative defense which, in light of Defendants having voluntarily dropped their counterclaims and affirmative defenses as to FRAND, is now out of this case for all purposes. Defendants may not raise the issue of FRAND in response to Wi-LAN’s damages case or for any other purpose in this trial.” [emphasis in original]
We will continue to track this case and provide any interesting updates, such as the September 26, 2013 transcript when it becomes available.