On March 20, 2014, the 9th U.S. Circuit Court of Appeals in an unpublished memorandum opinion dismissed LSI Corp.'s appeal of a preliminary injunction that blocked it from enforcing a potential import ban against Realtek Semiconductor Corp. Realtek Semiconductor Corp. v. LSI Corp., No. 13-16070 (9th Cir. Mar. 20, 2014). Earlier in the month, the International Trade Commission found that Realtek did not infringe LSI patents for wireless networking products. In the wake of that decision, and despite requests from both parties to hear the appeal in case LSI prevailed on appeal of the infringement ruling, the 9th Circuit held that LSI's appeal was moot. Judge Ronald M. Whyte of the Northern District of California had issued the injunction after finding that LSI had improperly filed its ITC complaint to pressure Realtek in royalty negotiations, without first making a FRAND offer to license the patents. Realtek Semiconductor Corp. v. LSI Corp., Case No. C-12-3451 (N.D. Cal.).
The 9th Circuit and ITC rulings followed a jury decision in February setting the FRAND rate for LSI's patents at 0.12 percent and 0.07 percent. That was the first time a jury had been tasked with determining the FRAND rate for standard-essential patents. LSI's initial offer had been for a royalty based on the value of the end products in which Realtek's allegedly infringing chips were used. However, the jury's significantly lower rate was based on the value of the chips. This followed the standard in In re Innovatio IP Ventures LLC Patent Litig., MDL 2303, Case No. 11 C 9308 (N.D. Ill. Sept. 27, 2013), where the court applied royalty rates to wireless chips rather than to laptops, scanners and other devices that used them. In that context, the jury's decision is the latest signal that Judge James Robart's modified Georgia-Pacific analysis in Microsoft Corp. v. Motorola, Inc., No. C10-1823 (W.D. Wash. Apr. 25, 2013), continues to influence how fact-finders evaluate FRAND royalties for standard-essential patents.
The 9th Circuit's unpublished memorandum is available here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.