Stephen Breyer is retiring, Jeopardy has new hosts, and the Cincinnati Bengals have made the Super Bowl—the world changes constantly.
Some things don’t change, though—patent trolls are still going to the ITC to try to extract huge payments from innovators under the threat of having their products barred from the U.S. market. This week’s contestant? Future Link Systems, a private equity funded NPE. So what’s at risk?
Well, if Future Link gets its way, then basically the entire U.S. smartphone supply would go away—they’re seeking to ban Apple and Qualcomm processors, which provide the processors for the vast majority of the U.S. smartphone market. While Future Link claims its licensees could make up any shortfall, the truth is that Future Link’s listed licensees—NXP, Marvell, NVIDIA, and Intel—can’t. NVIDIA, Marvell, and Intel have all exited the smartphone application processor market, and while NXP lists application processors on their website, I’ve been unable to find a single smartphone that uses those processors or even evidence that they’re designed for smartphone applications. Certainly they lack the performance of application processors developed by the likes of Apple and Qualcomm.
Now, if this case was in district court, there’s little chance Future Link would succeed in blocking importation. (Future Link has sued in district court too—like most ITC litigation, there are parallel district court cases filed by Future Link against the ITC defendants.) There’s a doctrine in district court cases called eBay that limits availability of injunctive relief, like import bans, when money damages would do. And non-practicing entities like Future Link pretty much categorically fit the bill—they don’t make any competing products, they just license patents, so money is always going to be enough.
But the ITC doesn’t abide by eBay. It bans products even if money would be adequate and even if the balance of hardships between plaintiff and defendant caused by an injunction (or lack thereof) favors the defendant, another eBay factor. And so NPEs like Future Link have flocked to the ITC, trying to use the threat of a complete sales ban to extract settlements far in excess of the value of their invention—even when their patents only cover a tiny aspect of a small piece of a product. While the ITC has a “public interest” requirement that allows it to refuse to issue an exclusion order if the public interest favors denying the order, it almost never does so, only denying three orders based on public interest in the past 40 years.
There are legislative efforts to improve the situation, and regulatory actions that at least might help—while the DOJ’s recent SEP/FRAND statement does not explicitly state it, it at least implies that the ITC’s public interest inquiry mimics the requirements of eBay. But until things change at the ITC, we can expect to see more NPEs adding an ITC case to their district court litigation campaigns.