U.S. District Judge Cathy Ann Bencivengo is not buying the FRAND-based injunction that u-blox and Sheppard, Mullin, Richter & Hampton are selling.
The Swiss developer of cellular modules sued IP licensing giant InterDigital Inc. on New Year’s Day, and asked Bencivengo to prevent it from contacting u-blox’s customers while the judge determines a fair, reasonable and non-discriminatory royalty on InterDigital’s 2G, 3G and 4G patents.
Sheppard Mullin partner Stephen Korniczky argued Thursday that the last time u-blox’s license expired, InterDigital notified u-blox customers that they were no longer covered by u-blox’s license. That unfairly forced u-blox to choose between paying InterDigital “exorbitant” royalties or risk losing its customers.
But even before Korniczky stood to argue Thursday, Bencivengo made her feelings clear. “I have to say I’m unimpressed with the motion,” she said. A half hour later she’d formally denied it, handing InterDigital and Wilson Sonsini Goodrich & Rosati a decisive early win in a case that’s drawn the interest of the Justice Department’s antitrust division.
Bencivengo told Korniczky it would be equally unfair to preclude InterDigital from approaching anyone in u-blox’s supply chain about practicing their patents without a license. Such contacts might make u-blox uncomfortable, “but I don’t know that that’s a legal ground to stop them from enforcing their patents,” she said.
Korniczky stressed that u-blox is a willing licensee, and the only dispute is over the royalty rate, which the court will decide. InterDigital has committed to the European Telecommunication Standards Institute that it will license its standard-essential patents on FRAND terms, and u-blox shouldn’t have to pay more than that while the case is litigated, he argued.
But neither should InterDigital forgo payments altogether while u-blox practices its patents, Bencivengo said. “You just want to practice the patents without a license in the hope that you’ll reach a deal later,” she said.
Wilson Sonsini partner David Steuer, who had argued in his briefs that u-blox is seeking an unconstitutional prior restraint on its speech, didn’t have to say much Thursday. He told Bencivengo that his client is not a “bully” or “shakedown” artist, as u-blox has alleged. In fact, the company is willing to submit the FRAND royalty issue to arbitration if u-blox wants a quick decision, he said.
Also appearing for InterDigital on Thursday were Wilson Sonsini partners Michael Levin and Maura Rees and of counsel Natalie Morgan.
InterDigital also had support from DOJ’s antitrust division. Although u-blox had disclaimed its antitrust cause of action for purposes of Thursday’s hearing, the division filed a statement of interest Tuesday critiquing u-blox’s motion.
Bencivengo said she’ll issue a written order but made clear that she will be denying the injunction based on all four eBay elements. She invited the parties to jointly propose a special master to take evidence on the FRAND royalty issue and submit a report and recommendation.