Insights
Publications

The Federal Circuit Reaffirms Its Judicial Support Of Standard Setting Organizations In Qualcomm

2/3/2009 Articles

The Qualcomm Inc. v. Broadcom Corp. litigation is probably best known by practitioners for the hefty discovery sanctions imposed by the trial court in the Southern District of California against Qualcomm and its attorneys for failure to produce key documents.  The case will soon be known for something else.  The Federal Circuit's December 1, 2008 opinion on appeal, in addition to affirming the lower court's sanctions order, focused on the important and more substantive issue of when participants in standard-setting organizations ("SSOs") have a duty to disclose potentially relevant patents.  Qualcomm Inc. v. Broadcom Corp., Nos. 2007-1545, 2008-1162, slip op. (Fed. Cir. Dec. 1, 2008).  In its decision, the Federal Circuit continued a trend toward holding participants in SSOs to stringent duties to disclose potentially relevant patents, even absent a written SSO policy compelling disclosure.  Especially in light of the increased prevalence and importance of SSOs in a wide variety of technology industries, companies that become involved in SSOs need to understand the obligations their participation creates, obligations which may not be apparent from the written SSO policy. 

The Qualcomm Opinion

In Qualcomm, The Federal Circuit ruled that Qualcomm had a duty to disclose two patents to Joint Video Team ("JVT"), an SSO of which it was a member, despite the fact that JVT's written policy did not explicitly impose a disclosure duty.  In so deciding, the Court confirmed its willingness to read between the lines to require SSO participants' disclosure of relevant patents.  The decision echoed the Court's 2003 opinion in Rambus Inc. v. Infineon Technologies AG 318 F.3d 1081 (Fed. Cir. 2003) ("Rambus"), where the Court likewise held that members of the Joint Electron Device Engineering Council ("JEDEC") SSO had a duty to disclose in the absence of a written policy clearly imposing such a duty.

To determine whether a disclosure duty existed, the Federal Circuit in Qualcomm followed the same contract interpretation approach it took in Rambus, looking first to the four corners of JVT's written intellectual property rights ("IPR") policy, which did not impose any disclosure duty on participants who did not submit technical proposals.  As in Rambus, however, despite the absence of a written disclosure duty, the Court went on to find an implied duty to disclose based largely on the fact that participants understood the policies as imposing such obligations and took actions consistent with the existence of a duty.  In both Rambus and Qualcomm, the Federal Circuit held that the duty to disclose extends "only to claims in patents or applications that reasonably might be necessary to practice the standard," defined as "when a reasonable competitor would not expect to practice the standard without a license under the undisclosed claims."   

The Tension Between IP Rights and SSOs

Lower courts are likely to look carefully at Qualcomm, not only for its explicit holding, but also for continued guidance about the proper level of judicial deference to be given to SSOs and their goals.  Presented with a scenario where intellectual property rights were in tension with the goals of an SSO, the Federal Circuit has now twice determined that intellectual property rights should yield to the goals furthered by the SSO, even in the absence of a written policy requiring disclosure.  The Federal Circuit's identification of a duty to disclose in the Qualcomm and Rambus cases - when it could have stopped its inquiry in either case upon finding that the relevant SSO lacked a written disclosure policy - suggests a strong level of judicial support for SSOs.  Both cases reflect an implicit determination that avoiding the threat of standard blocking by a patent hold-up was worth the reduction in value of patent rights resulting from the finding of a disclosure duty. 

Extending The Reach of Qualcomm and Rambus

Rambus and Qualcomm dealt with SSOs in the semiconductor and telecommunications fields, respectively.  It remains to be seen whether this degree of Federal Circuit support for SSOs will extend beyond markets such as these - often referred to as "network markets" - where compatibility is critical and where SSOs may offer a substantial benefit to consumers.  It also remains to be seen what level of evidence courts will require to demonstrate an implied duty to disclose, in cases where discovery misconduct is not at issue.

Firm Highlights

Publication

Practices to Protect Trade Secrets in Failed Acquisitions and Customer Relationships

Published on  ACCDocket.com . By Walt Norfleet, Smiths Group plc and Eugene Y. Mar, Farella Braun + Martel LLP In part one of this three-part series on best practices for protecting trade secrets and guarding...

Read More
Publication

Securing Against Trade Secret Pitfalls and Dangers Arising From Employee Mobility Situations

Published on ACCDocket.com . By Walt Norfleet, Smiths Group plc and Eugene Y. Mar, Farella Braun + Martel LLP Picture this: Your company is in a highly competitive industry with several leading players heavily supported...

Read More
Publication

How Defense Strategies Can Go Awry When Pursuing Concurrent PTAB Relief in Financial Services Patent Litigation

United States Automobile Association (USAA), a financial services company that provides insurance, banking, investment, and retirement products and services for members of the military and their families, filed a surprising patent infringement complaint against Wells Fargo...

Read More
Publication

Facebook Suspends Apps That Scrape Data From Its Platform Following Cambridge Analytica Scandal

Read More
News

Gov't Drops IP Theft Charges Against Ex-Jawbone Workers

Law360 reported that the U.S. Attorney’s Office for the Northern District of California in San Jose moved to dismiss all trade-secret-theft charges against the remaining four defendants in what was originally a six-defendant case...

Read More
Publication

Trade Secret Hygiene for Current Employees

Published on  ACCDocket.com . By Walt Norfleet, Smiths Group plc and Eugene Y. Mar, Farella Braun + Martel LLP In the first two parts of this series on best practices in protecting trade secrets, we...

Read More
News

Farella Braun + Martel Announces 2020 Partner Elevations

SAN FRANCISCO/ST. HELENA, Calif., January 21, 2020: Northern California legal powerhouse Farella Braun + Martel is pleased to announce the election of senior associates Evan Abrams, Lauren Galbraith, and Alex Reese to the partnership...

Read More
Publication

What California’s New Security Law Means to Your Business

Commonsense IoT security steps that startups and small business should consider to comply with California’s new law California recently enacted a new law, Senate Bill 327, that requires companies that make Internet of Things...

Read More
News

Sushila Chanana Named to 2020 Leadership Council on Legal Diversity Fellows Program

SAN FRANCISCO, February 13, 2020: Farella Braun + Martel is proud to announce that Sushila Chanana has been named a member of the 2020 class of Fellows participating in a landmark program created by...

Read More
News

Daily Journal Names Farella Lawyers Among Top IP Lawyers in California

Farella Braun + Martel is proud to announce that partners Jeffrey M. Fisher and James L. Day were named to the 2020 list of “Top Intellectual Property Lawyers” in California by the Daily Journal...

Read More