Case 3:16-cv-02787-WHO Document 235 Filed 02/01/18 Page 1 of 28
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`QUINN EMANUEL URQUHART & SULLIVAN, LLP
`Charles K. Verhoeven (Bar No. 170151)
`charlesverhoeven@quinnemanuel.com
`David A. Perlson (Bar No. 209502)
`davidperlson@quinnemanuel.com
`50 California Street, 22nd Floor
`San Francisco, California 94111
`Telephone: (415) 875-6600
`Facsimile: (415) 875-6700
`
`Kevin P.B. Johnson (Bar No. 177129)
`kevinjohnson@quinnemanuel.com
`Victoria F. Maroulis (Bar No. 202603)
`victoriamaroulis@quinnemanuel.com
`555 Twin Dolphin Drive, 5th Floor
`Redwood Shores, California 94065
`Telephone: (650) 801-5000
`Facsimile: (650) 801-5100
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`Attorneys for Samsung Electronics Co., Ltd.,
`Samsung Electronics America, Inc., and
`Samsung Research America, Inc.
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN FRANCISCO DIVISION
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`HUAWEI TECHNOLOGIES CO., LTD., et al.,
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`Plaintiffs,
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`SAMSUNG ELECTRONICS CO., LTD., et al.,
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`Defendants.
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`SAMSUNG ELECTRONICS CO., LTD. &
`SAMSUNG ELECTRONICS AMERICA, INC.
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`Counterclaim-Plaintiffs,
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`v.
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`HUAWEI TECHNOLOGIES CO., LTD.,
`HUAWEI DEVICE USA, INC., HUAWEI
`TECHNOLOGIES USA, INC., & HISILICON
`TECHNOLOGIES CO., LTD.
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`Counterclaim-Defendants.
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` CASE NO. 16-cv-02787-WHO
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`SAMSUNG’S MOTION TO ENJOIN
`HUAWEI FROM ENFORCING THE
`INJUNCTION ISSUED BY THE
`INTERMEDIATE PEOPLE’S
`COURT OF SHENZHEN
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`
`Hearing Date: March 14, 2018
`Time: 2:00 p.m.
`Place: Courtroom 2, 17th Floor
`Judge: Hon. William H. Orrick
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`REDACTED VERSION OF
`DOCUMENT SOUGHT TO BE
`SEALED
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`Case No. 16-cv-02787-WHO
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`SAMSUNG’S MOTION FOR A PRELIMINARY ANTISUIT INJUNCTION
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`Case 3:16-cv-02787-WHO Document 235 Filed 02/01/18 Page 2 of 28
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`TO PLAINTIFFS AND COUNTERCLAIM-DEFENDANTS HUAWEI TECHNOLOGIES
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`CO., LTD., HUAWEI DEVICE USA, INC., HUAWEI TECHNOLOGIES USA, INC., AND
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`HISILICON TECHNOLOGIES CO., LTD., AND THEIR COUNSEL OF RECORD
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`PLEASE TAKE NOTICE that on March 14, 2018 at 2:00 p.m., or as soon thereafter as the
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`matter may be heard, in the courtroom of the Honorable William H. Orrick, located at 450 Golden
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`Gate Avenue, San Francisco, California 94102, Defendants and Counterclaim-Plaintiffs Samsung
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`Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Research America, Inc.
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`(collectively “Samsung”) respectfully request that this Court enjoin Huawei Technologies Co., Ltd.,
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`Huawei Device USA, Inc., Huawei Technologies USA, Inc., and HiSilicon Technologies Co., Ltd.
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`(collectively “Huawei”) from taking steps to enforce, anywhere, the injunction issued by the
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`Intermediate People’s Court of Shenzhen, China against Samsung on January 11, 2018.
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`This motion is based on this notice of motion and supporting memorandum of points and
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`authorities, the supporting declarations of Dr. Song Lianbing, Guanbin Xie, and Tong Wang, the
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`accompanying exhibits, reply briefing in further support of this motion and supporting declarations
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`and accompanying exhibits, as well as other written or oral argument that Samsung may present to
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`the Court.
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`DATED: February 1, 2018
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`Respectfully submitted,
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`QUINN EMANUEL URQUHART &
`SULLIVAN, LLP
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`/s/ Charles K. Verhoeven
`By
`Charles K. Verhoeven
`Kevin P.B. Johnson
`Victoria F. Maroulis
`Thomas D. Pease
`David A. Perlson
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`Attorneys for Samsung Electronics Co., Ltd.,
`Samsung Electronics America, Inc., and
`Samsung Research America, Inc.
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`Case No. 16-cv-02787-WHO
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`SAMSUNG’S MOTION FOR A PRELIMINARY ANTISUIT INJUNCTION
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`Case 3:16-cv-02787-WHO Document 235 Filed 02/01/18 Page 3 of 28
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ..............................................................................................................................1
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`FACTUAL BACKGROUND ............................................................................................................4
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`I.
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`STANDARD-SETTING ORGANIZATIONS AND SEP “HOLD UP” ...............................4
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`II.
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`HUAWEI AND SAMSUNG’S FRAND COMMITMENTS AND
`NEGOTIATIONS ..................................................................................................................6
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`III.
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`HUAWEI’S GLOBAL LITIGATION OFFENSIVE AGAINST SAMSUNG .....................8
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`IV.
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`SAMSUNG’S EXTENSIVE MANUFACTURING OPERATIONS IN CHINA ...............10
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`ARGUMENT ...................................................................................................................................11
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`I.
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`APPLICABLE LEGAL STANDARD .................................................................................11
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`A.
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`The Court Has the Power to Issue Antisuit Injunctions under Microsoft ................11
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`II.
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`THE PARTIES AND ISSUES ARE FUNCTIONALLY THE SAME ...............................12
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`A.
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`B.
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`The Parties Are Functionally the Same ....................................................................12
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`The Issues Are Functionally the Same .....................................................................12
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`III.
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`HUAWEI HAS THE POWER TO ENFORCE THE SHENZHEN INJUNCTION ............15
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`IV.
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`THIS COURT IS UNIQUELY SITUATED TO RESOLVE THE GLOBAL
`FRAND ISSUES OF THE PARTIES’ COMPLIANCE WITH THEIR
`LICENSING OBLIGATIONS AND THE AVAILABILITY OF INJUNCTIVE
`RELIEF ................................................................................................................................16
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`V.
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`MULTIPLE UNTERWESER FACTORS APPLY ...............................................................17
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`A.
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`B.
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`C.
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`Huawei’s Enforcement of Injunctions in China Violates U.S. Antitrust Law
`and Will Frustrate Both U.S. Policy and the Policies of This Court ........................18
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`Huawei’s Chinese Injunction Actions Are Vexatious and Oppressive ....................19
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`Huawei’s Chinese Actions Prejudice Multiple Equitable Considerations ...............20
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`1.
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`2.
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`The Chinese Actions Permit Huawei to Circumvent U.S. Law and
`Risk Injuring Consumers and the Marketplace ............................................20
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`Huawei’s Chinese Actions Could Result in Inconsistent Rulings or a
`Race to Judgment .........................................................................................20
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`VI.
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`THE REQUESTED INJUNCTION HAS NO ADVERSE IMPACT ON COMITY ..........21
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`CONCLUSION ................................................................................................................................22
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`
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`TABLE OF AUTHORITIES
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`Page
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`Cases
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`Albemarle Corp. v. AstraZeneca UK Ltd.,
`No. Civ. A. 5:08-1085-MBC, 2009 WL 902348 (D.S.C. Mar. 31, 2009) .......................... 21
`
`Apple Inc. v. Qualcomm Inc.,
`No. 3:17-cv-00108-GPC-MDD, 2017 WL 3966944 (S.D. Cal. Sep. 7, 2017) ................... 17
`
`Apple, Inc. v. Motorola Mobility, Inc.,
`No. 11-CV-178-BBC, 2012 WL 5416941 (W.D. Wis. Oct. 29, 2012) ................................. 5
`
`Apple Inc. and NeXT Software, Inc. v. Motorola, Inc.,
`Nos. 2012-1548, 2012-1549, Dkt. No. 104 (Fed. Cir. Dec. 14, 2012) .................................. 5
`
`Applied Med. Distribution Corp. v. Surgical Co. BV,
`587 F.3d 909 (9th Cir. 2009) ......................................................................................... 12, 21
`
`E. & J. Gallo Winery v. Andina Licores S.A.,
`446 F.3d 984 (9th Cir. 2006) ............................................................................. 11, 12, 17, 21
`
`Hilton v. Guyot,
`159 U.S. 113 (1895) ............................................................................................................ 21
`
`InterDigital Tech. Corp. v. Pegatron Corp.,
`No. 15-CV-02584-LHK, 2015 WL 3958257 (N.D. Cal. June 29, 2015) ................ 12, 13, 21
`
`InterDigital Commc’ns, Inc. v. Huawei Tech. Co., Ltd.,
`No. 1:13-cv-00008-RGA, Dkt. 17 (D. Del. Feb. 11, 2013) ................................................ 18
`
`Laker Airways Ltd. v. Sabena, Belgian World Airlines,
`731 F.2d 909 (D.C. Cir. 1984) ............................................................................................ 19
`
`Microsoft Corp. v. Motorola, Inc.,
`871 F. Supp. 2d 1089 (W.D. Wash. 2012),
`aff’d, 696 F.3d 872 (9th Cir. 2012) ................................. 1, 11, 12, 13, 14, 16, 17, 19, 20, 21
`
`Microsoft Corp. v. Motorola, Inc.,
`795 F.3d 1024 (9th Cir. 2015) ............................................................................................... 5
`
`In the Matter of Motorola Mobility LLC and Google Inc.,
`F.T.C. File No. 121-0120, Dkt. No. C-4410 (July 23, 2013) ................................................ 5
`
`Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren,
`361 F.3d 11 (1st Cir. 2004) ..................................................................................... 11, 18, 19
`
`Realtek Semiconductor Corp. v. LSI Corp.,
`946 F. Supp. 2d 998 (N.D. Cal. 2013) .............................................................................. 5, 6
`
`Seattle Totems Hockey Club, Inc. v. National Hockey League,
`652 F.2d 852 (9th Cir. 1981) ............................................................................................... 21
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`1
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`TCL Commc’ns Tech. Holdings, Ltd. v. Telefonaktienbolaget LM Ericsson,
`No. 8:14-cv-00341-JVS-DFM, Dkt. 279-1 (C.D. Cal. June 29, 2015) ............................... 16
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`TCL Commc’ns Tech. Holdings, Ltd. v. Telefonaktienbolaget LM Ericsson,
`No. 8:14-cv-00341-JVS-DFM, 2016 WL 6562075 (C.D. Cal. Aug. 9, 2016) ...................... 6
`
`Unwired Planet International Ltd. v. Huawei Technologies Co., Ltd.,
`[2017] EWHC 711 (Pat) ................................................................................................ 16, 17
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`Zynga, Inc. v. Vostu USA, Inc.,
`No. 11-cv-02959-EJD, 2011 WL 3516164 (N.D. Cal. Aug. 11, 2011) .............................. 18
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`Additional Authorities
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`American National Standards Institute, United States Standards Strategy (2005) ........................... 4
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`German Institute for Standardization, Economic benefits of standardization (2000) ....................... 4
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`Impacts of Standards Users Group, Study Into the Impact of Standardization (2002) ..................... 4
`
`Mark A. Lemley, Intellectual Property Rights and Standard-Setting Organizations,
`90 Cal. L. Rev. 1889 (2002) .................................................................................................. 6
`
`Mark A. Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking,
`85 Tex. L. Rev. 1991 (2007) ................................................................................................. 4
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`Jeffrey I.D. Lewis, What Is “FRAND” All About?: The Licensing of Patents Essential to
`an Accepted Standard (June 11, 2014) .................................................................................. 6
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`Peter Swann, The Economics of Standardization (2000) .................................................................. 4
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`Samsung moves to enjoin Huawei from enforcing an injunction order recently issued in
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`INTRODUCTION
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`China on standard-essential patents (“SEPs”) that are the subject of this action. On January 11,
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`2018, the Intermediate People’s Court of Shenzhen (“Shenzhen Court”) issued an order enjoining
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`Samsung’s manufacture and sale in China of 4G LTE standardized smartphones. The Shenzhen
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`Court based this order on two Chinese patents that Huawei declared essential to 3GPP cellular
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`telecommunications standards. These patents are included in the worldwide portfolios of SEPs that
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`are the subject of the competing breach of contract claims before this Court; in fact, they are also
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`counterparts to two U.S. patents that Huawei asserts here. Huawei agreed to license these SEPs on
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`fair, reasonable, and non-discriminatory (“FRAND”) terms to companies like Samsung that
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`implement these telecommunications standards. Huawei’s enforcement of this injunction order
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`violates U.S. antitrust law forbidding patent “hold up,” is contrary to its FRAND licensing
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`obligations, and threatens a major disruption to U.S. commerce.
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`If Huawei is permitted to enforce the Shenzhen injunction, it will frustrate this Court’s ability
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`to adjudicate the FRAND contract issues, including the propriety of injunctive relief on the parties’
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`SEPs, that Huawei chose to put before this Court when it asked the Court to decide whether the
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`parties satisfied their FRAND licensing obligations. In these circumstances, the Ninth Circuit
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`specifically endorses the use of antisuit injunctions to bar SEP owners from enforcing foreign
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`injunction orders during the pendency of U.S. FRAND proceedings. Microsoft Corp. v. Motorola,
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`Inc., 696 F.3d 872, 889 (9th Cir. 2012) (affirming district court’s holding that U.S. breach of
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`FRAND obligations action “is dispositive of whether a German court may issue an injunction . . .
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`for infringement of the European patents.”). Because this action will decide whether Huawei and/or
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`Samsung are entitled to injunctive relief on their SEPs, it is “dispositive” of the Shenzhen action.
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`Id. Accordingly, the Court should enjoin Huawei from enforcing the Shenzhen injunction order
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`until the FRAND and antitrust claims presented here have been resolved.
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`Huawei’s hometown injunction actions are part of a coordinated strategy to force Samsung
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`to accept onerous non-FRAND terms for a cross-license to the parties’ worldwide 3G and 4G SEP
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`portfolios. Huawei chose to initiate that strategy in this Court. Its complaint, filed May 24, 2016,
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`alleges Samsung infringes eleven Huawei SEPs and seeks a declaratory judgment that Samsung
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`breached its contractual obligations to license Huawei’s worldwide portfolio of patents on FRAND
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`terms and conditions. Huawei also seeks a declaratory judgment setting the terms of a global
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`FRAND cross license and an injunction prohibiting Samsung from seeking injunctions against
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`Huawei anywhere in the world:
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`Enjoin Samsung from seeking injunctive relief against Plaintiffs (including their
`affiliates) in any jurisdiction with respect to any alleged infringement of any patent
`essential to 3GPP standards
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`Dkt. 1 (“Compl.”) at Prayer for Relief, E. Samsung, in turn, has asserted its own counterclaims for
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`breach of contract, as well as antitrust violation of Section 2 of the Sherman Act, and has asked the
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`Court to bar Huawei from seeking injunctive relief on its SEPs. Dkt. 91 (Samsung’s Answer and
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`Am. Countercls.) at 79-115.
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`When Huawei filed this contract action asking the Court to enjoin Samsung from seeking
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`injunctions against Huawei anywhere in the world, Huawei failed to disclose it was in the process
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`of filing eight individual SEP-based injunction actions against Samsung in Huawei’s home district
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`of Shenzhen. Each such action presents two issues: (1) whether the asserted SEP is infringed; and
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`(2) if so, whether to issue an injunction. Although Huawei could have sought damages, the sole
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`relief it seeks in the Shenzhen SEP actions are injunctions against Samsung’s manufacture and sale
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`of smartphones. Those actions have proceeded more quickly than this one. On January 11, 2018,
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`the Shenzhen Court entered judgment in two of the cases, concluding Samsung infringes two
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`Chinese SEPs and that its licensing conduct with respect to those patents was at fault. The Court
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`issued an injunction order against Samsung’s manufacture, sale, and offering for sale of smartphones
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`in China, a major manufacturing hub not only for the phones Samsung sells in China but for those
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`sold here and around the world. Because Samsung has now appealed the order to the Guangdong
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`High Court, that order is temporarily stayed, but will go into effect if and when it is affirmed;
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`although it is difficult to ascertain how long the appeal will take, it could conclude within months.
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`Samsung has litigated in China in the hopes that the Shenzhen Court would not enter an
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`injunction until the worldwide FRAND claims that Huawei first presented here had been fully
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`litigated. With the injunction order having been issued, a dangerous probability now exists that
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`Huawei’s hometown SEP actions might ultimately undermine this Court’s ability to decide the
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`broader FRAND and antitrust claims presented here. Samsung therefore brings the present motion.
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`Huawei makes no secret of its improper motive for seeking injunctive relief in China on
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`SEPs that are the subject of the broader global contract claims in this action. As Huawei’s Head of
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`Global Intellectual Property, Ding Jianxin, openly acknowledged last year, Huawei is using the
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`threat of injunctions in China as a “bargaining chip” to obtain royalties from Samsung:
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`Perhaps judges are quite reluctant to hear injunction cases because of its staggering
`impact on the market. . . Even if injunction order were to be enforced, does Huawei
`really want to kick Samsung out of China? Is it possible? Of course not. . . .At the
`end of the day, your purpose is to get the royalties in return, while using legal action
`as a bargaining chip.
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`Ex. 1 (Speech of Ding Jianxin at 2016 China Competition Policy Forum) (certified translation). Mr.
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`Ding is correct. The threat of an injunction against Samsung’s manufacture and sale of 4G LTE
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`phones in China, including many of the 4G LTE phones it sells in the United States, is a significant
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`bargaining chip; one that Huawei’s voluntary FRAND commitments were supposed to foreclose.
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`The anticompetitive “impact” of enforcement of the Shenzhen Court’s injunction would be
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`staggering, both here and in China. Samsung manufactures
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`China,
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`of which are exported to the United States and sold to U.S. customers.
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`If Huawei is permitted to enforce the Shenzhen Court’s injunction, Samsung will face a critical
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`business risk that could force an abrupt end to this litigation as Samsung would likely have no choice
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`but to accept the onerous terms from which Huawei has refused to waver.
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`Huawei chose to present the global contract issues arising from the parties’ SEP licensing
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`dispute to this Court for resolution. It should not be permitted to use the improper threat of
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`injunctions in China based on patents that are encompassed by this action to derail that process.
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`This Court should issue an antisuit injunction against Huawei’s enforcement of the injunctions in
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`China until such time as this Court has resolved the antitrust and breach of contract issues presented
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`by the parties’ competing FRAND claims. If this Court ultimately decides that Huawei is entitled
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`to seek injunctive relief in China, Huawei can seek to enforce the Shenzhen injunctions at that time.
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`In the meantime, if Huawei wishes to seek damages for alleged infringement of its Chinese
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`patents—relief that to date it has not sought—or to press forward with its recently filed action asking
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`a Chinese court to set the terms and conditions for a FRAND royalty limited to the parties’ Chinese
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`SEPs—it remains free to do so.
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`FACTUAL BACKGROUND
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`I.
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`STANDARD-SETTING ORGANIZATIONS AND SEP “HOLD UP”
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`The development and implementation of technological standards have reaped numerous
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`benefits for consumers, businesses, and society as a whole. Ex. 2 (American National Standards
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`Institute, United States Standards Strategy (2005)) at 3-4; Ex. 3 (Impacts of Standards Users Group,
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`Study Into the Impact of Standardization (2002)) at i-vii. Standardization benefits consumers by
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`maximizing the interoperability, compatibility, safety, repeatability, and quality of products and
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`services. Ex. 4 (ETSI, Why we need standards, available at http://www.etsi.org/standards/why-we-
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`need-standards); Ex. 5 (European Committee for Standardization, Bring benefits to society,
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`available at https://www.cen.eu/about/RoleEurope/Society/Pages/default.aspx). It also has many
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`pro-competitive benefits, including decreased barriers to entry, reduced costs, streamlined laws and
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`regulations, and increased competition in an industry. Ex. 6 (Peter Swann, The Economics of
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`Standardization (2000)) at 16-21; Ex. 7 (German Institute for Standardization, Economic benefits
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`of standardization (2000)). Nearly every industry, ranging from telecommunications to agriculture,
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`has benefited from standard setting. Ex. 3 at 2-4
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`Along with its advantages, standardization also carries the risk of patent “hold up.” Ex. 8
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`(Mark A. Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking, 85 Tex. L. Rev. 1991, 2016-
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`17 (2007)). When a patented technology is essential to practice a technological standard, the owner
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`of the patent may attempt to “hold up” implementers of the standard through the threat of an
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`injunction for infringement. Id. If unchecked, patent “hold up” can result in patentees extracting
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`royalties far in excess of the value of their patents, drastically increasing costs for implementers,
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`and destroying competition. See id. United States investigative and enforcement bodies, including
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`the U.S. Department of Justice, the Federal Trade Commission, and the United States Patent &
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`Trademark Office, have all recognized the dangers of patent “hold up,” and have specifically
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`identified injunctive relief for SEPs as abusive and anticompetitive:
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` The United States Department of Justice, Antitrust Division and the United States Patent &
`Trademark Office issued a joint policy statement in 2013 recognizing that an SEP holder
`subject to voluntary F/RAND commitments could use the threat of injunctive relief “to
`pressure an implementer of a standard to accept more onerous licensing terms than the
`patent holder would be entitled to receive consistent with the F/RAND commitment—in
`essence concluding that the patent holder had sought to reclaim some of its enhanced market
`power over firms that relied on the assurance that F/RAND-encumbered patents included in
`the standard would be available on reasonable licensing terms under the SDO’s policy.” Ex.
`9 at 6 (emphasis added).
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` The DOJ and USPTO elaborated “[s]uch an order may harm competition and consumers
`by degrading one of the tools SDOs employ to mitigate the threat of such opportunistic
`actions by the holders of F/RAND-encumbered patents that are essential to their standards.”
`Id. (emphasis added).
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` The United States Federal Trade Commission has also taken a strong stand against the
`indiscriminate use of injunctions for SEPs, noting in an amicus brief submitted to the Federal
`Circuit in Apple v. Motorola that “a royalty negotiation that occurs under the threat of an
`injunction may be heavily weighted in favor of the patentee in a way that is in tension with
`the RAND commitment.” Ex. 10, Apple Inc. and NeXT Software, Inc. v. Motorola, Inc.,
`Nos. 2012-1548, 2012-1549, Dkt. No. 104 at 6 (Fed. Cir. Dec. 14, 2012).
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` The Commission further noted a FRAND commitment means that the patentee “implicitly
`acknowledged that a royalty is adequate compensation for a license to use that patent,”
`further counseling against the award of an injunction. Id. at 9.
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` The Commission further concluded in an enforcement action that Motorola breached its
`FRAND obligations “by seeking to enjoin and exclude implementers of its SEPs” from
`practicing the relevant standards. Ex. 11, Complaint, In the Matter of Motorola Mobility
`LLC and Google Inc., F.T.C. File No. 121-0120, Dkt. No. C-4410 at 5 (July 23, 2013).
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` The Federal Trade Commission has also commented on the risks of injunctive relief on SEPs,
`describing the dangers of giving “SEP owner[s] the bargaining power to extract licensing
`terms that reflect the profits from potential lost sales, which can be extraordinarily high for
`an implementer if there is no feasible design-around alternative.” Ex. 12, FTC Chairwoman
`Edith Ramirez, Standard-Essential Patents and Licensing: An Antitrust Enforcement
`Perspective, 8th Annual Global Antitrust Enforcement Symposium (Sept. 10, 2014) at 7.
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`United States appellate and district courts have also reached consensus that injunctive relief
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`should generally be unavailable as a remedy for infringement of SEPs. Microsoft Corp. v. Motorola,
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`Inc., 795 F.3d 1024, 1046 (9th Cir. 2015) (pursuit of injunctions during pendency of suit to
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`determine RAND rates for patents suggested “the real motivation was to induce Microsoft to agree
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`to a license at a higher-than-RAND rate”); Apple, Inc. v. Motorola Mobility, Inc., No. 11-CV-178-
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`BBC, 2012 WL 5416941, at *15 (W.D. Wis. Oct. 29, 2012) (“from a policy and economic
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`standpoint, it makes sense that in most situations owners of declared-essential patents that have
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`made licensing commitments to standards-setting organizations should be precluded from obtaining
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`an injunction or exclusionary order that would bar a company from practicing the patents”); Realtek
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`Semiconductor Corp. v. LSI Corp., 946 F. Supp. 2d 998, 1009 (N.D. Cal. 2013) (granting antisuit
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`injunction to bar enforcement of injunctive relief on SEP because “the act of seeking injunctive
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`relief” on SEPs is “is inherently inconsistent” with a FRAND commitment, which “implies a
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`promise not to seek injunctive relief either domestically (as is the case here) or abroad”) (emphasis
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`added); TCL Commc’ns Tech. Holdings, Ltd. v. Telefonaktienbolaget LM Ericsson, No. 8:14-cv-
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`00341-JVS-DFM, 2016 WL 6562075, at *4 (C.D. Cal. Aug. 9, 2016) (denying summary judgment
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`for no breach of FRAND because “initiating infringement lawsuits and pursuing injunctive relief
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`can constitute something more than the more innocent conduct of merely making offers that are not,
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`themselves, FRAND”).
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`To minimize the danger of patent “hold up,” standard-setting organizations require
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`participants in the standard-setting process, including companies like Huawei and Samsung, to
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`follow specific licensing policies. Ex. 13 (Jeffrey I.D. Lewis, What Is “FRAND” All About?: The
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`Licensing of Patents Essential to an Accepted Standard (June 11, 2014), available at
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`https://cardozo.yu.edu/what-%E2%80%9Cfrand%E2%80%9D-all-about-licensing-patents-
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`essential-accepted-standard) at 2-3; see also Ex. 14 (Mark A. Lemley, Intellectual Property Rights
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`and Standard-Setting Organizations, 90 Cal. L. Rev. 1889, 1902-03, 1906 (2002)). In exchange for
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`allowing their patented technologies to be incorporated into standards, participants are typically
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`required to agree to make their SEPs available to implementers on fair, reasonable, and non-
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`discriminatory (“FRAND”) terms. Ex. 13 at 2-3. This availability of FRAND licenses is designed
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`to mitigate the threat of patent “hold up” and encourage participation in a standard. Id. When
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`standard-setting participants fail to comply with their FRAND obligations, their conduct threatens
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`participation in a standard and all of its benefits to the consumer and society, and thereby invites
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`anticompetitive and contractual scrutiny. See id. at 3-5; Ex. 14 at 1914, 1927.
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`II.
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`HUAWEI AND SAMSUNG’S FRAND COMMITMENTS AND NEGOTIATIONS
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`This case involves the patent licensing policy of ETSI, a European organization that sets
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`global wireless telecommunications standards, including those used in 3G and 4G networks. Ex. 15
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`(ETSI, Mobile
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`Communications,
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`available
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`at
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`http://www.etsi.org/technologies-
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`clusters/technologies/mobile). ETSI seeks to balance the public’s need for standards against the
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`rights of patent owners to be compensated for the use of their technology in the implementation of
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`standards. Dkt. 1-1 (“ETSI IPR Policy”) §§ 3.1-2. ETSI requires its members to disclose patents
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`that might be essential to a standard, id. § 4.1, and irrevocably undertake in writing that they are
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`prepared to license such patents on FRAND terms. Id. § 6.1.
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`Over time, both Samsung and Huawei have signed ETSI undertakings for numerous U.S.
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`and foreign patents that they believe might be essential to 3G and 4G standards. Dkt. 91-14, -18, -
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`23-26, -29, -34 (Samsung’s Licensing Declarations (Exhibits 14, 23-26, 29, and 34 to Samsung’s
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`Answer and Am. Countercls.)); Dkt. 59-1-9 (Huawei’s Licensing Declarations (Exhibits 2.1–2.43
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`to Huawei’s Compl.)). And both parties agree they must be willing to license any patents
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`determined to be essential on FRAND terms. Compl. ¶ 63 (Huawei admits Samsung is “irrevocably
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`entitled” to a FRAND license to Huawei’s essential patents); Dkt. 91 (Samsung’s Answer and Am.
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`Countercls) ¶ 29 (“Samsung admits that ETSI members who are subject to a commitment to offer
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`licenses on FRAND terms and conditions are obligated not to refuse to enter a license for declared,
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`essential patents that is fair, reasonable, and non-discriminatory.”).
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`Unlike Huawei, Samsung has not preemptively asserted its patents in an attempt to shut out
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`competitors or extract licensing revenue. Samsung has always been willing to enter into cross
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`licenses with other companies that own patents, including direct competitors, see, e.g., Ex. 16 (Nokia
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`press release, Nokia and Samsung expand their intellectual property cross license (July 13, 2016));
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`Ex. 17 (Samsung press release, Samsung and Google Sign Global Patent License Agreement (Jan.
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`27, 2014)). Samsung prefers to compete in the marketplace by offering cutting-edge products that
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`customers want to buy.
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`In August 2011, at Huawei’s request, the parties began negotiating a worldwide cross license
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`for their respective 3G and 4G patent portfolios. Ex. 18 (Mar. 2, 2015 Huawei letter). They
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`regularly