Case 1:20-cv-00493-LPS Document 41 Filed 03/24/21 Page 1 of 18 PageID #: 2073
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF DELAWARE
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`
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`LENOVO (UNITED STATES) INC. and
`MOTOROLA MOBILITY LLC,
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`Plaintiffs,
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`v.
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`2
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`CA. No. 20-493-LPS
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`INTERDIGITAL TECHNOLOGY
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`CORPORATION, IPR LICENSING, INC,
`INTERDIGITAL COMMUNICATIONS,
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`INC., INTERDIGITAL HOLDINGS, INC,
`and INTERDIGITAL, INC.
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`Defendants.
`
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`Jack B. BIuInenfeld, Rodger D. Smith II, Cameron P. Clark, MORRIS, NICHOLS, ARSI-IT &
`TUNNELL LLP, Wilmington, DE
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`Richard A. Cederoth, David C. Giardina, Leif E. Peterson, SIDLEY AUSTIN LLP, Chicago, IL
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`Melissa Colon-Bosolet, Ketan V. Patel, SIDLEY AUSTIN LLP, New York, NY
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`Scott M. Border, Joseph A. Micallef, SIDLEY AUSTIN LLP, Washington, DC
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`Attorneys for Plaintiffs
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`Neal C. Belgam, Eve H. Ormerod, SMITH, KATZENSTEIN & JENKINS LLP, Wilmington,
`DE
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`David S. Steuer, Michael B. Levin, Maura L. Rees, Ryan R. Smith, WILSON SONSINI
`GOODRICH & ROSATI, Palo Alto, CA
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`Attorneys for Defendants
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`
`
`
`MEMORANDUM OPINION
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`March 24, 2021
`Wilmington, Delaware
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`

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`Case 1:20-cv-OO493-LPS Document 41 Filed 03/24/21 Page 2 of 18 PageID #: 2074
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`Sic/Mm,.US District Judge:
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`Pending before the Court is a Motion to Dismiss for Failure to State a Claim and Lack of
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`Jurisdiction (DJ. 7) filed by Defendants lPR Licensing, lnc., InterDigital Communications, Inc,
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`InterDigital Holdings, Inc, InterDigital Ina, InterDigital Patents Holdings, Inc., and InterDigital
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`Technology Corporation (collectively, “lnterDigital” or “IDC”).
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`lnterDigital seeks to dismiss
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`Plaintiffs Lenovo (United States) Inc. and Motorola Mobility LLC’s (collectively, “Lenovo”)
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`Sherman Act Section 1 and Section 2 antitrust counts for lack of antitrust standing and failure to
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`state a claim.
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`lnterDigital further asks this Court to require Lenovo to plead its antitrust counts
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`(as well as a breach of contract count, which is not the subject ofthe pending motion) as
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`compulsory counterclaims in a patent infringement suit lnterDigital is pressing in this Court.
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`For the reasons stated below, lnterDigital’s motion will be granted in part and denied in
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`I.
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`BACKGROUND
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`lnterDigital is a patent holding company that holds Standard Essential Patents (“SEPS”)
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`related to cellular technologies underlying 3G and 4G LTE wireless standards. (D1. 1 Ex. 2
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`1] 27) Lenovo is a cellular telephone manufacturer that Wishes to incorporate those standards into
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`the chipsets it places in its phones.
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`(Id. at 1111 18-19) The relevant standards are promulgated by
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`the European Telecommunications Standards Institute (“BT81”), a member of the Third
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`Generation Partnership Project. (D.I. 1 'fl 1)
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`The parties’ dispute relates in part to obligations that InterDigital incurred pursuant to its
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`relationship with ETSI. As a standards~promulgating organization, ETSI commercialized the
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`technology that is now used worldwide as 3G and 4G LTE phones. (Id. '[fil 42—43) To do so,
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`ETSI developed new technology via patented and unpatented technological innovations. (Id.
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`'1 44)
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`In promulgating the 3G and 4G LTE standards, ETSI necessarily prevents other
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`technological competition by disincentivizing development of other standards. See Broadcom
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`Corp. v. Qualcomm Inc, 501 F.3d 297, 314 (3d Cir. 2007) (“When a patented technology is
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`incorporated in a standard, adoption of the standard eliminates alternatives to the patented
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`technology”). Further, ETSI’s implementation of the standards requires would-be implementers
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`to risk infringing the many patents underlying them.
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`(Id. 1111 44-45) This poses a substantial
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`antitrust risk — in obtaining market power, ETSI and those with rights to SEPs may be able to
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`hold-up implementers by demanding payment for licenses potentially not commensurate with the
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`patents’ worth. (Id)
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`To mitigate the risk of antitrust concerns, ETSI enters into a contract with SEP holders.
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`That contract, governed by French law (D1 1 Ex. 2 § 12), provides that any holder of a patent
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`that may reasonably relate to the ETSI 3G and 4G LTE standards must notify ETSI “in a timely
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`fashion.” (Id. § 4.1) SEP holders must also agree to bestow licenses to any would—be
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`implementer under fair, reasonable, and non-discriminatory (“FRAND”) terms.
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`(Id. § 6.1)
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`InterDigital submitted its patents for consideration by ETSl (D.I. 1 1] 61), thereby
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`contractually obligating InterDigital to license its patents under FRAND terms upon their
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`incorporation into the 3G and 4G LTE standards (D1. 1 Ex. 2 §§ din-6.4 & App’x A). That
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`FRAND obligation underlies the dispute between the parties here.
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`Further actions involving Lenovo and InterDigital are pending in the United Kingdom
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`and in this Court, generally relating to issues of InterDigital’s compliance with its FRAND
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`obligations. The United Kingdom litigation was filed by InterDigital on August 27, 2019, and
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`asks the Business and Property Courts of England and Wales to declare that InterDigital has
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`complied with its FRAND obligations in its offers to Lenovo. (D.I. 1 W 86-88) In the
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`alternative, InterDigital asks that the United Kingdom court determine a reasonable royalty that
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`is FRAND for Lenovo to pay for practicing the InterDigital SEP portfolio. (Id) The United
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`States action was filed by interDigital one day later, on August 28, 2019, and seeks a declaration
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`that Lenovo’s actions are an infringement of InterDigital’s U.S. SEPs.
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`(Id. i] 89) InterDigital
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`further asks for a determination that InterDigital’s licensing offers are FRAND, thereby entitling
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`InterDigital to an injunction against Lenovo’s infringing activity. (Id)
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`The instant matter concerns antitrust. In it, Lenovo alleges that InterDigital defrauded
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`ETSI when it agreed to license its SEPs on FRAND terms, allowing InterDigital to obtain
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`unlawful monopoly power and subjecting Lenovo to a risk of antitrust harm from InterDigital’s
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`exercise of that unlawful monopoly power. (See generally D.I. 1 Ex. 2) interDigital responds
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`that because it has offered licenses on FRAND terms — and has filed the United Kingdom and
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`United States actions to confirm that its offers are FRAND — Lenovo has not (and cannot, as a
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`matter of law) suffer any antitrust harm. (D.I. 8 at 8—1 1)
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`In considering the issues presented by InterDigital’s motion, the Court has considered not
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`only the parties’ extensive briefing (see D.I. 8, 18, 20, 23, 36) but also a statement of interest and
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`a further brief from the United States (D.I. 13, 28) and an amicus brief from The App
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`Association (D.I. 14). The Court also reviewed the multiple supplemental authorities submitted
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`by the parties. (See D.I. 27, 29, 31, 38) The Court heard argument on October 27, 2020. (D.I.
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`40) (“TL”)
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`II.
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`LEGAL STANDARDS
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`A.
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`Motions to Dismiss
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`Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires
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`the Court to accept as true all material allegations of the complaint. See Spruill v. Gillis, 372
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`F.3d 218, 223 (3d Cir. 2004). “The issue is not Whether a plaintiff will ultimately prevail but
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`whether the claimant is entitled to offer evidence to support the claims.” In re Burlington Coat
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`Factory Sec. Litig, 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted).
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`Thus, the Court may grant such a motion to dismiss only if, after “accepting all well—pleaded
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`allegations in the complaint as true, and viewing them in the light most favorable to plaintiff,
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`plaintiff is not entitled to relief.” Malo v. Aetna, Inc, 221 F.3d 472, 481-82 (3d Cir. 2000)
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`(internal quotation marks omitted).
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`However, “[t]o survive a motion to dismiss, a civil plaintiff must allege facts that ‘raise a
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`right to relief above the speculative level on the assumption that the allegations in the complaint
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`are true (even if doubtful in fact)” Vlctaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007)
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`(quoting Bell Ail. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim is facially plausible
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`“when the plaintiff pleads factual content that allows the court to draw the reasonable inference
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`that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
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`(2009). At bottom, “[t}he complaint must state enough facts to raise a reasonable expectation
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`that discovery will reveal evidence of [each] necessary element” of a plaintiff’s claim.
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`Wilkerson v. New Media Tech. Charter Sch. Inc, 522 F.3d 315, 321 (3d Cir. 2008) (internal
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`quotation marks omitted).
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`The Court is not obligated to accept as true “bald assertions,” Morse v. Lower Merion
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`Sch. Dist, 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), “unsupported
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`Case 1:20-cv-OO493-LPS Document 41 Filed 03/24/21 Page 6 of 18 PagelD #: 2078
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`conclusions and unwarranted inferences,” Schuylkill Energy Res, Inc. 12. Pa. Power & Light Co,
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`113 F.3d 405, 417 (3d Cir. 1997), or allegations that are “self-evidently false,” Namz' v. Fauver,
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`82 F.3d 63, 69 (3d Cir. 1996).
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`In evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(l), the
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`Court may treat the motion as “either a facial or factual challenge to the court’s subject matter
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`jurisdiction.” Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). In a facial
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`challenge, as is presented here, “the court must only consider the allegations of the complaint
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`and documents referenced therein and attached thereto, in the light most favorable to the
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`plaintif .” Id. That is, the Court here applies the same standard for Rule 12(b)(1) as it does
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`under Rule 12(b)(6).
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`B.
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`Antitrust Standing
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`As the Third Circuit explained in Pace Elms, Inc. v. Canon Comp. Syn, Inc, 213 F.3d
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`118, 120 (3d Cir. 2000):
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`To state a claim for damages under section 4 of the Clayton
`Act, 15 U.S.C. § 15, a plaintiff must allege more than that it has
`suffered an injury causally linked to a violation of the antitrust
`laws. See Brunswick Corp. v. Pueblo Bowl-O—Mat, Inc, 429 US.
`477, 489, 97 S. Ct. 690, 50 L.Ed.2d 701 (1977). In addition, it
`must allege antitrust injury, “which is to say injury of the type the
`antitrust laws were intended to prevent and that flows from that
`which makes defendants’ acts unlawfu .” Id.
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`C.
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`Sherman Act Section 1
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`Judge Andrews has summarized the standards for analyzing 21 Sherman Act Section 1
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`claim at the motion to dismiss stage:
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`To maintain an antitrust action under § 1 of the Sherman Act, a
`plaintiff must plead two elements: (1) “the defendant was a party
`to a contract, combination .
`.
`. or conspiracy;” and (2) “the
`conspiracy to which the defendant was a party imposed an
`unreasonable restraint on trade.” Bur-rah v. Milberg Factors, Inc. ,
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`662 F.3d 212, 221 (3d Cir. 2011) (quoting In re Ins. Brokerage,
`618 F.3d 300, 315 (3d Cir. 2010)). . ..
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`Courts have collectively described the first element of a Section
`1 claim w requiring a “contract, combination, or conspiracy” — as
`“concerted action.” Ins. Brokerage, 618 F.3d at 315 (quoting In re
`Baby Food Antitrust Litig, 166 F.3d 112, 117 (3d Cir.1999)).
`Concerted action is defined as “a unity of purpose or a common
`design and understanding or a meeting of minds or a conscious
`commitment to a common scheme.” Ins. Brokerage, 618 F.3d at
`315 (quoting In re Flat Glass Antitrust Litig, 385 F.3d 350, 357
`(3d Cir. 2004)). Therefore, Section 1 claims “always require the
`existence of an agreement.” Howard Hess Dental Labs. Inc. v.
`Dentsply Int’l, Inc, 602 F.3d 237, 254 (3d Cir. 2010); 15 U.S.C. §
`1. The agreement may be shown by either direct or circumstantial
`evidence. Lifewatch Serv. Inc. v. Highmark Inc, 902 F.3d 323,
`333 (3d Cir. 2018). . ..
`
`The second element of an antitrust claim — an unreasonable
`restraint on trade — is analyzed under one of two standards: per
`se or rule of reason. Bartel: v. Milberg Factors, Inc, 662 F.3d 212,
`221 (3d Cir. 2011). .
`.
`. “[T]he rule of reason requires the
`factfinder to decide whether[,] under all the circumstances of the
`case[,] the restrictive practice imposes an unreasonable restraint on
`competition.” Ariz. v. Martcopa C13}. Med. Soc, 457 U.S. 332,
`343, 102 S. Ct. 2466, 73 L.Ed.2d 48 (1982). Because the rule of
`reason requires courts to conduct a “fact-specific assessmen ,”
`courts “usually cannot properly apply the rule of reason without an
`accurate definition of the relevant market.” Ohio v. Am. Express
`Co, _ U.S. _ , 138 S. Ct. 2274, 2285, 201 L.Ed.2d 678
`(2018); Lifewatch, 902 F.3d at 336. Under the per se standard,
`however, “certain agreements or practices[,} which because of their
`pernicious effect on competition and lack of any redeeming
`virtue[,] are conclusively presumed to be unreasonable and
`therefore illegal without elaborate inquiry as to the precise harm
`they have caused or the business excuse for their use.” N. Pac.
`Railway Co. v. UnitedStates, 356 U.S. l, 5, 78 S. Ct. 514, 2
`L.Ed.2d 545 (1958). “Such determinations ofper se illegality are
`not casually made.” Larry v. Muko, Inc. v. Sw. Pa. Bldg. & Const.
`Trades Council, 670 F.2d 421, 428 (3d Cir. 1982). “It is only after
`considerable experience with certain business relationships that
`courts classify them as per se violations of the Sherman
`Ac .” United States v. Topco Assoc, Inc, 405 U.S. 596, 607~08,
`92 S. Ct. 1126, 31 L.Ed.2d 515 (1972).
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`Int ’1 Constr. Prods. LLC v. Caterpillar Inc., 419 F. Supp. 3d 791, 800-04 (D. Del. 2019).
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`D.
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`Sherman Act Section 2
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`The Third Circuit’s opinion in Broadcom sets out the standards for analysis of a
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`Sherman Act Section 2 claim:
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`
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`Section 2 of the Sherman Act, in what we have called “sweeping
`language,” makes it unlawful to monopolize, attempt to
`monopolize, or conspire to monopolize, interstate or international
`commerce. It is, we have observed, “the provision of the antitrust
`laws designed to curb the excesses of monopolists and near-
`monopolists.” LePage ’s Inc. v. SM 324 F.3d 141, 169 (3d
`Cir.2003) (en bane). Liability under § 2 requires “(1) the
`possession of monopoly power in the relevant market and (2) the
`willful acquisition or maintenance of that power as distinguished
`from growth or development as a consequence of a superior
`product, business acumen, or historic accident.” United States v.
`Grinnell Corp, 384 US. 563, 570-71 (1966). .
`.
`.
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`The existence of monopoly power may be proven through direct
`evidence of supracompetitive prices and restricted output. United
`States v. Mierosofi‘ Corp, 253 F.3d 34, 51 (D.C.Cir.2001) (en
`bane); Rebel Oil Co. v. Ail. Richfield Co, 51 F.3d 1421, 1434 (9th
`Cir.l995). It may also be inferred from the structure and
`composition of the relevant market. Harrison Aire, 423 F.3d at
`381; Microsofi 253 F.3d at 51. . ..
`
`The second element of a monopolization claim under § 2 requires
`the willful acquisition or maintenance of monopoly power. As this
`eiement makes clear, the acquisition or possession of monopoly
`power must be accompanied by some anticompetitive conduct on
`the part of the possessor. Verizon Commcn's Inc. v. Law Ofiices of
`Curtis V. Trinko, LLP, 540 U.S. 398, 407, 124 S. Ct. 872, 157
`L.Ed.2d 823 (2004). Anticompetitive conduct may take a variety
`of forms, but it is generally defined as conduct to obtain or
`maintain monopoly power as a result of competition on some basis
`other than the merits. LePage ’s, 324 F.3d at 147. Conduct that
`impairs the opportunities of rivals and either does not further
`competition on the merits or does so in an unnecessarily restrictive
`way may be deemed anticompetitive. Aspen Skiing Co. v. Aspen
`Highlands Skiing Corp, 472 US 585, 604~05 & n. 32, 105 S. Ct.
`2847, 86 L.Ed.2d 467 (I985). Conduct that merely harms
`competitors, however, while not harming the competitive process
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`itseif, is not anticompetitive. See Brooke Group Ltd. v. Brown &
`Williamson Tobacco Corp, 509 US. 209, 224 (1993).
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`501 F.3d at 306—08 (internal footnote omitted).
`
`E.
`
`Federal Rule 01‘ Civil Procedure 13(3)
`
`The Third Circuit has described the inquiry courts must undertake to determine whether a
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`claim is compulsory, under Federal Rule of Civil Procedure 13(a), as being:
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`“whether the counterclaim ‘bears a logical relationship to an
`opposing party’s claim?” Transamerica Occidental Life Ins. Co.
`v. Aviation Oflice ofAm, Inc, 292 F.3d 384, 389 (3d Cir.
`2002) (quoting Xerox Corp. v. SCM Corp, 576 F.2d 1057, 1059
`(3d Cir. 1978)). This court has stated that a logical relationship
`exists “where separate trials on each of the[] respective claims
`would involve a substantial duplication of effort and time by the
`parties and the courts.” Great Lakes Rubber Corp. v. Herbert
`Cooper Co, 286 F.2d 631, 634 (3d Cir. 1961); see
`also Transamerica, 292 F.3d at 38990. The compulsory
`counterclaim inquiry thus requires essentially the same comparison
`between claims as the res judicata analysis. See Transamerica,
`292 F.3d at 391 (noting “the close connection between Rule
`13(a) and the doctrine of claim preclusion”).
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`MR. v. Ridley Sch. Dist, 744 F.3d 112, 121 (3d Cir. 2014).
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`III.
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`DISCUSSION
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`A.
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`Lenovo Adequately Pleads Antitrust Standing
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`To plead antitrust standing, a plaintiff must adequately allege an injury that antitrust law
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`seeks to prevent. See Pace Elem, Inc, 213 F.3d at 120. Lenovo has alleged such an injury.
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`Lenovo’s allegations that it will be forced out of the cellular market or forced to pay higher-than—
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`FRAND royalties are sufficient to state an injury caused by InterDigital taking action prohibited
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`by the antitrust laws. That is, the injuries Lenovo claims it is suffering could not have occurred
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`unless InterDigital has committed some type of antitrust law violation. Therefore, Lenovo
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`alieges injury flowing from that which renders InterDigital’s alleged conduct unlawfiil.
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`InterDigital’s argument to the contrary is not persuasive. InterDigital largely relies on
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`Godo Keisha 11’ Bridge I v. TCL Comma ’ns Tech. Holdings, Ltd, CA. No. 15-634JFB-SRF
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`D.I. 367 (D. Del. Feb. 28, 2018), 126512 adopted, 2018 U.S. Dist. LEXIS 38506 (Mar. 8, 2018),
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`which dismissed an antitrust claim for lack of antitrust standing based on injury flowing from a
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`patent lawsuit’s prospective damages award. The alleged injury in Godo Kaisha had not
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`occurred at the time the plaintiff filed its pleading. Instead, that injury “appear[ed] to rely on the
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`court or jury creating an antitrust injury in the context of th[e] litigation through the award ofa
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`suprauFRAND damages award.” Id. at 22 (emphasis added). Here, by contrast, the alleged
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`injury is not judgment—dependent. Instead, Lenovo alleges that InterDigital is already injuring it
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`by presently demanding supra—FWD royalties and depriving Lenovo of access to cellular
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`technology, all because Lenovo will not satisfy lnterDigital’s demands. (E. g, Di. 1 Ex. 2 W 69,
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`92) The allegations here are sufficient to plead antitrust injury.
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`Also unavailing is InterDigital’s argument that the United Kingdom litigation andfor
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`offer to arbitrate constitute a “neutral FRAND determination.” No decision has issued in the
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`U.K. matter, and no arbitration has commenced. At least until there is such a decision, there is a
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`factual dispute about whether InterDigital’s license offers are FRAND. Resolving that factual
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`dispute in Lenovo’s favor — as the Court must, at this stage — means that Lenovo’s allegations of
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`InterDigital demanding supra-FRAND terms and possibly excluding Lenovo from the market are
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`plausible. The mere possibility that the U.K. action or some uninitiated arbitration could yield
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`FRAND terms does not change the present reality that, assuming Lenovo’s pleadings are true,
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`Interdigital is offering no such FRAND terms today.1
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`1 Further (albeit unnecessary) support for the Court’s conclusion is provided by The App
`Association’s contention that the United Kingdom action will yield a rate that is not FRAND.
`(See generally D.l. 35) Without crediting (or rejecting) this argument, the Court observes that
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`Hence, again, Lenovo has adequately pled harm of the type the antitrust laws contemplate
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`and, therefore, has adequately alleged antitrust standing.
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`B.
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`Lenevo Has Not Adequately Alleged A Section 1 Claim
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`To adequately plead a Violation of Section 1 of the Sherman Act, Lenevo must plausibly
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`allege an agreement in furtherance of a common scheme. See Howard Hess Dental Labs. Inc. v.
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`Dentsply Int‘l, Inc, 602 F.3d 237, 254 (3d Cir. 2010) (“[A] plaintiff must allege facts plausibly
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`suggesting “a unit or purpose or a common design and understanding, or a meeting of minds in
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`an unlawful arrangement”) (quoting Copperweld Corp. v. Independence Tube Corp, 467 US.
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`752, 767 n.13 (1984)). The Court agrees with InterDigital that Lenovo, which tries to allege
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`concerted action between InterDigital and ETSI and/or between InterDigital and other ETSI
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`members, has failed to do so. Lenovo does not point to an agreement between members of ETSI
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`or any scheme resulting from such an agreement. (DI. 8 at 16-18)
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`Assuming, arguendo, that the ETSI agreement is an agreement in furtherance of a
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`common scheme, Lenovo fails to connect how lnterDigital’s alleged actions (i.e., failure to offer
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`a FRAND royalty) were the same allegedly unlawful actions contemplated and agreed to by
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`ETSI members in setting cellular standards. Instead, as the United States aptly notes, “Lenovo’s
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`allegations focus on InterDigital’s unilateral breach of its FRAND commitment, and purely
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`unilateral conduct is not actionable under Section 1.” (13.1. 13 at 12; see also Bell Ail. Corp. v.
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`Twombly, 550 U.S. 544, 564 (2007) (complaint must allege “actual agreemen ” and not merely
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`“parallel conduct”); Apple Inc. v. Samsung Elecs. Ca, 2011 WL 4948567, at *7 (N.D. Cal. Oct.
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`the possibility that the ultimate U.K. court determination may not truly be FRAND weighs in
`favor of finding antitrust standing.
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`18, 2011) (“Plaintiff cannot state a claim absent an allegation that it acted in concert with another
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`party; it is not sufficient to allege that it acted alone in a collaborative forum”).
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`Lenovo suggests that ETSI members enabled the alleged breach by InterDigital by
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`agreeing to a contract lacking “reasonable safeguards.” (Id. at 17) The Court is not persuaded.
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`The complaint contains no plausible allegation of a link between a lack of “reasonable
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`safeguards” in the ETSI Agreement and concerted efforts to deny implementers, like Lenovo,
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`FRAND-compliant licenses. Lenovo has not alleged anticompetitive effect flowing from an
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`agreement. See Int’l Constr. Prods. LLC, 419 F. Supp. 3d at 800—04; see also generally Burtch v.
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`Milberg Factors, Inc, 662 F.3d 212, 221 (3d Cir. 2011) (noting Section 1 pleading requirement
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`of “imposfition of] an unreasonable restraint on trade”). Its contention that an alleged lack of
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`“reasonable safeguards” creates anticompetitive effects is conclusory.
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`(13.1. 15 at 16-17)
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`Asthe United States points out, agreements between SEP holders and standards—
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`promulgating organizations (like that between InterDigital and ETSI) are generally regarded as
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`procompetitive. (D1. 13 at 4, 7-14) That was the understanding of the Third Circuit in
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`Broadcom, 501 F.3d at 308—09; see also Allied Tube & Conduit Corp. v. Indian Head, Inn, 486
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`US. 492, 501 (198 8). InterDigital has not persuasively rebutted this understanding. Its
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`concluscry allegations to the contrary need not be accepted, even on a motion to dismiss.
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`Therefore, the Court will grant InterDigital’s motion to dismiss Lenovo’s Section 1
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`claim. However, such grant is without prejudice to Lenovo having an opportunity to file an
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`amended complaint, should Lenovo wish to do so.
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`C.
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`Lenovo Has Adequately Alleged A Section 2 Claim
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`In the standards-setting context, “a patent holder’s intentionally false promise to license
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`essential proprietary technology on FRAND terms, .
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`.
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`. coupled with a[] [standard-setting
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`Case 1:20-cv-00493-LPS Document 41 Filed 03/24/21 Page 13 of 18 PagelD #: 2085
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`organization’ 3] reliance on that promise when including the technology in a standard, and .
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`.
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`. the
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`patent holder’s subsequent breach of that promise, is actionable anticompetitive conduct.”
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`Broadcom, 501 F.3d at 314. Lenovo’s allegations track those at issue in Broadcom and
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`adequately state a Section 2 claim.
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`Lenovo's complaint is similar to that which this Court found sufficient in Microsoft
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`Mobile,2 which itself was consistent with Broadcom. See Microsofi Mobile Inc. v. Interdigital,
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`Inc, 2016 WL 1464545, at *2 (D. Del. Apr. 13, 2016). Lenovo alleges what Broadcom requires:
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`that InterDigital lied to ETSI about its commitment to FRAND licensing in order to obtain the
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`benefit of SEP status for its patent portfolio, thereby unlawfully obtaining market power which
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`InterDigital now seeks to exploit for its own gain. (D1. 1 BX. 211'“ 61~70) These allegations
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`plausibly state a claim for Section 2 antitrust liability.3
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`InterDigital’s arguments to the contrary again focus on the existence of the United
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`Kingdom action and potential arbitration, which are not persuasive. InterDigital insists that its
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`offer to arbitrate (or litigate) to set a FRAND rate distinguishes it from Qualcomrn, against
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`whom Broadcorn’s antitrust suit survived.
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`(See, e. g. , Tr. at 15-23) In lnterDigital’s View, its
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`offer to arbitrate or to have the United Kingdom court determine a royalty rate that is FRAND
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`demonstrates the non-Viability of Lenovo’s claim. (Di. 8 at 8—9; see also Tr. at 22 (IDC arguing
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`that its offer to arbitrate “defeats any attempt to rely on the holding of Broadcom vs. Qualcomm,”
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`2 Indeed, it appears that Lenovo prepared a table of ETSI declarations identical to that utilized in
`Microsoft. Compare Microsofi Mobile, Inc. v. InterDigital, Inc, CA. No. 15-723~RGA Di. 1
`fl 44 tbl. with Lenovo (United States) Inc. v. InterDigital, Ina, C.A. No. 20—493-LPS D1. 1 ll 61.
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`3 Several of the authorities on which IDC relies for its contrary View are from outside of the
`Third Circuit and do not follow Broadcom, which is binding on this Court. See, e.g, FTC v.
`Qualcomm, 969 F.3d 974, 1005 (9th Cir. 2020); Continental Auto. Syn, Inc. v. Avanci, LLC, 485
`F. Supp. 3d 712 735 (ND. Tex. 2020).
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`Case 1:20-cv-OO493-LPS Document 41 Filed 03/24/21 Page 14 of 18 PageID #: 2086
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`because “InterDigital has offered to give up any supposed holdup power in favor of a fair,
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`disinterested procedure that would set the terms of the license”)) Neither body has ruled that
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`InterDigital’s offers are, in fact, FRAND. Further, amicus The App Association casts doubt on
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`whether such a determination would truly be FRAND, for reasons involving national comity and
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`infringement determinations. (See generally D.I. 35) Given that there is not today a
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`determination of what the royalty rate between InterDigital and Lenovo is going to be, or a
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`determination that this rate (whatever it turns out to be) is FRAND, there is not a basis to find
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`that Lenovo has failed to state a claim.4
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`InterDigital’s argument goes to the merits of Lenovo’s claim, not the sufficiency with
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`which it is pied. It may very well be that the U.K. Court determines InterDigital’s offer to be
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`FRAND. But, at present, the Court must accept Lenovo’s allegation that InterDigital’s offer is
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`not FRAND, as well as Lenovo’s further allegations that InterDigital intended to offer a non-
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`FRAND license, and that InterDigital’s attempts to litigate or to arbitrate for a FRAND
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`determination do not change those intentions.5 As Lenovo points out, there is no binding
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`precedent holding that the mere availability of third-party FRAND adjudication is sufficient to
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`avoid antitrust liability. (DJ. 15 at 12-14; see also DJ. 1 ‘H 90 (“[T]he nature of the arbitration
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`4 Lenovo’s claims might possibly survive even after such determinations, an issue the Court does
`not decide today. (See generally Tr. at 50-51) (Lenovo: “So when you look at the royalties
`demanded, you look at the portfolios that would be covered, you look at where and how royalties
`would be assessed on a geographic basis vis-a-vis InterDigital’s actual patent holdings, you look
`at the relevant strength of patents, there could be a situation when you put that all together [that]
`doing it in arbitration is reasonable. But simply saying that it’s going to be done in arbitration is
`not itself .
`.
`. a get-out—of-jail free card or cure-all.”)
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`5 The Court need not reach Lenovo’s allegations that such proceedings are unfair or substantively
`biased against Lenovo.
`(E. g, D.I. 15 at 10-14) These allegations, if taken as true, would
`provide additional grounds for the Court’s conclusion as to the sufficiency of Lenovo’s Section 2
`claim.
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`Case 1:20-cv-OO493-LPS Document 41 Filed 03/24/21 Page 15 of 18 PageID #: 2087
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`that IDC seeks to coerce Plaintiffs into accepting is inherently biased toward achieving a non-
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`FRAND result while also continuing to maintain a shroud of secrecy over IDC’s abusive
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`licensing behavior. .
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`.
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`. IDC’s efforts to coerce Plaintiffs into arbitration is merely another means
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`by which it seeks to take advantage of secrecy and its inflated counts of declared SEPs to extract
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`non-FRAND royalties unsupported by the actual value of its global SEP portfolio.”))
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`InterDigital’s contention that Lenovo should be held to arguably-contradictory assertions
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`it made in other litigations does not provide a meritorious basis to dismiss Lenovo’s claims. For
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`instance, InterDigital writes: “Lenovo/Motorola’s Sherman Act claim also strains credulity given
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`that Motorola itself successfully advocated arbitration of FRAND terms in a case where it had
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`been accused of a Sherman Act Section 2 violation .
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`.
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`. .” (Di. 8 at 11-12) InterDigital does not
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`contend that Lenovo is estopped from pressing its claim here; nor has it not shown that, on a
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`motion to dismiss, the Court must be skeptical of Lenovo’s contentions based on arguments it
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`made in other litigation, involving different patents, different parties, and different
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`circumstances.
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`Nor does the United States’ statement of interest alter the Court’s conclusion. Instead,
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`the United States’ argument, which focuses mostly on Section 1, actually supports Lenovo’s
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`Section 2 position that Broadcomntype allegations suggest a “distortion of the competitive
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`process.” (D.I. 13 at 16) That is what Lenovo alleged: that InterDigital lied to ETSI in order to
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`have its SEPs incorporated into the 3G and 4G LTE standards, allowing InterDigital to obtain
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`and exploit market power and demand unlawful and artificially high rates. (D.I. 1 Ex. 2 W 61-
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`70)
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`IDC’s belated argument at the hearing as to Lenovo’s purported failure to define the
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`relevant technology markets and who is foreclosed from them is also unavailing. InterDigital did
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`Case 1:20-cv-OO493-LPS Document 41 Filed 03/24/21 Page 16 of 18 PageID #: 2088
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`not brief this argument, so it has been waived. ISee Tomaska v. Ira H. Weinstock, P. C., 357 F.
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`App’x 472, 480 (3d Cir. 2009) (“It would be unfair to permit Weinstock to prevail on arguments
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`raised for the first time at oral argument, a method of proceeding that can deprive one’s opponent
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`of any meaningful opportunity to respond”) In any event, Lenovo does adequately define an
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`alleged relevant market. The complaint specifies that “the relevant markets are the markets for
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`technologies covered by the lDC patents issued in the United States that are essential, or are
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`alleged to be essential, to the Cellular Standards, together with all other alternative technologies
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`to the IDC SEPs that could have been used in the Cellular Standards.” (D.I. 1 'H 54) The
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`complaint further alleges that Lenovo has been excluded from the relevant markets in that it
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`cannot access the technology on FRAND terms. (DI. 1 ll 93) These allegations are sufficient to
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`withstand the motion to dismiss. See Mcrosofi‘ Mobile, 2016 WL 1464545 at *1-2.
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`Accordingly, the Court will deny InterDigital’s motion to dismiss Lenovo’s Section 2
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`claim.
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`I).
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`This Action Is A Compulsory Counterclaim
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`Lenovo’s claims are required to be pled as compulsory counterclairns