Antitrust Law Daily Wrap Up, ANTITRUST—D. Del.: Patent misuse defense, antitrust counterclaims stayed against patent assertion entity, (Mar 23, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Wilmington, Delaware has stayed Toshiba’s patent misuse defense and antitrust counterclaims to patent infringement claims brought by Intellectual Ventures I, a patent assertion entity (PAE), as relating to the validity of the PAE’s patent portfolio. However, Toshiba’s antitrust counterclaims based on the numerosity and value of the PAE’s patent portfolio could proceed (Intellectual Ventures I LLC v. Toshiba Corporation, March 20, 2015, Robinson, S.).

Intellectual Ventures (IV), a patent licensing firm, filed suit against Japanese technology company Toshiba Corporation and three of its affiliates, alleging infringement of ten asserted patents regarding USB host flash memory products. In response, Toshiba filed a patent misuse defense and antitrust counterclaims. IV moved to stay the defenses and counterclaims until the patent infringement claims and the invalidity issues were decided.

Toshiba contended that IV’s semiconductor patents had little or no market power until IV acquired and aggregated them into an enormous portfolio, regardless of their validity. It further charged that IV engaged in patent holdup by using the patent suit to force Toshiba to pay monopoly prices for licenses.

The court determined that a stay of Toshiba’s patent misuse defense and antitrust counterclaims that involved the validity of IV’s patent portfolio was warranted. The court noted that, given the context of IV’s 3,700 patent portfolio, there was no reasonable way to determine how many of the patents were invalid and how many invalid patents tipped the balance between a legal and illegal business practice. Furthermore, if the patent misuse defense was tried with IV’s infringement case, a jury could possibly infer that the ten allegedly infringed patents were invalid by association with the remaining portfolio patents.

However, to the extent Toshiba’s antitrust counterclaims relied on the numerosity and value of IV’s patent portfolio and IV’s alleged improper leveraging of both, a stay was not warranted. The court concluded there were no overlapping issues with IV’s infringement case.

The case is No. 1:13-cv-00453-SLR-SRF.

Attorneys: Brian E. Farnan (Farnan LLP) for Intellectual Ventures I LLC, and Intellectual Ventures II LLC. Denise Seastone Kraft (DLA Piper LLP) for Toshiba Corp., Toshiba America Inc., Toshiba America Electronic Components Inc., and Toshiba America Information Systems Inc.

Companies: Intellectual Ventures I LLC; Intellectual Ventures II LLC; Toshiba Corp.; Toshiba America Inc.; Toshiba America Electronic Components Inc.; Toshiba America Information Systems Inc.

Cases: Antitrust DelawareNews