IP Law Daily, PATENT—N.D. Cal.: Antitrust counterclaims fail amid evidence of declining royalties and expanding competition, (Jan 9, 2026)

By Martin A. Steinberg, J.D.

Availink alleged that HDMI’s adopter licensing agreement violated Section 1 of the Sherman Act by unlawfully restraining trade through bundled licensing of patents and trademarks, and through reciprocal non-assertion obligations.

The federal district court in San Jose enforced the adopter licensing agreement between HDMI Licensing Administrator, Inc. and Availink Inc., rejecting all of Availink’s counterclaims, including its primary challenge under Section 1 of the Sherman Act, and concluding that the licensing framework neither restrained trade nor harmed competition. Applying the rule of reason, the court held that Availink failed to produce evidence of anticompetitive effects, pointing to undisputed market evidence of declining real royalty rates, expanding output, broad industry adoption of the HDMI standard, and sustained technological innovation over more than two decades. The court further found that Availink suffered no cognizable antitrust injury and that any alleged harms arose outside the United States, independently foreclosing relief. On that basis, the court granted summary judgment to HDMI on its breach-of-contract claim and all counterclaims, denied Availink’s cross-motion, dismissed the related state-law and patent-misuse theories, and deemed the parties’ Daubert motions moot (HDMI Licensing Administrator, Inc. v. Availink Inc., No. 5:22-cv-06947-EKL (N.D. Cal. Dec. 31, 2025)).

Background. The HDMI Specification is a globally adopted standard for transmitting high-definition audio and video through a single interface, developed in the early 2000s by a consortium of leading electronics manufacturers. The founders established the HDMI “Adopter Agreement,” which licenses the specification and all necessary underlying intellectual property, including copyrights, trade secrets, standard-essential patents, and trademarks, either through a blanket license administered by HDMI or through individual patent licenses obtained directly from the founders on FRAND terms.

Availink, a foreign manufacturer of system-on-chip integrated circuits used in set-top boxes, executed the Adopter Agreement in 2015 and incorporated HDMI 1.x technology into its products. According to HDMI, Availink failed to pay required annual fees and royalties, continued to use HDMI functionality after termination of the agreement, and asserted antitrust, trademark, and patent-misuse counterclaims in response to HDMI’s efforts to enforce the contract.

In November 2022, HDMI commenced this action, asserting claims for breach of contract and trademark infringement under the Lanham Act. The court dismissed the Lanham Act claims at the pleading stage, and they were not reasserted. Availink then pursued counterclaims alleging that the Adopter Agreement violated federal and state antitrust and unfair competition laws and seeking declaratory relief and cancellation of HDMI’s registered trademarks. The parties ultimately filed cross-motions for summary judgment, with HDMI moving on its breach-of-contract claim and all counterclaims, and Availink moving solely on whether it owed royalties under the Adopter Agreement.

Breach of contract claim. The court first addressed HDMI’s breach-of-contract claim and Availink’s cross-motion disputing its royalty obligations. Applying New York law, the court held that the Adopter Agreement is unambiguous and must be enforced according to its plain meaning, rejecting Availink’s reliance on extrinsic evidence or industry practice and concluding that differing interpretations do not create ambiguity as a matter of law.

Terms of the Adopter Agreement. Under the agreement, HDMI grants adopters a non-exclusive, worldwide license to use the HDMI Specification solely to design, manufacture, and sell “Licensed Products,” including components such as system-on-chip integrated circuits, in exchange for an annual administrative fee and per-product royalties outlined in Attachment B. The agreement also imposes confidentiality obligations covering the HDMI Specification that expressly survive termination. It includes a reciprocal non-assertion, or “grantback,” provision under which adopters agree not to assert necessary patent claims against other adopters or the founders. Termination for breach is treated as a withdrawal, triggering a three-year wind-down period subject to the agreement’s ongoing terms and conditions.

Breach. There was no genuine dispute that Availink failed to pay the required annual fee in 2018, did not cure after notice, and thereby triggered termination. The court rejected Availink’s argument that termination excused accrued fees or entitled it to a cost-free post-termination license, holding that post-termination rights remain conditioned on compliance with fee and royalty obligations. The court also granted summary judgment to HDMI on royalties, explaining that while components are exempt only when incorporated into royalty-bearing end-user products sold by another adopter, components sold otherwise are themselves royalty-bearing. Because Availink could not identify any adopter that incorporated its components into royalty-paid end products, the court held that Availink owed unpaid royalties as a matter of law.

Continuing breach. The court further held that Availink’s continued incorporation of HDMI functionality after termination constituted an ongoing breach. Availink’s argument that the HDMI Specification was publicly available failed because it had independently agreed to treat the specification as confidential. That obligation survived termination regardless of any third-party disclosure.

Damages and public policy defense. Finally, the court concluded that HDMI necessarily suffered damages from Availink’s nonpayment of fees and royalties, leaving only the amount of damages and potential injunctive relief for later proceedings. The court also rejected Availink’s public policy defense, holding that its antitrust, unfair competition, and misuse theories failed as a matter of law. On that basis, the court granted summary judgment to HDMI on its breach-of-contract claim and denied Availink’s cross-motion on royalties.

Trademark counterclaims. Next, the court granted summary judgment to HDMI on Availink’s trademark-related counterclaims. At the outset, the court noted that Availink withdrew its declaratory non-infringement counterclaim as moot after HDMI’s Lanham Act claims were dismissed, leaving no live controversy over trademark use.

The court then rejected Availink’s trademark cancellation claim under 15 U.S.C. § 1119, holding that it lacked subject-matter jurisdiction because § 1119 is purely remedial and applies only where a registered mark is otherwise at issue, conditions not present once the infringement claims were dismissed. The court further explained that HDMI’s enforcement of royalty and fee obligations under the Adopter Agreement did not “involve” trademarks, particularly where Availink’s own expert acknowledged that royalties are based on patent rights, not trademarks.

Even if jurisdiction existed, the court held that Availink lacked statutory standing because it does not use the HDMI marks or sell products in the U.S. and therefore could not show an objective and rational belief of damage from the marks’ continued registration. The court also found no Article III standing, concluding that any alleged injury from licensing fees was not redressable through trademark cancellation, which would not eliminate HDMI’s contractual rights or necessarily affect future fees. On these independent grounds, the court dismissed Availink’s trademark cancellation counterclaim in its entirety.

Sherman Act counterclaim. The court next addressed Availink’s counterclaim that the HDMI Adopter Agreement violates Section 1 of the Sherman Act by unreasonably restraining trade. Applying the rule-of-reason framework, the court held that Availink bore the burden of showing substantial anticompetitive effects, antitrust injury, and domestic harm in the U.S., and that failure on any one element independently warranted summary judgment. The court concluded that Availink failed on all three.

Harm to Competition. The court held that Availink failed to show either actual or indirect anticompetitive harm. It emphasized undisputed market evidence demonstrating that the HDMI licensing regime has been accompanied by declining real (inflation-adjusted) royalty rates, stable or reduced nominal fees, dramatic increases in output, and widespread adoption of the HDMI standard by thousands of firms. HDMI royalties have not increased since 2002, meaning the real cost of licensing has fallen significantly even as billions of HDMI-enabled products have entered the market. The court also highlighted sustained technological innovation, both through successive upgrades to the HDMI standard and through the emergence of competing technologies such as DisplayPort, USB-C, and wireless interfaces. Against this record, the court rejected Availink’s reliance on abstract economic theory and speculative “but-for” scenarios, holding that theoretical concerns cannot override concrete market evidence of robust competition.

Lack of antitrust injury. The court next concluded that Availink failed to establish antitrust injury. Because antitrust laws protect competition rather than individual competitors, the court held that Availink’s alleged injuries, primarily its obligation to pay royalties and fees under the Adopter Agreement, were contractual and self-inflicted, not the product of reduced competition or exclusionary conduct. Availink voluntarily entered into the agreement and had alternative licensing options, including direct patent licenses from the HDMI founders. As a result, its asserted harms did not flow from any injury to competition.

Absence of domestic effects. As an independent basis for summary judgment, the court held that Availink failed to show that the challenged conduct had a substantial impact in the U.S. The undisputed record established that Availink is a foreign company that manufactures and sells its products abroad, does not sell HDMI-enabled products in this country, and does not import those products into U.S. commerce. Without a sufficient domestic nexus, the court held, the Sherman Act does not apply.

Related claims. Because Availink failed to demonstrate anticompetitive harm, antitrust injury, or domestic effects, the court granted summary judgment to HDMI on the Sherman Act counterclaim. The court further held that the same deficiencies compelled dismissal of Availink’s related state-law antitrust and unfair competition claims, which rise and fall with the federal theory. Having resolved the antitrust claims on these grounds, the court deemed the parties’ Daubert motions concerning market definition, market power, and procompetitive justifications moot.

State counterclaims. The court held that Availink’s Cartwright Act, Donnelly Act, and state unfair competition claims were analytically coextensive with its Section 1 theory and therefore rose or fell with the federal antitrust analysis. Because Availink failed to establish antitrust injury, a sufficient domestic nexus, or any cognizable harm to competition under federal law, the court concluded that the parallel state-law claims necessarily failed as well. The court also rejected Availink’s patent misuse claim, finding no evidence that HDMI impermissibly expanded the scope of any patent rights or conditioned access to the HDMI Specification on unlawful restraints. To the contrary, the court characterized the Adopter Agreement as a lawful standard-setting licensing framework that offers alternative licensing paths, promotes interoperability, and does not coerce adopters or extend patent rights beyond their lawful scope. On these grounds, the court granted summary judgment to HDMI on all remaining counterclaims.

Patent misuse counterclaim. Availink’s patent misuse claim failed as a matter of law because there is no evidence that the Adopter Agreement impermissibly broadened any patent rights or produced anticompetitive effects. Patent misuse requires conduct extending a patent’s scope with anticompetitive impact, but, as with Availink’s Sherman Act claim, the record shows no such effects. Relying on Federal Circuit precedent, the court held that HDMI’s bundled, fixed-fee licensing model does not constitute misuse, as blanket licenses are lawful and procompetitive mechanisms that reduce transaction costs, prevent patent hold-up, and facilitate interoperability and competition within standardized technology markets. Accordingly, the court granted HDMI summary judgment on the patent misuse counterclaim.

The Case is No.5:22-cv-06947-EKL.

Judge: Lee, E.

Attorneys: Seth Greenstein (Constantine Cannon LLP) for HDMI Licensing Administrator, Inc. James J. Mcguire (Greenspoon Marder LLP) for Availink Inc.

Companies: HDMI Licensing Administrator, Inc.; Availink Inc.

Cases: Patent Trademark CaliforniaNews