On Monday, December 2, 2008, the United States Court of Appeals for the Federal Circuit issued a decision affirming in part the district court’s ruling in the patent dispute between Broadcomm and Qualcomm. See Qualcomm Inc. v. Broadcom Corp. The patent infringement case involved the consequence of silence in the face of a duty to disclose patents in a standards-setting organization. The district court concluded that Qualcomm breached its duty to disclose U.S. Patent No. 5,452,104 and U.S. Patent No. 5,576,767 to the Joint Video Team (“JVT”) standard-setting organization. As a remedy, the district court ordered the ‘104 and ‘767 Patents (and related patents) unenforceable against the world. Additionally, based on both Qualcomm’s JVT misconduct and its litigation misconduct, the court determined that this was an exceptional case and awarded Broadcom its attorney fees. The Federal Circuit affirmed the district court’s determinations that Qualcomm had a duty to disclose the asserted patents to the JVT, that it breached this duty, and that the JVT misconduct and litigation misconduct were proper bases for the court’s exceptional case determination. Because the scope of the remedy of unenforceability was too broad, however, the Federal Circuit vacated the unenforceability judgment and remanded with instructions to enter an unenforceability remedy limited in scope to H.264-compliant products.
The Federal Circuit explained that it is clear from a review of the JVT policies that identification of intellectual property rights by JVT participants is critical to the development of an effective industry standard, particularly where the goal of the JVT was to develop a royalty free baseline profile. Nevertheless, he threshold dispute between the parties was whether the written JVT IPR policies imposed any disclosure duty on participants apart from the submission of technical proposals. Qualcomm argued that the written JVT policies require disclosure only when a technical proposal is made, and that disclosure is merely encouraged from participants not submitting technical proposals. Broadcom, however, argues that the written policies of both the JVT and its parent organizations impose disclosure obligations on participants.
The Federal Circuit pointed out that he language of the JVT policies did not expressly require disclosure by all participants in all circumstances, but it did require at least best efforts to disclose relevant patents even apart from the submission of technical proposals. The Court then went on to explain that even by Qualcomm’s own admission, it did not present evidence of any efforts, much less best efforts, to disclose patents associated with the standardization proposal to the JVT prior to the release of the H.264 standard. This seemed to lead the Federal Circuit to conclude that Qualcomm, as a participant in the JVT prior to the release of the H.264 standard, did have at least some disclosure obligations and those disclosure obligations were not satisifed.
Qualcomm tried to rely upon the Federal Circuit’s earlier decision dealing with Rambus and their obligation to disclose when they were involved with the JEDEC standard-setting organization. In the Rambus situation, however, the relevant policy did not require the disclosure of related patents, leading the Federal Circuit to conclude that Rambus’s duty to disclose extended only to claims in patents or applications that reasonably might be necessary to practice the standard. This “reasonably necessary to practice” standard is an objective standard, which does not depend on a member’s subjective belief that its patents do or do not read on the proposed standard. Following the lead of the earlier panel having heard the Rambus case, this panel agreed with the district court that the language requires JVT participants to disclose patents that “reasonably might be necessary” to practice the H.264 standard. Thus, disclosure of patents is required when a reasonable competitor would not expect to practice the H.264 standard without a license under the undisclosed claims.
The sole victory for Qualcomm came with respect to the unenforceability of the ‘104 and ‘767 Patents. While the district court would have found these patents and any related patents unenforceable for all reasons, the Federal Circuit decided that the broadest permissible unenforceability remedy in the circumstances of the case would be to render the ‘104 and ‘767 Patents (and their continuations, continuations-in-part, divisions, reissues, and any other derivatives thereof) unenforceable against all H.264-compliant products (including the accused products in this case, as well as any other current or future H.264-compliant products). Accordingly, the Federal Circuit vacated the unenforceability remedy and remanded with instructions to enter an unenforceability remedy limited in scope to any H.264-compliant products.
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