Context: Last month, Administrative Law Judge (ALJ) Cameron Elliot of the United States International Trade Commission (USITC, or just ITC) rendered his final initial determination (FID) (though not truly final as it is subject to Commission review, Presidential review, and appealable) in investigation no. 337-TA-1380 of a complaint brought by Nokia over Amazon’s alleged infringement of multimedia standard-essential patents (SEPs) (December 21, 2024 ip fray article). Nokia prevailed on four out of five patents, a hit rate at the U.S. trade agency that is not unprecedented but not seen too often.
What’s new: Yesterday (January 8, 2025), the public redacted version (PRV) of the FID was released. It is heavily redacted, but there is now enough information in the public domain to understand that Amazon’s FRAND (fair, reasonable and non-discriminatory licensing) defense failed because ALJ Elliot was unconvinced that Nokia had not complied with its obligations. By way of contrast, Amazon apparently could have engaged more constructively and could have accepted Nokia’s offer. Amazon gained no mileage out of arguing that certain pool rates proved Nokia’s royalty demands to be supra-FRAND. Amazon’s public interest arguments did not gain traction either, given that its market share in devices is low and other resellers could distribute certain products in sufficient quantities. In other Nokia v. Amazon news, the Landgericht Düsseldorf (Dusseldorf Regional Court) today announced the postponement of an infringement ruling, which had been scheduled for today, to February 7, 2025.
Direct impact: At the review stage, Nokia appears to be trying to prevail on the fifth patent while Amazon is presumably fighting the many parts of the decision that are unfavorable to its interests. We have not been able to analyze the technical arguments the parties make. To the extent that there are parallel inter partes reviews (IPRs) at the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO), those were instituted based on a different set of arguments and some arguments Amazon is making in the ITC were, in fact, rejected by the PTAB.
Wider ramifications: There still is some uncertainty as to how far the FRAND obligations of SEP owners whose patents were pledged to the International Telecommunication Union (ITU) actually go. In an Ericsson-Lenovo case, the Office of Unfair Import Investigations (OUII, commonly referred to as “the ITC Staff”) argued that the ITU’s FRAND pledge merely requires negotiating in good faith, but stops short of entitling an implementer to a FRAND offer (December 1, 2024 ip fray article), and rejected case law based on the differently-worded European Telecommunications Standards Institute (ETSI) pledge that applies to cellular SEPs. Ericsson’s position was that even under ETSI-related case law (in its dispute with HTC), the SEP holder’s obligation is limited to negotiating in good faith toward a license (December 9, 2024 ip fray article). In his Nokia-Amazon FID, ALJ Elliot cites to what Judge James L. Robart of the United States District Court for the Western District of Washington held in Microsoft v. Motorola, which was that the ITU pledge does constitute a FRAND licensing obligation, but on substance does not appear to expect more of Nokia than negotiating in good faith.
Amazon tried to gain leverage from another holding by Judge Robart in its own home district, but ALJ Elliot perfectly understood the nuance also found in Microsoft that pool rates may serve as an indication, yet can also be lower than a FRAND rate, such as because a pool’s licensors may primarily have intended to accelerate adoption. Citing Judge Holderman’s Innovatio decision in the Northern District of Illinois, ALJ Elliot also writes that “pools do not necessarily allocate royalties based on the merit or strength of a patent, so that holders of valuable patents are less likely to join the pool.”
Amazon pointed to MPEG LA and Access Advance pool rates. ALJ Elliot held that “Amazon has not shown that either patent pool’s rate is comparable to Nokia’s [REDACTED] rates, or that Nokia’s current offer is otherwise not reasonable.
As for Nokia’s own (bilateral) license deals, what one can infer from the heavily-redacted document is that Nokia presented a significant number of comparable license agreements, and Amazon argued that two of them were more favorable to licensees than Nokia’s offer to Amazon. But ALJ Elliot did not see why Amazon, by (in other words) engaging more constructively, could not have reached an agreement with Nokia that would have addressed some specific (but redacted) concerns.
Amazon accused Nokia of having targeted smaller implementers first, trying to build comparables with licensees that lacked the resources to defend themselves. But ALJ Elliot quotes testimony according to which an Amazon expert’s related theory is “belied by the large numbers of sophisticated companies that have repeatedly agreed to take a license to Nokia’s patents at an established rate.”
The parts of the decision that describe Amazon’s conduct are heavily redacted. That includes to a long passage containing numerous quotes from Mr. Hayden, Amazon’s lead negotiator. It takes only five unredacted words to see how underwhelmed ALJ Elliot was: “This is all very unplausible […]”
Amazon failed to “show[] that Nokia ha[d] violated its duty to bargain in good faith” as its arguments came down to “a large number of nitpicky, tit-for-tat details” that ALJ Elliot did not even consider worth reciting in his decision (potentially more damning than anything). The decision credits Nokia for having acted in good faith before and after the rejection of one particular license offer:
“It is instead [of reaching the question of whether Amazon was an unwilling licensee, as Nokia argued that it was] enough to observe that Nokia negotiated in good faith until the license was [REDACTED], and since then Nokia has continued to attempt to license the Asserted Patents. More to the point, Amazon has not shown that Nokia “breached its duty to negotiate in good faith,” either before or after Amazon declined Nokia’s [REDACTED] offer.”
Different procedural approach to FRAND and public interest from ALJ McNamara in Ericsson-Lenovo
ALJ Elliot addressed Amazon’s FRAND arguments primarily as a defense to infringement, and then merely referenced those conclusions in the public interest context, where Amazon also brought up FRAND. By contrast, his colleague ALJ MaryJoan McNamara entered a FID exclusively on the technical merits in an Ericsson-Lenovo case (inv. no. 337-TA-1375) (December 18, 2024 ip fray article), without a recommended determination (RD) on remedy. ALJ Elliot’s Nokia-Amazon decision combines the technical FID and the RD in the same document.
The PRV of ALJ McNamara’s Ericsson-Lenovo decision has also become available just yesterday. There is nothing in it about FRAND, and even Lenovo’s license-based defense (referring to a Motorola Mobility deal with Ericsson of well over a decade ago) is not discussed, meaning that she left all of that for the RD (January 9, 2025 LinkedIn post by ip fray).
The RD can be provided separately, and normally within 14 days of the FID. But in this case, ALJ McNamara pushed it back by an unprecedented amount of time: 66 days (not 14), i.e., February 1, 2025 (December 31, 2024 ip fray article).
Wider Nokia-Amazon dispute
As mentioned further above, a decision by the Dusseldorf Regional Court, which (if Nokia prevails) could be a Germany-wide SEP injunction against Amazon Prime Video, was pushed back to February 7.
Nokia has now been enforcing a Munich injunction (September 20, 2024 ip fray article) for a few months. Amazon apparently prefers to just refrain from selling certain products, or from disabling certain standards.
In the summer, Amazon brought a countersuit against Nokia in the United States, but in the field of cloud computing (July 31, 2024 ip fray article). Nokia is defending itself against that one with the usual array of defenses, among them § 101 (abstractness) invalidity arguments.
While Amazon has not taken a license from Nokia yet, a deal with patent holder Adeia became known last month (December 3, 2024 ip fray article).