PUBLIC VERSION

UNITED STATES INTERNATIONAL TRADE COMMISSION

Washington, D.C.

In the Matter of
CERTAIN ELECTRONIC DEVICES, INCLUDING WIRELESS COMMUNICATION DEVICES, PORTABLE MUSIC AND DATA PROCESSING DEVICES, AND TABLET COMPUTERS
ORDER NO. 47

Inv. No. 337-TA-794

DENYING APPLES MOTION FOR SUMMARY DETERMINATION TERVIINATING THE INVESTIGATION AS TO THE 644 AND 348 PATENTS BASED ON SAMSUNGS AGREEMENTS WITH CHIP SUPPLIERS AND FRANI) COMMITMENTS
(March 30, 2012)

On March 5, 2012, Respondent Apple Inc. (Apple), pursuant to Commission Rule

210.18 (a) and Ground Rule 2, moved for summary determination against Complainants

Samsung Electronics Co. Inc. and Samsung Telecommunications America, LLC (collectively
Samsung), tenninating the investigation as to United States Patent Nos. 7,486,644 (the 644
patent) and 7,706,348 (the 348 patent). (Motion Docket No. 794-042.) Apple bases its
motion on licensing agreements {
}, and on Sa1nsungs

commitments to the members of the European Telecommunications Standards Institute

(ETSI), which includes Apple, that Samsung would license the asserted patents on fair,

reasonable, and non-discriminatory (FRAND) terms. (Mot. at l.)

On March l5, 2012, Samsung opposed Apples motion on the grounds that it lacks a
sufficient legal basis, misinterprets transactional instruments, ignores relevant facts, misconstrues
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applicable law, and fails to state adequate material facts. (Oppn at l3.)On that same date, the

Commission lnvestigative Staff (Staff) responded in opposition to Apples motion, saying

material facts remain in dispute. (Staff Resp. at 2.)
V I. Statement of Facts

A. The facts, according to Apple.

In its statement of facts in an accompanying memorandum, Apple says that the 644

patent purports to disclose [a] method and apparatus for transmitting control information of a
small block size Withhigh reliability in a mobile communication system supporting uplink
packet data service. (Mot. Mem. at 3.) According to Apple, Samsung contends that [t]he 644
Patent. ..relates to the SGPP UMTS standards that govern many, if not most, cell phones sold in

the U.S. (Id.) Apple notes that Samsnng is alleging that Apples iPhone (AT&T), iPhone 4S,
and iPad 2 3G (AT&T) infringe the 644 patent, primarily based on features and functionalities
{

}, both of which are baseband processor chips.

(Id. at 3-4.)

Apple says the 348 patent purports to disclose an apparatus and method for

encoding/decoding a transport format combination indicator in a CDMA mobile communication

system. (Id.) According to Apple, Samsung contends that [t]he 348 patent is related to a

feature found in UMTS. (Id.) Apple notes that Samsung is alleging that the iPl10ne4 (AT&T),
iPhone SGS, iPhone 3G, iPad 2 3G (AT&T), and iPad 3G infringe the 348 patent, primarily

based on features and functionalities of the {

} both of which are baseband processor chips. (Id.)

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According to Apple, {

} (Id .)

As regards the {

}. (ld.) Apple says

that for the Samsung patents, such as the 644 patent,

that have riority dates later than

p

December 31, 2000, {

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(Id)
As regards Apples assertion that Samsung is precluded from asserting the 644 and 348

patents because of its commitments in relation to the ETSII, Apple rst notes that standard

setting compacts offer many signicant procompetitive advantages by combining the expertise
of many industry participants for achieving a consensus on technical solutions. (Id. (citing Allied
Tube & Conduit Corp. v. Indian Head, lnc., 486 U.S. 492, 500-501 (l988)).) Apple argues that,

absent proper legal safeguards, standard-setting compacts also have a serious potential for

anticompetitive harm. (Id. (citing Allied Tube, at 501).) To address that potential harm, says

Apple, standard~settingorganizations generally adopt procedures that prevent the standard

setting process from being biased by members with economic interests in stifling competition.

(Id) These safeguards typically include disclosure and licensing commitments under which

participants in the standard-setting activities commit to license any intellectual property they

1European Telecommunications Systems Institute.

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PUBLIC VERSION
claim is essential to practicing any relevant standards. (Id. at 7.) According to Apple, these
commitments are critical to avoiding harm to competition, and once a standard is set,

implementers invest signicant amounts in the standard and lock themselves into the chosen
technologies. (Id.) Apple argues that a lock-in occurs because it is prohibitively expensive to

switch from a technology that a rm has already implemented to comply with a standard of an
altemative technology. (Id. (citing a study by the Federal Trade Commission, The Evolving IP
Marketplace," dated March 201 1).)

Apple says that, with costs involved in switching technologies so high, absent sufficient

constraints, patentecs can use the threat of injunctive relief or an ITC exclusion order that would
bar sales of the implementers standard-compliant products to extract royalties that are far

beyond those that are warranted by the intrinsic value of the patented technology, a phenomenon
known as hold-up. (Id.) According to Apple, standard-setting rules are designed to protect
against hold-ups. (Id.) Apple says that at ETSI, the Intellectual Property Rights (IPR) Policy
that governs the standard-setting process, provides safeguards to preclude holdup behavior in

order to ensure that ETS1, its members, and other implemcnters of ETSI standards do not sink

investments into such standards only to nd those investments are wasted because essential IPR
is not available. (Id.) Apple notes that ETSls IPR Policy expressly states that it is governed by
the laws ofl-Trance. (Id.)

Apple says that on December 14, 1998, Samsung, by letter to ETSI, made a general
FRAND2 commitment [w]ith regard to the WC-DMA3 technology being elaborated by ETS1 as

a standard for the UMTS4 Terrestrial Radio Access (UTRA) FDD Mode declaring that

Samsung was prepared to grant licenses to its essential lPRs on a fair, reasonable, and non
2Fair, reasonable, and non-discriminatory, (Oppn, Ex. 2 at Clause 6.1.) 3Wideband Code Division Multiple Access. (Oppn, Ex. 40 [the 644 patent] at 1:39.) 4Universal Mobile Telecommunication Service. (Oppn, Ex. 40 at 1:37.)
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PUBLIC VERSION
discriminatory basis in accordance with the terms and conditions set for in Clause 6.1 of the
ETSI IPR Policy. (Id.) Apple says that declaration does not specify any particular patents, and
instead, according to its general nature, Samsung promised to license, on FRAMD terms, all

Samsung IPR that it would ever claim is essential to UMTS. (Id.)

Apple says that on December 31, 2003, Samsung submitted a declaration to ETSI
covering the 348 patent. (1d.) Apple says that Samsungs declaration stated that Samsung

believed its indentied patents and patent applications to be essential, and Samsung committed
to license them on FRAND terms. (Id. at 9-10.) Apple says that on May 16, 2006, Sarnsung
submitted a declaration to ETSI covering the 644 patent. (Id. at 10.)

B. The facts, according to Samsung.

Samsung offers the following as its Counterstaternent of Material Facts.

Samsungs commitments to E TSI.

According to Samsung, ETSI, founded as a standard-setting organization in 1988, has

promulgated over 4,000 standards for infonnation and communication technologies, including
the UMTS standard. (Oppn at 4.) Samsung says ETS1was created to build a single unied
market in Europe. (Id.) Sarnsung says that in furtherance of this goal ETSI adopted an

lntellectual Property Rights Policy (ETSI LPRPolicy), which seeks a balance between the

needs of standardization for public use in the eld of telecommunications and the rights of the

owners of ]PRs. (Id.) Sarnsung says the ETSI web site explains that each STANDARD user

should seek directly a license from a patent holder. (]d.) Samsung quotes the following from
the ETSI IPR Policy:

When an ESSENTIAL IPR relating to a particular STANDARD or TECHNICAL SPECLFICATIONis brought to the attention of ETSI, the Director-General of ETSI shall immediately request the owner to give within three months an

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undertaking in writing that it is prepared to grant irrevocable licenses on fair, reasonable and non-discriminatory terms and conditions...
(Id.) Samsung says the ETSI IPR Policy does not dene what constitutes FRAND terms, but,
instead, encourages parties to agree on FRAND terms through bilateral negotiations, stating:

Specic licensing terms and negotiations are commercial issues between the companies and
shall not be addressed within ETSI. Technical Bodies are not the appropriate place to discuss
IPR issues. (Id. at 4-5 (quoting Ex. 3 [ETSI Guide on IPRs (27 Nov. 2008)], at 4.1.)

Sarnsung says the ETSI IPR Policy does not include any provisions restricting the ability
of its members to seek an injunction. (Id. at 5.) According to Samsung, ETSI has rejected

suggestions by some of its members that would have restricted the ability of the members to
pursue certain remedies respecting their intellectual property. (Id.) Consequently, argues

Samsung, ETSI members remain free to seek injunctions for infringement whenever offending
parties refuse to enter into meaningful bilateral negotiations for a license on FRAND terms. (Id.)
Samsung says that, as a member of ETSI since 1996, it has executed several undertakings
consistent with ETSI IRI Policy, including the following: With regard to the WCDMA

technology being elaborated by ETSI as a standard for the UMTS Terrestrial Radio Access
(UTRA) FDD mode, SEC [Samsung Electronics Corporation] is prepared to grant licenses to its

essential lPRs on a fair, reasonable, and non-discriminatory basis in accordance with the terms
and conditions set forth in Clause 6.1 of the ETSI IPR Policy. (Id.) Subsequently, reports

Samsung, it executed other declarations that identied IPRs that may be considered
ESSENTIAL to certain standards, some of which pertain to the UMTS standard and others to
different standards. (Id.) Sarnsung says it declared the 348 and (>44patents as essential or

likely to become essential to certain ETSI standards, stating:

PUBLIC VERSION
The SIGNATORY [Samsung] has notied ETSI that it is the proprietor of the IPRs listed in Annex 2 and has informed ETSI that it believes that the lPRs may be considered ESSENTIAL to the Standards listed above.

The SIGNATORY and/or its AFFILIATES hereby declare that they are prepared to grant irrevocable licenses under the IPRs on terms and conditions which are in accordance with Clause 6.1 of the ETSI IPR Policy, in respect of the STANDARD, to the extent that the lPRs remain ESSENTIAL.
(ld.) Samsung points out that, Whilethese declarations state that Samsung is prepared to grant

licenses to essential intellectual property rights, they do not specify the terms under which any
licenses are to be granted. (Id. at 6.) Samsung notes that it is apparent from the language cited

that the declarations do not mention such fundamental terms as duration, geographic scope, or

royalty rate of any licenses. Further, says Samsung, while it has disclosed patents for both
UMTS and nonUMTS standards, its declarations do not specify whether its patents would be

bundled into a group license, and were they to be, which patents would be affected. (Id.)

Samsungs agreement with {

{

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s

PUBLIC VERSION
(Id. at 6-7.) According to Samsung, {

} (Id.)

Samsung says the {

}. (Id.) Samsung says that; {

} (Id.)

Samsungs agreement with {

Samsung says that on {

}. (Id.)

On

PUBLIC VERSION

} (Id. at 8.) Samsung says that the contracting parties agreed that {

}~(Id)

Supply chain fbr Apples baseband chips

App 1es accused products, including those that have { Samsung says that all 01

Id

tn

A 1esResponse to Samsungs

}, are manufactured outside the United States. ( . (ci 1 g pp

Interrogatory No. 3, Aug. 18, 2011).) Samsung says the accused products incorporate { outside the United } baseband processors, that are manufactured
States, and {

baseband chips in the accused products are

} (Id. at 9.) The { }

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manufactured by {

} for Apple in June 2007, when the iPhone was announced.

Samsung says { }~.(Id.)

According to Samsung, the {

}. (Id.) Samsung says that, although {

} (Id-)

Samsung says that {

}) and those chips are made at two plaees{

} baseband processor ({
}, Taiwan, and { }, South Korea.

(Id.) The chips are thercaiter shipped to China, where they are incorporated in the accused
products. (Id.)

Apple rejection of Samsung s offer to license

Samsung says that, in July 2010, Apple communicated With Samsung concerning certain

patents that relate to mobile devices and accused Samsung of infringement. On August 4, 2010,
the two parties met and discussed Apples allegations. ([d.) Samsung says that, at that meeting,

Samsung informed Apple that its products infringed several of Samsungs patents, and at a

subsequent meeting on September 10, 2l()l , Samsung provided details to Apple regarding those
infringements. (1d.) Samsung says that at the latter meeting, Apple inquired whether Samsung

was willing to license its patents, and Samsung told Apple that Samsung was prepared to grant
licenses to Apple on FRAND terms. (Id.) Samsung says the two parties met twice more, but

Apple ultimately rejected Samsungs proposals for resolving their dispute, and on April l5,

2011, Apple led an infringement suit against Samsung, which was the rst of many lawsuits

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brought by Apple against Samsung in what has since become an ongoing battle over smart
phones and tablets. (Id.)

Samsung says that on April 27, 201 l it led suit against Apple, alleging infringement of

a number of Samsungs patents, including ones that were declared essential to the UMTS
standard. (Id.) Samsung says that shortly after that, Apple requested that Samsung quote Apple
terms for a FRAND license for chips that practice the UMTS standard, and Sarnsung responded
on May 13, 2011, requesting Apple to identify the patents to which it was seeking licenses. (Id.)

Samsung says that on June 3, 2011 it sent Apple a non-disclosure ageemcnt prior to the parties

undertaking any negotiations, and on July l8, 2011, Apple responded with its execution of that
agreement.

Two days after its receipt of the non-disclosure agreement signed by Apple, Samsung
informed Apple that Samsung was willing to accept a{ }percent royalty rate on sales of Apple

products practicing the UMTS standard in exchange for granting a license on Samsungs
portfolio of patents and pending applications declared essential to the UMTS/WCDMA
standards. (Id. at ll.) On August l8, 2Ol l, Apple rejected Samsungs offer, saying the rate was
inconsistent with Samsungs FRAND obligations. (Id.) Sainsung says that Apple did not

propose a rate that Apple considered to be FRAND and in subsequent correspondence, Samsung
urged Apple to make a counterproposal so that negotiations could proceed, but Apple refused to
do so. (Id) Samsung says that on June 28, 201 l, it requested that the ITC commence this

investigation wherein Samsung contends that all of the accused products infringe the 644 patent,
and of those products that use the { }, they also infringe the

348 patent. Samsung says that the earliest application to which the 644 patent claims priority
was led on December 1, 2004. (Id.)

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II.

The Parties Arguments

Exhaustion
Apple contends that. Samsungs 644 and 348 patents are exhausted as applied to

the {

} in the iPhone 4 (AT&T), iPhone 3GS, iPhone 3G, iPad 2 3G (AT&T), and iPad 3

G. Apple argues that the Supreme Court has held that [t]he longstanding doctrine of patent
exhaustion provides that the initial authorized sale of a patented item tenninates all patent rights

to that item. (Mot. Meni. at ll-12.) Apple argues that the fundamental purpose of patent
exhaustion [is] to prohibit post-sale restiictions on the use of a patented article. (Id. at 12
(quoting from Tessera, Inc., v. Int! Trade Comm n, 646 F.3d 1357, 1370 (Fed. Cir. 2011)).)

Apple says the doctrincs protection against post-authorized-sale infringement claims is deeply
entrenched in the law, citing Keeler v. Standard F olding-Bed C0., 157 U.S. 659, 666 (1985) and
Adams v. Burke, 84 U.S. (17 Wall.) 453, 456 (1873).

According to Apple, {
}. (Id.) Apple says that {

} (Id. at 12-l3.) Apple

contends that the agreeme11tslanguage could not be clearer and that the legal implications are
equally clear: {

} (Id. at 13 (citing Quanta, 553 U.S. at 625).) Apple argues that

Samsung received valuable cross~license rights {

} as part of the bargain it struck With

} and Samsung thus rcceive[d] the consideration for its [patents] use and part[ed] with

the right to restrict that use. (Id. (citing Adams, 84 U.S. at 456).) Apple says that Samsung

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PUBLIC VERSION
cannot now seek further compensation from Apple by asserting patent rights that have been
exhausted, as regards the { } chips. (Id.) Therefore, concludes Apple, patent exhaustion

requires summary determination on Samsungs 644 and 348 patent claims as applied to the

iPhone 4, iPhone 3GS, iPhone 3G, and iPad 3G products, because Samsungs infringement
claims are based on Apples use of {
those chips. (Id.)

} chips, and Samsung exhausted its rights with respect to

Apple argues that Samsungs agreement with {

Samsung cannot overcome. First {

} creates two hurdles that

} chip to Apple were made

with Sarnsungs authorization and thus exhausted Samsungs patent rights as applied to those
chips. (Id.) Second, {
}. (Id. at 13~l4.) Specically, says Apple, { A} promised

the following:
{

(Id. at 14 (citing EX.F at Section {

}.) This promise, argues Apple, clearly encompasses the

644 patent, and Samsung has never contended that any of its declared-essential patents fall
outside the scope of this agreement. (1d.) Moreover, according to Apple, {

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PUBLIC VERSION
the { }, those sales exhausted this patent as applied to those chips. (Id. (citing

Quanta, 553 U.S. at 625).)

Apple argues that {

}, Samsungs attempted revocation has no effect because it is directly

contrary to its FRAND obligations, as recently held by a French tribunal, which upon analyzing
the obligations imposed by Samsungs commitment to ETSI to irrevocably license its essential

patents on FRAND terms (governed under French law) explained that Samsung
cannot. .revoke the license granted to { } with respect to the implementation of [two
} Forthese essential patents being

declared essential patents]. ..the license granted to {

irrevocable in accordance with the ETSI rules. (Id. at 15-16 (citing Ex. O [Ex Parte Order of

December 8, 201l] at 16).) Apple says that because Samsung irrevocably licensed each of its

declared-essential patents, including the 644 patent, in accordance with Clause 6.1 of the ETSI
lPR Policy, Samsung has granted { } authorization to make and sell products that

substantially embody its declared-essential patents. (Id. at lo.) Apple says that under
Samsungs commitment to ETSI to license the declared essential patents in accordance with the

principles of Clause 6.1, any license it granted under those patents was required to be irrevocable
and Samsung has so declared. (Id. (citing Mot. Ex. L).) Apple argues that if Samsung were
permitted to revoke its covenant to { } that would permit Samsung to use its declared

essential patents to stifle competition in downstream products that contain UMTS chipsets,

including competition orn Samsungs most threatening and innovative rival, Apple. Apple says

this is precisely what the ETSI lPR Policy is designed to prevent, and Samsung should not be

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PUBLIC VERSION
permitted to violate its FRAND commitments by revoking its covenant to {
attempt to do so should be given no legal effect. (ld.)

}, and its

Samsung argues that Apple has failed to meet its burden of demonstrating that there is no
genuine dispute of material fact as to whether the sale of {
} exhaust the 644 and 348 patents. (Oppn at l9.) First, argues Samsung, Apple has failed

to demonstrate that Samsung authorized the sale of the {

}; and second, even if { }, such as { }, Apple

has provided no evidence that any initial sale of baseband chips occurred in the United States,
which is necessary in order to exhaust a United States patent. (Id.) According to Samsung, {

}. According to Samsung, the {

} (Id. (citing

Ex. l1).) Samsung says this language does not automatically extend licenses to any subsidiaries
but, rather, requires { } to take some affirmative action in order to demonstrate that it has

exercised this right. (Id. at 19-20 (citing Intel Corp. v. Broadcom Corp, 173 F. Supp. 2d 201,

222 (D. Del. 2001).) That court, notes Samsung, held that a provision in license agreement

giving Motorola the right to extend patent licenses to a subsidiary required that Motorola
affirmatively exercise that right, and in the absence of evidence showing that, the court granted

surnniaryjudgment in favor of Intel and against Motorolas subsidiary, holding that the

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PUBLIC VERSION

subsidiarys sales were not covered under {

} licenses to Motorola. (Id. at 20.) Samsung

argues that, just as in that case, the language in the {

} Agreement does not automatically vest

any interest in any licenses simply because the licensee, here { }, has subsidiaries. Also, argues
Samsung, because {
}. (Id. (citing Ex. 13 {
Further, argues Sarnsung, {_

} at 1).)

} (Id.) Samsung argues that

numerous provisions in the {

to recognize {

} demonstrate that the purpose of the agreement was

} right to make, have made, use, or sell their own products, not

the products of others; and language in the preamble of that agreement demonstrates that its
purpose Was to {

} (Id. at 20-21 (citing Ex. ll at 1).) Samsung asserts

that {

) (Id. at 21 (citing Ex. ll at {

notes that {

}) Sarnsung

} (Id.) Furthermore, according to Samsung, {

} (Id. (citing Ex. 13).)

Sarnsung argues that to interpret the {

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PUBLIC VERSION

}, Which would be contrary to New York law

disfavoring contract interpretations that render contract provisions superuous. (Id. at 21-22
(citing Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 324 (2007).)

Samsung says that Apples motion fails to disclose the fact that, in prior litigation
between Apple and Sarnsung in Korea, Apple itself introduced as evidence a declaration rornan
{ } employee that conclusively established that any sales of the { } by { } occur

outside the United States; therefore, because these sales do not take place in the United States,
they cannot exhaust United States patent rights. (Id. at 22.) To prove exhaustion, argues
Sarnsung, Apple has to establish that there are no genuine issues of material fact at issue; yet

Apple has not demonstrated that the alleged sale giving rise to Apples exhaustion claim took
place in the United States. (Id. (citing Jazz Photo Corp. v. International Trade Comm n,264

F.3d 1094, 1105 (Fed. Cir. 2001).) Samsung, quoting the court in Cornell Research Foundation,
Inc. v. Hewlett-Packard Company, 2007 WL 4249135 at *51 (N.D.N.Y 2007), says, The

location of a sale offered in support of a patent exhaustion defense presents an issue of fact.
(Id.) in a further quotation from Cornell, Samsung says, The determination of whether [a
particular sale] occurred under the laws of the United States, thereby [giving rise to an
exhaustion defense] requires the court to analyze the particulars of the transaction in issue, an
inherently fact-laden exercise. (Id. at 22-23 (quoting from Cornell at *50).) For this reason,

argues Samsung, courts frequently deny summary judgment as to exhaustion, because the issue
Whether a sale occurred within the United States is far too fact-intensive to be resolved on a
motion for summary judgment. (Id. at 23 (citing Minebea Co., Ltd. v. Papst, 374 F.Supp. 2d at

202,218(one.

2005).)

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PUBLIC VERSION

Samsung argues that the issue as to whether a sale took place in the United States

requires a rnulti-factor analysis that necessitates consideration of where the relevant

negotiations took place, the location where payment was made and, notably, the geographical
point at which delivery was taken. (Id. (citing Cornell, 2007 WL 4349135 at *5l).)

Ultimately, according to Samsung, it is the location where delivery occurs that is the most
important factor, because there cannot be a sale within the United States for purposes of
exhaustion if delivery is made outside the United States. (Id.) In the situation at hand, argues
Samsung, the facts demonstrate that the sales of the { } baseband chips

took place outside the United States, because the sales invoices show that the chips were
manufactured by {
although {

} and shipped from there to an {

(citing Ex. 22 [Hebert Decl.] at 1]4.).) From {

}. (Id. (citing Ex. 22).) The location of the delivery

of the goods demonstrates that the sale from { } is made outside the United States, as is the

delivery, and the {

} baseband chips are being sold outside the United

States. (ld.) In fact, argues Samsung, there is no evidence that {

} (1d.) Thus, there remains a material issue of fact as to whether {

indirectly to Apple, and there is no evidence as to the location of the negotiation of any of the
sales or where payment was made. (Id.)

Samsung also argues that there are genuine issues of material fact as to whether
{

} baseband chip sales to Apple exhausted Samsungs 644 patent. (Id.) Samsung

says that, while Apple contends that {

} sale of its baseband chip exhausts the 644

patent, there is no evidence that any authorized sale of such chips took place in the United States.
19

}. (Id. at 24

}, and

} sells chips

PUBLIC VERSION
([d.) According to Samsung, the evidence of record demonstrates that the sales of {

}. (Id. at

25 (citing Ex. 20 {

} Depo.] at 33-35).) The fact that these chips are shipped from one

foreign country to another, in the course whereof they do not enter the United States,
demonstrates that the chips are not sold here and, therefore, cannot be said to have resulted in an

exhaustion of the 644 patent. (Id.) At minimum, claims Samsung, the sale of these chips
outside the United States creates a question of fact as to whether the 644 patent is exhausted, as
claimed by Apple. (Id.) i

Staff argues that a party seeking summary judgment always bears the initial
responsibility of informing the. ..court of the basis for its motion, and identifying those portions
of the pleadings, depositions, answers to interrogatories, and admissions on le, together with

the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material
fact. (Staff Resp. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).) Staff says Apple

motion fails to fulll Apples initial burden of identifying evidence that supports several
fundamental parts of its defense. (Id.)

Staff says the Commission and Federal Circuit have held that the sale ofa product under
a license is not by itself sufficient to trigger patent exhaustion, and in order to exhaust the
patentees rights, the sale must take place within the United States. (Id. at 4 (citing Certain

Semiconductor Chips Having Synchronous Dynamic Random Access Memory Controllers and

Products Containing Same, lnv. No. 337-TA-661, Commn Op at l6-18 (Aug. l0, 2010).)
However, says Staff, Apple does not discuss this issue and the single invoice presented by Apple

implies that at least one sale may been made in the United States, even though it was shipped to

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China, reports Staff, but it is impossible to tell. (Id. (citing Mot, Ex. M.) Furthermore, argues

Staff, in order to terminate the investigation based on the defense of exhaustion, Apple must
demonstrate, or at least allege, that all of { }s sales to Apple took place here, but it has not

done so. Therefore, according to Staff, Apple has not satised its initial burden of showing that
it is entitled to summary determination with respect to the accused products that incorporate { }

chips. (Id.) Also, according to Staff, Supreme Court precedent establishes that sales of a

component, such as a baseband processor chip, exhaust the rights of the patentee only when the
components essentially, if not completely, embody the invention. (Id. (citing Quanta
Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 630 (2008). [n this investigation, says

Staff, Apple does not address whether or not the chips that it buys from {

} essentially embody

the claimed inventions. Instead, agues Staff, Apple makes only a statement that the infringement

allegations are based primarily on the chips. (Id. at 4-5 (citing Apple Statement ofMaterial
Facts at fl 6.) Staff argues that in the absence of any explanation as to Whether the facts relied on

by Apple satisfy the Supreme Courts criteria set forth in Quanta, Apple has not carried the
initial burden of showing that it is entitled to summary determination. (Id. at 5.)

With respect to Apples motion as it relates to the Samsung license agreement with
{ }, Staff argues, again, that Apple has failed to allege that the relevant sales were all

made in the United States. (Id.) Also, according to Staff, Apple has failed to allege that the
{ } chips at issue substantially embody the claimed invention. (Id.) Under these

circumstances, argues Staff, Apple has not shown that it is entitled to summary determination.
(Id. at 5-6.) In addition, argues Staff, Apple has not shown that it is a third-party beneciary to

the {

} license. Staff says that Apple appears to concede that even if the license
}

originally extended to Apple as a {

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PUBLIC VERSION
{ }. (Id. at 6 (citing

Mot. Mem. at 19; Mot., Ex. G 1[5.6 ({

}-;Mot., Ex. T {

}-) Staff says that Apple does not appear to dispute this action by Samsung but, rather,

argues only that the termination was legally ineffective under French law. (Id. (citing Mot.

Mem. at 19-20).) Staff argues that Apples position regarding the application of French law is a
separate issue from whether Apple remains a third-party beneciary under the { }

license, which is governed by California law. (Id.) Staff says that Apple has not pointed to any

reason why Samsungs revocation of any rights Apple may have once enjoyed by virtue of the
{ } license agreement was not in accordance with California law. Therefore, argues

Staff, Apple is not entitled to summary determination.

Covenant Not T0 Sue

Apple says that, in addition to patent exhaustion, Samsungs 644 infringement claims
against the iPhone 4S fail for another, independent reason; namely, in the { },

Samsung promised not to assert patents, such as the 644 patent, against {

},

such as Apple, where the alleged basis for infringement is the {

}. (Mot. Mem. at 17.) However, argues Apple, that is precisely what Samsung has
done. Apple notes the following provision of the {
{

}:

~'~

22

PUBLIC VERSION

(Id. at 17 (citing EX. G at {

}~)

Apple argues that the 644 patent is within the scope of {

} Apple says that Sarnsung has claimed in

this investigation that Apples iPhone 4S infringes the 644 patent by complying with the UMTS
standard, and has declared to ETSI that the 644 patent is essential to that standard; thus this
patent is within the scope of Samsungs covenant. (Id. at 18.)
Apple asserts that it is a {

Apple says that Sarnsungs infringement theory regarding the 644 patent, as it relates to
the iPhone 4S, depends on the { } which is incorporated therein. (Id. at 19.) Apple

contends that it is clear that Samsungs {

23

~~ ~
}

PUBLIC VERSION

Apple {

(Id.) Apple says that, {

}, Samsung has tried to revoke {

} and, once

again, Samsungs purported unilateral suspension is legally invalid. (1d.) Apple notes that by
{

} The letter, reports Apple, stated the following:

1

(Id. (citing Ex. T).) Apple argues that, although {

} does

include a suspension mechanism, Samsungs FRAND commitments precluded Samsung from

revoking rights it had conveyed to allegedly standard-essential patents, as the Paris Tribunal De
GrancleInstance held on December 8, 2011, saying that Samstmg cannot. . .rev0ke the license

granted to {
license granted to {

} with respect to implementation of [two declared essential patents]...the

} for these essential patents being irrevocable in accordance with the

ETSI rules. (Id. at 19-20 (citing M0t., Ex. O at 16).) Again, argues Apple, Samsung made

commitments to license the 644 patent in accordance with Clause 6.1 of the ETSl IPR Policy
and that policy provides that, by complying with clause 6.1, a member such as Samsung commits

24

W _

PUBLIC VERSION

that it is prepared to grant irrevocable licenses on fair, reasonable and non-discriminatory tenns
and conditions under such IPR. (Id. at 20 (citing Mot., Ex. H at Clause 6.1).)
Apple contends that Samsung has granted Apple, as a {
authorization to use the 644 patent {

},

}. (Id.) Under Samsungs commitment to ETSI to license the Declared Essential

Patents in accordance with the principles of Clause 6.1, any license it granted under those patents
Wasrequired to be irrevocable, and therefore Samsung ought not be permitted to revoke that
authorization and impede Apple from competing with it for downstream products, thereby

accomplishing exactly the anticompetitive, exclusionary effect that the irrevocable FRAND
commitment was designed to avoid. (Id.)

Apple says that, even if Samsung could overcome its agreements with {

}, Salnsung is prevented from doing so by reason of its FRAND commitments, and

under governing French law, Apple is presently licensed to the 644 and 348 patents. ([d.) At
minimum, according to Apple, Samsung either contractually agreed to forego, or else Waived,

any right to seek an exclusionary remedy of the type available from the United States

International Trade Commission. Apple contends that prior Commission precedent allowing
declared-essential patent claims to proceed in this forum is distinguishable. (Id. at 21.)

Apple argues that, under French law, Apple has a binding and presently enforceable
license to both the 644 and the 348 patents, even before royalty terms have been agreed upon,

and because selling or importing a licensed product cannot result in infringement of a patent, a
license is a complete defense in a Section 337 investigation. (Id. (citing Certain Semiconductor
Chips with Minimized Chip Package Size and Products Containing Same, lnv. No. 337-TA-630,
Initial Determination at 190 (Aug. 28, 2009) and Certain Computer Products, Computer

25

"

PUBLIC VERSION

Components and Products Containing Same, Inv. No. 337-TA-628, Initial Determination at 156
(March 16, 2009), Notice of Commission Non-review (July 13, 2009).) According to Apple, a

member that submits a FRAND declaration to ETSI pursuant to Clause 6.1 of the IPR Policy, as
Samsung did for the 644 and 348 patents, irrevocably commits to grant a license to the LPR

identied in the declaration to any patty that implements the standard. (Id.) Under French law,

such a commitment is contractually binding on the maker as a continuing offer that remains
open for acceptance by those to Whom the offer is made. (Id. at 21-22 (citing Mot., EX.P
[Molfessis Rep.] at 1[1l 63-64).)

According to Apple, as a matter of French law, an implementer of the UMTS standard

accepts a license when it begins to implement the standard. (Id. at 22 (citing Mot., EX. P at 11

71).) To establish a valid patent license upon acceptance, under French law, only the object of
the license, the patents to which they apply, must be identied. (Id. (citing Mot, Ex. P at 1111 27,

98-99).) By specifying the patents in the ETSI declarations pursuant to Clause 6.1, both the
duration of the licenses and the geographic scope are established, and the duration is the

individual term of each of the patents, since the grant is irrevocable, unless a patent ceases being
essential before its expiration. (Id. (citing Mot. E. P at fl 99).) The geographic scope is that of
the patent itself. (Id.)

Apple says a license is consummated by an implementcr whether or not the parties have
agreed on certain terms, such as the royalty, because French law recognizes that, as a general
rule, a valid contract can be formed without price or royalty being determined. (Id. at 22-23
(citing Mot., Ex. P at 111] 28-30).) Moreover, argues Apple, a decision by a French court of

appeal, relying on the 1995 decision of the Cour de cessation, conrmed just that, holding that a
patent license contract Was validly formed Where it provided that the parties would later agree on

26

.____..M_

.,

,_ _,,

PUBLIC VERSION
a royalty depending on sales volume because [a]hsence of the determination of the price does
not void the contract. (Id. at 23 (citing Mot., Ex. P at {I32).) Apple argues that if the ETSI IPR

Policy is to achieve its purpose of widespread adoption of the standards and avoidance of the risk
of [PR being unavailable, it necessarily means that manufacturers must be able to implement
the standard without rst negotiating licenses with each holder of declared-essential IPR. (Id.
(citing l\/lot., Ex. H at Clause 3.1).) According to Apple, if implementers had to negotiate with

every declared-essential patent holder before introducing new products, it could take years for
new products to come to market, and given the purpose of ETSI IPR Policy to seek[] a balance

between the needs of standardization for public use in the eld of telecommunications and the
rights of the owners of [PRs, it makes perfect sense that implementers are licensed on

implementation, with the appropriate royalty to be determined later through negotiations or, if
necessary, by a court. (Id. at 24.) Such a system, argues Apple, encourages widespread

implementation, while also ensuring that LPRowners are compensated with FRAND royalties, to
the extent patents are actually essential and valid and not exhausted. (Id.)

Apple argues that even if Samsungs FRAND declarations to ETSI had not resulted in

Apple being licensed, they would still preclude Samsung from pursuing an exclusion or cease

and-desist order because, by making those declarations, Samsung has contracted away any right
to prevent Apple from using the patents. (Id. at 24.) Apple argues that Samsungs membership

in, and declarations to, ETSI create binding contractual obligations, which, even if they fall short
of a present license, preclude Samsung from seeking an exclusionary remedy. (Id. (citing Mot.,
EX. P at ll 82-87).) Apple argues that in other litigations Samsung has acknowledged that

membership in ETSI creates an actual or implied contract to comply with ETSIs governing
documents, including, but not limited to, ETSls Intellectual Property Rights Policy. (Id. at 24

27

PUBLIC VERSION
25 (citing Mot., Ex. R [First Amended Complaint, Sarnsung Elec. C0. v. lnterDigital
Communications C0rp., No. 07-0167 (D. Del. Sept. l4, 2007)].) According to Apple, the

contractual commitments are made to ETSI and its members, including Apple, and are part of the

qui pro quo for the standard-setting organization agreeing to consider standardizing technologies
that may be covered by the FRAND deelarant's technology. (Id. at 25.) Under French law,
argues Apple, those obligations, once made, prevent a party from later seeking to prevent a
beneciary of its commitment from selling products that practice its IPR. (id. (citing Mot., Ex. P
at {HI82-87).)

Apple argues that any attempt to obtain an exclusion or cease-and-desist order is contrary
to Samsungs FRAND commitments as dened by the ESTSI IPR Policy and antithetical to the

purpose behind that policy. (Id.) Apple says that the ETSI IPR Policy is focused on ensuring

that patentees do not make essential lPR unavailable to implementers of the standard. (Id.)
Apple says that Samsung has acknowledged this in prior litigation, contending that a partys
enforcement of its intellectual property rights. . .(in seeking injunctive relief) .. .) and/or its

refusal to grant a license to the Defendants on fair, reasonable and non-discriminatory terms is in

breach of the contract which exists between parties with common membership of ETSI. (Id.)
That is what Samsung is attempting here, to use the threat of an exclusion order to make
unavailable to Apple the Declared-Essential Patents, in an effort to extract non-FRAND
royalties in contravention of the ETSI IPR Policy, according to Apple. (Id. at 25-26.)

Apple contends that the Commission may not impose remedies that complainant has
agreed not to seek. (Id. at 26 (citing Certain Rubber Antidegradants, Components Thereof And
Products Containing Same, Inv. No. 337-TA-533, Commn Op. at 37 (July l3, 2006).) Here,

argues Apple, Samsungs FRAND declarations constitute agreements not to seek an exclusion

28

PUBLIC VERSION
order or similar remedy and therefore Samsung should be held to those commitments. (Id. at
26.)

Finally, argues Apple, although the Commission has previously declined to grant early

termination based on various theories relating to FRAND commitments, those cases are readily
distinguishable because, unlike previous arguments, Apples motion does not turn on contested

issues of fact, but rather, is supported by unequivocal governing principles of French law as
applied to undisputed facts. (ld.) For example, argues Apple, in Certain 3G Mobile Handsets
and Components, lnv. No. 33'7~TA-613,Where Samsung predicated its motion for summary

determination on the fact-intensive doctrine of equitable estoppel, contending that Samsung had
relied on InterDigitals FRAND commitments to its detriment and lnterDigital had failed to offer

Sarnsung FRAND license terms, because its licensing demand exceeded InterDigitals

appropriate share of the cumulative industry royalty, the Administrative Law Judge concluded
that the issues raised by Samsungs equitable estoppel defense are ripe with disputed factual
issues. (Id. at 28 (citing Order No. 29 at 3-4 (April 14, 2008)).) Similarly, argues Apple, in

Certain Semiconductor Chips and Products Containing Same, lnv. No. 337-TA-753, Broadeom

moved for termination of the investigation for Rambuss patents for which FRAND declarations
had been made to the standard-setting organization PCI-SIG, and the Administrative Law Judge

denied the motion on the grounds that there were disputed issues of fact about whether Rambus
was actually bound by its FRAND commitments for its declared-essential patents. (ld.) Further,

argues Apple, the Administrative Law Judge in that instance faulted Broadcom for failing to
provide any legal basis to support its motion. (ld.)

Apple says the circumstances are different in the matter at hand because there are no

disputes of fact, since Samsung has never contested that it made binding FRAND commitments

29

PUBLIC VERSION
for is declared-essential patents; and moreover, says Apple, it has established the governing law,
in particular French contract law, that compels a decision in Apples favor: to Wit, Samsungs

FRAND commitments are irrevocable; Apple is presently licensed to Samsungs declared

essential patents; and at the very least, Samsung, by reason of its FRAND commitments, has
forfeited any right to an exclusionary order or cease-and-desist order. (Id. at 29.)

Sainsung counters that Apples arguments are awed for two reasons. First, the relevant
provision of the { } Agreement only {

}. (Oppn at 25.) Second, to the

{ }. (Id.)

As to the rst point, Samsung argues that Apple does not qualify as a {

} (Id. (citing Ex. 16 {

}).) According to Samsung,

Apple fails to provide any evidence that it incorporates baseband chips into the accused products.
(Id.) In fact, argues Samsung, {
25-26 (citing Ex. 20 { } Depo.] at 43).)

} (Id. at

Sainsung argues that Apples contention that Apple is a {

a awed reading of the { }, because Apple contends that it is a {

} is based on

} (Id. (citing Mot. Mem. at

18).) Samsung argues that Apple simply ignores language of the {

} that

30

PUBLIC VERSION
requires that a {
} (Id. (citing Ex. 16).)

Moreover, argues Samsung, even if Apple were a {

} (Id. (citing EX. l7).) In the matter at hand, argues Samsung,

Apple brought iningement claims against Samsung and, {

} (Id. (citing Mot., Ex.
T).)

As for Apples argument that Samsungs obligations to ETSI prevent Samsung from
exercising its right to revoke the { } Sarnsung says its declarations to ETSI did

not establish a license between Sainsung and Apple, and, as such, there is no agreement between

Samsung and Apple that would estop Samsung from terminating any rights Apple might have
enjoyed under the { }. (Id. at 27.) Moreover, says Samsung, no United

States law supports Apples contention that Samsungs obligations to a standard-setting

organization estop it from exercising rights granted under some other agreement, and Apple cites

none. (Id.) As for Apples citation to a French tribunals decision concerning the assertion of
French patents, that is irrelevant, argues Sarnsung. (Id.) The { } is governed

by California law, not French law, and the French tribunal did not analyze the contract under

California law, says Samsung. Therefore, the decision in Federal Savings & Loan Insurance

3 1

PUBLIC VERSION
Corp. v. Grif/en, 935 F.2d 691, 698 (5th Cir. 1991), which states that choice-of-law provisions

included in contracts control, applies, argues Sarnsung. (ld. (also citing Federal Deposit Ins.
Corp. v. Peterson, 770 F.2d 142 (10th Cir. 1985).)

Findings and conclusions

The Commission Rules permit a party to move with any necessary supporting afdavits
for a summary determination in its favor upon all or any part of the issues to be determined in the
investigation. 19 C.P.R. 2l0.18(a). Summary determination shall be rendered if pleadings
and any depositions, answers to interrogatories, and admissions on le, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a summary determination as a matter of law." 19 C.F.R. 210.1 8(1)).

Summary determination under Commission Rule 210.18 is analogous to summary judgment

under Federal Rule of Civil Procedure 56. See Certain Asian-Style Kamaboko Fish Cakes, lnv.
No. 337-TA-378, Order No. 15 at 3 (U.S.I.T.C., May 21, 1996) (unreviewed initial

determination).

The moving party bears the initial burden of establishing that there is an absence of a
genuine issue of material fact and that it is entitled to judgment as a matter of law. Celotex Corp.
v. Catren, 477 U.S. 317, 323 (1986). When such an initial showing is established, the burden

shifts to the opposing party, who must set forth specic facts showing that there is a genuine
issue for trial. Anderson v. Liberty Lobby, 1nc., 477 U.S. 242, 256 (1986). To avoid summary

judgment, the non-moving party must produce evidence of sufficient caliber to support judgment
in its favor. See Anderson, 477 U.S. at 252. If the responding party fails to make such a

showing, the moving party is then entitled to judgment as a matter of law. See Celotex, 477 U.S.
at 325.

32

_ __

PUBLIC VERSION
Apples motion rests on two legal theories: (1) that Apple is a third-party beneciary of
two cross-licensing agreements executed by Samsung, one with {

}, by virtue of which Samsungs patent rights have been exhausted and Samsung is not
entitled to patent compensation from Apple; and (2) Samsung, as a member of the European
Technical Standards Institute, declared the asserted patents subject to that b0dys Intellectual
Property Rights Policy, thereby granting Apple, who is also a member, licenses to those patents
and therefore not subject to a Section 337 proceeding.

With respect to the rst of these theories, involving cross-licenses, {

} (Mot., Ex. C), the Federal Circuit has held that a patent is not exhausted where the

sale of the product alleged to embody the claimed invention Wasnot within the United States.
Fuji Photo Film C0. Ltd. v. Jazz Photo C0rp., 394 F.3d l368, 1376 (Fed. Cir. 2005). Samsung
has produced a declaration of {
22) stating that the {

} (Oppn, Ex.
} (the chips Apple accuses

of iningement (see Mot. Mem. at 12)) are developed by {

} by a purchase and transfer

transaction, evidenced by invoice, and atterwards are sold to Apple by {
Wholly-owned subsidiary { }

Samsung notes that the evidence demonstrates that the sales of the accused chips occur

outside the United States, as evidenced by sales invoices showing that they were manufactured
by { }. (Oppn, Exs 22 [{ }

Decl.], 42-45.) Sarnsung says the chips are then shipped from {

} (Oppn at 24 (citing Ex. 22C).) Although these

documents are difeult to read, Ex. 22C is sufficiently legible to show that the chips that are the

33

we

PUBLIC VERSION

subject of this representative transaction were shipped from {

}. ln contrast,

Apple has not produced evidence showing that any relevant sales of the {
} chips took place in the United States. At minimum, there remains a legitimate issue of fact
as to whether Apples claim of exhaustion, as regards the { }, applies.

Consequently, Apples motion in respect to Apple s exhaustion claim as it pertains to the {

} is DENIED.

Samsung has asserted an additional reason why Apples motion with respect to Apples
exhaustion defense as it concerns the {
contends that the {

} should be denied. Samsung

}, but the evidence does not reect the fact that { } extended any of
its rights under the agreement to { }, the subsidiary that {
developing the {
C at { } states:
{

} said is responsible for

'

} (see Oppn, Ex. 22). The { } Agreement (Mot,

This provision, according to its terms, is not self executing with respect to extending {

licenses to its subsidiaries; that is a right the exercise or non-exercise ofwhich lies with { }, as

it might determine, based on business considerations unknown to strangers to its affairs; and
therefore, it is incumbent upon Apple to produce persuasive evidence that { } exercised the
right, { }, by performing some affirmative act to that end. Apple has

not produced any evidence that Wouldsupport that conclusion. For that reason as well, Apples
motion in respect to exhaustion in the case of the {
34

} is DENIED.

W _

PUBLIC VERSION
With respect to Apples assertion that, by virtue of the {
patent rights have been exhausted by {

}, Samsungs
}~, once again, the

evidence of record is not sufcient to show that the sales of these items occurred in the United
States, in accordance with the holding in Fuji Photo Film, 394 F.3d at 1376. Samsung has
produced evidence that the {

}. (Oppn, Ex. 20 [{

} Depo.] at 33-35, 41.) This evidence, at

minimum, raises an issue of fact regarding App1esexhaustion contentions, as they relate to

licenses extended by Samsung to { }, and for that reason, Apples motion in that respect

is DENIED.
As for Apples contention that the {

}. (Mot, Ex. T {

}.) This

termination with respect to Apple Was {

} (Mot, Ex. G at { }.) Apple contends that by virtue of Samsungs membership in

ETSI, and its declaration with respect to the asserted patents, Samsungs actions were prohibited
under ETSl [PR Policy. However, the {
follows: {

} provides, in {

}~, as

} (Id. at 25.) Therefore, any conicts between

ETSI and French law with respect to Samsungs rights under the {

as such conicts may bear upon App1esmotion in this investigation, are to be settled under the

35

}, insofar

PUBLIC VERSION
terms of that agreement, according to the express Willof the parties. Whether Samsungs action
was or was not in accord with its ETSI obligations and declarations is for the appropriate tribunal

to address, as provided by the governing ETSI body. The ETSI intellectual Property Rights

Policy, at Clause 14, Violation of Policy, states: Any violation of the POLICY by a MEMBER
shall be deemed to be a breach, by that MEMBER, of its obligations to ETSI. The ETSI General

Assembly shall have the authority to decide the action to be taken, if any, against the MEMBER
in breach, in accordance with the ETSI Statutes. But that is a different issue from whether
Samsung had the light to terminate {
}. There is no indication that { } protested Samsungs action or sought

judicial redress in response; nor, for that matter, is there any indication that Apple, as a third

party beneciary ostensibly having enforcement rights under the {

}, sought

strict performance or any other form of relief that was available under that agreement.
Therefore, Apples motion with respect to Samsungs covenant not to sue is DENIED.

Turning to Apples motion as it concerns Samsungs membership in the European

Telecommunications Standard Institute (ETSI) and Samsungs declarations made in relation
thereto, the Administrative Law Judge concludes that both the facts and the law fail to support

summary determination. Apple contends that, under controlling French law,

it pertains to

ETSI TPRPolicy, Samsungs participation and declarations to ETSI created a license on behalf

of Apple with respect to the 644 and 348 patents, and at a minimum, Samsung agreed to
forego, or else Waived, any right to seek an exclusionary remedy of the type available under 35
U.S.C. 1337. Apple asserts that Samsungs obligations Withrespect to its involvement with

ETSI are governed under French law, which treats Samsungs actions as a license, regardless of

the fact that, admittedly, no royalty rate was agreed upon between Samsung and Apple.

36

V _

PUBLIC VERSION

However, the evidence shows that {

}. (See Oppn, Exs. 27-39.)

Apple contends that under French law, it was extended a license to the asserted patents by reason
of ETS1 IPR Policy and San1sungs declarations with respect thereto, citing the report of its legal

expert, Nicolas Molfessis. (Mot, Ex. P.) Samsung disputes Apples assertion, citing the
declaration of its legal expert, Remy Libchaber. (Oppn Ex. 41.)
The determination of foreign law is a question of law. Guardian Industries Corp. v. U.S.,
477 F.3d 1386 (Fed. Cir. 2007). (See Fed. R. Civ. P. 44.1, Advisory Committee Notes.) The

evidence discloses that the price tenns for the licensing of San1sungs patents subject to ETS1

were never agreed upon by Apple and Sarnsung. A license under French law is a lease of things
or items. (Mot, P at 1136; Oppn, Ex. 41 at ll45; French Civil Code, Article 1709.) The

Cour de cassation (the French Supreme Court) reportedly has ruled, pursuant to Article 1709 of

the Civil Code, that a promise of lease can only be considered as a lease if it contains an
agreement of the parties on the price. (See Oppn, Ex. 41 at 11SO(citing Civ. 3, 27 June 1973,
Bull. H1, No. 446, p. 324; Civ. 3, 28 October 2009, Bull. III, No. 237; Civ. 3, 28 May 1997, Bull.

III, No. 116, p. 77; Civ. 3, 20 May 1992, Bull HI, No. 152, p. 93; Civ.3, 7April 1976, Bull. Ill,

No. 138, p. 111; Civ.3, 23 January 1970, Bulllll, No. 63, p. 45.) Although ,App1eslegal expert

suggests, based on analogy to French case law respecting service agreements, that contracts can

be fonned between parties Withoutan agreement on price, this is not persuasive, because service
contracts involve different considerations, and the legal authority cited by Samsungs expert, that

price is a necessary term for the formation of a contract, is more in point, and better reasoned.
(See Oppn, Ex. 41 at W 47-50.) Furthermore, the ETS1 IPR Policy provides a rnechanisni for

37

__A._._.._..----Z

PUBLIC VERSION

addressing a members non-compliance with its licensing requirements, which includes non~

recognition of the standard, rather than determining a defacto license. (Oppn, Ex. 2 at Clause
8.2.) Furthermore, the ETSI Guidelines on IPRs specically state, Specic licensing terms and
negotiations are commercial issues between the companies and shall not be addressed Within
ETSI. (Oppn, Ex. 3 at Clause 4.1.) The remedy provided for a mernbers non-compliance

with the licensing provisions of ETSI IPR Policy and the Guideline provision just quoted are
inconsistent with Apples constructive license argument.
For these reasons, Apples motion for summary determination terminating the
investigation as to the 644 and 348 patents (Motion Docket No. 794-042) is DENIED.

Within seven days of the date of this document, each party shall submit to the Office of
the Administrative Law Judges a statement as to whether or not it seeks to have any portion of

this document deleted om the public version. The patties submissions may be made by

facsimile and/or hard copy by the aforementioned date.

Any party seeking to have any portion of this document deleted from the public version
thereof must submit to this office a copy of this document with red brackets clearly indicating
any portion asserted to contain condential business information. The parties submissions

concerning the public version of this document need not be led with the Commission Secretary.

so ORDERED

Wm@
E. James Gildea, Administrative Law Judge

38

,_______i_7

CERTAIN ELECTRONIC DEVICES, INCLUDING WIRELESS COMMUNICATION DEVICES, PORTABLE MUSIC AND DATA PROCESSING DEVICES, AND TABLET COMPUTERS

337-TA-794

PUBLIC CERTIFICATE OF SERVICE

I, Lisa R. Barton, hereby certify that the attached ORDER has been served by hand upon the Commission Investigative Attorney, Lisa Murray, Esq., and the following parties as indicated
On May 11 ,2()12.

Lisa R. Barton V

Acting Secretary to the Commission U.S. International Trade Commission 500 E Street, SW, Room ll2A Washington, D.C. 20436

ON BEHALF OF COMPLAINANTS SAMSUNG ELECTRONICS CO., LTD. AND SAMSUNG TELECOMMUNICATIONS AMERICA. LLC:
S. Alex Lasher, Esq. QUINN EMANUEL URQUHART & ( ) Via Hand Delivery ( ) Via Oveniight Mail

SULLIVAN, LLP
1299 Pennsylvania Ave., NW Suite 825 Washington, DC 20004 (202) 538-8104

('\) Via First Class Mail

( ) Other: _ #__

ON BEHALF OF RESPONDENT APPLE INC.:_

Nina S. Tallon, Esq. ( ) Via Hand Delivery

WILMER CUTLER PICKERING HALE AND DORR LLP

l875 Pennsylvania Ave. NW Washington, DC 20006 (202) 663-6000

( ) Via OvernightMail (\) Via First Class Mail

( ) Other:

CERTAIN ELECTRONIC DEVICES, INCLUDING WIRF LESS COMMUNICATION DEVICES PORTABLE MLSIC AND DATA PROCESSING DEVICES, AND TABLET COMPUTERS

337-TA-794

PUBLIC MAILING
Heather Hall LEXIS NFXIS 9443 Spnngboro Pike
I\/I1211'I11SbLlTg, OH 45342

( ) Via Hand Delivery ( ) Via Overnight Mail (\) Via First Class Mail

( ) Other:________
( ) Via Hand Delivery ( ) Via Overnight Mail (\) Via First Class Mail ( ) Other:

Kenneth Clair

THOMSON WEST
1100 13th Street, NW Suite 200 Washington, DC 20005

7~ ~