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Microsoft Mobile, Inc. v. InterDigital, Inc.

United States District Court for the District of Delaware

April 13, 2016, Decided; April 13, 2016, Filed

Civil Action No. 15-723-RGA


Memorandum Order

Presently before the Court is Defendants' Motion to Dismiss and Motion to Strike (D.I. 16). Defendants (collectively "IDC") request dismissal pursuant [*2]  to Fed. R. Civ. P. 12(b)(6) and move to strike pursuant to Fed. R. Civ. P. 12(f). The issues have been fully briefed. (D.I. 17, 20, 21). The Court heard oral argument on March 1, 2016. (D.I. 26). For the reasons set forth herein, IDC's motion to dismiss and to strike is DENIED.

On August 20, 2015, Plaintiffs (collectively "Microsoft") filed this suit, alleging unlawful monopolization under § 2 of the Sherman Act. (D.I. 1). Microsoft's claim relates to IDC's interactions with a standard-setting organization and the enforcement of certain standard-essential patents ("SEPs") that IDC claims to hold. The European Telecommunications Standards Institute ("ETSI") promulgates standards with which cellular devices must comply in order to effectively communicate with wireless network infrastructure. (Id. ¶ 26). ETSI, in choosing which technologies are incorporated into the standard, may incorporate patented technologies that then become "essential" to the standard. (Id. ¶¶ 3, 28). Holders of these SEPs may, absent adequate safeguards, demand exorbitant royalties in a so-called "patent hold-up." (Id. ¶¶ 29, 30). To combat this problem, ETSI seeks an irrevocable commitment from owners of potential SEPs to license SEPs on fair, reasonable, and [*3]  non-discriminatory ("FRAND") terms. (Id. ¶¶ 32, 34).

Microsoft alleges that IDC, in order to induce ETSI to incorporate IDC's patented technology into the 3G and 4G standards, falsely promised to license its SEPs on FRAND terms. (Id. ¶¶ 4, 42, 44-45, 52). But for IDC's deception, Microsoft alleges, ETSI would have included in the standards alternate technologies or not specified any technology at all. (Id. ¶ 46). Microsoft alleges that, through this standard-setting process, roc unlawfully acquired monopoly power, and further, that IDC has exploited this power by refusing to honor its FRAND licensing obligations, transferring SEPs to related entities to "double dip" royalty demands, tying U.S. patent licenses to foreign patent licenses, tying SEP licenses to non-essential patent licenses, and requiring royalties on worldwide sales. (Id. ¶¶ 6, 56-69). Additionally, Microsoft alleges that roc has "pursued baseless infringement actions and baseless demands for injunctive relief and exclusion orders designed to increase Microsoft's costs and thereby coerce Microsoft to capitulate to InterDigital's unreasonable, non-FRAND demands." (Id. ¶¶ 6, 70-79).

In its motion to dismiss, IDC argues that [*4]  Microsoft has failed to adequately plead a § 2 monopolization claim. To state a claim for monopolization, the plaintiff must plead the possession of monopoly power in a relevant market and anticompetitive conduct on the part of the possessor. Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306-08 (3d Cir. 2007). Monopoly power may be shown through "direct evidence of supracompetitive prices and restricted output" or it may be "inferred from the structure and composition of the relevant market." Id. at 307. "To support an inference of monopoly power, a plaintiff typically must plead and prove that a firm has a dominant share in a relevant market, and that significant entry barriers protect that market." Id. (quotation marks omitted). "Anticompetitive conduct may take a variety of forms, but it is generally defined as conduct to obtain or maintain monopoly power as a result of competition on some basis other than the merits." Id. In Broadcom, the Third Circuit stated that, when patented technology is incorporated into a standard, "measures such as FRAND commitments become important safeguards against monopoly power." Id. at 314. Therefore, in the context of "a consensus-oriented private standard-setting environment," "a patent holder's intentionally false promise to license [*5]  essential proprietary technology on FRAND terms, ... coupled with [a standard-setting organization's] reliance on that promise when including the technology in a standard, and ... the patent holder's subsequent breach of that promise, is actionable anticompetitive conduct." Id.

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2016 U.S. Dist. LEXIS 49498 *; 2016-1 Trade Reg. Rep. (CCH) P79,589; 2016 WL 1464545


Subsequent History: Motion denied by Microsoft Mobile, Inc. v. Interdigital, Inc., 2016 U.S. Dist. LEXIS 76367 (D. Del., June 13, 2016)

Motion denied by Microsoft Mobile, Inc. v. InterDigital, Inc., 2017 U.S. Dist. LEXIS 40014 (D. Del., Mar. 21, 2017)


technology, patent, license, anticompetitive, antitrust, monopoly, standard-setting, cellular, sham