Defendant’s “Staged Delay” in Withdrawing FRAND Affirmative Defenses Amounted to “Rank Gamesmanship” and Supported an Award of Attorneys’ Fees

Dec 2, 2019

Reading Time : 2 min

On February 10, 2017, Plaintiffs Optis Wireless Technology, LLC, PanOptis Patent Management, LLC, and Optis Cellular Technology, LLC (collectively, “PanOptis”) sued Huawei for infringement of five standard essential patents (SEPs). Four of the patents were declared essential to the LTE cellular communications standard, and the fifth patent was declared essential to the H.264 video-coding standard. In Count IX, PanOptis sought a declaratory judgment that it had offered to license its SEPs to Huawei on fair, reasonable and non-discriminatory (FRAND) terms. Huawei countered with five FRAND affirmative defenses, alleging that PanOptis failed to offer a license on FRAND terms.

At Huawei’s urging, the Court bifurcated PanOptis’s claims into a jury trial and bench trial, with the declaratory action on FRAND relegated to the bench trial. In the jury trial, Huawei raised its FRAND defenses to argue that damages sought by PanOptis were not consistent with FRAND terms and that Huawei’s conduct was not willful because it sought only a FRAND license. When the Court proceeded to take up the bench trial while the jury was deliberating, however, Huawei dropped its FRAND defenses and argued that the Court lacked subject matter jurisdiction over Count IX. The jury ultimately found that the asserted patents were willfully infringed by Huawei and not invalid, and that Huawei owed PanOptis damages in the amount of $10,553,565. Over Huawei’s objection, the Court later held a bench trial, but based on insufficient evidence, the Court declined to issue a declaratory judgment on whether PanOptis complied with its FRAND obligations. The Court entered final judgment in favor of PanOptis and, in light of willfulness, enhanced the jury award by 25 percent. PanOptis then moved for a finding of exceptional case status and an award of attorneys’ fees under 35 U.S.C. § 285.

PanOptis asserted three grounds for exceptional case status: (1) Huawei’s use of timing and delay to force PanOptis to spend unnecessary resources; (2) Huawei’s assertion of weak infringement defenses; and (3) the jury’s willfulness finding. The Court found that PanOptis’s grounds were true and indicative of a “wide-spread pattern of litigation abuse.” The Court focused in particular on Huawei’s “staged delay” in withdrawing its FRAND defenses, characterizing it as “nothing less than rank gamesmanship that crossed the line of zealous advocacy.” The Court reasoned that Huawei was able to take advantage of its FRAND defenses before the jury, while depriving PanOptis of its opportunity for a declaratory judgment. According to the Court, the egregious nature of the conduct was compounded because Huawei would neither disavow that the delay was a planned tactic nor commit to refraining from this sort of conduct in the future. Based on the totality of the circumstances, the Court found exceptionality and awarded PanOptis all its attorneys’ fees and expenses.

Optis Wireless Technology, LLC et al. v. Huawei Device USA, Inc., No. 2:17-CV-00123-JRG (E.D. Tex. November 15, 2019)

Practice Tip: Although parties are encouraged to streamline issues for trial, they must do so in a timely manner so that their strategic decisions are not later viewed as exceptional litigation tactics unfairly timed to disadvantage and impose unnecessary costs on the opposing party.

 

Share This Insight

Previous Entries

IP Newsflash

March 24, 2025

The Federal Circuit affirmed a Patent Trial and Appeal Board (PTAB) final written decision holding that the prior art exception of AIA Section 102(b)(2)(B) does not apply to a prior sale by an inventor when the sale is conducted in private. According to the Federal Circuit, a sale must disclose the relevant aspects of the invention to the public to qualify for the prior art exception of Section 102(b)(2)(B).

...

Read More

IP Newsflash

March 21, 2025

Under the Lanham Act, a plaintiff who prevails on a trademark infringement claim may be entitled to recover the “defendant’s profits” as damages. The Supreme Court in Dewberry Group, Inc. v. Dewberry Engineers Inc. unanimously construed “defendant’s profits” in 35 USC § 1117(a) to mean that only the named defendant’s profits can be awarded, not the profits of other related corporate entities. The Court, however, left open the possibility that other language in § 1117(a) may allow for damages linked to the profits of related entities, if properly raised and supported.

...

Read More

IP Newsflash

March 13, 2025

In a series of rulings on a motion in limine, the District of Delaware recently distinguished between what qualifies as being incorporated by reference and what does not for the purposes of an anticipation defense. In short, a parenthetical citation was held to be insufficient, while three passages discussing a cited reference met the test.

...

Read More

IP Newsflash

March 4, 2025

On February 28, 2025, the USPTO announced that it was rescinding former Director Vidal’s 2022 memorandum on discretionary denials by the Patent Trial and Appeal Board. The 2022 memorandum effectively narrowed the application of discretionary denials in cases with parallel district court litigation by specifying instances where discretionary denial could not be issued. With the withdrawal of the memorandum, individual PTAB panels will regain flexibility in weighing discretionary denials. While the long-term effect of that increased flexibility is not yet known, the immediate effect is likely to be a shift towards the discretionary analysis applied by PTAB panels before the issuance of the memorandum.

...

Read More

IP Newsflash

March 3, 2025

A District of Delaware judge recently granted a defendant’s motion to include a patent prosecution bar in its proposed protective order after determining that litigation counsel’s ability to practice before the Patent Office—without ever having represented the plaintiffs at the Patent Office in the past—weighed heavily in favor of the bar.

...

Read More

IP Newsflash

February 12, 2025

The Federal Circuit recently reversed a district court decision that found a patent that did not describe after-arising technology failed to satisfy the written description requirement. In so doing, the Federal Circuit explained that written description and enablement are evaluated based on the subject matter that is claimed, not the products that practice those claims. As a result, the patentee was not required to describe unclaimed, later-discovered features of the accused products despite the broad language in the claims that undisputedly covered the products.

...

Read More

IP Newsflash

January 24, 2025

The District of Delaware recently rejected a patentee’s argument that non-production of an opinion letter from counsel, combined with knowledge of the patent, warranted a finding that defendant induced infringement.

...

Read More

IP Newsflash

January 17, 2025

The District of Delaware recently denied a motion to dismiss a patent infringement complaint involving gene editing technology that sought relief under the Safe Harbor Provision of the Hatch-Waxman Act. Specifically, the court found the patentee’s complaint sufficiently alleged at least some uses of the claimed technology that, when taken as true, were not solely uses of a “patented invention” that were “reasonably related” to an FDA submission.

...

Read More

© 2025 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.