Case 1:23-cv-01237-GBW Document 20 Filed 02/15/24 Page 1 of 24 PageID #: 2017
`
`IN THE UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
`
`NOKIA TECHNOLOGIES OY,
`
`Plaintiff / Counterclaim Defendant,
`
`Civil Action No. 23-cv-1237-GBW
`
`v.
`
`HP, INC.,
`
`Defendant / Counterclaim Plaintiff.
`
`DEFENDANT HP, INC.’S OPPOSITION TO PLAINTIFF NOKIA TECHNOLOGIES
`OY’S MOTION TO DISMISS DEFENDANT/COUNTERCLAIMANT HP, INC.’S
`COUNTERCLAIMS
`
`Dated: February 15, 2024
`
`
`
`John V. Gorman (DE Bar No. 6599)
`Amy M. Dudash (DE Bar No. 5741)
`MORGAN, LEWIS & BOCKIUS LLP
`1201 N. Market Street, Suite 2201
`Wilmington, Delaware 19801
`Telephone: 302.574.3000
`john.gorman@morganlewis.com
`amy.dudash@morganlewis.com
`
`

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`Case 1:23-cv-01237-GBW Document 20 Filed 02/15/24 Page 2 of 24 PageID #: 2018
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`TABLE OF CONTENTS
`
`I.
`
`II.
`
`III.
`
`IV.
`
`V.
`
`INTRODUCTION .............................................................................................................. 4
`
`NATURE AND STAGE OF PROCEEDINGS .................................................................. 5
`
`SUMMARY OF THE ARGUMENT ................................................................................. 6
`
`STATEMENT OF FACTS ................................................................................................. 7
`
`ARGUMENT ...................................................................................................................... 8
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`Legal Standard ........................................................................................................ 8
`
`HP Need Not Concede Standard Essentiality at the Pleading Stage
`(Applicable to Counts I-VII) ................................................................................... 9
`
`ITU-T Language Does Not Bar HP’s Breach of Contract Claim (Nokia
`Seeking Injunctions and Unilaterally Abandoning Negotiations)
`(Applicable to Count II) ........................................................................................ 13
`
`Nokia’s Arguments Against HP’s Unenforceability Counterclaim
`Similarly Fail (Applicable to Count III) ............................................................... 14
`
`HP Alleges a Cognizable Antitrust Claim Under Section 2 of the Sherman
`Act (Applicable to Count IV) ............................................................................... 15
`
`1.
`
`2.
`
`3.
`
`4.
`
`HP Sufficiently Pleads All Elements Required By Broadcom v.
`Qualcomm ................................................................................................. 15
`
`HP Is Not Required to Affirmatively Allege That Nokia’s Asserted
`Patents Are Essential to the Asserted Standards ....................................... 18
`
`HP Pleads Anticompetitive Conduct With Sufficient Particularity,
`As Required by Broadcom ........................................................................ 19
`
`HP Sufficiently Pleads a Relevant Market ................................................ 21
`
`VI.
`
`CONCLUSION ................................................................................................................. 22
`
`i
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`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Apple Inc. v. Samsung Elecs. Co.,
`No. 11-CV-01846-LHK, 2011 WL 4948567 (N.D. Cal. Oct. 18, 2011) ...........................16, 18
`
`Arbutus Biopharma Corp. v. Moderna, Inc.,
`638 F. Supp. 3d 397 (D. Del. 2022) ...........................................................................................6
`
`Broadcom Corp. v. Qualcomm Inc.,
`501 F.3d 297 (3d Cir. 2007)............................................................................................. passim
`
`Core Wireless Licensing SARL v. Apple Inc.,
`899 F.3d 1356 (Fed. Cir. 2018)....................................................................................10, 11, 12
`
`CrowdStrike, Inc. v. NSS Labs, Inc.,
`No. CV 17-146 (MN), 2018 WL 6716094 (D. Del. Dec. 21, 2018) ..........................................7
`
`eBay Inc. v. MercExchange, LLC,
`547 U.S. 388 (2006) .................................................................................................................10
`
`Fairchild Semiconductor Corp. v. Power Integrations, Inc.,
`935 F. Supp. 2d 772 (D. Del. 2013) .......................................................................................5, 6
`
`FTC v. Qualcomm,
`969 F.3d 974 (9th Cir. 2020) ...................................................................................................13
`
`Klotz v. Celentano Stadtmauer & Walentowicz LLP,
`991 F.3d 458 (3d Cir. 2021).......................................................................................................6
`
`Koninklijke KPN N.V. v. Sierra Wireless, Inc.,
`No. 17-cv-90-LPS, 2020 WL 1891454 (D. Del. Apr. 16, 2020) ...............................................9
`
`Lenovo (United States) Inc. v. Interdigital Tech. Corp.,
`No. 20-493-LPS, 2021 WL 1123101 (D. Del. Mar. 24, 2021) ....................................13, 14, 19
`
`Microsoft Mobile Inc. v. InterDigital, Inc.,
`No. 15-723-RGA, 2016 WL 1464545 (D. Del. Apr. 13, 2016) ...................................13, 16, 17
`
`Qualcomm Inc. v. Broadcom Corp.,
`548 F.3d 1004 (Fed. Cir. 2008)..........................................................................................11, 12
`
`Queen City Pizza, Inc. v. Domino’s Pizza, Inc.,
`124 F.3d 430 (3d Cir. 1997).....................................................................................................19
`
`ii
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`Rambus Inc. v. FTC,
`522 F.3d 456 (D.C. Cir. 2008) ...........................................................................................13, 18
`
`TCL Commc’ns Tech. Holdings Ltd. v. Telefonaktenbologet LM Ericsson,
`No. SACV1400341JVSANX, 2014 WL 12588293 (C.D. Cal. Sept. 30, 2014)....................6, 7
`
`Townshend v. Rockwell Int’l Corp.,
`No. C99-0400SBA, 2000 WL 433505 (N.D. Cal. Mar. 28, 2000) ....................................17, 18
`
`TQ Delta, LLC v. Adtran, Inc.,
`No. 14-cv-954-RGA, 2021 WL 3633637 (D. Del. Aug. 17, 2021) ...........................................9
`
`Winer Fam. Tr. v. Queen,
`503 F.3d 319 (3d Cir. 2007).....................................................................................................10
`
`Zenith Electronics, LLC v. Sceptre, Inc.,
`No. LA CV14-05150 JAK (AJWx), 2015 WL 12765633 (C.D. Cal. Feb. 5,
`2015) ..........................................................................................................................................7
`
`Statues
`
`Fed. R. Civ. P. 9(b) ........................................................................................................................16
`
`Fed. R. Civ. P. 15(a)(2) ....................................................................................................................2
`
`iii
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`I.
`
`INTRODUCTION
`
`Nokia’s Motion to Dismiss HP Inc.’s (“HP”) Counterclaims (D.I. 18, “Motion”) seeks to
`
`dismiss all counterclaims by improperly using patent essentiality as both a sword and shield. In
`
`its Complaint (D.I. 1) against HP, Nokia alleges infringement of ten patents (the “Asserted
`
`Patents”) that Nokia asserts include claims essential to the Asserted Standards.1 Yet in its
`
`Motion to dismiss HP’s Counterclaims2 related to those same ten Asserted Patents (and more),
`
`Nokia argues HP’s claims must be dismissed because HP has not conceded essentiality.3 But HP
`
`is not required to do so in order to assert its Counterclaims. Indeed, Nokia cites no legal
`
`authority in this District or the Third Circuit that requires HP to concede essentiality at the
`
`pleading stage, and courts outside this Circuit have expressly rejected Nokia’s argument.
`
`HP pleads that (1) Nokia alleges in its Complaint that each of the Asserted Patents is
`
`essential to one or both of the Asserted Standards; (2) Nokia filed declarations with the ITU
`
`standard-setting organization (“SSO”) claiming that each Asserted Patent is essential to one or
`
`both of the Asserted Standards; (3) Nokia’s infringement allegations rely almost exclusively on
`
`standard documents; and (4) Nokia represented during multi-year negotiations with HP that its
`
`relevant patent portfolio includes patents essential to the Asserted Standards. This is more than
`
`sufficient for HP to plausibly plead that it is entitled to relief. In making its motion, Nokia asks
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`this Court to ignore Nokia’s actions, statements, and allegations and HP’s counterclaim
`
`allegations, and force HP to conduct an essentiality analysis at the pleading stage, prior to
`
`receiving Nokia’s infringement contentions and without the benefit of fact and expert discovery.
`
`This is contrary to law and should be rejected.
`
`1 As used herein and in HP’s Counterclaims, the H.264 and H.265 Standards released by the
`International Telecommunication Union (“ITU”) are referred to as the “Asserted Standards.”
`2 HP’s counterclaims appear at D.I. 11 at 44-83 (“Counterclaims”).
`3 The Asserted Patents are defined in the Complaint, D.I. 1 ¶ 7.
`
`

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`The Court should also reject Nokia’s arguments related to HP’s counterclaim for a
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`Sherman Act Section 2 antitrust violation. HP pleads that Nokia participated in the
`
`standardization process and advocated for particular technical proposals to be included in the
`
`Asserted Standards, but concealed and delayed disclosure to the ITU SSO that those proposals
`
`were encumbered by Nokia’s patents and/or patent applications, and that these actions
`
`represented an improper monopolization attempt that injured HP. Nokia seeks dismissal of the
`
`Section 2 claim by forcing HP to plead stringent requirements that are not required by Broadcom
`
`v. Qualcomm—the governing law in this District—relying instead on out-of-circuit case law.
`
`Additionally, Nokia misapprehends HP’s definition of the relevant market and seeks dismissal
`
`based on that improper reading.
`
`The Court should deny Nokia’s Motion to Dismiss. To the extent the Court dismisses
`
`any counterclaim, HP requests that the Court grant HP leave to amend such counterclaim(s).
`
`Fed. R. Civ. P. 15(a)(2) (“The court should freely give leave when justice so requires.”).
`
`Because Nokia seeks dismissal on HP’s purportedly deficient pleading of Counts I and III-VII—
`
`not that those counts are improper as a matter of law—any such amendment would not be futile.4
`
`II.
`
`NATURE AND STAGE OF PROCEEDINGS
`
`This litigation is in its early stages. Nokia filed suit on October 31, 2023; HP answered
`
`and alleged counterclaims on December 11, 2023; and Nokia filed the present motion on
`
`February 1, 2024.
`
`HP asserts seven counterclaims against Nokia based on Nokia’s conduct involving its
`
`Asserted Patents. In particular, HP asserts three contract-related counterclaims related to
`
`4 See D.I. 18 at 1 (seeking to dismiss counterclaim counts I and III-VII without prejudice).
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`Nokia—demanding unreasonable royalties for its FRAND5-encumbered Asserted Patents (Count
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`I), unilaterally abandoning negotiations with HP and seeking injunctive relief against willing-
`
`licensee HP (Count II), and failing to negotiate in good faith (Count V). Based on Nokia’s late
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`disclosure of its intellectual property rights to the ITU—including waiting until after the
`
`standards were frozen to identify and declare its patents essential—HP seeks a declaration of
`
`unenforceability (Count III), and asserts a Sherman Act Section 2 antitrust violation claim
`
`(Count IV) and a common law fraud claim (Count VII). HP also counterclaims for a declaration
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`of Nokia’s obligation to license standard-essential patents (“SEPs”) on FRAND terms and
`
`conditions, and a declaration of the FRAND terms and conditions, including rates (Count VI).
`
`III.
`
`SUMMARY OF THE ARGUMENT
`
`1.
`
`HP sufficiently pleads counterclaims I-VII. HP is not required to affirmatively
`
`concede essentiality at the pleading stage where Nokia (1) alleges in its Complaint that each of
`
`the Asserted Patents is essential; (2) has declared each of the Asserted Patents essential to the
`
`Asserted Standards; (3) relies on the Asserted Standards to allege infringement; and (4)
`
`represented during negotiations that the Asserted Patents are essential. Nokia fails to identify
`
`any legal support requiring HP to concede essentiality at the pleading stage. Likewise with
`
`respect to counterclaim III, Nokia additionally does not show that HP is required to prove actual
`
`essentiality at any time, let alone at the pleading stage.
`
`2.
`
`This Court should reject Nokia’s argument that counterclaim II (breach of
`
`contract), which alleges that Nokia unilaterally abandoned negotiations and sought injunctive
`
`relief against a willing licensee, must fail as a matter of law. HP pleads all elements of its breach
`
`5 While HP’s Counterclaims use the term FRAND (“fair, reasonable, and non-discriminatory”)
`and Nokia’s Motion uses the term RAND (“reasonable and non-discriminatory”), there is no
`material difference in these terms for the purposes of Nokia’s Motion.
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`claim, and Nokia fails to identify any legal support sufficient to carry its burden to show that
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`HP’s counterclaims are legally deficient.
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`3.
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`HP sufficiently pleads all elements of a Sherman Act Section 2 antitrust violation
`
`(counterclaim IV) as required by Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir.
`
`2007), the Third Circuit law governing a patent holder’s intentionally false promise to license
`
`essential technology on FRAND terms. The Court should reject Nokia’s arguments that
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`Broadcom is not good law. HP properly pleads anticompetitive conduct with sufficient
`
`particularity and is not required to plead the stringent requirement Nokia demands. Additionally,
`
`the Court should reject Nokia’s misapprehension of HP’s definition of the “relevant market.”
`
`IV.
`
`STATEMENT OF FACTS
`
`SSOs develop standards to increase interoperability and encourage innovations that lead
`
`to an increase in competition and improved products for consumers. See Counterclaims, D.I. 11
`
`¶¶ 15-17. Standards are created based on proposals from SSO members and other stakeholders,
`
`which are either accepted and included within the standard, or rejected in favor of alternatives (or
`
`the functionality is not included at all). So-called “lock-in” is a major concern of SSOs because
`
`once a proposal is incorporated into a standard, the alternatives to perform the functions are no
`
`longer viable substitutes, and SEP owners can seek to exclude implementers from practicing the
`
`entire standard, not merely the claimed invention. Id. ¶ 17. This lock-in effect allows SEP
`
`owners to demand supra-competitive royalties that are not tied to the value of the invention
`
`(“hold-up”).
`
`A common method to prevent hold-up is to require SSO members participating in the
`
`standardization process to declare that the member has intellectual property rights (“IPR”) that
`
`cover the proposed technology, so that the SSO (and its members) can consider the technical
`
`merit of the proposal as well as the potential implications of incorporating technology into the
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`standard that is encumbered by IPR. Id. ¶¶ 18-21. The SSO relevant to this dispute, the ITU-T,
`
`has a Common Patent Policy that governs SSO members’ obligations. Id. ¶¶ 22-27, Exs. A-B.
`
`Nokia asserts in the Complaint that all Asserted Patents are essential to the Asserted
`
`Standards. See Compl., D.I. 1 ¶¶ 65, 83, 104, 130, 153, 175, 198, 221, 244, 268. Additionally,
`
`Nokia has declared to the ITU-T the patents are or may be essential to the Asserted Standards
`
`and has represented to HP during multi-year negotiations that Nokia’s patent portfolio includes
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`numerous essential patents to the Asserted Standards. As outlined in HP’s Counterclaims,
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`however, Nokia waited until after the Asserted Standards were frozen before informing the ITU-
`
`T about the patents’ purported essentiality, violating the ITU-T’s Common Patent Policy and
`
`injuring HP and others. See Counterclaims, D.I. 11 ¶¶ 28-99. Once the Asserted Standards were
`
`frozen, and allegedly incorporated, at Nokia’s urging, Nokia’s patented technology, Nokia
`
`sought grossly excessive rates that reflected the value of the standard as a whole, rather than the
`
`ex ante value of the alleged inventions. See, e.g., Counterclaims, D.I. 11 ¶¶ 2-3, 5, 100-113,
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`118-119, 143. When HP refused to pay royalties that exceeded the FRAND rate Nokia
`
`contractually obligated itself to offer, Nokia began a worldwide litigation campaign to exclude
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`HP from the market through injunctions (including on an ex parte basis) in Brazil and the
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`Unified Patent Court in Germany. See, e.g., Counterclaims, D.I. 11 ¶¶ 4, 124-127, 145, 148.
`
`V.
`
`ARGUMENT
`
`A.
`
`Legal Standard
`
`In evaluating a motion to dismiss, “courts separate the factual and legal elements of a
`
`claim, accepting all of the complaint’s well-pleaded facts as true, but [disregarding] any legal
`
`conclusions.” Fairchild Semiconductor Corp. v. Power Integrations, Inc., 935 F. Supp. 2d 772,
`
`775 (D. Del. 2013) (brackets in original, citations and internal quotation marks omitted). “This
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`first step requires courts to draw all reasonable inferences in favor of the non-moving party.” Id.
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`(citations omitted). Courts also determine “whether the facts alleged in the complaint are
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`sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Id. (citations omitted). “A
`
`claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw
`
`the reasonable inference that the defendant is liable for the misconduct alleged.’” Klotz v.
`
`Celentano Stadtmauer & Walentowicz LLP, 991 F.3d 458, 462 (3d Cir. 2021). The moving party
`
`“bears the burden of demonstrating that the [non-movant] has not stated a claim upon which
`
`relief can be granted.” Arbutus Biopharma Corp. v. Moderna, Inc., 638 F. Supp. 3d 397, 403 (D.
`
`Del. 2022).
`
`B.
`
`HP Need Not Concede Standard Essentiality at the Pleading Stage
`(Applicable to Counts I-VII)6
`
`Nokia’s primary argument for dismissal is based on the mistaken premise that, to raise
`
`SEP-related claims, HP must affirmatively plead or concede that Nokia’s Asserted Patents are
`
`essential to the Asserted Standards. But this is not the law, and Nokia does not cite any
`
`authority—from this District or elsewhere—suggesting otherwise.
`
`Indeed, Nokia’s argument has been expressly rejected in other cases. For example, in
`
`TCL v. Ericsson, SEP owner Ericsson moved to dismiss a similar claim by TCL. See TCL
`
`Commc’ns Tech. Holdings Ltd. v. Telefonaktenbologet LM Ericsson, No.
`
`SACV1400341JVSANX, 2014 WL 12588293 (C.D. Cal. Sept. 30, 2014). Ericsson argued that,
`
`to assert a claim against Ericsson for breach of an agreement to license SEPs on FRAND terms,
`
`6 Nokia argues that this issue is “fatal to all of its counterclaims.” Opening Br., D.I. 19 at 7 n. 4.
`Nokia makes this argument with respect to Counts I-II and V (id. at 5-7), Count VI (id. at 8),
`Count III (id.), Count IV (id. at 11). Nokia seeks to dismiss Count VI as “derivative of HP’s
`contract-based claims” and because the claim “is predicated on those patent claims that are
`essential to a standardized technology,” but Nokia does not identify any argument unique to this
`claim. Opening Br., D.I. 19 at 8. Nokia does not make any specific arguments with respect to
`Count VII, but states in footnote 8 that common law fraud is “premised on the same theories” as
`other counts, and, as such, Nokia appears to argue that this issue is relevant to Count VII as well.
`Id. at 12-13 n.8
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`TCL was required to concede in the complaint that Ericsson’s patents were essential to the
`
`standards at issue. Id. at *4. In rejecting Ericsson’s argument and declining to dismiss TCL’s
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`breach of contract claim, the court agreed that TCL’s allegations were sufficient where TCL
`
`alleged that Ericsson had a contractual obligation to license its patents on FRAND terms because
`
`Ericsson represented that the patents were standard essential. See id. Importantly, the court
`
`found “no reason why TCL cannot put forth the argument that TCL’s patents are not standard
`
`essential while reserving the right to pay the FRAND rate should the Court ultimately determine
`
`otherwise.” Id. Moreover, the court noted that the Federal Rules of Civil Procedure expressly
`
`permit a party to plead in the alternative. Id. at *4 n. 3 (citing Fed. R. Civ. P. 8(d)). The Central
`
`District of California reached a similar result in Zenith Electronics, LLC v. Sceptre, Inc., No. LA
`
`CV14-05150 JAK (AJWx), 2015 WL 12765633, at *3-4 (C.D. Cal. Feb. 5, 2015) (denying
`
`motion to dismiss breach of contract claim where defendant alleged that the patents were
`
`“purportedly” or “allegedly” essential, establishing a defense challenging the essentiality of the
`
`patents-in-suit while maintaining breach claim).7
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`Here, “HP brings these counterclaims based on Nokia’s refusal to offer a license to its
`
`alleged standard-essential patents” on FRAND terms, “breaching its contractual obligations
`
`made through its…participation and membership in the International Telecommunication
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`7 Regardless, Nokia’s declarations to the ITU state that Nokia “is prepared to grant a license to
`an unrestricted number of applicants on a worldwide, non-discriminatory basis and on reasonable
`terms and conditions…,” and this declaration is made because Nokia “believe[d] that it holds
`granted and/or pending applications for [P]atents, the use of which would be required to
`implement the” identified Asserted Standard. See, e.g., Counterclaims, D.I. 11, Exs. D at 1-2, F
`at 1-2, G at 1-2, H at 1-2, I at 1-2, J at 1-2. Because HP “may plead claims or defenses in the
`alternative or ones that are consistent with one another,” CrowdStrike, Inc. v. NSS Labs, Inc., No.
`CV 17-146 (MN), 2018 WL 6716094, at *3 (D. Del. Dec. 21, 2018) (citing Indep. Enters. v.
`Pittsburgh Water & Sewer Auth., 103 F.3d 1165, 1175 (3d Cir. 1997)), HP need not establish or
`assert actual essentiality at the pleading stage.
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`Union.” Counterclaims, D.I. 11 ¶ 1 (emphasis added). HP also asserts that Nokia (and its
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`parent, Nokia Corporation) was involved in developing the Asserted Standards, and as part of its
`
`participation in setting the standards and efforts seeking patent protection, that it expressly
`
`disclosed the Asserted Patents as essential or potentially essential to the ITU-T. See id. ¶¶ 28-35,
`
`41, 47, 53, 55, 61, 67, 69, 75, 81, 87, 93, 99. HP also describes its negotiation with Nokia in
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`which Nokia represented that the relevant portfolios (which include the Asserted Patents)
`
`consisted of patents essential to the Asserted Standards. Id. ¶¶ 100-113. Nokia’s Motion would
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`have the Court ignore these well-pleaded allegations.
`
`Nokia’s own Complaint alleges essentiality of the Asserted Patents to the Asserted
`
`Standards as a basis for its claims. Compl., D.I. 1 ¶¶ 65 (“Because at least Claim 7 of the ’808
`
`patent is essential to the H.264 Standard, the Accused Products’ incorporation of the H.264
`
`Standard infringes at least Claim 7 of the ’808 patent.”) (emphasis added), 83 (’134 patent), 104
`
`(’818 patent), 130 (’714 patent), 153 (’267 patent), 175 (’991 patent), 198 (’321 patent), 221
`
`(’469 patent), 244 (’599 patent), 268 (’273 patent). Likewise, Nokia alleges infringement of
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`each of the Asserted Patents by relying almost exclusively on citations to standard documents for
`
`the Asserted Standards. See generally, Compl., D.I. 1, Exs. 12-20, 22. Nokia further describes
`
`its purported “Investment in Video Coding Standards and Resulting Patents” (Compl., D.I. 1
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`¶¶ 16-24) (emphasis added) and its purported “Compliance with the ITU Common Patent
`
`Policy and Nokia’s Relevant Declarations” (id. ¶¶ 25-38) (emphasis added). Nokia represented
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`to HP during the years-long negotiation that preceded this litigation that it has many patents,
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`including the Asserted Patents and their family members, that are essential to the Asserted
`
`Standards. For example, Nokia provided HP with claim charts that purportedly showed
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`infringement of Nokia’s patents based on HP’s products implementing the Asserted Standards.
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`None of Nokia’s cited cases supports dismissal of HP’s claims at the pleading stage.
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`Nokia cites two opinions at the summary judgment stage in which summary judgment was
`
`granted for insufficient evidence following discovery, not based on simply pleading essentiality.
`
`See Opening Br., D.I. 19 at 6 (citing Koninklijke KPN N.V. v. Sierra Wireless, Inc., No. 17-cv-
`
`90-LPS, 2020 WL 1891454, at *2 (D. Del. Apr. 16, 2020)8; 3G Licensing, S.A. v. HTC Corp.,
`
`No. 1:17-cv-00083-LPS (D. Del. Oct. 2, 2020), D.I. 489 at 7). In 3G Licensing, a case quoted by
`
`Nokia, the court emphasized the factual, merits-based nature of the essentiality determination:
`
`“essentiality depends on objective findings, i.e., whether practicing the relevant standard in fact
`
`infringes the asserted patents and whether non-infringing alternatives in fact exist.” 3G
`
`Licensing, D.I. 489 at 7 (emphasis in original); see also Opening Br., D.I. 19 at 6 n. 3. And TQ
`
`Delta is inapplicable here, as it involved the timing of disclosing infringement allegations based
`
`on essentiality in contentions and expert reports, not the sufficiency of a pleading. TQ Delta,
`
`LLC v. Adtran, Inc., No. 14-cv-954-RGA, 2021 WL 3633637, at *3 (D. Del. Aug. 17, 2021).
`
`Finally, Nokia cites to a portion of a hearing transcript in u-blox v. Interdigital (S.D. Cal. Aug. 9,
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`2023), but the court’s comments there did not form the basis of its ultimate ruling. Opening Br.,
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`D.I. 19 at 6-7. Indeed, not only did that case involve a different issue, but Nokia is effectively
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`asking this Court to allow it to “have it both ways” by pleading essentiality and relying on
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`standards for alleging and proving essentiality, while preventing HP from asserting non-
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`essentiality and non-infringement. None of Nokia’s legal authority supports such a result.
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`8 The defendant in Sierra Wireless did not affirmatively assert in its counterclaims that KPN’s
`patent was, in fact, essential to the standard, instead referring in its counterclaims to statements
`SEP owner KPN itself made that the patent was essential. See generally Koninklijke KPN N.V. v.
`Sierra Wireless, Inc., No. 17-cv-90-LPS (D. Del. June 2, 2017), D.I. 16 (redacted answer and
`counterclaims).
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`Case 1:23-cv-01237-GBW Document 20 Filed 02/15/24 Page 14 of 24 PageID #: 2030
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`C.
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`ITU-T Language Does Not Bar HP’s Breach of Contract Claim (Nokia
`Seeking Injunctions and Unilaterally Abandoning Negotiations) (Applicable
`to Count II)
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`The Court should reject Nokia’s argument (Opening Br., D.I. 19 at 7) that HP’s breach of
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`contract claim, arising from Nokia seeking injunctive relief and unilaterally abandoning
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`negotiations with willing-licensee HP (Count II), fails as a matter of law. As the moving party,
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`Nokia has the burden to show that HP’s breach of contract claim is legally foreclosed, but the
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`sole case upon which Nokia relies does not support its position.9 The Federal Circuit in Apple v.
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`Motorola merely stated that there is no per se rule against injunctions for infringement of SEPs.
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`757 F.3d 1286, 1331 (Fed. Cir. 2014). Apple does not stand for the proposition that an SEP
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`owner unilaterally terminating negotiations and pursuing injunctive relief to obtain supra-
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`FRAND royalties—as Nokia has done here—cannot, as a matter of law, give rise to a breach of
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`contract claim.10
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`HP sufficiently pleads its breach claim by alleging that (1) Nokia entered into an express
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`or implied contract11 with ITU-T and with third-party beneficiaries, such as HP (Counterclaims,
`
`9 In addition to one legal opinion, Nokia cites to the 2019 Policy Statement on Remedies for
`Standards-Essential Patents Subject to Voluntary F/RAND Commitments, Opening Br., D.I. 19 at
`10-11 n. 7. First, this document was not referenced in the Counterclaims and should not be
`considered on a motion to dismiss. See Winer Fam. Tr. v. Queen, 503 F.3d 319, 327 (3d Cir.
`2007). But even if it may be considered, this policy statement is irrelevant—it was expressly
`withdrawn on June 8, 2022 by the Department of Justice, the U.S. Patent and Trademark Office,
`and the National Institute of Standards and Technology. See
`https://www.uspto.gov/sites/default/files/documents/SEP2019-Withdrawal.pdf.
`10 Indeed, the injunction factors outlined in eBay are fact-intensive and are frequently unsuitable
`for a determination at the pleading stage. eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006)
`(citing Roche Products v. Bolar Pharm. Co., 733 F.2d 858, 865 (Fed. Cir. 1984) (recognizing the
`“considerable discretion” district courts have “in determining whether the facts of a situation
`require it to issue an injunction”)).
`11 Nokia declared to ITU-T that it “is prepared to grant a license to an unrestricted number of
`applicants on a worldwide, non-discriminatory basis and on reasonable terms and conditions…”
`See, e.g., Counterclaims, D.I. 11 at Ex. E (emphasis added). To date, Nokia has failed to provide
`an offer to a license “on a worldwide, non-discriminatory basis and on reasonable terms and
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`Case 1:23-cv-01237-GBW Document 20 Filed 02/15/24 Page 15 of 24 PageID #: 2031
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`D.I. 11 ¶¶ 122-123; see also id. ¶¶ 22-99); (2) Nokia breached and continues to breach its
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`contractual obligations by unilaterally terminating pre-suit negotiations with HP and refusing to
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`provide a FRAND-compliant royalty rate to HP and instead seeking injunctive relief (including
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`in international jurisdictions and on an ex parte basis) against willing licensee HP (id. ¶¶ 124-
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`125; see also id. ¶¶ 100-113); and (3) HP has been injured by Nokia’s conduct (id. ¶¶ 126-127).
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`These allegations set forth a cognizable claim for breach of contract.
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`D.
`
`Nokia’s Arguments Against HP’s Unenforceability Counterclaim Similarly
`Fail (Applicable to Count III)
`
`Nokia argues that HP’s request for a declaration of unenforceability of the Asserted
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`Patents as to the Asserted Standards fails because HP does not plead or concede that those
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`patents are essential to those standards. Nokia’s argument fails for the reasons identified above,
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`as HP was not required to so plead or concede.
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`As HP alleges in its counterclaims, “Nokia purports to own patents that are essential to
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`the Asserted Standards,” and the ITU Guidelines for Implementation of the Common Patent
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`Policy for ITU-T/ITU-R/ISO/IEC (see Counterclaims, D.I. 11 at Ex. B) requires disclosure to
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`ITU-T “from the outset” when the patents “may relate to Recommendations | Deliverables under
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`development.” Id. ¶¶ 6, 19 (“prompt disclosure of members’ IPR, including any IPR that may be
`
`included in a technical proposal or that may be incorporated into the specification of the standard
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`in development”); id. at Ex. B, §§ 1, 3.12 Thus, HP alleges a duty of disclosure because the
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`Asserted Patents are purported by Nokia to be “essential to the Asserted Standards,” and thus,
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`are patents that “may be incorporated into the specification of the standard.” See Qualcomm Inc.
`
`v. Broadcom Corp., 548 F.3d 1004, 1018 (Fed. Cir. 2008) (analyzing the ITU-T’s and MPEG’s
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`conditions.” See Counterclaims, D.I. 11 ¶¶ 2-5, 100-113. There is a factual and legal dispute
`whether Nokia offered a FRAND-compliant offer to HP.
`12 While Core Wireless involved ETSI, the ITU policy