Failure to Disclose Patents to a Standards-Setting Organization Can Impair Enforceability of the Patents

Qualcomm Incorporated v. Broadcom Corporation, [2007-1545, 2008-1162] (December 1, 2008) [PROST, Mayer, Lourie] The Federal Circuit affirmed the district court’s determinations that Qualcomm had a duty to disclose the asserted patents to the JVT, that it breached this duty, but vacated the unenforceability judgment and remanded with instructions to enter an unenforceability remedy limited in scope to H.264-compliant products.
DISCUSSION: By failing to disclose relevant intellectual property rights (“IPR”) to an SSO prior to the adoption of a standard, a “patent holder is in a position to ‘hold up’ industry participants from implementing the standard. Industry participants who have invested significant resources developing products and technologies that conform to the standard will find it prohibitively expensive to abandon their investment and switch to another standard.” In order to avoid “patent hold-up,” many SSOs require participants to disclose and/or give up IPR covering a standard. The case turned on four issues: (1) Existence of Disclosure Duty: Did Qualcomm, as a participant in the JVT, have a duty to disclose patents to the JVT prior to the release of the H.264 standard in May 2003; (2) Scope of Disclosure Duty: If so, what was the scope of its disclosure duty; (3) Breach: Did Qualcomm breach its disclosure duty by failing to disclose the ’104 and ’767 Patents; and (4) Remedy: If so, was it within the district court’s equitable authority to enter an unenforceability remedy based on the equitable defense of waiver in the SSO context? LOF: The existence of a disclosure duty is a legal question with factual underpinnings. The Federal Circuit agreed that Qualcom had a duty. As to the scope of that duty, the Federal Circuit also agreed that JVT participants only had to disclose patents that “reasonably might be necessary” to practice the H.264 standard. The Federal Circuit also agreed that Qualcom had violated this standard, but disagreed that as a result the patents should be completely unenforceable. Instead, the Federal Circuit limited the unenforceability to all current and future H.264-compliant products.