By Asher Lowenstein – Edited by Saukshmya Trichi
The US International Trade Commission ("ITC") has initiated an investigation into possible infringement of Nvidia’s graphics processing units ("GPU") patents by Samsung and Qualcomm. Nvidia claims that Samsung infringes seven of its GPU patents that are purportedly embodied in Samsung products, including Galaxy Note Edge, Galaxy Note 4, Galaxy S4, and Galaxy S5. If ITC finds that the patents were infringed, it could enjoin importation of all such phones into the US. In September, Nvidia also filed an infringement lawsuit in the District of Delaware. Law360 reporting this development lists the patents in question.
Tech firms have been pursuing such claims with the ITC because it is a potentially lucrative alternative to seeking an injunction from courts against the alleged infringer. Since the Supreme Court’s 2006 eBay decision, there has been uncertainty on the firms' ability to obtain injunctive relief. Such relief is greated in equity, and eBay requires courts to consider “the balance of hardships between the plaintiff and defendant.” See eBay Inc. v. MercExchange L.L.C., 547 U.S. 388, 391 (2006). This imposes a higher standard for a patent holder to establish a case for injunction, especially where the alleged infringing products are already in the market, because an injunction would result in a significant loss of revenue as well as exclude competition. However, the Federal Circuit has held that ITC is not necessarily bound by the eBay injunction test. It observed that the legislative intent appears to offer injunctions as a mandatory statutory remedy under Section 337, and thus that irreparable harm isn’t a relevant factor for determination. See Spansion, Inc. v. ITC, 629 F.3d 1331, 1359 (Fed. Cir. 2010).
The advantage of approaching the ITC in such cases is its faster procedural pace over the courts. This is of great relevance in the smartphone market, where a product might last only a couple of years before it is replaced with upgraded models. An injunction in a civil lawsuit granted after several years of litigation would not be strategically viable.
The ITC also emphasizes that “public interest favors the protection of intellectual property rights.” See San Huan New Materials High Tech, Inc. v. ITC, 161 F.3d 1347, 1363 (Fed. Cir. 1998). Under § 337 (the ITC is required to consider public interest factors, enumerated as – 1) public health and welfare, 2) competitive conditions in the US economy, 3) production of like and competitive products in the US and 4) US consumers. See Spansion, 629 F.3d at1359. In practice, ITC rarely withholds an exclusion order because of public interest factors. The Federal Circuit considering the legislative history of § 337 has held that “as long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337.” InterDigital Communications, LLC v. International Trade Com'n, 707 F.3d 1295, 1304 (2013).
In its complaint, Nvidia briefly addresses the public interest factors ITC must consider. After making clear that are no public health or safety concerns, Nvidia argues that the requested injunction of Samsung products “would not offend the public interest” because consumers would be able to purchase similar products from other manufacturers. Inv. No. 337-TA-932, Public Interest Statement of Nvidia Corp. at 2. Those manufacturers would be able to produce substitutes for Samsung products in a commercially reasonable time. Id. at 3. The injunction would not impact consumers, who can purchase other products. Id. at 4.
Recently, ITC has been criticized for its lax approach to granting injunctions, in contrast to federal courts. See Colleen V. Chien & Mark A. Lemley, Patent Holdup, the ITC, and the Public Interest, 98 Cornell L. Rev. 1. The investigation of Samsung’s popular smartphones could be an opportunity for ITC to broaden its definition of public interest factors. Samsung smartphones currently account for about 30% of smartphones in the US, which might render unrealistic Nvidia's claim that removing Samsung smartphones would not impact market competition and consumer choices. It might also be overly simplistic to say, without investigating the practical ramifications on Samsung and the smartphone market, that Samsung could just choose to pay for the patents. Even if ITC does grant the injunction, the case could have far-ranging implications for future investigations if ITC pays more attention to public interest arguments against injunction.