Published: 1/1/13
The plaintiff in this case, Realtek, a manufacturer of Wi-Fi chips, asserted that LSI, a holder of two FRAND-encumbered Wi-Fi SEPs breached its FRAND obligation by seeking an exclusion order (the equivalent of an injunction) against the importation of Realtek’s Wi-Fi chips and sought an order barring LSI from seeking to enforce or enforcing any injunctive relief against Realtek based on those SEPs. Realtek also asserted that proffer of a FRAND license was “inherently unreasonable because it reflects the total value of the end product rather than the value of the component parts that Realtek supplies, and would require Realtek to pay a royalty that exceeds the selling price of Realtek’s products.” The court held that LSI’s “act of seeking injunctive relief (here, at the ITC before proposing a RAND license to Realtek) is inherently inconsistent and a breach of defendants’ promise to license the patents on RAND terms.” The court granted Realtek a preliminary injunction barring LSI from enforcing any exclusion order that it might obtain against Realtek with respect to the two SEPs.
The case was subsequently tried before a jury, which made the FRAND determination after being instructed by the court to “(1) “compar[e] the technical contribution of the two LSI patents to the technical contributions of other patents essential to the standard,” and (2) “consider the contribution of the standard as a whole to the market value of Realtek’s products utilizing the standard.” The jury established a royalty of 0.19% of the selling price of Realtek’s Wi-Fi chips, or an estimated US$0.0019 to US$0.0033 per chip, as compared to LSI’s initial demand for a royalty exceeding the $1-1.75 price of Realtek’s Wi-Fi chips.