Lenovo and Motorola filed a complaint against InterDigital Communications (IDC) in the Delaware District Court claiming their patents are inhibiting Lenovo and Motorola from reaching industry-wide cellular standards. Lenovo and Motorola Mobility are represented by Morris, Nichols, Arsht & Tunnell. While the suit concerns patents, it accuses IDC of violating the Sherman Antitrust Act.
The plaintiff mobile phone manufacturers claim InterDigital refused to license its patents, essential for 3G and 4G cell phones, under fair licensing obligations despite offers to pay tens of millions of dollars. They claim IDC demanded excessive royalties for use of their patents and discriminated against the plaintiffs’ licensing demands due to their relatively smaller size compared to others in the industry. “IDC’s actions have injured competition by excluding alternative technologies and imposing unjustified costs on Plaintiffs and other companies that are consumers of the technologies,” the complaint says.
The cellular standards discussed in the complaint were developed through the Third Generation Partnership Project; the complaint says these standards are used by a large majority of the telecommunications industry and need to be met in order “to be commercially viable.” The complaint explains these standards and the patents needed to reach the standards are “locked in” which gives patent owners the ability to exclude companies from being able to reach the standard or raise the cost of reaching the standards, causing a “hold-up.” Lenovo and Motorola claim Interdigital has been doing this at their expense through agreements with competitors and claims their patents are essential to reaching the cellular standards.
“IDC’s scheme has harmed, and continues to threaten further harm to, competition in the market for wireless devices compliant with the Cellular Standards, Plaintiffs and other makers of such devices, and consumers,” the complaint claims. “IDC has secured market power in the Relevant Technology Markets as a holder of a portfolio of an unknown number of patents that are essential to the Cellular Standards and IDC has obtained the power to control prices in the Relevant Technology Markets. IDC has wielded that power to extract monopoly rents from implementers of the Cellular Standards through many means, including the threat of injunctions that would exclude implementers from the entire wireless telecommunication market.”
The complaint alleges that their portfolio is “artificially inflated” and includes patents that have no use and are not essential to reaching the Cellular Standards, but they are using them to raise the cost of using the necessary patents. They also allege IDC is dividing its portfolio in order to “double-dip” in royalties from businesses implementing the Cellular Standards.