Arbitration Ordered in Cellular Patent Fight

     SAN FRANCISCO (CN) – A federal judge has granted a wireless company’s request to compel arbitration over claims that it failed to license standard-essential patents on fair and reasonable terms.
     Asus Computer International sued Interdigital Communications Inc. and its subsidiaries in April this year for allegedly “monopolizing cellular markets,” engaging in unfair competition and breaching a 2008 agreement.
     Both companies are members of standard-setting organizations (SSOs), which require entities that integrate patented technologies into technical standards to license those patents on fair, reasonable and nondiscriminatory terms.
     The SSOs establish technical standards that universalize compatibility, such as allowing cellphones made by different companies to communicate with one another.
     In 2008, both companies signed a patent license agreement and continued to negotiate the licensing of other wireless standard-essential patents. However, Asus claims Interdigital broke the law by failing to license the patents at fair and reasonable terms in the contract and in later negotiations.
     Because contract disputes are subject to an arbitration clause, Interdigital filed arbitration claims against Asus in June and asked the judge to compel arbitration.
     In turn, Asus filed a motion for preliminary injunction to stop Interdigital from proceeding with arbitration.
     U.S. District Judge Beth Labson Freeman found that six of Asus’ seven claims against Interdigital were subject to arbitration because they directly involved the 2008 agreement.
     However, the judge also ruled that Asus’ third cause of action for breach of contract based on Interdigital’s alleged refusal to license patents not covered under the 2008 agreement at reasonable terms were not subject to arbitration.
     “The parties’ negotiation for unlicensed patents involves a separate business transaction and defendants’ assertion of arbitrability is wholly groundless,” Freeman wrote in the Sept. 4 ruling.
     Freeman denied Asus’ motion for a preliminary injunction to stop arbitration and stayed further proceedings in the case until an arbitrator’s decision is rendered on the six claims against Interdigital.

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