The Pompatus of Silence

After the most recent decision in Qualcomm Inc. v. Broadcom Corp., patent law may need a new word^[1] to describe the specific consequences of silence in the face of a duty to disclose patents while participating in a standards-setting organization ("SSO").  Such silence by the patent holder in Qualcomm-along with some genuinely shocking litigation shenanigans-resulted in the Federal Circuit finding an implied waiver of patent enforceability against those practicing the standard set by the SSO. The Qualcomm court also looked to evidence of Qualcomm's pre-suit business misconduct to affirm an award of §285 "exceptional case" attorneys fees. Though the Federal Circuit had previously disallowed consideration of pre-suit conduct, here it said the evidence served as a predicate for understanding and evaluating other litigation and trial misconduct.

Ooo eee baby, that don't sound like a good time.

The patents at issue in Qualcomm covered video compression technology.  Patent holder Qualcomm brought a suit against Broadcom alleging patent infringement. Broadcom's affirmative defense claimed the Qualcomm's participation in the Joint Video Team (JVT) SSO-whose purpose was to develop "a simple royalty free baseline profile" for industry members-made the patents unenforceable.

Throughout the litigation and trial, Qualcomm claimed it had not participated in setting the relevant standard (known as H.264) and that it had no responsive relevant evidence.  However, on the last day of trial, the testimony of a Qualcomm witness led to the discovery of more than 200,000 pages of additional e-mail and other documentary evidence.  This previously undisclosed information showed that Qualcomm had fully participated in setting the H.264 standard and that it had intentionally shielded its patents from the SSO so that it could later obtain royalties from products that complied with the standard. (Qualcomm's efforts regarding concealment of the evidence also resulted in multiple sanctions for its trial team and generated other oft-cited opinions).

Because Qualcomm allowed the standard to be developed using technologies covered by its patents, the Federal Circuit found that equity required that the patents be rendered unenforceable against those using the standard "until the misuse is purged"-a lessening of the consequence ordered by the district court which had held the patents unenforceable "against the world."  The Qualcomm court used implied waiver as the specific doctrine for its order because it found that Qualcomm had breached a duty (both explicit and as understood by the participants of the SSO under Rambus) to disclose its relevant technology.

Note that the Federal Circuit had no time for Qualcomm's argument that consideration of Broadcom's affirmative defense regarding enforceability was improper because the jury had returned a verdict of non-infringement.  Given the right circumstances, savvy defendants can use Qualcomm's teachings to gain considerable leverage in a case, including posturing for settlement.  By persisting in an unenforceability defense (even when there's a finding of non-infringement) a defendant can convey to the patent owners that it faces exposure beyond a finding of non-infringement.

Qualcomm's consideration of pre-suit conduct in its award of attorney's fees to Broadcom also offers a framework for getting courts to look at events that occur before the litigation as evidence.  By linking such pre-litigation bad conduct to misconduct that occurs during the trial, litigants may be able to create a compelling picture that what happened at trial is the culmination of a coordinated practice of bad conduct by a bad actor.  With Qualcomm, both the patent and the patent holder then become the joker and both must face the music.