The US Department of Justice, Antitrust Division, and the US Patent and Trademark Office (USPTO) recently filed a Statement of Interest in the case of Radian Memory Systems, LLC v. Samsung Electronics Co.
Radian is a patent infringement case pending in the United States District Court for the Eastern District of Texas.
It’s unusual for the US government to file a Statement of Interest in a patent case, and it’s not clear why they did so in this relatively obscure case.
According to Law360,
The patent assignment records list Radian as the assignee, followed by the address of Fortress Investment Group’s New York headquarters.
The nominee for USPTO director, John Squires, helped form the multibillion-dollar intellectual property arm of Fortress. Squires has claimed that he hasn’t worked with the group since 2016 or 2017, but the relationship has been repeatedly questioned, including at his nomination hearing and again in written comments from Senate Judiciary Committee members.
As the Statement explains, Radian filed a complaint for patent infringement against Samsung Electronics. In its motion for a preliminary injunction, Radian alleged that it developed and patented an innovative technology to improve management of flash solid-state drives (SSDs), particularly for use in enterprise and data-center operations.
Radian is a “non-practicing entity” (NPE) – i.e., a business that doesn’t manufacture items using the patents it owns. However, it claims to have tried.
The Statement says that,
According to Radian, despite its best efforts to participate in the market before its patents issued, Samsung and other market participants iced Radian out of the industry using standards-development efforts. … Specifically, Radian alleges that Samsung—a top-tier member of NVM Express (NVMe), which was developing standards in the SSD space—organized others in the industry to try to pressure Radian to join; however, Radian refused due to NVMe’s policies that would have required Radian to grant royalty-free licenses of its patented technology to other members. … Following Radian’s decision not to join NVMe, Radian alleges that the members (including Samsung) began infringing upon Radian’s patented technology.
Injunctions are generally only granted in patent infringement cases if the patent owner will suffer irreparable harm that can’t be addressed with monetary damages.
Radian claims that it will continue to suffer irreparable harm due to loss of both market opportunities, including potential deals with existing and prospective customers, and market position as a technology pioneer, since it’s unable to compete with Samsung in the market by licensing its technology to Samsung and others on Radian’s own terms.
According to the Statement, the court should
evaluate the possibility of irreparable harm under traditional equitable principles. Under those principles, an ongoing patent infringement would, in many cases, result in irreparable harm based on the inadequacy of a monetary remedy, which can be difficult to calculate accurately. This position treats patents in this specific context like other unique assets that are difficult to value, making damages hard and costly to calculate. And it permits the same remedy—an injunction—to prevent an ongoing violation of rights in a unique asset regardless of who owns the asset. Radian’s claims of injury to its market opportunities and position may support a likelihood of irreparable harm because these claims (to the extent supported by evidence) may support a conclusion that monetary damage—an ongoing reasonable royalty—would be difficult and expensive to calculate.
The government alleged that infringement of an NPE’s patent can cause irreparable harm, noting that the US Supreme Court had held that “[s]uch patent holders may be able to satisfy the traditional four-factor test” and should not be “categorically den[ied] . . . the opportunity to do so.”
The Supreme Court had noted that
some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves.
The Statement concluded:
Adopting a broader rule that suggests irreparable harm is an insurmountable burden for a patentee that relies solely on licensing would affect the patentee’s ability to seek not only preliminary but also permanent injunctive relief. When damages are costly and fraught with significant uncertainty, an injunction can shift the burden of determining costs from the court to the parties.
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