Nokia Corp. v. InterDigital, Inc., (2nd Cir. 2008)
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08-1642-cv
Nokia Corp. v. InterDigital, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to summary orders filed
after January 1, 2007, is permitted and is governed by this court's Local Rule 32.1 and Federal
Rule of Appellate Procedure 32.1. In a brief or other paper in which a litigant cites a summary
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summary order must serve a copy of that summary order together with the paper in which the
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At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York,
on the 31st day of July, two thousand and eight.
PRESENT:
HON. RICHARD C. WESLEY,
HON. PETER W. HALL,
Circuit Judges,
HON. JOHN G. KOELTL, District Judge.* NOKIA CORPORATION, Plaintiff-Appellee, v. 08-1642-cv INTERDIGITAL, INC., INTERDIGITAL COMMUNICATIONS, LLC, INTERDIGITAL TECHNOLOGY CORPORATION, Defendants-Appellants. Appearing for Plaintiff-Appellee: PATRICK J. FLINN , Alston & Bird L.L.P., Atlanta, Georgia (John D. Haynes, Matthew D. Richardson, William R. Hubbard, Alston & Bird L.L.P., Atlanta, Georgia, Alan Mark Kanzer, Alston & Bird L.L.P., New York, New York, Paul F. Brinkman, Alston & Bird L.L.P., Washington, D.C., on the brief).
Appearing for Defendants-Appellants: DONALD R. DUNNER, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, D.C. (Allen M. Sokal, Kara F. Stoll, Molly R.
Silfen, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, D.C., Glenn C.
Colton, James D. Metzger, Wilson Sonsini Goodrich & Rosati, P.C., New York, New York, on the brief).
Appeal from the March 23, 2008 order of the United States District Court for the Southern District of New York (Batts, J.) granting Plaintiff-Appellee's motion for a preliminary injunction, enjoining Defendants-Appellants from participating in the investigation of Plaintiff-Appellee being conducted by the International Trade Commission and requiring Defendants-Appellants to submit to arbitration.
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the order be and it hereby is REVERSED.
Defendants-Appellants (collectively, "InterDigital") appeal from the district court's grant of Plaintiff-Appellee's motion for a preliminary injunction. We assume the parties' familiarity with the facts, the procedural history, and the issues on appeal.
To prevail on a motion for preliminary injunctive relief, a party must show (1) a likelihood of irreparable harm, and (2) "either a likelihood of success on the merits or sufficiently serious questions going to the merits to make them a fair ground for litigation, with a balance of hardships tipping decidedly in the movant's favor." Doninger v. Niehoff, 527 F.3d 41, 47 (2d Cir. 2008). The district court granted Nokia's motion for preliminary injunctive relief because it found that (1) Nokia had shown that it was likely to succeed on its claim that its dispute with InterDigital was arbitrable, and (2) Nokia would be irreparably harmed if it were unable to exercise its right to arbitrate. We review the district court's ruling for abuse of discretion. Lusk v. Vill. of Cold Spring, 475 F.3d 480, 484 (2d Cir. 2007).
Upon reviewing the record of the multiple proceedings involving Nokia and InterDigital that have taken place in Delaware and the ITC, we conclude that the district court abused its discretion in granting preliminary injunctive relief because Nokia has waived its right to arbitrate disputes involving its license rights to InterDigital's 3G patents.1 Although we do not lightly infer waiver, we have considered: "(1) the time elapsed from when litigation was commenced until the request for arbitration; (2) the amount of litigation to date, including motion practice and discovery; and (3) proof of prejudice," Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading, Inc., 252 F.3d 218, 229 (2d Cir. 2001), and find that Nokia's conduct demonstrates a desire to litigate claims stemming from the TDD Agreement in a judicial forum rather than in arbitration.
When evaluating "the time elapsed from when litigation was commenced until the request for arbitration" and "the amount of litigation to date," we start with the first complaint that Nokia filed in the Delaware lawsuit on January 12, 2005. Although Nokia now claims that the Delaware lawsuit concerned matters unrelated to its "license defense," the first Delaware complaint referenced the TDD Agreement, alleged that "no Nokia product [sold in the United States] infringes any valid claim of InterDigital's 3G patents," and acknowledged a "dispute" between Nokia and InterDigital "as to the validity and scope of the patents that form the basis of 1 Because we find ourselves in agreement with the Administrative Law Judge's finding that Nokia had waived arbitration, we need not consider whether the ALJ's finding would otherwise preclude us from reaching a different conclusion. the Agreements between them." Nokia alleged that it feared a patent infringement action by InterDigital, and among the relief it sought was a declaration "that Nokia's 3G products do not infringe any valid claim of those patents." Nokia's amended complaint in the Delaware lawsuit, filed in January 2007, asserted Nokia's license to InterDigital's 3G patents even more directly. After describing InterDigital's alleged practice of extracting royalty payments from the wireless industry, the complaint asserted (1) that Nokia had a license to InterDigital patents under an industry-wide agreement and (2) that Nokia had "an agreed-upon, fully-paid, irrevocable license to InterDigital's TDD Patents." Again, Nokia sought a declaration that "no Nokia 3G compliant product infringes any valid, enforceable claim of any of the patents in Attachment A." Attachment A identified patent number 6,973,579 (the "579 patent") as one of the patents as to which Nokia sought a declaration of non-infringement. InterDigital later successfully sought to add the "004 patent" and the "966 patent" to the Delaware action.
InterDigital's ITC complaint, which it had filed about one month earlier, based its claims on the 004 patent and the 966 patent. Thus, at the time InterDigital filed its ITC complaint, those patents were already at issue in the Delaware litigation that Nokia had initiated, and they were among the patents as to which Nokia was seeking a declaration of non-infringement, and as to which Nokia claimed to have a "an agreed-upon, fully-paid, irrevocable license." InterDigital moved to add the 579 patent to the ITC complaint on September 28, 2007.
On October 5, 2007, Nokia moved for a mandatory stay of the Delaware litigation pending the ITC action, as provided for by 28U.S.C. § 1659(a). Nokia argued that the ITC investigation and the Delaware action raised several common issues, such as whether InterDigital's patents were "essential" to 3G technology and the core question of "the scope, validity and enforceability of the three InterDigital patents at issue in the ITC" (which at that time included the 004, 966, and 579 patents). Nokia further stated that in the Delaware action, it had identified the 579 patent "as one of . . . the patents whose scope was contested." Nokia also claimed that "[t]he issue of enforceability and validity of that patent were joined in this case with the January 2007 Amended Complaint." On December 5, 2007, the Delaware district court granted the motion and stayed the lawsuit pending the ITC's investigation. The first time that Nokia claimed in a legal proceeding that the claims should be submitted to arbitration was on December 4, 2007, when it filed its motion to terminate, or in the alternative to stay, the ITC proceeding as to Nokia.
This lengthy history, and Nokia's intentional use of judicial process to resolve issues stemming from the TDD Agreement--including, as asserted in its amended complaint, its "irrevocable license" to InterDigital's TDD patents--evidence Nokia's desire and successful efforts to litigate, rather than arbitrate, claims involving these patents. Three years ago, Nokia sued InterDigital and sought a declaration of non-infringement because of disputes between the two parties over the validity and scope of patents involved in the TDD Agreement. Eighteen months ago, Nokia continued to litigate and added the new allegation that it had a license to InterDigital's 3G patents under the Agreement. It also identified the 579 patent as one of the patents to which the license extended. One year ago, InterDigital added the 004 and 966 patents to the Delaware court action, and Nokia continued to litigate that action. Finally, Nokia sought to stay the Delaware action because that lawsuit raised the same issues that were raised in the ITC investigation. Thus, Nokia has stayed the Delaware action, which it initiated, because the ITC investigation raises the same common issues (including the very patents at issue here), yet it now wants effectively to stay the ITC investigation, so that it can now arbitrate the scope of the TDD Agreement license.
As for the final prong of the three-part waiver inquiry, we have little difficulty finding that InterDigital has been prejudiced by Nokia's conduct. Nokia first sued InterDigital over issues involving the TDD Agreement and InterDigital's 3G patents three and a half years ago in Delaware. It successfully amended that complaint, and the parties have engaged in discovery. It was only when InterDigital filed its own complaint in the ITC less than one year ago that Nokia sought to stay the Delaware lawsuit, see 28U.S.C. § 1659(a), and then, through this lawsuit, sought to enjoin InterDigital from participating in the ITC investigation. Allowing Nokia to prevail and force InterDigital into yet another forum (i.e., arbitration) would cause InterDigital to suffer prejudice in the form of an ever-increasing delay in the resolution of the multiple disputes between the parties in Delaware and at the ITC. Nokia should not be permitted selectively to invoke arbitration and further lengthen the time it will take to resolve those disputes.
We conclude, therefore, that Nokia has waived its right to arbitrate through its repeated, intentional invocation of judicial process to resolve questions about the scope of the patents at issue and the applicability of the license established by the Agreement to these patents. Because Nokia has waived its right to arbitrate these questions, it has failed to show a likelihood of success on the merits of its underlying action to enforce the arbitration agreement. That failure is fatal to its motion for a preliminary injunction, and the district court's grant of that motion is therefore REVERSED. The case is REMANDED for further proceedings consistent with this order.
FOR THE COURT: Catherine O'Hagan Wolfe, Clerk By:
* The Honorable John G. Koeltl, of the United States District Court for the Southern District of New York, sitting by designation.
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