Trade Agency to Partly Review Order in Sony-Fujifilm Patent Fight

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By Malathi Nayak

The International Trade Commission said it would partially review an initial ruling that Sony Corp. infringed two Fujifilm Corp. magnetic tape patents, opening the door for the agency to provide guidance on enforcing patents essential to widely used technology standards.

An ITC administrative law judge found in September that Sony infringed the two patents, but not three others. Both companies are aggressively vying for control of the market for mass data storage under the LTO (Linear Tape-Open) standard.

The judge, David P. Shaw, had also recommended that the agency halt Sony’s import and sale of certain magnetic tape storage products that he found infringed the two Fujifilm patents. The ITC said in a Dec. 12 order that it would review-in-part Shaw’s ruling, including re-examining some findings on infringement and validity involving anticipation, or lack of novelty, and obviousness of the patents at issue.

The dispute stems from a May 2016 complaint by Fujifilm asserting patents against Sony’s imports of seventh-generation LTO data storage products. The ITC also said it would it extend the deadline to complete its investigation in the case to Feb. 20, 2018.

Standard-Essential Patent Issues

The closely-watched case could see the ITC shed light on a developing area of case law that also touches on antitrust and international trade principles—the enforcement of standard-essential patents that are key to an industry standard technology.

Sony, in its defense, had argued that patent claims asserted by Fujifilm were essential to the seventh-generation LTO technology standard covered in an LTO-7 consortium agreement, which Fujifilm, Hewlett Packard Enterprise, Quantum Corp., and IBM Corp. have signed. The companies have agreed to license their patents essential to the standard under fair, reasonable and non-discriminatory (FRAND) licensing terms. As a signatory to the agreement, Fujifilm had waived rights, including injunctive relief, and was committed to give Sony a license under FRAND terms instead of asserting its patents, Sony said.

The ITC said it has decided to also review Shaw’s finding that Sony hadn’t shown that three Fujifilm patents—one of which he found Sony infringed—are essential to the LTO-7 Standard.

At the heart of the patent fight are magnetic data tapes used by businesses, such as banks and retailers, to backup and archive large volumes of data, including invoices and financial information, relating to their sales and operations and store them for later use.

In addition to this lawsuit, Sony and Fujifilm have lodged three other ITC complaints, four federal district court lawsuits, and over a dozen patent validity challenges at the Patent and Trademark office against each other over magnetic tape technology.

This case is Certain Magnetic Data Storage Tapes and Cartridge Containing the Same , USITC, No. 337-TA-1012, Notice to Review-in-Part 12/12/17

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bloomberglaw.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bloomberglaw.com

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