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LG, Toshiba Seek New ITC Penalty For Last-Minute Withdrawal


Toshiba Corp. and LG Electronics Inc. on Thursday called for a change to the U.S. International Trade Commission's rules that would enable the agency to punish companies abandoning patent infringement cases at the last minute, citing a recent withdrawal motion from Straight Path IP Group Inc.

The companies, along with Vizio Inc., told the commission that Straight Path withdrew its complaint alleging infringement of three of its Voice Over Internet Protocol, or VoIP, patents without explanation just eight days before the case's first hearing and after the parties had spent several months and millions of dollars in discovery.

While the companies did not oppose Straight Path's motion to terminate the case, they accused the company of exploiting a loophole in the ITC's rules that allows companies to exit shaky infringement suits without consequences once it becomes clear that they won't be able to strike a deal to settle the case.

"Straight Path simply wasted the commission's time and abused its process as part of a never-ending stream of lawsuits intended to avoid the merits in favor of creating litigation costs," the companies said. "This sort of behavior is anathema to justice and should come at a price."

Straight Path filed suit at the ITC in August under Section 337 of the Tariff Act of 1930, accusing Toshiba, LG, Vizio and several others of importing devices into the U.S. that violate patents covering network communication technology.

The company's petition also accused Netflix Inc. and Google Inc. of infringing its patents, but did not name them as respondents. According to LG, Toshiba and Vizio, Straight Path was fighting a "proxy war" with Google and Netflix's many partners instead of testing the patents in one consolidated action against the innovators themselves.

The cases proceeded apace and Straight Path even managed to secure settlement agreements with Google, Sharp Corp. and Sony Computer Entertainment Inc. But the other respondents held firm, asserting that Straight Path's patents were "hopelessly invalid" in light of prior technology.

"Straight Path was long aware that its case against respondents was without merit, yet delayed withdrawal of its complaint until only days prior to the hearing," the companies said. "This last-minute retreat served Straight Path's purpose: to extend the prehearing procedures as long as possible, maximizing the costs of litigation for Straight Path's opponents."

Toshiba, LG and Vizio urged the commission to punish Straight Path for its litigation withdrawal strategy so that it may serve as a deterrent to other nonpracticing entities in the future.

An attorney for the respondents declined to comment Friday and an attorney for Straight Path did not immediately respond to a request for comment.

The patents-in-suit are U.S. Patent Numbers 6,009,469; 6,108,704; and 6,131,121.

Toshiba is represented by Ashok Ramani, Matthias A. Kamber and Sharif E. Jacob of Keker & Van Nest LLP and Paul T. Meiklejohn, David Tseng, Lukas Dudkowski and Clint Conner of Dorsey & Whitney LLP.

LG is represented by Smith R. Brittingham IV, Rajeev Gupta, Aidan C. Skoyles and Michael E. Kudravetz of Finnegan Henderson Farabow Garrett & Dunner LLP.

Vizio is represented by Kevin M. O'Brien, Richard V. Wells and Matt S. Dushek of Baker & McKenzie LLP.

Straight Path IP is represented by Michael T. Renaud of Mintz Levin Cohn Ferris Glovsky & Popeo PC.

The case is In re: Certain Point-to-Point Network Communication Devices and Products Containing Same, case number 337-TA-892, in the U.S. International Trade Commission.