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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- PLAINTIFFS’ MPAs IN SUPPORT OF EX PARTE APPLICATION FOR TRO SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership Including Professional Corporations STEPHEN S. KORNICZKY, Cal. Bar No. 135532 [email protected] MARTIN R. BADER, Cal. Bar No. 222865 [email protected] MATTHEW W. HOLDER, Cal. Bar. No. 217619 [email protected] RYAN P. CUNNINGHAM, Cal Bar No. 275813 [email protected] 12275 El Camino Real, Suite 200 San Diego, California 92130-2006 Telephone: 858.720.8900 Facsimile: 858.509.3691 DANIEL L. BROWN (Pro Hac Vice Pending) [email protected] 30 Rockefeller Plaza, 39 th Fl. New York, New York 10112 Telephone: 212.653.8700 Facsimile: 212.653.8701 Attorneys for Plaintiffs UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA U-BLOX AG, U-BLOX SAN DIEGO, INC., AND U-BLOX AMERICA, INC., Plaintiffs, v. INTERDIGITAL, INC.; INTERDIGITAL COMMUNICATIONS, INC; INTERDIGITAL TECHNOLOGY CORPORATION; INTERDIGITAL PATENT HOLDINGS, INC.; INTERDIGITAL HOLDINGS, INC.; and IPR LICENSING, INC. Defendants. Case No.: PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF THEIR EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION Complaint Filed: January 1, 2019

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PLAINTIFFS’ MPAs IN SUPPORT OF EX PARTE APPLICATION FOR TRO

SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership Including Professional Corporations

STEPHEN S. KORNICZKY, Cal. Bar No. 135532 [email protected] MARTIN R. BADER, Cal. Bar No. 222865 [email protected] MATTHEW W. HOLDER, Cal. Bar. No. 217619 [email protected] RYAN P. CUNNINGHAM, Cal Bar No. 275813 [email protected] 12275 El Camino Real, Suite 200 San Diego, California 92130-2006 Telephone: 858.720.8900 Facsimile: 858.509.3691 DANIEL L. BROWN (Pro Hac Vice Pending) [email protected] 30 Rockefeller Plaza, 39th Fl. New York, New York 10112 Telephone: 212.653.8700 Facsimile: 212.653.8701

Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

U-BLOX AG, U-BLOX SAN DIEGO,

INC., AND U-BLOX AMERICA,

INC.,

Plaintiffs,

v.

INTERDIGITAL, INC.;

INTERDIGITAL

COMMUNICATIONS, INC;

INTERDIGITAL TECHNOLOGY

CORPORATION; INTERDIGITAL

PATENT HOLDINGS, INC.;

INTERDIGITAL HOLDINGS,

INC.; and IPR LICENSING, INC.

Defendants.

Case No.: PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF THEIR EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION Complaint Filed: January 1, 2019

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TABLE OF CONTENTS

Page

I. INTRODUCTION ............................................................................................. 1

II. FACTUAL BACKGROUND ........................................................................... 4

A. Standard Setting Organizations and ETSI’s IPR Policy ......................... 4

B. In Reliance on InterDigital’s FRAND Obligations and Commitments, u-blox Becomes an InterDigital Licensee ...................... 6

C. To Coerce u-blox to Sign a Non-FRAND Agreement, InterDigital Interfered with u-blox’s Customer Relationships ............... 7

D.

........................................................................ 10

E. InterDigital Must Be Enjoined From Threatening u-blox’s Customer Relationships to the Extreme Detriment of u-Blox .............. 12

III. ARGUMENT .................................................................................................. 12

A. Applicable Legal Standards .................................................................. 12

B. A TRO And Preliminary Injunction Should Be Granted ...................... 13

1. u-blox is Likely to Succeed on the Merits of its Claims ............ 13

a. u-blox is Likely to Succeed on Its Declaratory Relief Claim ................................................................................ 14

b. u-blox is Likely to Succeed on Its Breach of Contract Claim ................................................................................ 15

c. u-blox is Likely to Succeed on Its Antitrust Claim ................ 17

C. u-blox Will Suffer Irreparable Harm Absent A TRO And Preliminary Injunction .......................................................................... 19

1. InterDigital’s Conduct Will Irreparably Harm u-blox’s Goodwill and Reputation ............................................................ 19

2. The Harm to u-blox ..................................................................................... 22

D. The Equities Weigh Heavily in u-blox’s Favor .................................... 23

E. A Preliminary Injunction is in the Public Interest ................................ 24

IV. u-Blox Should Not Be Required To Post a Bond ........................................... 25

V. CONCLUSION ............................................................................................... 26

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TABLE OF AUTHORITIES

Page(s)

Federal Cases

Alliance for the Wild Rockies v. Cottrell

632 F.3d 1127 (9th Cir. 2011) .............................................................................. 13

Auntie Anne’s, Inc. v. Wang

No. CV 14-01049 MMM (EX), 2014 WL 11728722 (C.D. Cal. July

16, 2014) ............................................................................................................... 22

Blindlight, LLC v. Cubbison

No. LA CV-1703497 JAK (PLAx), 2017 WL 4769460 (C.D. Cal.

July 3, 2017) ................................................................................................... 21, 22

Blizzard Entm’t, Inc. v. Ceiling Fan Software LLC

28 F. Supp. 3d 1006 (C.D. Cal. 2013) .................................................................. 15

Broadcom Corp. v. Qualcomm Inc.

501 F.3d 297 (3d Cir. 2007) ........................................................................... 18, 25

C & C Props. v. Shell Co.

No. 1:14-CV-01889-JAM-JLT, 2015 WL 5604384 (E.D. Cal. Sept.

23, 2015) ................................................................................................... 13, 14, 15

California v. Tahoe Reg’l Planning Agency

766 F.2d 1319 (9th Cir. 1985) .............................................................................. 25

Certified Restoration Dry Cleaning Network v. Tenke Corp.

511 F.3d 535 (6th Cir. 2007) ................................................................................ 25

Eureka Fed. Sav. & Loan Ass’n v. Am. Cas. Co.

873 F.2d 229 (9th Cir. 1989) ................................................................................ 14

Extreme Reach v. Spotgenie Partners

No. CV 13-07563-DMG (JCGx), 2013 WL 12081182 (C.D. Cal.

Nov. 22, 2013) ...................................................................................................... 23

Foremost Grps. Inc. v. Ayers Bath USA Corp.

Case No. CV 11-07473 GAF (Ex), 2011 WL 13221024 (C.D. Cal.

Dec. 20, 2011) ...................................................................................................... 21

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Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck

Drivers

415 U.S. 423 (1974) ............................................................................................. 12

Henry Schein, Inc. v. Cook

191 F. Supp. 3d 1072 (N.D. Cal. 2016) ................................................................ 13

Huawei Techs., Co. v. Samsung Elecs. Co.

No. 3:16-cv-02787-WHO, 2018 WL 1784065 (N.D. Cal. Apr. 13,

2018) ..................................................................................................................... 24

Image Tech. Servs., Inc. v. Eastman Kodak Co.

125 F.3d 1195 (9th Cir. 1997) .............................................................................. 18

Indep. Living Ctr. of S. California, Inc. v. Maxwell-Jolly

572 F.3d 644 (9th Cir. 2009) ................................................................................ 25

In re Innovatio IP Ventures, LLC Patent Litig.

2013 WL 5593609 (N.D. Ill. Oct. 3, 2013) .................................................... 15, 17

Jews For Jesus v. Brodsky

993 F. Supp. 282 (D.N.J. 1998) ............................................................................ 25

Mahroom v. Best Western Int’l., Inc.

No. C 07–2351 JF (HRL), 2009 WL 248262 (N.D. Cal. Feb. 2,

2009) ..................................................................................................................... 23

Microsoft Corp. v. Motorola, Inc.

795 F.3d 1024 (9th Cir. 2015) ........................................................................ 17, 24

Microsoft Corp. v. Motorola, Inc.

No. C10-1823JLR, 2013 WL 2111217 (W.D. Wash. Apr. 25, 2013) ........... 15, 17

Powell v. McCormack

395 U.S. 486 (1969) ............................................................................................. 14

Rackwise v. Archbold

No. 17-797 WBS CKD, 2017 WL 2547040, at *4 (E.D. Cal. June

13, 2017) ............................................................................................................... 21

Realtek Semiconductor

Corp., No. C-12-3451-RMW, 2014 WL 2738226 (N.D. Cal. June 3,

2014) ..................................................................................................................... 24

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Realtek Semiconductor Corp. v. LSI Corp.

946 F. Supp. 2d 998 (N.D. Cal. 2013) .................................................................. 21

Regents of Univ. of California v. Am. Broad. Cos., Inc.

747 F.2d 511 (9th Cir. 1984) ................................................................................ 22

Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc.

944 F.2d 597 (9th Cir. 1991) ................................................................................ 21

Research in Motion Ltd. v. Motorola, Inc.

644 F. Supp. 2d 788 (N.D. Tex. 2008) ................................................................. 18

Signal Hill Serv., Inc. v. Macquarie Bank Ltd.

No. CV 11-01539 MMM, 2011 WL 13220305 (C.D. Cal. June 29,

2011) ..................................................................................................................... 22

Stuhlbarg Int’l Sales Co. v. John D. Brush & Co.

240 F.3d 832 (9th Cir. 2001) .......................................................................... 13, 21

TCL Commc’n Tech. Holdings v. Telefonaktiebolaget Lm Erricsson

No: SACV 14-341 JVS(DFMx), 2017 WL 6611635, at *57 (C.D.

Cal. Dec. 21, 2017) ....................................................................... 14, 15, 16, 17, 24

Textile Unlimited, Inc. v. A. BMH and Co.

240 F.3d 781 (9th Cir. 2001) ................................................................................ 13

Federal: Statutes, Rules, Regulations, Constitutional Provisions

28 U.S.C. § 2201 ........................................................................................................ 14

Fed. R. Civ. P. 65(b) .................................................................................................. 12

Fed. R. Civ. P. 65(c) .................................................................................................. 25

Sherman Act, 15 U.S.C. § 2....................................................................................... 17

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Plaintiffs u-blox AG, u-blox San Diego, Inc., and u-blox America, Inc.

(collectively, “Plaintiffs” or “u-blox”) respectfully request that this Court

immediately grant u-blox’s motion for a Temporary Restraining Order (“TRO”)

against InterDigital, Inc., InterDigital Communications, Inc., InterDigital

Technology Corporation, InterDigital Patent Holdings, Inc., InterDigital Holdings,

Inc., and IPR Licensing, Inc. (collectively, “InterDigital” or “Defendants”) to

protect its client relationships pending a hearing to show cause why a preliminary

injunction should not issue in this case.

I. INTRODUCTION

u-blox filed this action to obtain the court’s assistance in obtaining a fair,

reasonable and non-discriminatory (“FRAND”) license to InterDigital’s 2G, 3G, and

4G standard essential patent (“SEP”) portfolio. u-blox seeks this TRO to prevent

InterDigital from irreparably interfering with u-blox’s customer relationships in an

attempt to force it to accept license terms and conditions that are not FRAND.

There is no dispute that InterDigital must provide a FRAND license to u-blox. u-

blox requests a TRO merely to keep the status quo between the parties while this

court determines the FRAND terms for such a license. This relief is required

because InterDigital has threatened and interfered with u-blox’s customer

relationships in the past, forcing u-blox to vastly and unlawfully overpay for a

license to InterDigital’s SEP portfolio. Now, without a current license, u-blox’s

business and customer relationships are again at risk. The Court should not allow

InterDigital to engage in such strong-arm tactics in order to extract “hold-up” value

from its SEP portfolio.

By way of background, InterDigital repeatedly contracted with the European

Telecommunications Standards Institute (“ETSI”), a technology standard setting

organization (“SSO”), that if InterDigital’s alleged SEPs were adopted and

incorporated into the 2G, 3G, and 4G telecommunications standards, InterDigital

would license those patent to implementers of the standards, such as u-blox, on

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FRAND terms. u-blox is a third-party beneficiary of this contract and is ready and

willing to enter into a license with InterDigital, but the parties are unable to agree on

the terms. Thus, u-blox filed its Complaint seeking a declaratory judgment to, inter

alia, set the FRAND terms and conditions, including, but not limited to, the FRAND

royalty rate for a license to InterDigital’s 2G, 3G, and 4G SEPs.

As other courts have done when the parties cannot come to an agreement, the

FRAND terms and rates will be decided by the Court in this action. InterDigital has

no incentive to negotiate FRAND terms because in the past it has been able to force

u-blox into license extension agreements that required u-blox to continue paying the

existing exorbitant non-FRAND rates. InterDigital is thus able to hold u-blox

hostage by threatening its customers when the existing license agreement expires.

More recently, in a blatant attempt to force u-blox to capitulate and sign a new

patent license on non-FRAND terms, InterDigital has refused to refrain from

contacting u-blox’s customers and downstream manufacturers. InterDigital’s

strategy is to

InterDigital’s conduct is egregious because InterDigital is well aware that: (i)

u-blox’s customers and downstream manufacturers

and (ii) u-blox is a ready and willing licensee once a FRAND rate is

determined.

In addition, as explained herein and in detail in the supporting u-blox

Declarations,1 InterDigital’s threats to u-blox’s customers and their downstream

manufacturers not only threaten to profoundly impact u-blox’s critical customer 1 See Declaration of Andreas Thiel (“Thiel Decl.”), Declaration of Kent Baker

(“Baker Decl.”) and Declaration of Mark Murray (“Murray Decl.”) (collectively, the

“Declarations”).

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relationships, but u-blox’s Indeed, u-blox has been a licensee of

InterDigital’s alleged SEPs since 2011 and relied on InterDigital’s FRAND

commitment to invest significant resources to develop products that practice the 2G,

3G, and 4G cellular standards, all of which will be lost if InterDigital is permitted to

threaten u-blox’s customers and their downstream manufacturers.

Indeed, u-blox’s customers are building products that they plan to sell for

many years, and those customers therefore rely upon and need to have confidence

that their critical component suppliers, such as u-blox, will continue to be licensed

and around long into the future. As such, not only would u-blox’s significant

investments in its technology, business, and customers be lost without any

opportunity for recoupment, but the loss of u-blox customers would be devastating

to u-blox, as the goodwill, image and reputation that u-blox has built up with its

customers and in the industry over many years will be gone forever.

Leveraging and interfering with u-blox’s customers in order to force u-blox to

pay greatly inflated royalties is the definition of patent “hold-up” and should not be

permitted.

Unfortunately, this is not the first time that InterDigital has used these strong-

arm tactics against u-blox in order to coerce it to entering a patent license agreement

on non-FRAND terms. In 2017, upon the expiration of a prior patent license

agreement between the parties, InterDigital immediately contacted and threatened u-

blox’s customers and downstream manufacturers,

. These tactics are

outrageous and highly improper. Indeed, InterDigital knew that: (i) u-blox entered

into relationships with its customers in reliance on InterDigital’s commitment to

offer a FRAND license, and (ii) u-blox’s customers and their downstream

manufacturers relied on u-blox to maintain its license with InterDigital to design and

incorporate u-blox’s technology into their products. Because InterDigital’s threats

to u-blox’s customers would have caused extreme detriment to u-blox’s critical

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customer relationships, u-blox had no choice but to capitulate and sign a temporary

patent license agreement with InterDigital that included royalty payments far in

excess of what could be considered fair or reasonable.

The term of u-blox’s temporary license from InterDigital expired on

December 31, 2018. u-blox is again ready and willing to enter into a new patent

license with InterDigital on FRAND terms. However, InterDigital is refusing to

refrain from repeating the tactics that it employed in 2017, including unnecessarily

contacting u-blox’s customers and downstream manufacturers,

In sum, because the FRAND rate will be decided by this Court and u-blox

will be an InterDigital licensee, there is no legitimate reason for InterDigital to

contact u-blox’s customers during the pendency of this action with respect to u-

blox’s products.

Accordingly, u-blox submits this request for a TRO and preliminary

injunction to enjoin InterDigital, during the pendency of this action, or until the

parties otherwise agree on the FRAND terms of a patent license between them, from

contacting u-blox’s customers and downstream manufacturers, demanding royalty

payments from them for products incorporating u-blox technology, or otherwise

disrupting or interfering with u-blox’s relationships with its customers and

downstream manufacturers.

II. FACTUAL BACKGROUND

A. Standard Setting Organizations and ETSI’s IPR Policy

Standard setting organizations (“SSOs”) are voluntary membership

organizations whose participants engage in the development of industry standards

for the benefit of their members, affiliates, and third parties implementing the

standards. SSOs and the standards they promulgate play an important role in the

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technology market, because SSOs allow companies to agree on common technology

standards so that compliant products implementing the standards will work together.

Standards also deliver economic benefits to innovators, firms that implement the

standards, and consumers who benefit from continued innovation, reduced costs,

and other efficiencies from widespread interoperability and economies of scale and

scope enabled by the standard.

Standards can also potentially impose excessive and unfair costs on these

same constituencies when owners of patents that cover or are declared to cover

various technologies necessary to practice a standard engage in opportunistic

behavior. Therefore, in order to prevent SEP owners from unfairly exploiting

alleged SEPs, SSOs have adopted intellectual property rights (“IPR”) policies. The

IPR policies permit standard setting participants the opportunity to have their

technology incorporated into a standard and to receive compensation for its use in a

larger number of devices that operate using the standard in exchange for agreeing to

license any such SEP on fair, reasonable, and non-discriminatory (“FRAND”)

terms. Firms that implement the standard thus receive assurance that they will

always have access to the standard-essential patents and will not be exploited by

patent holders or disadvantaged relative to other implementers if they invest in

implementing the standard or developing innovative products that may operate with

the standard.

For example, the IPR Policy of the SSO European Telecommunications

Standards Institute (“ETSI”) requires that if an ETSI member owns IPR, including

patents that may be considered essential to a particular standard or technical

specification, the owner must grant irrevocable licenses on FRAND terms and

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conditions to anyone practicing the standard in return for inclusion of such IPR into

the standard.2

Clause 6.1 of ETSI’s IPR Policy provides:

A. When an ESSENTIAL IPR relating to a particular STANDARD or TECHNICAL SPECIFICATION is brought to the attention of ETSI, the Director-General of ETSI shall immediately request the owner to give within three months an irrevocable undertaking in writing that it is prepared to grant irrevocable licences on fair, reasonable and non-discriminatory [FRAND] terms and conditions under such IPR… The above undertaking may be made subject to the condition that those who seek licences agree to reciprocate.

ETSI IPR Policy, § 6.1.

As an ETSI member, in conjunction with the adoption of the 2G, 3G, and 4G

standards, InterDigital made submissions to the technical bodies within ETSI,

declaring that certain of its patents or patent applications may be or may become

essential to the mobile device standards under consideration. InterDigital also

repeatedly represented that it was committed to license any such essential patents it

held on FRAND terms and conditions. True and Correct copies of InterDigital’s

declarations to ETSI are attached to u-blox’s Complaint as Exhibits 1 through 33.

In sum, because InterDigital declared a number of its patents to be essential to

the 2G, 3G, and/or 4G cellular standards established by ETSI and implemented

worldwide in a variety of wireless electronic devices, consistent with ETSI’s IPR

Policy, InterDigital agreed that it would license any such SEPs to implementers of

the technology standard on FRAND terms, including to u-blox. Id.

B. In Reliance on InterDigital’s FRAND Obligations and

Commitments, u-blox Becomes an InterDigital Licensee

u-blox delivers wireless technology to reliably locate and connect people and

devices. u-blox is a leading developer of global positioning technology, including

2 ETSI’s IPR Policy is available at https://www.etsi.org/images/files/IPR/etsi-ipr-

policy.pdf.

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products and services based on Global Navigation Satellite Systems (GNSS),

including GPS and GALILEO, for the automotive, mobile communications, and

infrastructure markets. u-blox develops cellular modules incorporating a variety of

different cellular technologies, including those that provide global geographic

coverage such as the 2G, 3G, and 4G standards. See Thiel Decl. at ¶ 9.

In reliance on InterDigital’s promise to license its alleged SEPs on FRAND

terms,

See Thiel Decl. at ¶¶ 20 – 21.

In addition,

. Id. at ¶ 15.

As explained above, InterDigital is required to license its declared SEPs to u-

blox consistent with InterDigital’s commitments to ETSI and participants and

implementers of the technology standards. However, as explained below,

InterDigital is refusing to license its declared essential patents to u-blox on FRAND

terms and conditions.

C. To Coerce u-blox to Sign a Non-FRAND Agreement, InterDigital

Interfered with u-blox’s Customer Relationships

Baker Decl. at ¶ 16.

There are a number of reasons why the royalty rates u-blox is paying are not

FRAND, including that the rates cannot be supported by any reasonable “top-down”

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analysis, which has become a well adopted method for valuing SEPs. Additionally,

patent royalty rates decline over time.

Baker Decl. at

¶ 17. Accordingly,

See id. at ¶ 23. However, despite the fact that such true-ups are

commonly agreed to by patent owners in order to allow licensees to negotiate

without the licensee being unfairly locked into paying non-FRAND rates,

Id. at ¶ 24.

In addition,

but in a blatant attempt to coerce u-blox to agree to pay excessive non-FRAND

rates, InterDigital immediately reached out to u-blox’s customers and downstream

manufacturers, informing them that

. See Baker Decl. at ¶ 25.

InterDigital’s conduct was unnecessarily destructive and outrageous, because

InterDigital knew that: (i) u-blox’s customers and downstream manufacturers would

, and (ii) u-blox was ready and willing to enter into a license with

InterDigital once a FRAND rate was agreed upon. As such, there was no legitimate

reason why InterDigital would reach out to u-blox’s customers or downstream

manufacturers to discuss u-blox.

Nonetheless, InterDigital refused to provide a FRAND license to u-blox and

then, in order to force u-blox into a license that was not on FRAND terms,

InterDigital reached out to important u-blox customers and downstream

manufacturers including, at a minimum,

. See Murray Decl. at ¶¶ 18 – 21. Not surprisingly,

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u-blox’s customers and/or downstream manufacturers were extremely concerned.

Id. at ¶ 17. InterDigital was now in a position to

that incorporate the 2G, 3G and 4G standard.

Indeed, those u-blox customers and downstream manufacturers had relied on u-

blox’s representation that it was licensed by InterDigital to design, incorporate,

and/or manufacture products containing a u-blox component – products that take

years to design and manufacture. See Baker Decl. at ¶ 30. But, now, after having

relied on u-blox’s representation that it was licensed by InterDigital to design,

incorporate, and/or manufacture products containing a u-blox component, u-blox’s

customers and downstream manufacturers found themselves at risk of

In addition, u-blox’s customers and those customers’ manufacturers and end

users – particularly in the automotive and industrial markets – are building products

they plan to sell for many years. These customers and manufacturers need

confidence that their suppliers, such as u-blox, will be around and able to supply

modules long into the future. But, InterDigital was now causing u-blox’s customers

to question u-blox’s credibility and reliability, and to lose their trust in u-blox.

Baker Decl. at ¶ 32.

It was clear to u-blox that the only reason why InterDigital continued to

demand non-FRAND rates from u-blox while threatening u-blox’s customer

relationships was to force u-blox to agree to a license extension based on excessive

royalty payments and non-FRAND terms. u-blox faced a dilemma – refuse the

unfair license terms and lose its clients and business or continue to negotiate the

license while paying the exorbitant (i.e., non-FRAND) rates. u-blox could not risk

losing its customers, goodwill, and reputation. Therefore,

See Baker Decl. at ¶ 33, Exhibit B.

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D.

In addition, because, as

discussed above, the rates that u-blox was paying were not FRAND rates,

Id. at ¶ 35.

Id. at ¶ 36.

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In

other words, despite u-blox committing to accepting a license on FRAND terms,

Id. at ¶ 37.

As such, and in order to limit the time when u-blox would

continue to be forced to pay royalties that were not FRAND,

Id. at ¶ 38.

Id. at ¶ 39.

Id. at ¶ 40.

On December 21, 2018,

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Id. at ¶ 41.

E. InterDigital Must Be Enjoined From Threatening u-blox’s

Customer Relationships to the Extreme Detriment of u-Blox

u-blox is ready and willing to enter into a new patent license with InterDigital

on FRAND terms, and those terms will now be decided by this Court in this action.

Therefore, there is no legitimate reason for InterDigital to contact u-blox’s

customers or downstream manufacturers claiming that u-blox is unlicensed. The

only reason why InterDigital needs to do so would be to threaten u-blox’s customer

relationship to force u-blox to once again sign a license agreement that is not on

FRAND terms. Nonetheless, InterDigital is refusing to refrain from this conduct

that it employed successfully in 2017.

As a result, u-blox respectfully requests that a TRO issue and an Order to

Show Cause why a Preliminary Injunction should not issue prohibiting InterDigital

during the pendency of this action or until a FRAND rate is otherwise determined

from contacting u-blox’s customers and downstream manufacturers, demanding

royalty payments from them for products incorporating u-blox technology, or

otherwise disrupting or interfering with u-blox’s relationships with its customers and

downstream manufacturers.

III. ARGUMENT

A. Applicable Legal Standards

A temporary restraining order (“TRO”) is a form of preliminary injunctive

relief that can be issued with or without notice to the opposing party or that party’s

attorney. See Fed. R. Civ. P. Rule 65(b). Its sole purpose is to prevent irreparable

harm from occurring by preserving the status quo pending a hearing on the moving

party’s application for a preliminary injunction. See Granny Goose Foods, Inc. v.

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Brotherhood of Teamsters & Auto Truck Drivers, 415 U.S. 423, 439 (1974); Textile

Unlimited, Inc. v. A. BMH and Co., 240 F.3d 781, 786 (9th Cir. 2001) (“A

preliminary injunction is not a preliminary adjudication on the merits, but a device

for preserving the status quo and preventing the irreparable loss of rights before

judgment.”).

The standard for issuing a TRO is the same as the standard for issuing a

preliminary injunction. See Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240

F.3d 832, 839-40 & n.7 (9th Cir. 2001). To obtain a TRO, a movant “must establish

that he is likely to succeed on the merits, that he is likely to suffer irreparable harm

in the absence of preliminary relief, that the balance of equities tips in his favor, and

that an injunction is in the public interest.” Henry Schein, Inc. v. Cook, 191 F. Supp.

3d 1072, 1076 (N.D. Cal. 2016).

These factors are balanced against one another, such that a strong showing of

irreparable harm may overcome a lesser showing of likelihood of success, and

likewise a strong showing on the merits justifies preserving the status quo even in

cases with less substantial irreparable harm. See Alliance for the Wild Rockies v.

Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011) (“A preliminary injunction is

appropriate when a plaintiff demonstrates … that serious questions going to the

merits were raised and the balance of hardships tips sharply in the plaintiff's

favor.”).

B. A TRO And Preliminary Injunction Should Be Granted

1. u-blox is Likely to Succeed on the Merits of its Claims

“A plaintiff need only show success on the merits is likely for one claim, not

all claims to meet the burden of establishing an entitlement to a preliminary

injunction.” C & C Props. v. Shell Co., No. 1:14-CV-01889-JAM-JLT, 2015 WL

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5604384, at *4 (E.D. Cal. Sept. 23, 2015), report and recommendation adopted

(Dec. 3, 2015). Here, u-blox is likely to succeed on the merits of several claims.3

a. u-blox is Likely to Succeed on Its Declaratory Relief

Claim

The Declaratory Judgment Act allows a federal court to “declare the rights

and other legal relations” of parties to a “case of actual controversy.” 28 U.S.C. §

2201 (2018); C & C Props., 2015 WL 5604384, at *8. “The availability of

declaratory relief depends on whether there is a live dispute between the parties, and

a request for declaratory relief may be considered independently of whether other

forms of relief are appropriate.” TCL Commc’n Tech. Holdings v.

Telefonaktiebolaget Lm Ericsson, No: SACV 14-341 JVS(DFMx), 2017 WL

6611635, at *57 (C.D. Cal. Dec. 21, 2017) (citing Powell v. McCormack, 395 U.S.

486, 517-518 (1969)).

In the Ninth Circuit, “[d]eclaratory relief is appropriate (1) when the

judgment will serve a useful purpose in clarifying and settling the legal relations in

issue, and (2) when it will terminate and afford relief from the uncertainty,

insecurity, and controversy giving rise to the proceeding.” Eureka Fed. Sav. & Loan

Ass’n v. Am. Cas. Co., 873 F.2d 229, 231 (9th Cir. 1989).

Here, as detailed in Plaintiffs’ Complaint and u-blox’s Declarations, a

justiciable controversy exists between u-blox and InterDigital regarding what

constitutes FRAND terms and conditions for a license to InterDigital’s alleged 2G,

3G, and 4G SEPs with respect to u-blox’s products.

As such, as other courts have done when the parties cannot agree on FRAND

terms, this Court will resolve the parties’ dispute by issuing a judgment that sets the

applicable FRAND terms and conditions, including the royalty rate(s), for a license

3 u-blox is likely to succeed on the merits of each of its claims, but since it is only

required to succeed with respect to one for purposes of an injunction, u-blox does

not address the merits of each of its claims.

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to InterDigital’s alleged 2G, 3G, and 4G SEPs. See, e.g., TCL Commc’n Tech.

Holdings, 2017 WL 6611635, at *51-52, *57-58 (entering judgment determining the

FRAND rate); In re Innovatio IP Ventures, LLC Patent Litig., No. 11 C 9308, 2013

WL 5593609, at *43 (N.D. Ill. Oct. 3, 2013) (determining FRAND rate); Microsoft

Corp. v. Motorola, Inc., No. C10-1823JLR, 2013 WL 2111217, at *100 (W.D.

Wash. Apr. 25, 2013) (determining FRAND rate).

In fact, it is virtually a certainty that this Court will determine the applicable

FRAND rate in this action. See TCL Commc’n Tech. Holdings., 2017 WL 6611635,

at *2 (“It is unnecessary for the Court to determine whether the failure to arrive at an

agreed FRAND rate violated Ericsson’s FRAND obligation. Regardless of the

answer to that question, the Court is required to assess whether FRAND rates have

been offered in light of the declaratory relief which both sides seek.”). Based on the

foregoing, u-blox is likely to succeed on its claim seeking a declaratory judgment

that sets the FRAND terms and conditions.4

b. u-blox is Likely to Succeed on Its Breach of Contract

Claim

A cause of action for breach of contract requires proof of: (1) existence of the

contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s

breach; and (4) damages to plaintiff as a result of the breach.” Blizzard Entm’t, Inc.

v. Ceiling Fan Software LLC, 28 F. Supp. 3d 1006, 1017 (C.D. Cal. 2013).

4 In addition, when the plaintiff has shown that it is likely to succeed on the merits

of a substantive claim, courts have found that the plaintiff is likely to succeed in

obtaining a related determination of the rights and interests of the parties. See C &

C Props., 2015 WL 5604384, at *9 (finding that plaintiffs were likely to succeed on

its declaratory judgment claim when plaintiffs also established a trespass claim).

Here, u-blox is likely to succeed on its declaratory judgment claim because, as set

forth below, u-blox is also likely to succeed on the merits of its underlying breach of

contract claim based on InterDigital’s failure to negotiate in good faith for a

FRAND license.

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Here, InterDigital entered into contractual commitments with ETSI and their

respective members, participants, and implementers relating to the 2G, 3G, and 4G

standards. As a member of ETSI and to comply with ETSI’s IPR Policy,

InterDigital made a binding commitment to ETSI, ETSI members, and implementers

of the standard, such as u-blox, to grant irrevocable licenses to InterDigital’s alleged

SEPs on FRAND terms and conditions if its alleged SEPs were incorporated into the

technology standards.

u-blox stands willing to enter into a license with InterDigital on terms that are

FRAND. However, in breach of InterDigital’s contract with ETSI, InterDigital is

attempting to extract from u-blox supra-competitive royalties which are not on

FRAND terms. See Baker Decl. at ¶¶ 20 – 21. Among other things,

Id. at ¶¶ 21 – 22. In

addition, a study conducted by Concur IP as part of unrelated litigation,

See Complaint ¶¶ 101-103. Compare to TCL where the Court used a total

royalty stack of between only 6-10% for a license to all 4G SEPs. TCL Commc’n

Tech. Holdings, 2017 WL 6611635, at *26

As explained

above, there is no legitimate reason for Interdigital to contact u-blox’s customers or

downstream manufacturers because u-blox is willing and committed in good faith to

finalize a new PLA.

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A number of cases that have been litigated in U.S. courts demonstrate that

patent hold-up is a widespread problem, with SEP owners violating their FRAND

commitments by making royalty demands significantly above the adjudicated

FRAND rates. See, e.g., TCL Commc’n Tech. Holdings., 2017 WL 6611635, at

*51-52 (determining FRAND rates of 0.314%-0.45% for 4G, 0.224%-0.30% for 3G,

and 0.09%-0.16% for 2G, as compared to Ericsson’s demand of 1.5% for 4G, 1.2%

for 3G, and 0.8%-1.0% for 2G); In re Innovatio, 2013 WL 5593609, at *43 (for 19

asserted patents, assessing damages of $0.0956 per unit as compared to the proposed

royalty of $16.17 per unit for tablet computers); Microsoft Corp. v. Motorola, Inc.,

2013 WL 2111217, at *100 (determining, FRAND rate of $0.03471 per Microsoft’s

xBox unit, as compared to Motorola’s initial demand of $6.00-$8.00 per xBox unit).

In every case, the SEP owner demanded royalty payments that were multiple times

in excess of what was FRAND.

This is precisely what is occurring here. InterDigital is refusing to offer u-

blox a license on FRAND terms, and is continuing to take actions, like it did in

2017, to force u-blox to enter into a non-FRAND license. Without a FRAND license

from InterDigital, not only will u-blox suffer significant monetary harm, but as

explained below, u-blox will suffer a loss of its customers, its goodwill, product

image, and reputation.

Based on the foregoing, u-blox is more than likely to succeed on its breach of

contract claim. See Microsoft Corp. v. Motorola, Inc., 795 F.3d 1024, 1046 (9th Cir.

2015) (“the jury could conclude that Motorola's actions were intended to induce

hold-up, i.e., to pressure Microsoft into accepting a higher RAND rate than was

objectively merited, and thereby to frustrate the purpose of the contract.”).

c. u-blox is Likely to Succeed on Its Antitrust Claim

u-blox asserts an antitrust monopolization claim under the Sherman Act, 15

U.S.C. § 2, based on InterDigital’s alleged abusive licensing practices and unlawful

monopolization in certain relevant markets for 2G, 3G, and 4G cellular

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technologies. As alleged in detail in u-blox’s Complaint and described above,

InterDigital has engaged in an unlawful scheme to exploit its undue market power

over technologies necessary for implementers, including u-blox, to practice the 2G,

3G, and 4G standards. InterDigital’s market power is due solely to its false

commitments to license its alleged SEPs on FRAND terms and conditions, which

“locked in” its technology into the standard(s).

However, after acquiring an unlawful monopoly over the relevant technology

markets, InterDigital has illegally exploited this power against u-blox by refusing to

honor its obligation to license its alleged SEPs on FRAND terms and conditions and

threatening u-blox’s customers relationships to further its monopolistic scheme.

InterDigital’s actions injure competition by excluding alternate technologies

which could have been included in the standard and then forcing implementers of

the standards such as u-blox to face drastically higher costs for access to cellular

technologies necessary for the manufacture of standard-compliant products.

InterDigital’s attempt to extract monopoly rates that are not FRAND from u-blox,

including, for example,

, see Baker Decl. at ¶ 22, is

precisely the type of “patent hold-up” that patent policies of SSOs were designed to

eliminate. See Research in Motion Ltd. v. Motorola, Inc., 644 F. Supp. 2d 788, 791,

794 (N.D. Tex. 2008); see also Image Tech. Servs., Inc. v. Eastman Kodak Co., 125

F.3d 1195, 1216 (9th Cir. 1997) (“the right of exclusion [does not] protect an

attempt to extend a lawful monopoly beyond the grant of a patent”); Broadcom

Corp. v. Qualcomm Inc., 501 F.3d 297, 312 (3d Cir. 2007) (explaining the “unique

dangers of deception in the standard- setting context … where participants rely on

structural protections, such as rules requiring the disclosure of [intellectual property

rights], to facilitate competition and constrain the exercise of monopoly power”).

Accordingly, u-blox is likely to succeed on the merits of its antitrust claim.

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C. u-blox Will Suffer Irreparable Harm Absent A TRO And

Preliminary Injunction

1. InterDigital’s Conduct Will Irreparably Harm u-blox’s

Goodwill and Reputation

As explained in detail in the Declarations of u-blox’s representatives, if, prior

to this Court determining the FRAND rate for u-blox’s license to InterDigital’s

patents, InterDigital is permitted to contact u-blox’s customers and downstream

manufacturers and , u-blox’s customer

relationships will be profoundly harmed and the

Indeed, as explained above, when InterDigital contacted u-blox’s customers

and downstream manufacturers in 2017, stating that

(even though the real reason why InterDigital

was doing so was to pressure u-blox to accept InterDigital’s non-FRAND rate), u-

blox’s customers and their downstream manufacturers were confused and, not

surprisingly, extremely concerned. See Murray Decl. at ¶¶ 17 – 21. Indeed, having

relied on u-blox’s representation that it was licensed by InterDigital to design,

incorporate, and/or manufacture products containing a u-blox component that takes

years to design and manufacture, these customers and downstream manufacturers

were suddenly at risk of

Id. at ¶ 19 (“u-blox is

the licensee of InterDigital, but now InterDigital said u-blox is not in the license list.

If that is true, we will have a big issue.”).

u-blox was extremely worried because InterDigital was causing u-blox’s

customers to question u-blox’s credibility and lose their trust in u-blox. Id. at ¶¶ 22

– 23 (“if InterDigital continued to state to

, it would

not only kill u-blox’s business with its customers, but, as explained below, would

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cause u-blox irreversible harm.”). u-blox could not risk losing its customers, and

ultimately its business. Therefore,

.

See Baker Decl. at ¶ 33.

The impact on u-blox if InterDigital is permitted to again contact u-blox’s

customers and downstream manufacturers claiming, again, that

would be

devastating to u-blox. See Thiel Decl. at ¶¶ 27-29; see also Murray Decl. at ¶¶ 25 –

32.

Indeed, among other things, in reliance upon InterDigital’s promises that it

would license its technology to u-blox and others on FRAND terms, u-blox has

made significant investments into the research, development, and production of its

cellular modules, and has committed to its customers a product roadmap based on

cellular technology reaching beyond 2020. See Thiel Decl. at ¶¶ 20-22. Similarly,

u-blox’s customers – particularly in the automotive and industrial markets – are

building products that they plan to sell for many years, and those customers

therefore rely upon and need to have confidence that their critical component

suppliers, such as u-blox, will continue to be licensed and around long into the

future. See Thiel Decl. at ¶ 29.

As such, not only would the significant investments by u-blox in its

technology, business, and customers essentially be lost without any opportunity for

recoupment, see Thiel Decl. at ¶ 27, but the loss of u-blox customers would be

devastating to u-blox, as the goodwill, image and reputation that u-blox has built up

with its customers and in the industry over many years will be gone forever. See

Thiel Decl. at ¶ 30.

u-blox’s customers would also be facing

after spending significant time and money to design

their products around u-blox’s technology. In addition, u-blox’s customers and

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downstream manufacturers will lose credibility in u-blox, destroy u-blox’s goodwill

and reputation and, ultimately, its customers. See Thiel Decl. at ¶¶ 31 – 32 (“[i]f,

after all of these efforts a u-blox customer is left with an unsaleable product, the

goodwill and trust that u-blox has obtained with many years of hard work will

inevitably be destroyed.”)

“Evidence of threatened loss of prospective customers or goodwill certainly

supports a finding of the possibility of irreparable harm.” Stuhlbarg Int’l. Sales Co.,

240 F.3d at 841; see also Rent-A-Center, Inc. v. Canyon Television & Appliance

Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991) (damage to goodwill may support a

finding of irreparable harm because it is difficult to quantify); Rackwise v. Archbold,

No. 17-797 WBS CKD, 2017 WL 2547040, at *4 (E.D. Cal. June 13, 2017)

(granting plaintiff’s motion for preliminary injunction when defendant’s conduct

would harm “the reputation and goodwill of plaintiff with investors, customers, and

the SEC.”); Realtek Semiconductor Corp. v. LSI Corp., 946 F. Supp. 2d 998, 1009

(N.D. Cal. 2013) (granting plaintiff’s motion for a preliminary injunction to enjoin

defendant from enforcing an exclusion order when it “harmed [plaintiff’s] reputation

and poses an imminent threat of customer and revenue loss.”); Foremost Grps. Inc.

v. Ayers Bath USA Corp., Case No. CV 11-07473 GAF (Ex), 2011 WL 13221024,

at *10 (C.D. Cal. Dec. 20, 2011) (granting plaintiff’s request to enjoin defendant

from selling parts and products because the court found it likely that such conduct

would impair plaintiff’s ability to maintain business relationships with its customers

and develop business with others).

It will be impossible for u-blox to recover from the harm to its goodwill and

business reputation. See Thiel Decl. at ¶ 35 (“[I]t would be impossible for u-blox to

recover the goodwill and reputation that u-blox has built up over so many years.”).

Blindlight, LLC v. Cubbison, No. LA CV-1703497 JAK (PLAx), 2017 WL

4769460, at *12 (C.D. Cal. July 3, 2017), is instructive. In Blindlight, the court

found that potential harm to a plaintiff’s business reputation was irreparable because

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plaintiff’s clients were “confused and concerned by the abrupt change” in plaintiff’s

service after the plaintiff and defendant subcontractor were unable to reach an

agreement. Id. at *12. This is precisely what occurred here in 2017 before u-blox

was forced to give up its rights and accept a non-FRAND license. See Murray Decl.

at ¶¶ 17 – 21 (explaining that u-blox’s clients expressed serious concerns and

confusion when InterDigital began communicating with them stating that u-blox

was not licensed by InterDigital). Here, as in Blindlight, InterDigital’s actions are

“likely to harm Plaintiff’s goodwill with both particular clients and in the general

marketplace.” Blindlight, 2017 WL 4769460, at *12. “Because the loss of goodwill

is not easily quantified, it supports a showing of irreparable harm.” Id.

2. The Harm to u-blox

While monetary harm generally will not support a request for injunctive

relief, it is well-settled that monetary harm can rise to the level of irreparable harm

when a monetary remedy would be inadequate, such as when there is a threat to the

very existence of a business. Regents of Univ. of California v. Am. Broad. Cos.,

Inc., 747 F.2d 511, 523 n.3 (9th Cir. 1984) (“threat to business’ existence” is an

exception to the rule that monetary damages do not constitute irreparable harm).

Here, InterDigital’s refusal to refrain from contacting u-blox customers in

order to put pressure on u-blox See Thiel

Decl. at ¶ 39

Thus, InterDigital’s conduct “support[s] a finding of irreparable harm.”

Signal Hill Serv., Inc. v. Macquarie Bank Ltd., No. CV 11-01539 MMM (JEMX),

2011 WL 13220305, at *18 (C.D. Cal. June 29, 2011) (“Courts within the Ninth

Circuit have also recognized that the ‘major disruption of a business’ or

‘termination’ thereof can constitute irreparable injury.”); see also Auntie Anne’s,

Inc. v. Wang, No. CV 14-01049 MMM (Ex), 2014 WL 11728722, at *9 (C.D. Cal.

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July 16, 2014); Mahroom v. Best Western Int’l., Inc., No. C 07–2351 JF (HRL),

2009 WL 248262, at *3 (N.D. Cal. Feb. 2, 2009).

Indeed, InterDigital’s wrongful interference has put u-blox’s business

. See Thiel Decl. at ¶ 19 (stating that if InterDigital is

permitted to contact u-blox’s customers stating that

; see also Baker Decl. at ¶ 32 (“InterDigital’s threats to u-blox’s customers

and downstream manufacturers ); Murray

Decl. at ¶ 29 (u-blox’s harm would be such that “u-blox would be unable to

recover”); id. at ¶ 30 (“if, under these circumstances, u-blox loses a design to a

competitor and/or u-blox’s customer finds another supplier and transfers its goodwill

to that supplier, it will be extremely difficult, if not impossible, to unwind that

relationship and get that customer to return to u-blox”).

Based on the foregoing, if a TRO is not granted prohibiting InterDigital from

contacting u-blox’s customers and downstream manufactures claiming that u-blox is

not licensed, u-blox will be irreparably harmed.

D. The Equities Weigh Heavily in u-blox’s Favor

The Court must also consider and “balance the competing claims of injury

and must consider the effect on each party of the granting or withholding of the

requested relief.” Extreme Reach v. Spotgenie Partners, No. CV 13-07563-DMG

(JCGx), 2013 WL 12081182, at *8 (C.D. Cal. Nov. 22, 2013). Here, the equities

strongly favor u-blox.

Here, on the one hand, u-blox is willing to enter into a license agreement with

InterDigital as long as the rate is FRAND. See Baker Decl. at ¶ 43. As such, and

because the parties are in disagreement as to what the FRAND rate is, u-blox

brought this action so that the Court may adjudicate the issue. Once the FRAND

rate is determined by this Court (subject, of course, to any potential appeals), u-blox

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will pay the FRAND rate to InterDigital, as the parties did in TCL Commc’ns Tech.

Holdings. See 2017 WL 6611635, at *5. u-blox will therefore ultimately have an

InterDigital license,

.

On the other hand, there is no legitimate reason why InterDigital would reach

out to u-blox’s customers or downstream manufacturers while this litigation is

pending. To the contrary, the only reason why InterDigital would interfere with u-

blox’s customers would be to apply wrongful pressure on and “hold-up” u-blox to

force it to accept a non-FRAND license. See Microsoft, 795 F.3d at 1046 (upholding

a jury verdict finding that Motorola breached its good faith and fair dealing

obligations when Motorola intended to induce hold-up, i.e., to pressure Microsoft

into accepting higher RAND rate than was objectively merited).

As explained above, if InterDigital is not enjoined pending the outcome of

this litigation and determination of a FRAND rate, u-blox is at risk of losing its

market goodwill, losing its key clients, suffering financial loss

In sharp contrast, InterDigital will not suffer any

injury if InterDigital is enjoined, because InterDigital will be paid the FRAND rate

once it is established by this Court. See, e.g., Realtek Semiconductor, Corp., No. C-

12-3451-RMW, 2014 WL 2738226, at *6 (N.D. Cal. June 3, 2014) (setting a

FRAND rate as part of final judgement). In sum, the equities strongly favor u-blox.

See, e.g., Huawei Techs., Co. v. Samsung Elecs. Co., No. 3:16-cv-02787-WHO,

2018 WL 1784065, at *10 (N.D. Cal. Apr. 13, 2018) (“the Shenzhen Order

interfere[s] with ‘equitable considerations’ by compromising the court’s ability to

reach a just result in the case before it free of external pressure on [Samsung] to

enter into a ‘holdup’ settlement before the litigation is complete.”).

E. A Preliminary Injunction is in the Public Interest

Finally, the public interest factor weighs heavily in favor of u-blox as well.

This factor requires the Court to consider “whether there exists some critical public

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interest that would be injured by the grant of preliminary relief.” Indep. Living Ctr.

of S. California, Inc. v. Maxwell-Jolly, 572 F.3d 644, 659 (9th Cir. 2009). “Where a

party demonstrates both the likelihood of success on the merits and irreparable

injury, ‘it almost always will be the case that the public interest will favor’ the

issuance of an injunction.” Jews For Jesus v. Brodsky, 993 F. Supp. 282,

312 (D.N.J. 1998).

Here, the public has an interest in seeing companies like InterDigital, that

own SEPs, comply with their obligations to offer licenses to alleged SEPs at fair

rates. See Broadcom Corp., 501 F.3d at 308–14 (explaining how industry standard-

setting can enhance consumer welfare by increasing competition, preventing patent

hold-up, and reducing costs); Certified Restoration Dry Cleaning Network v. Tenke

Corp., 511 F.3d 535, 551 (6th Cir. 2007) (granting injunction based on the “general

public interest in the enforcement of voluntarily assumed contract obligations”).

The public also has an interest to see technology companies and manufacturers

design and innovate products, but InterDigital’s interference with u-blox’s customer

relationships, and prospective customer relationships, will disrupt the supply chain.

The issuance of this injunction will thus allow u-blox to pursue a FRAND rate,

without the disruption of its relationships with customers and its business. It will

also prevent u-blox from being wrongfully pressured into an unfair and non-

FRAND license.

In sum, the public interest will be served by the injunctive relief and

therefore, u-blox’s request for relief should be granted.

IV. u-Blox Should Not Be Required To Post a Bond

For purposes of the security requirement under Federal Rule of Civil

Procedure 65(c), u-blox submits that, in light of the high likelihood that u-blox will

prevail in this action, the fact that the balance of equities sharply favors u-blox, and

because InterDigital’s interests will not be impacted if an injunction issues, u-blox

should not be required to post a security at all. See California v. Tahoe Reg’l

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Planning Agency, 766 F.2d 1319, 1326 (9th Cir. 1985) (“the likelihood of success

on the merits . . . tips in favor of a minimal bond or no bond”).

V. CONCLUSION

For the foregoing reasons, u-blox respectfully requests that a TRO issue and

an Order to Show Cause on why a Preliminary Injunction should not issue,

prohibiting InterDigital during the pendency of this action or until a FRAND rate is

otherwise determined from contacting u-blox’s customers and downstream

manufacturers, demanding royalty payments from them for products incorporating

u-blox technology, or otherwise disrupting or interfering with u-blox’s relationships

with its customers and downstream manufacturers.

Dated: January 1, 2019 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP

By

/s/ Stephen S. Korniczky STEPHEN S. KORNICZKY

MARTIN R. BADER

MATTHEW W. HOLDER

DANIEL L. BROWN

RYAN P. CUNNINGHAM

Attorneys for Plaintiffs