Philips can pursue import ban in Thales wireless patent dispute, court says

Logo of Thales in Brest
The logo of Thales is seen on a company building in Brest, France, March 14, 2022. REUTERS/Stephane Mahe
  • Thales said Philips used threat of ban to seek unfair license
  • Court said Thales' injury too speculative to halt Philips' case

(Reuters) - French defense company Thales SA lost a bid Wednesday to block Koninklijke Philips NV from pursuing a U.S. import ban on its products in their licensing dispute over Philips' wireless standard-essential patents.

The harm Thales said it suffered was too speculative to support a court order halting Philips' case at the U.S. International Trade Commission, according to a ruling by the U.S. Court of Appeals for the Federal Circuit.

A Thales spokesperson noted that the company won the ITC case last week. The spokesperson said the appeals court's decision did not affect the ITC's ruling and that Thales is "not restricted in any way from the U.S. market."

Philips and its attorneys did not immediately respond to requests for comment.

Philips sued Thales and others for patent infringement in Delaware federal court and at the ITC after talks to license Philips' wireless patents broke down. Philips said the patents are essential to 3G and 4G international wireless standards, which means that any devices that adhere to the standards use the technology.

The Dutch electronics company said Thales' modules for connecting to wireless networks, used in internet-of-things products and other devices, violated its rights.

Thales countersued in Delaware, arguing Philips breached its duty to offer licenses to standard-essential patents on fair and reasonable terms. It asked the court to determine fair terms for the license.

Thales appealed to the Federal Circuit last year after the Delaware court denied its request to halt the ITC proceedings. It told the appeals court that Philips was using the threat of an import ban to try to extract unreasonably high royalties.

The Federal Circuit found Wednesday that Thales had not shown a risk of irreparable harm that would justify stopping the ITC case.

"Thales did not present any evidence that it lost customers, had customers delay purchases, or struggled to acquire new business because of the ongoing ITC proceedings," Chief Circuit Judge Kimberly Moore wrote for a three-judge panel. Instead, customers had only "voiced concerns" about its ability to deliver products if it lost.

Moore said Thales' "speculative" harm did not justify a "rare and extraordinary" order to halt the ITC case.

The case is Koninklijke Philips NV v. Thales DIS AIS USA LLC, U.S. Court of Appeals for the Federal Circuit, No. 21-2106.

For Philips: Eley Thompson of Foley & Lardner

For Thales: Paul Zeineddin of Axinn, Veltrop & Harkrider

(NOTE: This story has been updated with comment from Thales.)

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets, for Reuters Legal. He has previously written for Bloomberg Law and Thomson Reuters Practical Law and practiced as an attorney. Contact: 12029385713