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Wi-Fi Patent Owner Gets Ruling Setting Patent Royalties

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Oct. 4 (Bloomberg) -- A federal judge set 9.56 cents per chip as the value of contested patents used in wireless computer network technology in a case by patent-holder Innovatio IP Ventures LLC against electronic device makers Cisco Systems Inc., Netgear Inc. and Motorola Solutions Inc.

The ruling issued yesterday by U.S. District Judge James Holderman in Chicago stops short of fixing damages in the two-year-old litigation because the parties agreed to allow him to determine the royalty value before considering whether the patents were valid or infringed.

“The court hopes that by doing so, the possibility of settlement will be enhanced because the parties will be better able to evaluate the potential risks and benefits of expending additional resources in the litigation,” Holderman said.

Innovatio IP, based in Chicago, accuses the defendants, which also include Hewlett-Packard Co., Dell Inc. unit SonicWALL, and businesses that bought Wi-Fi devices made by the manufacturers, of infringing its portfolio of patents.

Holderman, citing an April ruling by U.S. District Judge James Robart in Seattle in a patent dispute between Google Inc.’s Motorola Mobility Holdings unit and Microsoft Corp., said the payment rate was based in part on an agreement by the patents’ original owner, Broadcom Corp., that they were essential to Wi-Fi technology and that license fees should be fixed at reasonable and non-discriminatory, or RAND, terms.

Attorneys for Innovatio IP and for Cisco said it was too soon to estimate potential damages.

Licensing Chips

“At a minimum, the court’s determination that the Wi-Fi chip is the appropriate base to which the RAND rate applies opens the door for Innovatio to potentially license hundreds of millions of units sold by numerous Wi-Fi chip suppliers,” Matthew McAndrews, an Innovatio IP attorney, said yesterday in an e-mailed statement.

Innovatio IP will be making licensing offers to the manufacturers based on Holderman’s order, McAndrews said.

Innovatio IP “still has a number of hoops to jump through before they can get anything,” Mark Chandler, general counsel for San Jose, California-based Cisco, said in a phone interview.

Chandler cited the open issues of validity and infringement, adding his company is also pursuing breach of contract claims against Innovatio IP.

“We would be shocked if we had to pay anything,” he said.

Holderman presided over a non-jury trial last month, during which he heard evidence on the RAND rate to which Innovatio IP would be entitled, and limited, if it proved infringement, he said in his ruling.

The judge has set a follow-up status hearing for Oct. 10. “The parties shall file an agenda for the status hearing, including proposals for setting further dates to resolve this litigation” by Oct. 8, Holderman said.

The case is In re Innovatio IP Ventures LLC, 11-cv-09308, in the U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew Harris in in federal court in Chicago at aharris16@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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