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January 28, 2013

The Honorable Lisa R. Barton Acting Secretary to the Commission 500 E Street, SW, Room 112 Washington, DC 20436 Re: Docket No. 337-2929 Certain Wireless Devices with 3G and/or 4G Capabilities and Components Thereof

Dear Acting Secretary Barton: On behalf of proposed respondents Huawei Technologies Co. Ltd., Huawei Device USA, Inc., and Futurewei Technologies, Inc. (collectively “Huawei”), we urge the Commission to delay institution of the complaint filed by InterDigital Communications, Inc., InterDigital Technology Corporation, IPR Licensing, Inc. and InterDigital Holdings, Inc. (collectively “InterDigital”) until the federal district court has determined the appropriate FRAND U.S. rate in the parallel action, Civ. Action No. 13-08 (D. Del. 2013) (“Delaware Action”), or at a minimum, until the Commission issues its Final Determination in the related case of Certain Wireless Devices with 3G Capabilities and Components Thereof, Inv. No. 337-TA-800 (“800 Investigation”). Following on the heels of the Federal Trade Commission, Department of Justice and United States Patent and Trademark Office’s concerns regarding the issuance of exclusion orders applicable to FRAND-committed patents, InterDigital filed its second complaint against Huawei (and third complaint against the Nokia respondents) making allegations that coincide with these agencies’ policy fears. InterDigital has again alleged infringement of standard essential patents (“SEPs”) subject to FRAND commitments and sought an exclusion order from the Commission. Like its prior complaint in the 800 Investigation, the new complaint raises serious substantive and policy questions regarding the assertion of FRAND-encumbered patents at the ITC. There is also substantial overlap between InterDigital’s new complaint and 800 Investigation — four of the seven patents overlap and all but one of the proposed respondents are the respondents in the 800 Investigation. A delay in institution of InterDigital’s complaint will significantly conserve Commission and party resources, as well as permit the Commission to implement the recommendation of its

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The Honorable Lisa R. Barton Acting Secretary to the Commission January 28, 2013 Page 2 sister agencies and federal district courts concerning exclusion orders applicable to FRANDcommitted SEPs. A. Factual Background Concerning Parallel Actions 1. The Delaware Action

At the same time that InterDigital filed its latest complaint with the Commission, InterDigital also filed complaints in the U.S. District Court of the District of Delaware against the proposed respondents alleging infringement of all of the patents asserted in the ITC. See Exhibit A (InterDigital Communications Corp. v. Huawei, Civ. Action No. 13-08, Complaint (D. Del. 2013)). Huawei does not intend to seek an automatic stay of the Delaware Action pursuant to 28 U.S.C. § 1659. Instead, Huawei has filed an answer asserting counterclaims, including for breach of contract and equitable estoppel, relating to InterDigital’s FRAND commitments, as well as declaratory judgment counterclaims asking the district court to set FRAND terms for InterDigital’s United States 3G and 4G LTE patents. See Exhibit B at Counts I-III, V, VI (Huawei Answer, Civ. Action No. 13-08 (Jan. 24, 2013)). Huawei will be bound by the district court’s determination of a FRAND rate. 2. The 800 Investigation

The 800 Investigation, instituted in August 2011, 76 Fed. Reg. 54252 (Aug. 31, 2011), has significant substantive and policy overlap with InterDigital’s new complaint. The hearing in the 800 Investigation is scheduled to begin on February 12, 2013 and the target date is October 28, 2013. Order 62 (Sept. 10, 2012). A majority of the parties are the same in the 800 Investigation and the new complaint. The complainant InterDigital is the same, and Huawei, Nokia Corporation, Nokia Inc. (collectively “Nokia”), ZTE Corporation and ZTE (USA) Inc. (collectively “ZTE”) are respondents in both actions. Cf. Third Amd. Complaint, Inv. No. 337TA-800 (Nov. 27, 2012) with Complaint Dkt. No. 337-2929. Further, of the seven patents asserted in the new complaint, four are asserted in the 800 Investigation.1 Like in the 800 Investigation, all of the asserted patents in InterDigital’s new complaint have been declared by InterDigital to be potentially essential to wireless communication 3G and/or 4G LTE standards. Similarly, for all of the asserted patents, InterDigital has made binding written commitments to license them on FRAND terms. See, e.g. IPR Information Stmt. US. Patent Nos. 7,616,970, 7,706,830, 8,009,636 and 7,502,406, which are asserted against Huawei, Nokia, LG and ZTE in the 800 Investigation, are asserted in the new complaint against Samsung. Cf. Third Amd. Complaint ¶ 7.2, Inv. No. 337-TA-800 (Nov. 27, 2012) with Complaint Dkt. No. 337-2929 ¶¶ 7.8, 7.9, 7.11, 7.12.
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The Honorable Lisa R. Barton Acting Secretary to the Commission January 28, 2013 Page 3 and Licensing Declaration, Annex 1, ISLD-200407-004 (April. 8, 2004); IPR Information Stmt. and Licensing Declaration, Annex, ISLD-201109-021 (Nov. 4, 2011) (declaring patents essential to the European Telecommunications Standards Institute (“ETSI”)). Despite its FRAND commitments, however, InterDigital has vigorously opposed any effort to establish a FRAND rate. See, e.g., Huawei Comments Relating to the Public Interest (Jan. 15, 2013). As a result, the same core set of facts concerning InterDigital’s FRAND obligations at issue in the 800 Investigation, and the same policy questions concerning whether it is appropriate to issue an exclusion order for FRAND-encumbered patents, will likely be repeated in the new investigation. B. A Delay Until Conclusion of the 800 Investigation Would Simplify Issues, and Conserve Commission Resources.

Given the overlap between the 800 Investigation and InterDigital’s new complaint, delaying institution of the new investigation until the Commission issues its Final Determination in the 800 Investigation will significantly conserve Commission and party resources, simplify issues in the new investigation, and permit resolution of common policy questions concerning the assertion of FRAND-encumbered patents at the ITC. Such benefits coincide with Commission precedent concerning stays. Post-institution, Administrative Law Judges (“ALJs”) have stayed investigations “pending resolution of a related litigation or administrative proceeding.” Certain Integrated Circuits, Chipsets, and Products Containing Same Including Televisions, Inv. No. 337-TA-822, Order 17 at 3 (Aug. 6, 2012) affirmed by Comm’n, Notice (Aug. 30, 2012) (“Integrated Circuits”). The Commission has considered five factors in determining whether to issue a stay: 1. 2. 3. 4. 5. The state of discovery and the hearing date; Whether a stay will simplify the issues and hearing of the case; The undue prejudice or clear tactical disadvantage to any party; The stage of parallel proceedings; and The efficient use of Commission resources.

Id. at 3-4. The factors have supported a stay where, for example, a new investigation has significant overlap with an existing, procedurally-advanced ITC action. Id. (granting motion to stay pending Commission determination in an investigation involving the same patents, same complainant, and many of the same respondents); Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same, Inv. No. 337-TA-649, Order 18 (Feb. 10, 2009) (granting stay pending Commission review of Final Initial Determination in a related investigation) (“Semiconductor Chips”). Further, investigations have also been stayed until a parallel court can decide key foundational issues. Certain Digital Cameras and Components Thereof, Inv. No. 337-TA-593, Order 7 (May 11, 2007) (granting motion to stay pending state court determination as to the ownership of the patents) (“Digital Cameras”).

The Honorable Lisa R. Barton Acting Secretary to the Commission January 28, 2013 Page 4 The five factors, on balance, strongly support delaying institution of InterDigital’s new complaint. First, since the new complaint has not yet been instituted, no hearing date has been set and no discovery has been conducted. A delay in institution, therefore, is appropriate. See Integrated Circuits, Order 17 at 5-6 (investigation stayed where discovery completed). Second, delaying institution will simplify, and perhaps eliminate, issues in the new investigation. As discussed, four of the seven patents in the new complaint are asserted in the 800 Investigation. At a minimum, the Commission’s final determination as to these four patents will inform claim constructions and domestic industry issues in the new investigation.2 More importantly, the same core set of facts concerning InterDigital’s FRAND obligations are at issue in the 800 Investigation and the new complaint. Both the substantive questions — whether InterDigital has failed to abide by its FRAND obligations — and the policy question — whether an exclusion order applicable to FRAND-encumbered patents is against the public interest — will be common to the two investigations. The Commission’s decision on these issues in the 800 Investigation, particularly as to the policy question, will streamline the FRAND and public interest issues in the new investigation. Similar to Integrated Circuits, the Commission’s final determination will undoubtedly and unquestionably have a significant impact on narrowing and simplifying the issues in this investigation, i.e., all of the parties will have the benefit of the Commission’s guidance. Id. at 6-7. See also Semiconductor Chips, Order 18 (finding that the Commission’s decision on infringement and invalidity of the common patents “will play an integral role . . . and provide guidance to the parties and the ALJ as they proceed . . . thereby simplifying the issues and more accurately focusing the parties’ efforts”). The second factor, thus, weighs strongly in favor of a delay. Third, InterDigital will suffer only minimal prejudice as a result of a delay, and any such prejudice is the result of its own litigation tactics. Although a delay may minimally prejudice InterDigital by prolonging the new investigation’s target date, that delay is the result of its own decision to file two separate ITC actions (or in the case of the Nokia respondents, three). Huawei is currently not aware of any reason why the three new patents asserted against Huawei and ZTE, and the one new patent asserted against Nokia, could not have been included in the 800 Investigation. Thus, any prejudice caused by the delay results from InterDigital’s tactical decision. Further, the likely narrowing of issues resulting from a delay outweighs any prejudice. See Integrated Circuits, Order 17 at 7 (granting stay despite prejudice to complainant).
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The Commission determination in the 800 Investigation, while informative in the new investigation, may not have a preclusive effect.

The Honorable Lisa R. Barton Acting Secretary to the Commission January 28, 2013 Page 5 Fourth, the stage of the 800 Investigation weighs in favor of delaying institution. The hearing in the 800 Investigation is scheduled to begin on February 12, 2013 and the target date is October 28, 2013. Order 62 (Sept. 10, 2012). Because the 800 Investigation has a definite final date — the target date — which is less than nine months away, the stage of parallel proceedings factor supports a delay. See Integrated Circuits, Order 17 at 7 (finding stage of parallel proceeding supported granting a stay where parallel proceeding was an ITC action in the late stages of the investigation). Fifth, delaying institution will result in the efficient use of Commission resources. As discussed, there are issues common to both investigations concerning InterDigital’s FRAND obligations and the larger policy concern of whether an exclusion order applicable to FRANDencumbered patents is against the public interest. To the extent the Commission determines in the 800 Investigation, consistent with the advice of several sister federal agencies,3 that an exclusion order is against the public interest, the issues in the new investigation will be streamlined, and, perhaps, eliminated entirely. A delay will permit the Commission to resolve the common policy questions once instead of in multiple investigations. This will, in turn, minimize the chance of different outcomes and the resulting burden on the Commission. C. A Delay Until the District Court Determines the FRAND Royalty Is Warranted.

Although delaying institution until conclusion of the 800 Investigation will promote judicial efficiency, the common substantive and policy FRAND issues in the new complaint and the parallel Delaware Action also warrant delay of institution until the determination of FRAND terms in the Delaware Action. As previously mentioned, Huawei is not seeking a mandatory § 1659 stay in the parallel Delaware Action and has, instead, filed counterclaims including a counterclaim seeking declaratory relief regarding appropriate FRAND terms for InterDigital’s 3G and 4G LTE US patents. See Exhibit B. In recent months, multiple district courts and federal agencies have acknowledged that injunctive relief in cases involving SEPs subject to a FRAND commitment is contrary to the public interest where the alleged infringer is able, and has not refused, to license on FRAND terms. All have suggested that an exclusion order should only issue for FRAND-encumbered See U.S. Dept. of Justice & U.S. Patent and Trademark Office, Policy Stmt. on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (Jan. 8, 2013) (suggesting that the public interest may preclude issuance of an exclusion order in cases where the infringer is able, and has not refused to license on FRAND terms); Federal Trade Commission, Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition at 244 (Mar. 2011) (“FTC Report”) (expressing similar concerns).
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The Honorable Lisa R. Barton Acting Secretary to the Commission January 28, 2013 Page 6 SEPs in narrow circumstances where there has been an offer to arbitrate FRAND terms that has been refused, or until litigation to set a FRAND rate is complete (and the potential licensee refuses to pay the set rate). For example, the Federal Trade Commission (“FTC”) recently determined that it is anticompetitive for a patent holder to seek injunctive relief against willing licensees using patents subject to FRAND commitments, as InterDigital does here and in the 800 Investigation. See In the Matter of Motorola Mobility LLC and Google Inc., FTC File No. 1210120. A recent FTC Consent Order prohibits Google from seeking injunctions on any SEP Google has committed to license on FRAND terms except where an offer to arbitrate FRAND license terms has been refused, or where litigation to determine a FRAND rate has concluded, and a license on such terms has been rejected. See In the Matter of Motorola Mobility LLC and Google Inc., FTC File No. 1210120, Analysis of Proposed Consent Order to Aid Public Comment at 6. The FTC has also noted that “we are concerned that a patentee can make a RAND commitment as part of the standard setting process, and then seek an exclusion order for infringement of the RAND-encumbered SEP as a way of securing royalties that may be inconsistent with that RAND commitment.” Certain Gaming and Entertainment Consoles, Related Software, and Components Thereof, 337-TA-752, Third Party United States Federal Trade Commission’s Statement on the Public Interest at 1 (June 6, 2012). The United States Department of Justice (“DOJ”) and the United States Patent and Trademark Office (“USPTO”) concur, noting in a recent policy statement that injunctive relief may be inconsistent with the public interest in the SEP context where “[a] decision maker could conclude that the holder of a F/RAND-encumbered, standards-essential patent had attempted to use an exclusion order to pressure an implementer of a standard to accept more onerous licensing terms than the patent holder would be entitled to receive consistent with the F/RAND commitment.” U.S. Dept. of Justice & U.S. Patent and Trademark Office, Policy Stmt. on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (Jan. 8, 2013). The DOJ/USPTO statement contemplates that an exclusion order should not issue unless and until litigation to set a FRAND rate is complete (and the putative licensee refuses to pay the set rate). Id. (“An exclusion order may still be an appropriate remedy . . . [f]or example, if a putative licensee refuses to pay what has been determined to be a F/RAND royalty or refuses to engage in a negotiation to determine F/RAND terms.”). Federal district courts have reached similar conclusions concerning injunctive relief for FRAND-encumbered patents. See Apple, Inc. v. Motorola, Inc., 869 F. Supp. 2d 901 (N.D. Ill. 2012) (“I don’t see how, given FRAND, I would be justified in enjoining Apple from infringing the ‘898 unless Apple refuses to pay a royalty that meets the FRAND requirement.”). The risks identified by the FTC, DOJ, USPTO and district courts are particularly significant here where InterDigital has a history of refusing to abide by its FRAND obligations. When Huawei sought to establish a FRAND rate in Delaware Chancery Court and the U.S.

The Honorable Lisa R. Barton Acting Secretary to the Commission January 28, 2013 Page 7 District Court for the District of Delaware, InterDigital vigorously opposed such efforts. See Huawei Technologies Co. Ltd., v. Interdigital Technology Co., C.A. No. 6974-CS; InterDigital et al. v. Huawei Technologies et al., C.A. No. 11-cv-00654-RGA (D. Del.). Huawei has also initiated contract and antitrust lawsuits in China and asked a Chinese court to set a royalty rate for InterDigital’s Chinese essential patents. Again, InterDigital has opposed the setting of a royalty rate. InterDigital’s actions make clear it was far more interested in exploiting the hold-up power of the ITC process than complying with its FRAND obligations. Delaying institution of the new complaint would permit the Commission fully to consider the recommendations of its sister agencies and federal district courts in the 800 Investigation. If the Commission agreed with those other agencies, or otherwise issued guidance in the 800 Investigation, the delay would further permit the Commission and the ALJ in the new case to consider and apply that decision and guidance. At the same time, if the district court sets FRAND terms for InterDigital’s 3G and 4G LTE US patents, then Huawei can pay the determined royalty, and its license will be a complete defense to InterDigital’s complaints. As such, a delay until the district court determines FRAND terms would narrow the issues and conserve Commission resources. In prior investigations, the Commission has stayed an investigation pending determination of critical issues in a parallel court, finding that simultaneously addressing such issues at the ITC “would be a waste of resources.” See Digital Cameras, Inv. No. 337-TA-593, Order 7 (May 11, 2007) (granting motion to stay pending state court determination as to the ownership of the patents). A similar stay is appropriate here. Therefore, Huawei requests that the Commission delay institution of InterDigital’s complaint against Huawei until the federal district court has determined the appropriate FRAND rate in the Delaware Action, or at a minimum, until the Commission issues its Final Determination in the 800 Investigation. In the alternative, if the Commission chooses not to delay institution, Huawei requests that it instruct the ALJ in the Notice of Investigation to consider a motion to stay the investigation against Huawei early in the proceeding. See Certain Course Management System Software Products, Inv. No. 337-TA-677, Notice of Investigation (June 3, 2009) (declining to not institute an investigation but stating that “the administrative law judge may wish to consider whether a stay is warranted at an early date in this proceeding”), Sincerely, /s/ Sturgis M. Sobin Sturgis M. Sobin

Certain Wireless Devices with 3G and/or 4G Capabilities and Components Thereof

Pending Institution Inv. No. 337-2929

CERTIFICATE OF SERVICE I, Danute Abrishami, certify that on January 28, 2013, copies of the foregoing LETTER AND EXHIBITS A AND B were delivered, pursuant to Commission regulations, to the following interested parties as indicated: The Honorable Lisa Barton Acting Secretary to the Commission U.S. INTERNATIONAL TRADE COMMISSION 500 E Street, SW Washington, DC 20436 By EDIS and Hand Delivery (8 Copies)

/s/ Danute Abrishami
Danute Abrishami Senior IP Litigation Specialist COVINGTON & BURLING LLP 1201 Pennsylvania Ave., NW Washington, DC 20004-2401 dabrishami@cov.com | 202.662.6573

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