On September 10, 2013, Chief ALJ Charles E. Bullock issued the public version of Order No. 63 (dated August 29, 2013) denying Respondent ZTE Corporation and ZTE (USA) Inc.’s (collectively, “ZTE”) motion to certify to the Commission a request for judicial enforcement of its April 8, 2013 subpoenas to Intel Corporation (“Intel”) in Certain Wireless Devices with 3G and/or 4G Capabilities and Components Thereof (Inv. No. 337-TA-868).

According to the Order, ZTE argued that in 2012 Intel entered into a patent sales transaction with Complainants InterDigital Communications, Inc., InterDigital Technology Corporation, IP Licensing, Inc., and InterDigital Holdings, Inc. (collectively, “InterDigital”) involving the sale of approximately 8% of InterDigital’s patent portfolio, including more than 1,700 patents and applications related to 3G, LTE, and 802.11 technologies.  ZTE contended that on April 8, 2013, it served suponeas duces tecum and ad testificandum on Intel, seeking documents and testimony related to the sales negotiations between Intel and InterDigital, including Intel’s internal notes and analyses and Intel’s valuation of InterDigital’s patent portfolio at the time of the Intel acquisition.  ZTE argued that these documents are directly relevant to Respondents’ affirmative defenses relating to InterDigital’s commitment to licensing patents under Fair, Reasonable, and Non-Discriminatory (FRAND) terms and whether InterDigital’s portfolio value and the FRAND rates were decreased upon that sale.  ZTE asserted that Intel has denied the existence of any non-privileged internal documents related to the transaction, and that Intel should be required to conduct a reasonable search, produce any responsive, nonprivileged documents, produce a privilege log of any newly found documents that Intel claims are privileged, and produce a witness to testify regarding the narrowed deposition topics.

In opposition, Intel argued that ZTE’s subpoenas seek privileged documents and testimony concerning Intel’s internal legal assessments of the patents Intel purchased from InterDigital.  Intel added that it had provided a list of representative documents in its possession to ZTE and ZTE had conceded that the documents were privileged.  ZTE also argued that these documents and information were irrelevant because the patents that Intel purchased are different patents from those asserted in this Investigation and that none of the patents asserted in this Investigation were valued by its lawyers.  Further, Intel argued that ZTE already had all of the information needed to conduct an analysis of the value of InterDigital’s portfolio and whether its licensing offers complied with FRAND because it already knows the identity of the patents Intel purchased and how much Intel paid for those patents and has the documents and information constituting the negotiations between Intel and InterDigital.

ALJ Bullock agreed with Intel, stating that ZTE had failed to explain why the discovery it sought from Intel was relevant in light of Intel’s representations that it did not conduct a valuation of the patents asserted in the Investigation.  The ALJ explained that an argument that Intel “may” possess portfolio valuations of InterDigital’s patent portfolio “does not rebut the sworn declaration provided by in house counsel for Intel, nor does it explain why Intel’s valuation of patents that are not asserted in this Investigation are relevant to the proper FRAND rates for the asserted patents.”  Further, the ALJ noted that, ZTE already knew how much money Intel paid for the patents sold and thus the materiality of Intel’s internal valuations would be minimal.  Accordingly, the ALJ determined there was no basis to certify a subpoena seeking ZTE’s requested discovery and denied ZTE’s motion.