On March 27, 2018, Hybrid Audio, LLC (“Hybrid Audio”) sued Nintendo of America Inc. and Nintendo Co., Ltd. (“Nintendo”) for alleged infringement of RE 40,281, a reissue of U.S. 6,252,909. The allegedly infringing products include the Nintendo Wii and the Nintendo DS. RE 40,281 generally relates to signal processing and is part of technology used for MP3 technology, and Hybrid Audio’s argument is that Nintendo infringes via practicing various parts of the MP3 technical standard (ISO/IEC 11172-3:1993).
As part of Hybrid Audio’s complaint, it notes that Nintendo may enter a Reasonable and Non-Discriminatory (“RAND”) agreement to license RE 40,281 as part of the MP3 Standards. Hybrid Audio also indicates that products supplied by Microsoft Corporation are not part of the allegedly infringing products, suggesting that Microsoft has possibly already entered into such an agreement.
RAND agreements, sometimes called FRAND agreements (for “Fair, Reasonable, and Non-Discriminatory”), are commonly used in patent pools. In industries where standards (e.g., audio standards like MP3 and cellular communications standards like 3G or LTE) are important, patent owners often collectively pool “standards-essential” patents and mutually agree to license those patents on FRAND/RAND terms. For patent owners, this can be a good deal: once their patents become standards-essential, users of the standard must license their patent, albeit on RAND/FRAND terms. For licensees, this can also be a good deal: because all patent owners must license their standards-essential patents on RAND/FRAND terms, they can usually acquire licenses to the standard fairly easily and with reasonable terms.
Strangely, Hybrid Audio’s complaint specifically identifies the Nintendo Wii and Nintendo DS as infringing products. The Nintendo Wii was launched in 2006, whereas the Nintendo DS was launched in 2004. 35 U.S.C. § 286 limits damages to six years prior to the filing of a complaint, meaning that Hybrid Audio’s recovery will be limited to the period from 2012 to 2018. During that period, Nintendo was marketing different a next generation of game consoles (the Wii U and the 3DS), which are not referenced in Hybrid Audio’s complaint. Potential damages related to sales of the Wii and DS are likely to be extremely small.