Northern District of California Grants Via Licensing Corporation’s Motion for Partial Summary Judgment Against Haier America Trading

October 9, 2018

Judge Richard Seeborg of the Northern District of California granted Via Licensing Corporation's Motion for Partial Summary Judgment against Haier America Trading, LCC for millions of dollars in damages related to Haier's breach of the parties' Advanced Audio Coding Patent Licensing Agreement. Via is a patent pool administrator that licenses in a single license  patents owned by multiple entities that are essential to practice the AAC audio compression standards, offering a convenient and cost-effective way for companies practicing AAC to acquire rights from many patent owners in a single transaction.

Via and Haier entered into the AAC license  pursuant to which Haier agreed to provide Via with quarterly royalty payments and reports detailing the quantity of licensed products Haier sold each quarter as well as payments and reports for the period before the effective date of the license. Haier reported that it had sold zero licensed products before signing the contract, and starting in 2013, Haier stopped providing quarterly reports and paying royalties. Via engaged an independent auditor, which, after attempting for 10 months to secure Haier's cooperation in the audit, produced  a final report that concluded, largely based on third-party data and extrapolation, that Haier failed to report sales of 2.6 million products. In opposing Via's Motion based on the audit report, Haier argued that the auditor's reliance on third-party data and extrapolation provided a disputed issue of material fact because the auditor characterized those sales as “Probably Reportable Issues,” which, Haier argued, meant that the auditor conceded that it could not determine whether the sales actually required  royalty payments from Haier. The Court rejected this and other Haier arguments, holding that the license required Haier to accept the audit report, and that regardless of whether royalty payments were due outside of a state of limitations period, the claim that Haier failed to pay royalties based on the audit report was timely. The Court liberally cited Haier's admissions obtained by S&C during the course of pre-trial depositions.

The S&C team representing Via was led by Garrard Beeney and Laura Kabler Oswell, who argued the motion.