At the same time that Judge Gilstrap recently entered his bench trial ruling that rejected Metaswitch’s standards-based equitable defenses (see our Oct. 2, 2016 post), he also entered an Order that rejected Metaswitch’s request to set aside a jury’s verdict that it infringed valid patent claims based on, among other things, SEP-related grounds. The ruling is interesting mainly due to the procedural issues it raises. Judge Gilstrap did make a substantive ruling that the CableLabs, IETF and ITU-T intellectual property rights (IPR) agreements at issue applied on a patent claim-by-claim basis and not on a patent-by-patent basis (i.e., some claims in a patent may be subject to the IPR agreement, but other claims within that same patent may not).
Severing Patent Infringement Claims from Competition/Contract Claims
First, Judge Gilstrap rejected Metaswitch’s argument that it was prejudiced by the court severing non-patent counterclaims from the instant patent infringement portion of the case. Specifically, Judge Gilstrap issued an Order that severed from this case and consolidated into another action between the parties various non-patent claims raised by both parties, including Metaswitch’s competition law claims and contract claims based on standard setting activity. Judge Gilstrap stated that, in the instant patent action, “the jury nevertheless heard evidence concerning Genband’s FRAND license defenses” and “apparently rejected these defenses.”
The public record is not clear on what the jury specifically heard and was instructed with respect to the standards-based defenses because the jury trial transcripts remain unavailable from Pacer and the parties joint proposed juyy instructions show a dispute on how to instruct the jury on the standards-based issues.
It also will be interesting to see whether and to what extent the severed case on standards-based issues may be impacted by the jury verdict that apparently rejected Metaswitch’s standards-based defenses and Judge Gilstrap’s bench trial ruling that rejected standards-based defenses. For example, will Metaswitch provide evidence in the severed case on issues that Judge Gilstrap found lacking in the instant action. Judge Gilstrap stated that “the Court will withhold opinion on the applicability of preclusion doctrines to other pending disputes between these parties.”
Rejecting Alter-Ego Jury Instruction
Second, Judge Gilstrap rejected Metaswitch’s argument that it erred in not providing alter-ego instructions to the jury about Nortel being bound by standards-based activity and commitments of Nortel’s subsidiary (NNCSI). In addition to Metaswitch not timely raising the instruction, Judge Gilstrap found there was insufficient evidence presented “to pierce [the] corporate veil between NNCSI and the parent Nortel Network Ltd.” Judge Gilstrap also had rejected alter-ego argument in his bench trial ruling in this case.
Declining to Declare No Entitlement to License
Third, Judge Gilstrap rejected Genband’s motion for partial summary judgment that “Metaswitch is not entitled to a license to any asserted claim on FRAND, royalty-free, or any other terms based on an alleged obligation to license made to a standard setting organization, including CableLabs, IETF, and ITU.” Judge Gilstrap ruled that the jury had entered a verdict in Genband’s favor notwithstanding Metaswitch’s licensing defense, and Rule 50(b) “does not allow Genband to seek advisory opinions from the Court on issues it had already prevailed on.” Further, “it is unclear what relief Genband seeks” because granting the motion “would not alter any aspect of the verdict, nor would it provide a basis for a new trial on damages.” The court would not issue advisory rulings “that cannot affect the rights of litigants in the case before them.”
IPR Agreements Apply On Claim-By-Claim Basis
Substantively, Judge Gilstrap rejected Metaswitch’s argument that any licensing obligations imposed by alleged CableLabs, IETF and ITU agreements applied on a patent-by-patent basis. Judge Gilstrap ruled that the those agreements applied on a claim-by-claim basis such that some claims within a patent may be subject to a standards-based licensing commitment while other claims within that same patent would not, stating:
First, the CableLabs IPR Agreement addresses this issue in terms of “Licensed Claims,” thus suggesting licenses were granted on a claim-by-claim basis. Second, the ITU Declarations suggest that any license obligations extend only to “items that have been patented” and “whose use would be required to implement ITU-T Recommendations.” Since some claims in a patent may be required to implement ITU-T Recommendations while other claims in the same patent are not required, the langauge of the agreement suggests that the license obligations apply on a claim-by-claim basis. Accordingly, the Court’s instructions on this issue were not erroneous.