Breach of contract

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Judge James V. Selna of the Central District of California (“C.D. Cal.”) recently released the redacted, 115-page public version of his Memo of Facts and Law with his FRAND determination in the TCL v. Ericsson SEP dispute concerning 2G, 3G and 4G cellular technology in the European Telecommunications Standards Institute (“ETSI”) standards along with his Final Judgment And Injunction, which injunction has detailed terms like one would find in a licensing agreement.

Judge Selna ultimately ruled that Ericsson’s licensing conduct did not breach its FRAND commitment, but that Ericsson’s proposed licensing terms were not FRAND.  Judge Selna rejected the FRAND methodologies and resulting FRAND royalty rates proposed by both TCL and Ericsson.  Judge Selna did his own FRAND methodology based on the methods and evidence presented by the parties, following mainly a modified version of a “top down” approach proposed by TCL.  The FRAND rates determined by Judge Selna fell about half-way between TCL and Ericsson’s proposals, though direct comparison is difficult.  For example, for Ericsson’s 4G SEPs, the royalty rates from the parties and court varied as to scope (e.g., blended global rate versus regional rate) and required some conversion to compare (e.g., Judge Selna computed an effective “unpacked” royalty that accounted for lump-sum payments and royalty floors in Ericsson’s offers):

4G SEP Royalty Rate
(Percentage of Mobile Phone’s Net Price)
TCL’s Proposed 4G Global Rate 0.16% (Blended global rate)
Court’s 4G Rates (by region) 0.450% (U.S.)
0.314% (Rest of World; No 4G Sales in Europe)
Ericsson Effective U.S. 4G Rates
(Court calculated from Option A and B offers)		 1.074% (Option A Effective U.S. Rate) or
1.988% (Option B Effective U.S. Rate)

We provide below a bullet-list summary of some key points from the decision as well as a (rather lengthy) detailed discussion of Judge Selna’s decision.  We consider this an important decision to read, and encourage you to do so, because it is one of the few decisions that describe a court’s analysis in determining a disputed FRAND royalty.  But we also believe this case provides only incremental development of the case law itself given the highly factual nature of the decision in this still developing area of law.  Judge Selna  acknowledged that trying to obtain “precision and absolute certainty” here was a “doomed undertaking.”  In other words: Learn from this decision, but do not assume it represents a definitive proper FRAND analysis and is representative of a FRAND royalty for all FRAND cases. Its one step in a continuing journey …
Continue Reading Judge Selna determines FRAND Rate and enters contract-type injunction on ETSI SEPs (TCL v. Ericsson)

Yesterday, a jury returned a verdict finding that Fujitsu had breached its standard-setting obligations to offer its declared ‘737 Patent (now expired) to Tellabs on reasoanble and non-discriminatory terms (RAND).  Judge Holderman then issued an order to show to cause why the patent should not be held unenforceable as to Tellabs.  This case presents many…

Last week, Judge Holderman issued several orders on various motions in limine filed by Fujitsu and Tellabs in advance of the jury trial of the case, which began this past Monday.  The jury will decide whether Fujitsu breached its alleged obligation to offer Tellabs a license to Fujitsu’s ‘737 patent on reasonable and non-discriminatory terms…

SanDisk brought suit against Round Rock Research in the District of Delaware last week, alleging that the patent assertion entity’s acquisition and enforcement of standard essential patents previously held by Micron Technology has violated federal and state antitrust laws and breached contractual commitments to license the patents on RAND terms. The action, Sandisk Corporation v.

gavel

This afternoon the RAND breach of contract case between Microsoft and Motorola went to the jury, and this evening — after just a few short hours of deliberation — the jury came back with its verdict.  According to Curtis Cartier (@curtis_cartier on Twitter), a freelance journalist who attended the trial, the jury found…

A month ago, we discussed how Microsoft and Motorola filed dueling summary judgment motions in an attempt to eliminate some of the issues from the upcoming RAND breach of contract jury trial in Seattle (currently set to begin August 26).  Judge James L. Robart held an oral argument on July 31, and this morning, his order hit the docket (the order is actually dated yesterday — Judge Robart is apparently not taking Sundays off).

[2013.08.11 Order on Microsoft-Motorola SJ Motions]

As you can tell from the title of this post, Judge Robart granted summary judgment on some — but not nearly all — of the issues briefed by the parties.  Both Microsoft and Motorola prevailed on some issues and lost on others.  The bottom line is that the jury will still have a lot to decide in this case.  After the jump, we’ll take a look at how Judge Robart ruled — starting with the motions that he denied.


Continue Reading Two weeks ahead of Microsoft-Motorola jury trial, summary judgment ruling reduces the issues (but only a little bit)

A couple months ago, Microsoft asked Judge James L. Robart to confirm that the second phase of the Microsoft-Motorola RAND breach of contract trial — in which the actual breach and damages issues will be addressed — would be tried to Judge Robart himself, and not a jury (a motion that Motorola opposed).  Microsoft…

The district court in the Microsoft-Motorola RAND breach of contract case has already decided some unique issues of first impression, and will take on some more in the next phase of the case.  And if the parties don’t settle, an appeal is likely to follow.  This raises an interesting question, one that doesn’t necessarily have a clear answer — which appellate court would have jurisdiction over an appeal of Judge Robart’s RAND-related rulings?

The Western District of Washington sits within the 9th Circuit Court of Appeals (which, as noted below, has already heard an interlocutory appeal in this case).  But as you may know, in order to preserve uniformity in patent law, the U.S. Court of Appeals for Federal Circuit in Washington, DC is the court designated by Congress as the appeals court with exclusive jurisdiction for nearly all patent cases.  The Microsoft-Motorola case (at least the part which has garnered the most attention) involves a breach of contract issue relating to patents, standard-setting, and patent licensing issues.  So, which is it — the 9th Circuit or the Fed Circuit?

Brace yourselves – this will take a couple thousand words.


Continue Reading Which appeals court has appellate jurisdiction over the Microsoft-Motorola RAND case?

In the aftermath of last week’s Microsoft-Motorola RAND-setting opinion, the case will now to proceed toward an August trial date.  At this trial — if it gets that far — either Judge Robart or a jury (this issue is still up in the air) will determine (1) whether Motorola breach its RAND obligations to the IEEE and ITU; (2) if a breach has occurred, whether Microsoft is entitled to damages as a result; and (3) the amount of any damages owed.  As we’ve noted before, Microsoft will likely seek summary judgment prior to trial, given the difference between Motorola’s opening 2.25% offer and the final RAND royalty rate set by Judge Robart.  But either way, the issues of breach of contract and potential damages remain in the case, and the parties are currently taking some limited discovery on these issues.

Yesterday, Motorola filed a letter motion with the court [LINK], asking it to limit the theories on which Microsoft may base its damages claims.  Motorola asserts that in recent weeks, Microsoft has significantly (and improperly) expanded its damages contentions in violation of the Federal Rules of Civil Procedure, prejudicing Motorola’s ability to prepare its own case.Continue Reading Motorola asks Washington court to limit Microsoft’s theories of damages for potential RAND breach

The standard-essential patent battle between InterDigital and Chinese handset makers Huawei and ZTE rages on in the U.S. District Court for the District of Delaware.  Recall that the parties are awaiting an Initial Determination in ITC Inv. No. 337-TA-800, and are also involved in Inv. No. 337-TA-868.  In the companion district court cases to the -868 investigation, Huawei and ZTE attempted to have the Delaware court expedite a determination of FRAND terms for InterDigital’s portfolio, an attempt that was rebuffed by the court.  But now, in motion filed yesterday, InterDigital seeks to have Huawei and ZTE’s FRAND-related claims dismissed altogether.  InterDigital argues that the FRAND counterclaims should have been asserted in an earlier litigation, are not ripe, and merely seek an advisory opinion.  InterDigital also claims that Huawei and ZTE have failed to allege the existence of an enforceable contractual commitment under the applicable law.
Continue Reading InterDigital asks Delaware court to dismiss Huawei, ZTE’s FRAND counterclaims