Today, a three-judge panel of the Fifth Circuit affirmed the judgment that Ericsson’s licensing offers to HTC on 2G, 3G and 4G standard essential patents (SEPs) based on the mobile device price (rather than the price of the baseband processor component inside the mobile device) complied with Ericsson’s ETSI commitment to license SEPs on fair,
Yesterday, Judge Gilstrap of the Eastern Division of Texas issued a preliminary injunction Order (an anti-antisuit-injunction or, more properly, an anti-interference injunction) designed to allow both the instant U.S. case filed by Ericsson and a parallel case filed by Samsung in China concerning contractual FRAND dispute on SEPs to proceed in parallel without either case interfering with the other.
This is an interesting procedural issue that we will see increased activity about as national courts from different countries seek to balance international comity–i.e., deference to the sovereignty and jurisdictional independence of another country–with enforcing national rights when parties in global disputes forum shop to file suits in perceived favorable countries. An important undertone in this case was that the China court’s procedure when enjoining Ericsson from enforcing its SEPs anywhere else in the world did not have the timely notice and opportunity for the sued party to respond that is provided and expected in U.S. courts. Further, Judge Gilstrap sought to limit interference with the China action and its procedures. For example, he did not preclude Samsung from proceeding in the China action or require Samsung to timely serve Ericsson documents filed in China (which is not provided for in the China court’s procedures). But he did Order that Samsung indemnify Ericsson if Ericsson is subject to any fines in the China action based on Ericsson proceeding in the instant U.S. case.
It will be interesting to see whether and to what extent the China court responds to Judge Gilstrap’s order, his effort to minimize interference with the China Action, and his statement that “Without hesitation this Court equally insists that it be permitted to adjudicate the issues raised here pursuant to its own legitimate jurisdiction and without interference.”…
On April 3, 2020, Judge Selna issued an Order in the TCL v. Ericsson case upon remand from the Federal Circuit, teeing the matter up for a jury trial on all liability and FRAND issues in the case to be heard at the same time. …
Continue Reading Judge Selna will hold jury trial on all SEP issues on remand (TCL v. Ericsson)
Today the Federal Circuit vacated Judge Selna’s bench trial decision in the much-watched TCL v. Ericsson case, ruling that Ericsson has the right to a jury trial to determine compensation for past infringement of Ericsson’s standard essential patents (SEPs) under the Seventh Amendment of the U.S. Constitution. So this case involving a FRAND computation method…
Last week, Judge Gilstrap ruled that Ericsson’s end-product-based “offers to HTC–$2.50 or 1% with a $1 floor and a $4 cap per 4G device–were fair, reasonable and non-discriminatory.” Judge Gilstrap found that the comparable licenses presented by Ericsson to be “the best market-based evidence” of the value of Ericsson’s standard essential patents (SEPs) and that “the market evidence, in the form of comparable licenses, has failed to embrace HTC’s preferred SSPPU [smallest salable patent-practicing unit] methodology.” He noted that there was no evidence that industry licenses are negotiated based on the cost of a baseband chip (the alleged smallest saleable patent practicing unit or SSPPU) and evidence showed that the value of SEPs can exceed the value of the chip, which price does not include the cost if that intellectual property. This SEP cases is one of the closest to capturing what actually happens in the licensing market with FRAND-committed SEPS, rather than generating new litigation-based theories on valuing SEPs (e.g., top-down analysis). This decision also is at odds in many respects with the decision by Judge Selna in the TCL v. Ericsson case that currently is on appeal at the Federal Circuit (see our Jan. 3, 2018 post summarizing that decision).
Continue Reading Judge Gilstrap rules Ericsson’s licensing offers were FRAND-compliant (HTC v. Ericsson)
Today, Judge Selna issued on Order ruling on Ericsson’s motion to alter or amend his FRAND ruling. (See our Jan. 3, 2018 post summarizing FRAND royalty ruling). Under the procedural posture of the Rule 52(b) motion for seeking modification of a judge’s bench trial findings of fact and law, Ericsson had to show that its proposed changes to that ruling were needed “to correct manifest errors of law or fact or to address newly discovered evidence or controlling law” or were not changes that “would not affect the outcome of the case or are immaterial to the court’s conclusions.” (Order at 2). Given this difficult standard, Judge Selna only agreed to make minor word changes to his decision, which he will soon reissue with other clerical corrections and some corrections to be made based on TCL’s Rule 52(b) motions (which were also apparently minor changes). To be clear: by “minor changes” we mean as far as significance in applying the decision to other cases between other parties; we could be mistaken and, moreover, have no comment on how significant the changes may be to the instant parties in this particular case. The next substantive step in this case will be the Federal Circuit appeal that Ericsson already filed, but that has been stayed pending the outcome of the parties’ Rule 52(b) motions.
Continue Reading Judge Selna will make minor changes to FRAND ruling (TCL v. Ericsson)
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
|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)
Ericsson and Apple reportedly have settled the patent disputes between them, including those involving standard essential patents that were pending in district courts in California and Texas as well as in the U.S. International Trade Commission. This is reported to be a 7-year agreement that involves cross-licensing as well as Apple paying royalties to Ericsson. …
Yesterday the Federal Circuit issued its long-awaited Ericsson v. D-Link decision that reviewed the Judge Davis jury verdict award for RAND-obligated 802.11 standard essential patents (see our Aug. 7, 2013 post). The Federal Circuit eschews any per se rules for RAND-obligated patents–e.g., no set modified Georgia-Pacific analysis–and instructs the court to fashion damages instructions…
Last summer, we reported on a jury verdict and post-trial rulings in favor of SEP patent holder Ericsson in its infringement suit against several manufacturers of WiFi-compliant products. As we noted, the jury awarded several million dollars for infringement of Ericsson’s 802.11-essential patents. Thereafter, several defendants took an appeal to the Federal Circuit, which is…