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TCL Communication Technology Holdings Ltd. v. Telefonaktiebolaget LM Ericsson

FRAND Royalty Setting May Invoke Jury Trial Right

TCL Communication Technology Holdings Ltd. v. Telefonaktiebolaget LM Ericsson, __ F.3d __, 2019 WL 6598216 (Fed. Cir. Dec. 5, 2019) (Newman, CHEN, Hughes) (C.D. Cal.: Selna) (4 of 5 stars)

Fed Cir part-reverses, part-vacates FRAND-based damages award for infringement of Ericsson patents essential to ETSI standards. The district court erred by resolving questions relating to a prospective FRAND royalty and a related, retrospective “release payment” via bench trial, rather than submitting them to a jury. The opinion reasons that the release payment was in substance legal relief, not equitable, and thus could trigger Ericsson’s Seventh Amendment right to a jury trial. This was notwithstanding that the payment was ordered in the form of an injunction, and notwithstanding that the payment was implementing (at least in part) Ericsson’s contractual obligation of FRAND-compliant licensing. The opinion reasons that the payment was compensatory for past damages, not restitution to Ericsson. The opinion also rejects TCL’s argument that Ericsson waived its right to a jury trial. Thus the district court’s bench resolution of FRAND issues contravened the Seventh Amendment.

KEYWORDS: FRAND; DAMAGES; STANDARDS ESSENTIAL PATENTS; SEVENTH AMENDMENT; INJUNCTION