TCL COMMUNICATION TECHNOLOGY v. TELEFONAKTIEBOLAGET LM
- Dec 5 2019 |
- Category: CAFC Updates
TCL manufactures mobile devices that implement European Telecommunications Standards Institute (ETSI) standards so that they may interoperate in the mobile communications environment. As a member of ETSI, Ericsson is bound by its contractual “fair, reasonable and non-discriminatory” (FRAND) rate obligation to ETSI to be prepared to offer TCL FRAND-complaint terms to license its standard-essential patent (SEP) portfolio. TCL sued Ericsson seeking a declaratory judgment that Ericsson had failed to offer a FRAND rate to TCL, and Ericsson sued TCL for patent infringement. After a ten-day bench trial, the District Court imposed FRAND rates in a binding worldwide license on Ericsson and TCL, including: (1) a prospective FRAND royalty rate for practicing each standard, and (2) a “release payment” computed based on a closely related, retrospective FRAND rate for “TCL’s past unlicensed sales.” To determine these rates, the court employed its own version of a “top-down” approach in combination with comparable license evidence to compute the FRAND rates. The CAFC concludes that the release payment is in substance compensatory relief for TCL’s past wrongs (i.e., practicing Ericsson’s patented technologies without a license), and holds that the district court deprived Ericsson of its constitutional right to a jury trial on that legal relief by requiring that Ericsson adjudicate that relief in a bench trial. Accordingly, the CAFC vacates district court’s determination of the release payment, reverses the dismissal of Ericsson’s patent infringement claims, and remands for further proceedings.