TCL Communication v. Telefonaktiebolaget LM Ericsson was decided on December 5, 2019 on appeal from the Central District of California. Following a bench trial, the district court determined that declaratory defendant Ericsson’s proposed offers were not “fair, reasonable, and non-discriminatory” (FRAND). “Over Ericsson’s repeated assertions of its jury trial right,” the court then set forth terms for a binding worldwide license to Ericsson’s standard essential patents (SEPs). “These terms included (1) a prospective FRAND rate for [declaratory plaintiff] TCL’s future licensed practice of Ericsson’s SEPs and (2) a cumulative release payment for TCL’s past unlicensed practice of Ericsson’s SEPs.” The court then “issued an Amended Final Judgment and Injunction, ordering that Ericsson’s patent infringement claims and TCL’s related counterclaims of invalidity and non-infringement be dismissed without prejudice because they are moot in light of the equitable relief granted in the release payment.” Ericsson appealed.
The Federal Circuit vacated the determination of the release payment, vacated the determination that Ericsson’s offers are not FRAND and its determination of prospective FRAND royalty rates, reversed the dismissal of Ericsson’s patent infringement claims and TCL’s related counterclaims of invalidity and non-infringement, and remanded.
Ericsson was entitled to a jury trial on the legal relief of a release payment for past unlicensed sales. The Seventh Amendment provides that, “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” Where the relief sought is legal in nature, the claimant is entitled to a jury trial. “In cases that have legal and equitable claims, and issues common to both, the court must conduct a jury trial on any legal issues for which a trial by jury is timely and properly demanded.”
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The release payment “is legal in nature and thus entitled to a jury trial determination.” It is a “well-settled principle that jury trials are available for damages for patent infringement.” In its bench trial decision, the district court “defined the function of the release payment as compensation, explaining that both of Ericsson’s offers specify a release payment intended to compensate Ericsson for TCL’s unlicensed use of Ericsson’s SEPs.” “[G]iven that TCL does not dispute infringement of Ericsson’s SEPs, it is hard to see how a payment for TCL’s past unlicensed sales is in substance materially different from damages for past patent infringement.” Regardless of whether the release payment is characterized as “compensation for past patent infringement or restitution for TCL’s past unlicensed sales, the underlying nature of the relief is legal.” Moreover, Ericsson did not waive its right to a jury trial on the release payment term.
Accordingly, the Federal Circuit held “that the district court deprived Ericsson of its Seventh Amendment right to a jury trial by deciding the legal relief of a release payment for past unlicensed sales in a bench trial,” and remanded.