United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
PAVNE UNITED STATES MAGISTRATE JUDGE
in this case is scheduled to begin December 4, 2017. The
following opinion and order resolves the parties' pending
motions, with the exception of motions in limine,
which will be addressed at the pretrial conference.
parties to the lawsuit are global networking and
telecommunications equipment and services companies. The two
plaintiffs are companies based in the United States and
Sweden. Ericsson is a Delaware corporation based in Plano,
Texas. Compl. ¶ 1, Dkt. No. 1. Telefonaktiebolaget LM
Ericsson is based in Stockholm, Sweden. Id. ¶
2. The plaintiffs are collectively referred to as
“Ericsson.” Ericsson owns two relevant patent
portfolios. The first is a portfolio that Ericsson alleges
includes patents that are essential to global 2G, 3G, and 4G
telecommunications standards established by the European
Telecommunications Standards Institute (ETSI). See TCL
Commc'n Tech. Holdings, Ltd. v. Telefonaktienbolaget LM
Ericsson et al., Case No. 8:14-cv-00341-JVS- DFM, Dkt.
No. 279-1 at 2 (C.D. Cal. June 29, 2015). The second is a
portfolio that includes patents claiming inventions used to
implement telecommunications standards in cellular handsets,
smartphones, tablet computers, televisions, and other
electronic devices. Compl. ¶ 3, Dkt. No. 1. Ericsson has
not declared the patents in the second portfolio essential to
ETSI telecommunications standards. See TCL Commc'n
Tech. Holdings, Case No. 8:14-cv-00341-JVS-DFM, Dkt. No.
279-1 at 3. The patent-in-suit is a member of the second
portfolio. See Compl. ¶¶ 3, 14, Dkt. No.
defendants are companies based in China, Hong Kong, and the
United States, and are all owned by TCL Corporation, a
company based in Shenzhen, China. TCL Communication
Technology Holdings, Ltd. is one of the three defendants also
based on Shenzhen. Compl. ¶ 4, Dkt. No. 1, Am. Ans.
¶ 4, Dkt. No. 45. TCT Mobile Limited is based in Hong
Kong. Compl. ¶ 5, Dkt. No. 1; Am. Ans. ¶ 5, Dkt.
No. 45. The third defendant, TCT Mobile (US), Inc., is a
Delaware corporation based in Irvine, California. Compl.
¶ 6, Dkt. No. 1; Am. Ans. ¶ 6, Dkt. No. 45. The
three defendants are collectively referred to as
“TCL.” TCL's answer alleges that it is the
fifth largest mobile telecommunications vendor in the world,
with products available for sale in more than 100 countries.
Am. Ans. ¶ 78, Dkt. No. 45. TCL sells products under the
“Alcatel Onetouch” brand in the United States.
Id.; Ericsson Ans. ¶ 78, Dkt. No. 51. Products
sold under this brand, including the Alcatel OneTouch Fierce,
include the Android operating system, which includes
functionality that Ericsson claims is covered by the
patent-in-suit. See Compl. ¶¶ 47-48, Dkt.
The Parties' Dispute
lawsuit is a relatively small element of a larger global
dispute. The larger dispute arises from failed license
negotiations related to the patent portfolio Ericsson claims
is essential to telecommunications standards set by ETSI.
See TCL Commc'n Tech. Holdings, Case No.
8:14-cv- 00341-JVS-DFM, Dkt. No. 279-1 at 2. The parties
attempted to negotiate a license to Ericsson's alleged
standard essential patent (SEP) portfolio, but the parties
were unable to reach agreement. Id. When a company
such as Ericsson declares patents essential to a standard set
by ETSI, the company must agree to license the patents on
fair, reasonable, and nondiscriminatory (FRAND) terms.
See Id. TCL claims that Ericsson's license
offers did not meet ETSI obligations. See id.
parties' impasse prompted litigation around the world.
From the fall of 2012 through 2014, Ericsson sued TCL for
patent infringement in Brazil, France, Argentina, Germany,
and Russia. See Id. at 6-9. In 2013, TCL petitioned
a court in the United Kingdom to revoke certain patents, and
Ericsson counterclaimed for infringement. Id. at
6-7. The domestic litigation began in the Central District of
California in May 2014, with a lawsuit filed by TCL. See
Id. at 2. TCL, an alleged third-party beneficiary to
Ericsson's ETSI agreement, claimed that Ericsson breached
its FRAND obligation. Id. TCL also sought a
declaratory judgment that certain alleged SEPs were invalid
and not infringed, and TCL asked the court to determine a
FRAND rate for a license to Ericsson's SEP portfolio.
months later, Ericsson filed a lawsuit against TCL in this
district, seeking a declaratory judgment that Ericsson had
complied with ETSI obligations, and alleging infringement of
two alleged SEPs. Id. at 6. That lawsuit was
transferred to the Central District of California in March
2015. Id. In early January 2015, Ericsson filed the
present lawsuit, alleging infringement of five patents-United
States Patent Nos. 7, 149, 510, 6, 029, 052, 6, 418, 310, RE
43, 931, and 6, 535, 815. Compl. ¶¶ 11-17.
California court channeled the global dispute at the
parties' request. Because the parties indicated that the
breach of contract action in California “should result
in a ‘global resolution' of the SEP patent
licensing and damages claims, ” the court enjoined both
parties from continuing to pursue or initiating lawsuits
regarding the SEPs at issue in the California lawsuit.
See TCL Commc'n Tech. Holdings, Case No.
8:14-cv-00341-JVS-DFM, Dkt. No. 279-1 at 11 (citation
omitted). The court also stayed the alleged SEP infringement
claims in the lawsuit originally filed in this district, in
addition to all “non-FRAND matters.” Id.
at 16. The lawsuit concerning Ericsson's FRAND obligation
proceeded to bench trial earlier this year before the
California court, and a final decision from the court is
pending. The California court otherwise declined to enjoin or
otherwise disturb the present lawsuit because it involves
intellectual property Ericsson has not declared essential to
telecommunications standards set by ETSI. Id. at 9.
This Lawsuit and the Remaining Patent-in-Suit
lawsuit originally involved allegations that TCL infringed
claims of five patents that Ericsson had not declared
essential to ETSI standards. Id.; Compl.
¶¶ 11-17. These patents are generally related to
systems and methods for controlling software and hardware
functionality of mobile devices. See Dkt. No. 174 at
3. In response to Ericsson's infringement claims, TCL
petitioned the Patent Trial and Appeal Board (PTAB) for inter
parties review (IPR) of the asserted claims. See
Dkt. No. 276. After the PTAB instituted IPR of all asserted
claims, the lawsuit was stayed. Dkt. 270. Earlier this year,
the PTAB found that TCL had proven by a preponderance of the
evidence that the asserted claims of the '052, '931,
'310, and '815 patents are unpatentable. See
Id. at 3; IPR2015-01650, Paper No. 32. Ericsson has
appealed those decisions to the Federal Circuit. The only
claims that survived IPR were the claims of the '510
patent, which is the only remaining patent-in-suit.
See Dkt. No. 276 at 3. Because the '510 patent
claims emerged from IPR, the stay was lifted in May of this
year. See Dkt. No. 280.
'510 patent describes advancements in mobile device
technology resulting in demands that have been difficult to
meet because of the limited size, memory, and power of mobile
devices.'510 patent at 1:55-61. Mobile devices were at
one time used only to make and receive phone calls.
Id. at 1:33-35. As technology developed, mobile
devices became capable of sending email and accessing the
Internet, among other functions similar to those performed on
a computer. See Id. at 1:35-40. These advanced
functions prompted third parties to develop non-native
application software, often referred to as an
“application” or “app, ” which could
be downloaded by a user. See Id. at 2:18-24. The
problem is that such applications often need to access the
mobile device's native software or hardware
functionality, and if left unrestricted, the applications may
jeopardize the integrity of the mobile device, for example by
triggering cost-incurring events without the user's
approval. See Id. at 2:18-32. Consequently, the
'510 patent describes a need for controlling or limiting
an application's access to the mobile device's native
functionality. See Id. at 2:40-44.
with its title, “Security Access Manager in Middleware,
” the '510 patent describes a system for
controlling an application's access to native software
and hardware on a mobile device. See Id. at 4:14-16.
An exemplary embodiment of the invention claimed by the
'510 patent is shown in Figure 1 (color added):
application software (blue) is installed, loaded, and run on
the mobile platform. Id. at 4:14-16. The software
services component (green) provides services such as control,
structured storage, and access to hardware driver software.
Id. at 5:33-40. The hardware component (red)
includes units associated with and controlled by the
respective units of the software services component.
Id. at 4:27-32. During operation, the non-native
application requests access to the software services
component, and an interception module intercepts these
requests. Id. at 7:11-13.Once intercepted, a
decision entity determines whether the request should be
granted based on the security policies of the mobile platform
and determines whether the user should be prompted to grant
access to certain native functionality. Id. at
is currently asserting claim 1 of the '510 patent and
claims that depend from claim 1 (claims 3-5, and 9).
See Dkt. No. 276 at 3. Claim 1 recites:
A system for controlling access to a platform, the system
a platform having a software services component and an
interface component, the interface component having at least
one interface for providing access to the software services
component for enabling application domain software to be
installed, loaded, and run in the platform;
an access controller for controlling access to the software
services component by a requesting application domain
software via the at least one interface, the access
an interception module for receiving a request from the
requesting application domain software to access the software
and a decision entity for determining if the request should
be granted wherein the decision entity is a security access
manager, the security access manager holding access and
wherein the requesting application domain software is granted
access to the software services component via the at one
least interface if the request is granted.
the PTAB initially found that TCL had established a
reasonable likelihood that the asserted claims of the
'510 patent are invalid, see, e.g.,
IPR2015-01605, Paper No. 10, the PTAB issued final written
decisions after trials on the merits concluding that TCL
failed to meet its preponderance of the evidence burden,
see id., Paper No. 44. In the first IPR proceeding,
for example, TCL argued that the asserted claims are invalid
as obvious under 35 U.S.C. § 103 in view of two
combinations of references-Usui and Gong, and Usui, Gong, and
Spencer. See Id. at 11. The PTAB concluded that TCL
had failed to establish that a person of ordinary skill in
the art would have been motivated to combine Usui, which
describes a Java application environment and software
platform for mobile phones, with Gong, which describes Java
security mechanisms for computers. See Id. at 29-37.
PTAB reasoned that TCL had not come forward with sufficient
evidence establishing that it would have been obvious to
combine the relatively elaborate computer security software
described by Gong with the mobile platform of Usui
“given the design constraints of less memory and
resources of a mobile phone.” See Id. at
29-30. The PTAB reached essentially the same conclusion in
two related IPR proceedings, concluding that TCL had failed
to establish that a person of ordinary skill in the art would
have been motivated to combine a mobile phone software
platform with computer security software. See
IPR2015-01622, Paper No. 44 at 24-33; IPR2015-01628, Paper
No. 43 at 27-36. As a result of the PTAB's decisions, the
parties stipulated that TCL would not raise certain
invalidity defenses at trial. See Dkt. No. 296.
contends that certain phones manufactured or sold by TCL
include functionality that falls within the scope of the
'510 patent claims. The accused products all include some
version of the Android operating system, and Ericsson's
infringement theory is based in large part on features of
this operating system. See, e.g., Dkt. No. 340-3
Motions for Summary Judgment and Related Motions
moves for summary judgment of no willful infringement and
summary judgment of invalidity under § 101. Summary
judgment must be granted when there is no genuine issue as to
any material fact and the movant is entitled to judgment as a
matter of law. Fed.R.Civ.P. 56(c). “A genuine issue of
material fact exists ‘if the evidence is such that a
reasonable jury could return a verdict for the non-moving
party.'” Crawford v. Formosa Plastics Corp.,
La., 234 F.3d 899, 902 (5th Cir. 2000) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). The court must consider evidence in the record in
the light most favorable to the non-moving party and draw all
reasonable inferences in favor of that party. Thorson v.
Epps, 701 F.3d 444, 445 (5th Cir. 2012). The moving
party must identify the portions of the record that
demonstrate the absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Once a party has made that showing, the non-moving party
bears the burden of establishing otherwise. Geiserman v.
MacDonald, 893 F.2d 787, 793 (5th Cir. 1990) (citing
Celotex, 477 U.S. at 323). The non-moving party
cannot “rest upon mere allegations or denials” in
the pleadings, but “must set forth specific facts
showing there is a genuine issue for trial.”
Liberty Lobby, 477 U.S. at 248. Thus, summary
judgment “is appropriate if the non-movant ‘fails
to make a showing sufficient to establish the existence of an
element essential to that party's case.'”
Bluebonnet Hotel Ventures, LLC v. Wells Fargo Bank,
N.A., 754 F.3d 272, 276 (5th Cir. 2014) (quoting
Celotex, 477 U.S. at 322).
TCL's Willfulness Motions
Summary Judgment of No Willfulness, Dkt. No. 217 (see
also Dkt. No. 300)
original motion for summary judgment of no willfulness was
filed before the Supreme Court's decision in Halo
Electronics, Inc. v. Pulse Electronics, Inc., 136 S.Ct.
1923 (2016), see Dkt. No. 217, and the parties have
since updated their briefs to reflect the change in law.
See Dkt. Nos. 300, 302, 305, 306. Although a close
call, TCL's willfulness motion is denied because a
reasonable jury could possibly conclude that TCL's
conduct has been egregious. This conclusion, however, is far
from certain, and the Court will carefully monitor the
evidence presented at trial.
arguments in support of summary judgment are based in large
part on the applicable willfulness standard, and for that
reason it is helpful to explain the standard as it stands
today. The Supreme Court's Halo decision
clarified the narrow circumstances in which enhanced damages
should be awarded. They are not to be awarded in a
“typical infringement case, but are instead designed as
a ‘punitive' or ‘vindictive' sanction for
egregious infringement behavior.” Halo, 136
S.Ct. at 1932 (citation omitted). In surveying the relevant
cases, the Supreme Court characterized the conduct supporting
enhanced damages as “willful, wanton, malicious,
bad-faith, deliberate, consciously wrongful, flagrant,
or-indeed-characteristic of a pirate.” Id.
word in the Supreme Court's list of culpable conduct that
has created the most uncertainty is “willful”
because that word implies nothing more than intentional
infringement. As foreshadowed by Justice Breyer, parties have
interpreted “willful” to mean knowledge of the
patent “and nothing more.” See
Halo, 136 S.Ct. at 1936 (Breyer, J., concurring). As
this Court has recognized, however, knowledge of an asserted
patent, without more, cannot justify enhanced damages under
the Halo standard. See Erfindergemeinschaft
UroPep GbR v. Eli Lilly & Co., No. 2:15-CV-1202-WCB,
2017 WL 2190055, at *3 (E.D. Tex. May 18, 2017) (Bryson, J.,
sitting by designation). This conclusion is consistent
with-and in fact compelled by-the majority opinion in
Halo, which repeatedly emphasizes that enhanced
damages are “reserved for egregious cases of
culpable behavior.” Halo, 136 S.Ct. at 1932
(emphasis added). In other words, culpable conduct is
required, but the culpable conduct must be egregious, i.e.,
outrageous or shocking.
addition to uncertainty regarding what is required for
enhanced damages, it is also not clear from Halo
whether willfulness is a jury question. The Supreme Court did
not have a reason to address the issue. A plausible reading
of Halo nevertheless suggests that a jury may be
asked whether infringing conduct was indeed egregious,
particularly since a prerequisite to such an egregiousness
finding is an accused infringer's subjective belief that
he is infringing a valid patent. See Erfindergemeinschaft
UroPep GbR v. Eli Lilly & Co., 240 F.Supp.3d 605,
618 (E.D. Tex. 2017) (Bryson, J., sitting by designation).
Intent is a classic factual issue.
jury finds the requisite intent and that the intentional
conduct was egregious, or in effect worthy of punitive
damages, the Court may in its discretion determine whether
damages should be enhanced. See Halo, 136 S.Ct. at
1931-32 (explaining that the Court's discretion “is
not whim”). Even if this characterization of
Halo is incorrect, however, and willfulness is not a
jury question, there is no disadvantage in submitting the
question to the jury. See Kinetic Concepts, Inc. v. Smith
& Nephew, Inc., 688 F.3d 1342, 1356-60 (Fed. Cir.
2012) (explaining the basis for why ultimate legal questions
such as obviousness are routinely submitted to the jury). It
may be prejudicial to a defendant if the plaintiff repeatedly
refers to the defendant's conduct as “wanton”
or “egregious” in front the jury, but the
plaintiff may also prejudice itself by making such extreme
characterizations without reasonable support. In sum, there
is no error in submitting a willfulness question to a jury,
assuming of course that the summary judgment record could
support a willfulness finding.
is also uncertainty regarding pre-suit and post-suit conduct,
namely whether post-suit conduct alone can justify enhanced
damages. Indeed, part of the basis for TCL's motion is
that there is no evidence of egregious pre-suit conduct that
would support enhanced damages. Id. at 6. The
Federal Circuit, however, has at least suggested that there
is no per se rule precluding a finding of willful
infringement based solely on conduct occurring after the
lawsuit is filed. See Mentor Graphics Corp. v. EVE-USA,
Inc., 851 F.3d 1275, 1295-96 (Fed. Cir. 2017) (district
court “erred in concluding that Synopsys could not
present evidence of post-filing willful infringement because
Synopsys did not seek a preliminary injunction.”). It
appears that the Federal Circuit was simply saying that
pre-suit willful infringement could continue after the suit
was filed, and that a motion for a preliminary injunction is
not required to recover enhanced damages for continued
post-filing willful infringement. See Id. But it
would seem contrary to Halo to suggest that an
accused infringer could intentionally infringe an asserted
patent and engage in other egregious behavior, such as
deliberately driving a less-resourceful patentee out of
business, as long as the egregious behavior begins after the
patentee filed the complaint. A fair reading of Halo
suggests that truly egregious behavior may warrant a punitive
response regardless of when the behavior occurs.
more pertinent question is whether there is any evidence to
support a finding of egregious culpable behavior at any time
in this case. TCL argues that Ericsson has not produced
evidence of “egregious infringement behavior” or
behavior of a “wanton and malicious pirate.” Dkt.
No. 300 at 2. TCL also argues that its good faith belief of
noninfringement and invalidity of the '510 patent is
“demonstrated by its summary judgment motion on
invalidity as well as the IPRs that were instituted by the
PTAB.” Id. While nothing in the record clearly
stands out as egregious, Ericsson has come forward with
evidence suggesting that TCL's infringement has
accelerated since the lawsuit was filed. This may be because
TCL believed it was not infringing a valid patent. See
WesternGeco L.L.C. v. Ion Geophysical Corp., 837 F.3d
1358, 1363 (Fed. Cir. 2016) (even after Halo, the
objective reasonableness of the accused infringer's
positions can still be relevant to the § 284 issue).
has offered little other evidence relevant to the subjective
belief of its decision makers at the relevant time. TCL's
IPR petitions came after its knowledge of the '510
patent, as did TCL's motion for summary judgment
invalidity under § 101. As TCL acknowledges,
“culpability is generally measured against the
knowledge of the actor at the time of the challenged
conduct.” Halo, 136 S.Ct. at 1933. There is no
evidence, for example, going to TCL's subjective beliefs
when its infringement allegedly accelerated after Ericsson
filed the lawsuit. Consequently, the Court cannot conclude
with confidence at this point that no reasonable jury could
find that TCL subjectively believed it was infringing a valid
patent, and that this intentional conduct was egregious. The
motion for summary judgment is therefore denied.
TCL's Motion to Bifurcate ...