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Saint Lawrence Communications LLC v. Motorola Mobility LLC

United States District Court, E.D. Texas, Marshall Division

February 15, 2018

SAINT LAWRENCE COMMUNICATIONS LLC, Plaintiff,
v.
MOTOROLA MOBILITY LLC, Defendants.

          REDACTED FINDINGS OF FACT AND CONCLUSIONS OF LAW

          RONDEY GILSTRAP UNTED STATES DISTRICT JUDGE

         This is a patent infringement case brought by Plaintiff Saint Lawrence Communications LLC (“SLC”) against Defendant Motorola Mobility LLC (“Motorola”). The Court seated a jury on March 3, 2017, and a trial before that jury commenced on March 20, 2017. The jury then returned a unanimous verdict finding willful infringement and no invalidity. (Dkt. No. 34.)

         After the close of evidence, and while the jury was deliberating, the Court provided the Parties an opportunity to present evidence and argument in support of and in opposition to, as appropriate, any equitable defenses urged by Motorola. At that time, the Parties agreed not to present any evidence or argument orally to the Court, electing instead to submit the issues to the Court on the papers. (Dkt. No. 58, 3/24 Trial Tr. at 3:22-4:14.) Thereafter, the Court issued an Order setting forth the post-trial briefing schedule on all outstanding issues, including Motorola's equitable defenses. (Dkt. No. 72.) The Court also granted the Parties' request for additional briefing on said equitable defenses. (Dkt. No. 85.) Accordingly, Motorola's equitable defenses of patent misuse and limitation of damages based on FRAND principles are now fully before the Court. Pursuant to Rule 52 of the Federal Rules of Civil Procedure, the Court issues these Findings of Fact (“FF”) and Conclusions of Law (“CL”).

         I. Findings of Fact

         A. The Parties

         [FF1] Motorola is a corporation organized under the laws of the State of Delaware and headquartered in Chicago, Illinois. (Dkt. No. 1 at ¶ 2; No. 2:15-cv-349, Dkt. No. 46 at ¶ 2.) It is in the business of developing, among other things, cell phones and related technology. (Dkt. No. 46, 3/20 AM Trial Tr. at 52:12-15.)

         [FF2] SLC is a Texas limited liability company with its principal place of business in Plano, Texas. (Dkt. No. 1 at ¶ 1.) SLC is in the business of licensing and monetizing its patent portfolio. (Dkt. No. 46, 3/20 AM Trial Tr. at 40:13-16.)

         B. Procedural History

         [FF3] On March 10, 2015, SLC filed its original complaint in this case. (Dkt. No. 1.) In that complaint, SLC alleged that certain Motorola products infringed U.S. Patent Nos. 6, 795, 805 (“the '805 Patent”), 6, 807, 524 (“the '524 Patent”), 7, 151, 802 (“the '802 Patent”), 7, 260, 521 (“the '521 Patent”), and 7, 191, 123 (“the '123 Patent”) (collectively “Patents-in-Suit” or “Asserted Patents”). (Id.)

         [FF4] On June 25, 2015, this case was consolidated with a related case involving Saint Lawrence and ZTE Corporation et al. (Dkt. No. 7.)

         [FF5] On September 1, 2015, Motorola filed its original answer in this case. (No. 2:15-cv-349, Dkt. No. 46.) In its answer, Motorola denied SLC's allegations of infringement of the Patents-in-Suit and raised a defense of patent misuse. (Id.) Motorola additionally pled that “SLC's claim for damages may also be limited by FRAND principles.” (Id. at ¶ 37.)

         [FF6] During discovery, Motorola identified documents and other materials supporting its patent misuse defense and its limitations on damages defense, including SLC's inconsistent royalty rates for its licensees to the Patents-in-Suit. (Dkt. No. 74-2 (Ex. A to SLC's Opp'n) at 8-12.)

         [FF7] SLC did not move to dismiss Motorola's patent misuse defense, nor did SLC move for summary judgment or bring any other pretrial motion on this defense.

         [FF8] In the Parties' Joint Pretrial Order, Motorola contended that any claim by SLC for damages was limited by SLC's obligation to license the patents pursuant to FRAND principles. (No. 2:15-cv-349, Dkt. No. 413 at 5, 7.) Motorola also contended that SLC's claims were barred in whole or in part under the doctrine of patent misuse, and it identified patent misuse as a defense that it intended to assert at trial. (Id. at 7, 12, 13.)

         [FF9] During the pretrial conference, SLC conceded that Motorola had raised, as an affirmative defense, an “equitable patent misuse defense” and stated that “both parties agree the question of patent misuse is an equitable defense” that the Court should decide. (No. 2:15-cv-349, Dkt. No. 449, 2/21 Pretrial Conference Tr. at 54:9-55:15.) The Parties then stipulated to a procedure for how they would present the evidence relating to Motorola's misuse defense. (Id. at 64:20-65:11.)

         [FF10] A jury trial on the non-equitable issues in this case was held from March 20-March 24, 2017. (Dkt. No. 45-58.) On March 24, 2017, the jury returned a verdict finding willful infringement of claim 2 of the '805 Patent, claim 4 of the '524 Patent, claim 1 of the '802 Patent, claim 1 of the '521 Patent, and claim 102 of the '123 Patent. (Dkt. No. 34 at 2, 5.) The jury also did not find any claim invalid, and it further awarded damages in the amount of $9, 177, 483. (Id. at 3-4.)

         [FF11] At the conclusion of trial, SLC and Motorola agreed that a separate bench trial was not needed to address the remaining equitable issues. Instead, the Parties agreed that, to the extent Motorola wished to raise one or more of its equitable defenses, it would do so in post-trial briefing. (Dkt. No. 58, 3/24 Trial Tr. at 3:22-4:14.)

         [FF12] The Court issued an order on April 14, 2017 setting a timeline for post-trial briefing, including Motorola's briefing in support of its equitable defenses. (Dkt. No. 72.)

         [FF13] Pursuant to that order, on April 27, 2017, Motorola filed its opening brief on its equitable defenses of patent misuse and the FRAND limitations on damages. (Dkt. No. 73.) SLC filed its response on May 11, 2017. (Dkt. No. 74.) Motorola then filed an unopposed motion for leave to file limited additional briefing on the equitable issues (Dkt. No. 83), which the Court granted (Dkt. No. 85). Motorola filed its limited additional briefing in the form of a reply on May 19, 2017. (Dkt. No. 84.) SLC filed a sur-reply on May 30, 2017, thereby concluding the parties' briefing on the equitable defenses of patent misuse and the limitation of damages due to FRAND principles. (Dkt. No. 91.)

         C. The Patents-in-Suit

         [FF14] The '805 Patent is entitled “Periodicity Enhancement in Decoding Wideband Signals.” (PX-1.) The application for the '805 Patent was filed on October 27, 1999, and issued on September 21, 2004. (Id.) The inventors listed on the face of the '805 Patent are Bruno Bessette, Redwan Salami, and Roch Lefebvre. (Id.) At trial, SLC accused Motorola of infringing claim 2 of the '805 Patent. (Dkt. No. 34.)

         [FF15] The '524 Patent is entitled “Perceptual Weighting Device and Method for Efficient Coding of Wideband Signals.” (PX-2.) The application for the '524 Patent was filed on October 27, 1999, and issued on October 19, 2004. (Id.) The inventors listed on the face of the '524 Patent are Bruno Bessette, Redwan Salami, and Roch Lefebvre. (Id.) At trial, SLC accused Motorola of infringing claim 4 of the '524 Patent. (Dkt. No. 34.)

         [FF16] The '802 Patent is entitled “High Frequency Content Recovering Method and Device for Over-Sampled Synthesized Wideband Signal.” (PX-3.) The application for the '802 Patent was filed on October 27, 1999, and issued on December 19, 2006. (Id.) The inventors listed on the face of the '802 Patent are Bruno Bessette, Redwan Salami, and Roch Lefebvre. (Id.) At trial, SLC accused Motorola of infringing claim 1 of the '802 Patent. (Dkt. No. 34.)

         [FF17] The '521 Patent is entitled “Method and Device for Adaptive Bandwidth Pitch Search in Coding Wideband Signals.” (PX-4.) The application for the '521 Patent was filed on October 27, 1999, and issued on August 21, 2007. (Id.) The inventors listed on the face of the '521 Patent are Bruno Bessette, Redwan Salami, and Roch Lefebvre. (Id.) At trial, SLC accused Motorola of infringing claim 1 of the '521 Patent. (Dkt. No. 34.)

         [FF18] The '123 Patent is entitled “Gain-Smoothing in Wideband Speech and Audio Signal Decoder.” (PX-5.) The application for the '123 Patent was filed on November 17, 2000, and issued on March 13, 2007. (Id.) The inventors listed on the face of the '123 Patent are Bruno Bessette, Redwan Salami, and Roch Lefebvre. (Id.) At trial, SLC accused Motorola of infringing claim 102 of the '123 Patent. (Dkt. No. 34.)

         D. The Patents-In-Suit as Standard Essential Patents

         [FF19] The original owner of the Patents-in-Suit was a company called VoiceAge. (PX-1-5.)

         [FF20] In 2000, VoiceAge, through a partnership with Nokia, entered a competition supervised by the European Telecommunications Standard Institute (“ETSI”) and the Third Generation Partnership Project (“3GPP”) for the development of a speech audio coding standard. (Dkt. No. 46, 3/20 AM Trial Tr. at 109:20-112:9.) Nine competitors entered the preselection phase of the competition. (Id. at 113:10-17.) Together, VoiceAge and Nokia submitted a codec, referred to either as the “Nokia candidate” or the “Nokia/VoiceAge candidate.” (Id. at 111:14-18.) The Nokia/VoiceAge candidate codec allowed for wideband speech coding capabilities and transmission components over cellular networks and channels. (Id. at 110:25-111:5.)

         [FF21] Five candidates made it to the selection phase of the competition: Nokia/VoiceAge, Motorola, Texas Instrument, Ericsson, and a consortium of four other companies. (Id. at 113:18-114:6.)

         [FF22] The Nokia/VoiceAge codec won, and it was then incorporated into the Adaptive Multi-Rate Wideband (“AMR-WB”) standard by the standard setting organizations ETSI and 3GPP. (Dkt. No. 46, 3/20 AM Tr. at 115:10-22, 117:2-16; see also Dkt. No. 49, 3/21 AM Tr. at 13:24-14:1.)

         [FF23] As part of this process, VoiceAge agreed, under ETSI's Intellectual Rights Policy, “to grant irrevocable licenses on fair, reasonable and non-discriminatory terms and conditions.” (PX-133; DX-731; DX-1112.)

         [FF24] An obligation to license on fair, reasonable and non-discriminatory terms is commonly abbreviated as a “FRAND” obligation. (Dkt. No. 51, 3/21 PM Sealed Trial Tr. at 19:7- 15.)

         [FF25] It is undisputed that SLC assumed VoiceAge's FRAND obligations when it acquired the Patents-in-Suit. (Dkt. No. 49, 3/21 AM Trial Tr. at 78:8-11; Dkt. No. 59, 3/21 PM Trial Tr. at 57:2-10.)

         [FF26] As a result of the standardization process, AMR-WB became mandatory for a smartphone to make Voice over LTE (“VoLTE”) calls over an LTE network, and certain carriers made the standard mandatory for other types of networks, too. (Dkt. No. 52, 3/22/2017 PM Trial Tr. at 29:11-30:2 (explaining AMR-WB is necessary for VoLTE calls on Verizon and AT&T as well as international calls on Sprint); Dkt. No. 56, 3/23 Sealed Trial Tr. at 13:22-25 (XXXXX).)

         E. VoiceAge's Licensing of the Patents-In-Suit and the W-CDMA Patent Pool

         [FF27] The W-CDMA patent pool included patents related to W-CDMA or 3G cellular communication standards, including AMR-WB. (Dkt. No. 56, 3/23 Sealed Tr. at 3:16-23; Dkt. No. 49, 3/21 AM Tr. at 31:15-21.) Licensees received a license to all the patents in the pool. (Id.) Sipro Lab Telecom, a company with the same corporate ...


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