A FRAND Encumbrance May Not Necessarily Dampen Damages Under 35 U.S.C. § 284 | January 14, 2024

Patentees (and litigation funders) sometimes worry that a FRAND encumbered patent will necessarily command a lower damages figure under 35 U.S.C. § 284 than a non FRAND-encumbered patent.  Not so, for a few reasons:

  1. A FRAND rate arguably only applies to a license (ex post release of future liability) not damages (remedy for ex ante infringement). For example, FRAND provisions say things like “[patentee must] grant a license under reasonable rates to an unrestricted number of applicants on a worldwide basis with reasonable terms and conditions that are demonstrably free of unfair discrimination.” So suing to recover a reasonable royalty doesn’t necessarily violate a FRAND commitment.  See Atlas Global v. TP Link, 2:21-cv-00430-JRG-RSP (ED Tex. July 28, 2023) (“The [IEEE] Letter of Assurance does not require a license or specific terms be offered before filing suit . . . [it] requires a commitment to grant a license under reasonable rates to an unrestricted number of applicants on a worldwide basis with reasonable terms and conditions that are demonstrably free of unfair discrimination.”); see also Ericsson Inc. v. D-Link Sys., Inc., No. 6:10-CV-473, 2013 WL 4046225, at *25 (E.D. Tex. Aug. 6, 2013) (“A patent holder does not violate its RAND obligations by seeking a royalty greater than its potential licensee believes is reasonable … Instead, both sides’ initial offers should be viewed as the starting point in negotiations.”).  

  2. Entitlement to FRAND is an affirmative defense that may be waived if not pled. See Wi-Lan Inc. v. HTC Corp., No. 2:11-CV-68-JRG, 2013 WL 8811318, at *4 (E.D. Tex. Oct. 11, 2013) (holding that FRAND is an affirmative defense for which “Defendants have the affirmative burden of proof”); see also 3G Licensing, S.A., Koninklijke KPN N.V., Orange, S.A., v. HTC Corporation, No. 1:17-cv-00082-LPS (D. Del., Oct. 2, 2020). 

  3. Entitlement to a FRAND rate may require the potential licensee to concede essentiality. See HTC Corp. v. Telefonaktiebolaget LM Ericsson, 12 F.4th 476, 481 (5th Cir. 2021) (“Companies seeking to license under these terms become third-party beneficiaries of the contract between the standard-essential patent holder and the standard setting organization. They are thus enabled to enforce the terms of that contract”); see also 3G Licensing, S.A., Koninklijke KPN N.V., Orange, S.A., v. HTC Corporation, No. 1:17-cv-00082-LPS (Delaware, Oct 2, 2020) (finding that alleged infringed failed to analyze infringement of the standard or essentiality, which is a necessary precondition to entitlement to a FRAND rate). 

  4. Entitlement to a FRAND rate arguably requires the licensee to be “willing.” Particularly when there is a strong willfulness case, there is a decent argument that a licensee can’t claim entitlement to a FRAND rate as a nominal third-party beneficiary of a contract that it is arguably repudiating.  See In re Qualcomm Litig., 2019 WL 7834768, at *7 (S.D. Cal. Mar. 20, 2019) (finding unwilling licensee not entitled to a FRAND rate). 

The Basic Interplay Between SEPs and FRAND | January 7, 2024

Standard Essential Patent (“SEP”) and Fair, Reasonable, and Non-Discriminatory (“FRAND”) are key concepts in the context of standardization and technology development. SEPs are patents essential for implementing an industry or technology standards established by standard-setting organizations (“SSO”). SEPs ensure interoperability and compatibility among various technologies.

FRAND, by contrast, is a set of licensing terms to which SEP holders generally commit when licensing their patents (and often in exchange for the SSO including their patent as part of the standard). Failing to comply with a FRAND obligation may lead to the the SSO to remove the technology from the standard. Courts employ various approaches, including competition law/dominance and contract approaches, to assess whether a SEP holders' licensing practices are FRAND-compliant. The cases addressing FRAND have generally adjudicated negotiation rules and the availability of injunctions against unwilling licensees.

In short, SEPs and FRAND licensing form the foundation of standardization. As the legal landscape continues to evolve, parties must navigate the complexities of licensing processes, consider leveraging patent pools, and engage in good-faith negotiations to balance compensation for the value-add of a SEP to and promoting incentives to innovate and rely on the standard.

Opening statement frameworks for patent cases | November 23, 2023

Patent infringement trials are perceived by many to be dry and technical.  Yet, many attorneys manage to move the jury with a compelling story that results in a significant damages award. Reading their opening statements, it’s clear that their structure falls within one of three categories:

The first category is the “inventory story.” This approach structures the opening statement around the story of the inventor and the “aha moment” preceding it.  The structure is compelling because it’s in consonance with how ordinary people perceive how inventions come about.  The approach was masterfully utilized in Voxer v. Meta (Case No. 1:20-cv-00655, WDTX), wherein the plaintiff’s attorney told a compelling story of a Yale-educated inventor who, while working as an special forces communications sergeant, came up with a patented invention concerning “live messaging” technology “on the battlefield of Afghanistan following 9/11.”  The plaintiff allege that Meta’s video streaming offerings infringed these patents.  After 2.5 hours of deliberation, the jury awarded $174.5 million in running royalties.

The second category is the “technology story.”  These opening statements tell a story about the societal value of the patented technology.  This approach is most often utilized by non-practicing entity (NPE) plaintiffs hoping to move the jury to conclude that the just result is requiring the defendant to pay their fair share for using the NPE’s ground-breaking technology.  The approach is also consistent with the public’s perception that a patent is only granted  for highly valuable inventions deserving of the property right. This approach was used in PanOptis  v. Apple (Case No. 2:19-cv-00066, EDTX) with a story about the value of LTE technology generally, and the value of plaintiff’s patents to the LTE standards specifically.  The opening statement told the story of how every company but Apple acknowledged the value of PanOptis’s patents, so it’s only right for Apple to have to pay too.  The trial resulted in a verdict of $506 million (and then retried the following year, resulting in $300 million verdict).

The third category is the “good guy vs. bad guy” story.  This approach works best when the defendant has not only refused to license a patent but has acted in bad faith during the parties’ dealings, allowing the plaintiff to present a story that highlights evidence that the defendant learned of the value of plaintiff’s intellectual property but never had a genuine intention of paying for it.  This was the case in Viasat v. Space Systems (Case No. 3:12-cv-00260, SD Cal.), where Viasat accused Space Systems of feigning interest in a partnership only to relay the information learned about Viasat’s technology to Viasat’s competitor (who later developed an infringing technology for Space Systems).  The opening statement hammered home the idea that the jury has the power to right the wrong inflicted on Viasat, resulting in a $284 million verdict ($181 million for patent infringement and $102 million for breach of contract).  See Edmond Cahn, 1949, The Sense of Injustice (“the most powerful call is not to do right, but to undo wrong.”).

These approaches highlight the importance of creating a compelling story around any patent infringement trial (and why there is no need for a patent infringement trial to be a dull affair).