HTC v. Telefonaktiebolaget
12f4th476
| 5th Cir. | 2021Background
- Ericsson is a FRAND-encumbered holder of numerous 2G/3G/4G standard-essential patents via an ETSI commitment; HTC makes standard-compliant phones and previously had cross-licenses with Ericsson.
- In 2017 negotiations to renew a license, Ericsson offered a per-device rate (initially $2.50; later 1% with floor/cap); HTC countered using a smallest-salable-patent-practicing-unit (SSPPU) approach and offered $0.10 per device.
- HTC sued, alleging Ericsson breached its ETSI FRAND commitment and failed to negotiate in good faith; Ericsson counterclaimed that its offers were FRAND and HTC negotiated in bad faith.
- A jury found HTC failed to prove Ericsson breached FRAND and found both parties negotiated in bad faith; HTC did not file a Rule 50(b) motion after verdict.
- The district court entered a declaratory judgment that Ericsson complied with its FRAND assurance; it excluded three HTC-proposed jury instructions and excluded prior expert testimony from a different case as hearsay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Exclusion of HTC's jury instructions (apportionment and non-discrimination) | Court should have instructed jury to apportion patent value (SSPPU or incremental value) and to treat non-discrimination as leveling the playing field | Proposed instructions relied on U.S. patent-law doctrines (not French contract law governing ETSI commitment) and would impose inappropriate MFN-style limits; district instruction (totality; no fixed method) was adequate | Affirmed: district court did not abuse discretion; HTC's instructions relied on inapplicable law and non-discrimination instruction contradicted ETSI's flexibility; HTC was able to present apportionment arguments at trial |
| Declaratory judgment that Ericsson's offers were FRAND | Disparities between HTC's offers and licenses to large competitors show discrimination and non-FRAND terms | Comparable licenses and evidence supported Ericsson's valuation and non-discrimination defenses; jury rejected HTC's proofs | Affirmed: HTC failed to preserve a sufficiency challenge (no Rule 50(b)); even on the merits evidence supports Ericsson and reasonable jurors could so find |
| Exclusion of prior expert testimony/report from other Ericsson litigation | Prior expert Kennedy’s testimony is opposing party statement/admission and was admissible under Rule 801(d)(2)(C) | Kennedy was not an agent/authorized speaker for Ericsson; prior testimony was for a different case and thus hearsay | Affirmed: district court acted within discretion to exclude the prior expert material as hearsay; experts are not party agents merely by retention |
Key Cases Cited
- Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201 (Fed. Cir. 2014) (SEP royalty awards must be apportioned to patented invention value, not the value of the standard as a whole)
- Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012) (FRAND disputes treated as contractual claims enforceable by third-party beneficiaries)
- Garretson v. Clark, 111 U.S. 120 (U.S. 1884) (patentee must separate or apportion value of patented feature from unpatented features)
- Brown v. Bryan Cnty., 219 F.3d 450 (5th Cir. 2000) (standard for granting Rule 50(b) judgment as a matter of law)
- Kanida v. Gulf Coast Med. Pers. LP, 363 F.3d 568 (5th Cir. 2004) (standards for reversing refusal to give a requested jury instruction)
- Fox v. Taylor Diving & Salvage Co., 694 F.2d 1349 (5th Cir. 1983) (expert testimony as party admission is narrowly construed and requires agency or case-specific circumstance)