TCL v Ericsson overturned on appeal

By Richard Vary


Readers will remember the news of Christmas 2017.  Judge Selna in the Central District of California determined the FRAND royalties that TCL should pay to Ericsson. The decision attracted comment because the rates were very much lower than the findings that Mr Justice Birss had made in relation to Ericsson's portfolio in Unwired Planet, despite similar evidence.

Today the Court of Appeals of the Federal Circuit overturned that decision: judgment here.
Ericsson appealed on two grounds: that it had been deprived of its right to a jury trial, and that Judge Selna's calculations contained many errors (some of which are explored here).
Happily for Ericsson, but disappointingly for followers of FRAND, the CAFC agreed with the first of those grounds. That means it did not need to look at the second. 
The right to a trial by jury arises from the Seventh Amendment to the US constitution. This 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 pre-served . . . .” . This is understood to mean that if the Claimant would have had a right to a jury trial in the common law courts of England (before the courts of law and equity were merged) then he shall have that right in the US. 
The issue was whether the relief granted by Judge Selna was legal or equitable. According to Dairy Queen v Wood,  where there were mixed legal claims and equitable claims arising from the same facts, the legal claims must first be decided by a jury.  Judge Selna had determined that it was all equitable, so could be determined by a bench trial. The CAFC disagreed with Judge Selna in respect of  the past payments that TCL must make to Ericsson, finding that although in form these were an element of the injunctive relief, in substance these were damages for patent infringement. Those are a legal remedy, and as such were a matter for the jury.
Judge Selna's decisions in relation to Ericsson's offers, and his determination of both past and prospective royalties, were vacated. The case is remanded for a jury trial.