Thursday, March 24, 2022

Ericsson making headway in 5G patent dispute in Texas: judge denies Apple's motion to dismiss, moves up FRAND trial to December, thwarts Apple's attempt to sidestep Fifth Circuit appeals court

In the renewed Ericsson v. Apple patent dispute, where the parties brought infringement claims after their last seven-year license agreement expired in mid-January, Chief Judge Rodney S. Gilstrap of the United States District Court for the Eastern District of Texas has entered an order that resolves multiple motions brought by Apple and Ericsson. The short version is that the case structure in the Eastern District is now identical to Ericsson's preferred way forward: it remains the plaintiff (instead of Apple taking the driver's seat), and appellate jurisdiction over the parties' FRAND claims remains with the United States Court of Appeals for the Fifth Circuit, where Ericsson (against HTC) as well as the Avanci patent pool (to which Ericsson contributes greatly) recently scored major victories in standard-essential patent (SEP) cases.

Apple's procedural gamesmanship, no matter how sophisticated its strategy and its execution were, didn't pan out at all. This structural outcome is totally consistent with my analysis and implied predictions. For example, I wrote:

"What can be said with certainty is that Apple faces more hurdles to get its preferred procedural outcome than Ericsson does."

Apple saw only one of its wishes granted by Judge Gilstrap, who moved up the now-unified FRAND trial--with Ericsson as plaintiff and Apple as defendant-counterclaimant, which Apple wanted the other way round--from June/July 2023 to December 5, 2022. Apple once proposed that particular trial date. However, at the time Apple made that proposal, it didn't envision that the case structure would be so unfavorable to its interests. Should Ericsson's 5G royalty demand be blessed at the December trial, with a formal judgment by the district court following in the first half of 2023, Apple would be confronted with that outcome in a variety of parallel proceedings, be it in the ITC (where one of Ericsson's three requests for a U.S. import ban involves 5G standard-essential patents and will be heard in February 2023) or overseas jurisdictions like Germany (where a series of Mannheim trials over Ericsson SEPs will begin in November) or the Netherlands.

There's still going to be an Apple v. Ericsson trial in the Eastern District starting July 10, 2023, but the only claims left in that separate action are Apple's declaratory judgment requests relating to three of Ericsson's countless SEPs. It wouldn't help Apple in any significant way even if it prevailed on those DJ claims all the way. What it really wanted to achieve was to give the Federal Circuit--not the Fifth Circuit--appellate jurisdiction, but in that case those claims would have had to become part of a unified FRAND case. A single patent infringement or validity claim in a case makes it subject to Federal Circuit appellate jurisdiction.

Apple and Ericsson had just agreed on one of Judge Gilstrap's predecessors as Chief Judge of the Eastern District of Texas, David Folsom, as a mediator of their dispute. By laying out the procedural way forward, Judge Gilstrap definitely ups the pressure on Apple to settle, but Apple being Apple...

The early procedural debate between Apple and Ericsson, which has been put to rest now at least with respect to their cases in the Eastern District, was interesting to watch. Apple, which a few years ago even moved a couple of its stores out of the Eastern District in order to be in a better position to have patent infringement cases transferred out of there, actually considered it the relatively most favorable forum in its global dispute with Ericsson--a lesser evil than the Western District of Texas and, especially, injunction-happy jurisdictions like the ITC or, particularly, certain foreign courts. It wasn't hard for Ericsson to debunk Apple's newfound love of the Eastern District. Ericsson also accused Apple of having wasted court and party resources by forcing unnecessary (duplicative) litigation.

Judge Gilstrap's order is very clear, and the way he reaches his conclusions is compelling. I had already commented in depth on the parties' filings (though I didn't even find time to comment on a last-minute attempt by Apple--on the eve of last week's case management hearing--to at least sidestep the Fifth Circuit's appellate jurisdiction). At this stage, may I just refer you to the actual order (which you find right below) and an early February post that contains a table comparing the parties' preferred ways forward and explanations of how either party sought to get there.

22-03-23 Order on Motions t... by Florian Mueller

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