Wednesday, May 4, 2022

Federal judge: if Apple doesn't take Ericsson's licensing offer but implements Ericsson patents anyway, it 'subject[s] itself to actions for infringement'

Before I share the latest information regarding Ericsson v. Apple, here's some information further to my previous post (on a Nokia v. OPPO 4G/5G case): the Mannheim Regional Court has scheduled a decision for July 5, 2022. Two months from trial is relatively long for German patent infringement ruling, but the court's Second Civil Chamber is extremely busy--not least with a number of Ericsson-Apple cases.

Most of the time, if a party brings a motion and the court denies it, it has reasons to be disappointed. There are, however, exceptions to that rule. In my view, one of those exceptions is the fact that Judge Rodney Gilstrap (the Chief Judge of the United States District Court for the Eastern District of Texas) yesterday denied a somewhat unusual Ericsson motion to confirm Apple's commitment to be bound by the Texas-based court's decision on whether Ericsson offered Apple FRAND licensing terms last year. While it would have been ideal for Ericsson if it knew that Apple would (have to) take that $5-per-iPhone deal (provided that the court deems it to be FRAND), the denial of that motion actually deals a blow to Apple's credibility with various foreign courts. That's because Apple, according to Ericsson, asked courts in different jurisdictions to stay Ericsson's patent infringement cases, claiming that the Texas case would inevitably result in a license agreement on FRAND terms, so the other courts should just let the Texas FRAND case (with a trial scheduled for December 2022) run its course.

Based on Judge Gilstrap's order (signed on May 2 and filed yesterday, May 3), Ericsson can now tell all those courts that Apple mischaracterized the inevitability of the Texas case putting the global SEP dispute to rest. The key passage of Judge Gilstrap's order says this:

"Indeed, as in any contractual negotiation, the offeror’s offer only becomes binding on the offeree when it is accepted by the offeree. Here, if Ericsson’s offer is found to be FRAND, then Apple may accept it and create a binding contract; Apple may reject it and not implement Ericsson’s patented technology; or Apple may reject the FRAND offer, implement Ericsson’s technology without the benefit of a license and subject itself to actions for infringement. The Court knows of nothing unique to the SEP scenario that alters these principles of black letter contract law." (emphasis added)

It's not the end of the world, but simply the normal course of business, if Ericsson has to enforce its SEPs (and non-SEPs, which are a separate topic) against Apple in various jurisdictions. It's what not only Ericsson but also other SEP holders have to do all the time. But what Ericsson--in my observation--seeks to avoid is that Apple points to the Texas case as the "be all and end all" of Ericsson-Apple patent cases in order to dissuade other courts (and also the USITC) from doing their jobs while actually not being prepared to commit to Ericsson's proposed way forward, which is for the court to decide whether Ericsson has discharged its FRAND obligations. Ericsson has previously--in that case, by means of correspondence between the parties as opposed to a motion--exposed Apple's newfound love of the Eastern District of Texas as being only skin-deep: when push came to shove, Apple wouldn't say "yes, withdraw your cases in the Western District and let's sort it all out in the Eastern District." I believe Ericsson's motion to confirm Apple's commitment was equally about just not letting Apple get away with contradictory positions. Ericsson doesn't want Apple to have it both ways and keep all of its options open in Texas while telling courts in other jurisdictions (U.S. and abroad) that the case in the Eastern District is going to dispose of the entire global dispute pretty soon.

The latest order cuts both ways. If Apple doesn't have to enter into a license agreement in case Ericsson prevails on its own key FRAND claim, why should Ericsson have to grant Apple a license based on a FRAND determination that could have an unpredictable outcome? If Apple can walk, why shouldn't Ericsson have the same right?

Judge Gilstrap is prepared to help the parties, but what he can't do is make their decisions as to what agreement to conclude. If Apple thought Judge Gilstrap was going to be outraged at the fact that Ericsson is enforcing its patents in some other jurisdictions, it was wrong.

I'd like to show you the entire order but haven't been able to upload it to Scribd yet. I have to figure out whether it's a problem with Scribd or with a Firewall setting on my end. But rest assured that there's nothing really instructive or enlightening in it other than the passage I quoted above.

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