Tuesday, October 17, 2023

Sisvel subsidiary 3G Licensing wins jury verdict against HTC in Delaware: per-patent per-unit royalties of 37 and 43 cents; pool license would have been cheaper

[PRELIMINARY NOTE] Let me note upfront that this is one of the last articles--possibly the penultimate one--that I'll ever publish on FOSS Patents. That doesn't mean FOSS Patents will disappear immediately: it remains available as an archive for a limited transitional period and may very well be used by others than me in the future. Nor will I personally disappear, but in the nearest term I will focus on writing a book about the Microsoft-ActivisionBlizzard merger saga, which became the most spectacular turnaround in merger regulation history and gave rise to a decision by a U.S. federal judge that communications between Microsoft and me were not a legitimate subject of pretrial discovery (as I mentioned toward the end of this recent post). I am going to remain interested in patent litigation and patent policy, as I have been for almost 20 years by now, but I have various new ideas and have to decide which ones to pursue, how, and when. I'll say something more in my final FOSS Patents post. As I'm also in the midst of relocation, this is a time of change and fresh new starts for me. [/PRELIMINARY NOTE]

Damages verdicts over standard-essential patents (SEPs) are rare because most SEP licenses are granted without litigation and in the few cases where infringement actions are filed, settlements typically occur ahead of any damages trial. But yesterday was one of those exceptional days: 3G Licensing, a subsidiary of patent pool administrator and licensing firm Sisvel, prevailed in the District of Delaware on two--based on the company's name, guess what--3G patents over mobile device maker HTC.

On a per-patent per-unit basis, the damages figure that was awarded shows that SEP infringement can get a lot costlier than licensing. 3G Licensing prevailed on two patents-in-suit, U.S. Patent No. 7,995,091 on a "mixed media telecommunication call manager" and U.S. Patent No. 6,856,818 on a "data store for mobile radio station." The damages verdict is so granular that it makes a distinction for the '818 patent between "Verizon Accused Products" and "Google-Fi [a mobile virtual network operator] Accused Products":

  • For the '091 patent, 3G Licensing was awarded $0.37 per product, amounting to $7,228,042.13 for a total quantity of 19,535,249 infringing products.

  • For the '818 patent, the royalty is again $0.37 per product with respect to 2,551,265 units of the Verizon Accused Products (a total of $943,968.05), and $0.43 for each of 1,84,295 infringing products that are Google-Fi Accused Products (a total of $795,196.85).

  • In total, that's almost exactly $9 million.

  • 3G Licensing obviously participates in Sisvel's 3G/4G mobile communications patent licensing program, and the published "compliant rate" (for willing licensees) that applies to 3G UMTS is just €0.35. That's $0.37 for the entire pool (all relevant patents from multiple patent holders)--but here it's the amount that the jury now found HTC owes on a per-patent per-unit basis, with the number being even higher for the Google-Fi Accused Products. The complaint mentioned that 3G Licensing was open to bilateral as well as pool licensing.

That litigation has been going on since 2017, following (according to the complaint) extensive but fruitless efforts to work out a negotiated agreement. I wasn't following it, but now that this interesting verdict has come out, someone may wish to take a closer look at the history of the case. The dispute is also instructive with a view to the debate over the EU SEP Regulation: I've been saying since earlier this year that any attempt by the EU to encourage and enable hold-out in its own courts will make other jurisdictions more attractive, and I mentioned U.S. damages verdicts as another way for SEP holders to stop infringement. There is nothing an EU regulation could lawfully (and without violating international trade agreements) do to prevent patent holders like 3G Licensing from enforcing their rights in the United States, where damages verdicts can become costly for infringers.

For now, let me just show you the public redacted version of the jury verdict. There's actually a typo in the verdict form concerning the number of the '091 patent that I noticed, but it was easy to find the correct one based on the complaint.

3G Licensing v. HTC (case no. 17-cv-83-GBW, D.Del.): verdict form (public redacted version)