Ericsson, TCL Say April Trial 'Highly Unlikely' Amid COVID-19

By Andrew Karpan
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Law360 (December 3, 2020, 9:11 PM EST) -- Ericsson and the Chinese smartphone maker TCL both argued their six-year saga over licensing rates for standard-essential patents on 3G and 4G wireless technology is not likely to end up going to trial next April, as it's "essentially inevitable" that a jury still won't be able to convene in five months because of the ongoing pandemic.

In a joint filing on Wednesday, the two long-fighting telecom giants came together to urge U.S. District Judge James V. Selna to reschedule both the trial and most of the pretrial deadlines in their fight over the rates Ericsson set for licensing standard-essential patents, as it's now "highly unlikely that the trial will begin in April 2021."

In a footnote, the companies also noted that a mediation session scheduled for later this month has already been pushed to early January "to account for a need to reschedule a time-sensitive arbitration wherein one of the parties' lawyers had contracted COVID."

Now, they say there's little reason to believe that next year's jury trial — currently scheduled to start before Judge Selna on April 6, 2021, in the Central District of California — will not also eventually be rescheduled. An order back in May by Judge Virginia A. Phillips had ordered jury trials in the district only to resume in the final phase of the court's reopening plan.

In their filing, both companies said that point still seems pretty far off, citing the "current trajectory of various metrics related to COVID-19."

The companies added that they also don't want to bother complying with the process of pre-trial disclosure yet either, since there's also a chance the case could settle early next year. Pointedly, they requested Judge Selna not push forward the already rescheduled mediation session, which is now set for early January, before retired Judge Andrew Guilford.

"The parties believe it makes sense that they be able to defer the burden of complying with the pretrial deadlines until closer to the actual trial date, and after such time as it becomes clear that the case will not be resolved via settlement," they say in the filing.

Even if the trial date is delayed, Judge Selna will still have a good bit of the company's legal fight on his plate. In addition to requesting the delay, both companies proposed competing jury verdict forms and competing stances on how that trial, whenever it takes place, ought to go about.

TCL wants it split in two: a jury trial to decide if the rates Ericsson set were fair, reasonable and nondiscriminatory, or FRAND, and another bench trial to decide what those rates should be.

Back in 2017, Judge Selna initially ruled on both questions, finding that Ericsson was not offering to license its patents to TCL on reasonable terms, compared to other companies in the marketplace, and he had set the rates himself. By his own estimation, Ericsson had to sell the rates to TCL for $16.5 million instead of the nearly $100 million that Ericsson wanted to charge.

But the Federal Circuit reversed that decision late last year and said that such a ruling had to come from a jury.

In Wednesday's filing, TCL told Judge Selna that having a jury decide both things would confuse them, especially if the jury was told how much TCL made using those technologies since 2015, which they would have to know in order to determine what the FRAND rate on them might be.

"Juries should be shielded from information that can be misused even if the parties and their counsel are on their best behavior," TCL said.

And since calculating the rate "would consist of nothing more than basic arithmetic," there's no need for a jury to do that, TCL added.

But Ericsson disagrees.

TCL only wants to hide its sales numbers from the jury because "TCL has remained a relatively minor player in the global smartphone market."

At his since-vacated bench ruling in 2017, Judge Selna had rejected Ericsson's argument that the rates it charges companies like Apple and Samsung are not similarly situated to the ones it charges smaller companies like TCL, finding that "the prohibition on discrimination would mean very little" if the largest players were a category unto themselves.

But jurors will be able to see through TCL's efforts to compare itself to the tech giants anyway, Ericsson said, in tone that seemed, at times, incredulous at the Chinese company's efforts to work around its lagging sales.

"The jurors will have shopped for smartphones between 2015 and 2020 and be aware of the major smartphone players. They will know that, as of today, TCL is simply not in the same ballpark as Apple or Samsung."

More to the point, splitting the trial in two also goes against the very Federal Circuit ruling that caused the case to be sent to a jury in the first place, Ericsson also argued.

Representatives for the parties did not immediately return a request for comment.

Ericsson is represented by Chase A. Scolnick at Keller/Anderle LLP.

TCL is represented by Stephen S. Korniczky at Sheppard Mullin Richter & Hampton.

The case is TCL Communication Technology Holdings Ltd. v. Telefonaktiebolaget LM Ericsson et al., case number 8:14-cv-00341, in the U.S. District Court for the Central District of California.

--Additional reporting by Nadia Dreid and Ryan Davis. Editing by Emily Kokoll.

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