On August 4, 2020, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a district court’s infringement finding and its rulings regarding owed royalties, concerning the infringement of two patents directed to LTE technology owned by Godo Kaisha IP Bridge 1 (IP Bridge). In an apparent issue of first impression, the CAFC held that comparing the asserted claims of a patent against an industry standard to determine whether the claims are essential to the standard, is akin to an infringement analysis, and therefore is a fact issue decidable by a jury, and not a question of law that must be decided by the court.
IP Bridge brought an infringement action against TCL Communication Technology (TCL) for infringement of claims of two patents which IP Bridge alleged were essential to the LTE standard. At trial, IP Bridge provided evidence that the asserted claims were essential to mandatory sections of the LTE standard, and that the accused devices sold by TCL were LTE-compatible. IP Bridge argued the accused devices necessarily infringed the asserted claims because the accused devices were LTE-compatible, arguing based on CAFC precedent that if the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement.
A jury agreed with IP Bridge’s arguments and awarded IP Bridge $950,000 in damages. The court also awarded IP Bridge an ongoing royalty of four cents per patent for both accused products as well as certain non-accused products sold by TCL. TCL appealed the infringement verdict and the district court’s rulings regarding royalties.
Determining the Standard-Essentiality of Asserted Claims is a Fact Issue, Not a Question of Law
On appeal, TCL argued that the district court had erred by allowing the jury to determine whether the asserted claims were essential to the LTE standard. TCL argued that the court, and not the jury, “must first make a threshold determination as part of claim construction that all implementations of a standard infringe the claims.” IP Bridge argued that whether the asserted claims are essential to a standard is a classic fact issue, and is decidable by a jury.
The CAFC agreed with IP Bridge, and found that TCL had wrongly interpreted CAFC precedent by conflating the court’s role with respect to claim construction and the court’s role in determining the essentiality of the asserted claims of a patent. The CAFC stated that while claim construction is the role of the court, comparing the claims to a standard is akin to traditional infringement analysis by which claims are compared to an accused product, which is a fact issue, and not a question of law. The CAFC noted that “[e]ssentiality is, after all, a fact question about whether the claim elements read onto mandatory portions of a standard that standard-compliant devices must incorporate.”
Accordingly, the CAFC rejected TCL’s argument and held that whether asserted claims are essential to all implementations of an industry standard is a question to be resolved by the trier of fact. The CAFC affirmed the jury’s verdict and affirmed the award of royalties to IP Bridge, noting that TCL’s own documents and marketing materials admitted the products were compliant with the LTE standard.
The CAFC’s decision reinforces and strengthens the role of a jury in an infringement action involving standard-essential patents. Rather than requiring a judge to decide as a matter of law whether claims of a patent are essential to an industry standard, such issues may be allowed to go to a jury as a factual issue. Some commenters believe the CAFC decision may be beneficial to patent owners, based on the perception that jurors tend to favor patent owners. Others believe the CAFC decision could lead to increased costs in litigation involving standard-essential patent disputes due to the increased involvement of juries.