court of sound when established jurisdiction do agree that you could waive your right to a jury trial yet so rule thirty nine provides a mechanism for reading and spy stipulation the district court didn't find that we waived our right to a jury trial you didn't find that there was any way that we agreed to a bench trial and that would be very hard for the procedural posture this is really complicated though and it does seem at certain points you suggest a district where that certain issues were ready appropriate ready ready for the judge to resolve rather than a jury and those issues ended up being in or twine with the things that you're now saying you're headed jury right to so i think it can you explain to i mean i understand it doesn't seem to me like the district court was willful ignoring your requests it seems like this was a very complicated thing and he thought he was responding to white why isn't that a fair reading that you said you can hear these issues and those are the issues that ended up resulting in the royalty rate and that and the what you want to call it damages or and they want to call a release payment i'm not sure what the differences you know and so i think the critical thing through all of this is that we have always said that the jury would decide st whether or not our offers were framed that that would always be a jury question and that is an important issue and it's a jury question because the jury's going to decide among other things are common issues for example when you're talking about options and the right exactly and those those aren't for example options a and b both included a release payment as compensation for past infringement opposition from past unlicensed sales the jury would decide if those terms were frantic if the jury decided that those terms for a friend that that released payment was  resolve all issues there's nothing more for the court to do because the jury has now decided that our offers are friends and that was the jury's function if the jury rejected our offers and so they weren't friends at that point we're saying the court could go back and reform the contract reform the offers and then that would be up to the court to figure out what the right amount is for the police payment to write of course but remember the key thing here is that the jury in our view oh is goes st and that's what beacon theatre says and that's  what dairy queen says the jury decides for us and civil it's actually fairly familiar phenomenon in this court where the jury would decide damages but the court afterwards might decide what the forward looking rate is for an ongoing warranty backwards  friend there was nothing for the court to do and that's absolutely critical because if the jury offers this and decides our offers are friend then we're entitled to collect that money that's our damages for the past and license and the court only gets involved the court preserve this quite vociferously when the court proposed going to a bench trial any retroactive payment for compensation any retroactive payment for past wrongs is by its terms legal relief and we never side court you can decide the amount of legal relief without injury going for years we always said and to see no itself said look i guess it raises the question of what are we supposed to her we supposed to think about this release payment you know we're talking about of that contract breach on the other hand i think like what you're saying if you turn it around and look at it like this you could say well that's in substance and character just like pan infringement damages i think it's kind of like both is it now actually judged and i think your answer the question you said in substance that's patent damages and because the supreme court said don't look at the form of really look at it substance and so for example in great west life it's almost invariably were inconsistent with with the statements they were making below i mean i can find statements from your side that say yes the release payments going to be decided by the court i mean there's a clear statement by your side give the revenues and the the data that supports the amount and so the response seems obvious as that will determine by the court but by the court as an ems term it simply means it will be determined as a result of this to the cation the district court didn't take that as a waiver of our jury trial right that we're saying hey judge you can decide to release them out on your own with no jury trial in fact the dresser court said flat out look this is absolutely preserve the strip portside and i'm or question briefed i mean i'm trying it was there in order anything that nd of explains the reasoning why whatever was going on here was equitable and and shouldn't be regarded as report hey that declaratory judgment action that you're about to try if we had been the plaintiff it would have been a suit for patton infringement by us for damages and that's also pretty apparent because the district court issued an injunction across the board globally preventing us from filing additional patent suits including patents for damages that declaratory judgment was not about patent infringement for damages how are we in joining patent suits across the world and in the united trial and all sort of claims we pointed specifically to a lease payment that was contemplated the money being paid as compensation to reasonable royalty for passed on license else and said that's legal relief you can't give that legal  a jury trial st you certainly can't try common issues and i think that brings me to the rd point which is that as between the patent infringement action that we asserted and the declaratory judgment action they have sort of there are common issues so it decides for example like you have a jury write it all on threat rates because the friend rates are not that sort of there's no friend cause of action the only way we got into court is they f declaratory judgment action because they knew we were going to sue them for power infringement and they said we have you defense we'd like to assert and it's federal jurisdiction here because we're anticipating being sued by erik's and that's based on the fact that it's a patent infringement suit  if there was only perspective really from volves that would weaken our case somewhat but even then wouldn't weaken it all the way well no i don't think so because we can't we actually have a suit of our own seeking retroactive relief and when those actions are join day without that without that if there's this year they said we only want to go for a prospective relief only no common issues and we've never and we give up our right to damages we give up our right to retrospective that's the point isn't to me that the claim for the payment is your trigger for why you you can have an argument that there's a legal claim here will certainly not if we never had you have options and options if they were just prospective friend rates then i don't think you'd have an argument is that right no i don't i think we would because the lesson from lockwood is that the patent use decision is what controls and so if we had returned back and said no no this is legal we were actually kind of want damages going backward that would have controlled the case but if we say my hypothetical as if you were only forward looking if we surrendered it then we would look a lot more like gigo or tech license licensing exactly where you would affirmatively surrendered said  did and that there's a familiar context for this court which is if someone brings an action for infringement seeking damages and if we're looking worldy the damages component goes to the jury in the district court if it's going to order it for looking  hypothetically what if we were to agree with you and say ok when we take a closer look at this it looks like there needed to be a jury trial because of this common issue beacon theatres  for breach of contract to begin with which case there is no jurisdiction in california and if that were to occur the court would order the dismissal of the california action the texas case would go back to texas and be tried there we think the right answer frankly is that there is was an action that descriptor actually decided damages and this is how much you get as compensation for my question is then i pathetically this court would issue an opinion that doesn't comment at all or rule at all on any of the plethora of brand related issues yes that's right and i think that actually is an important is that when you have these issues what is the amount of damages or sort of typical jury question how much they've got the way this court has controlled that is by saying this is the these are techniques that experts can use and this is we put to the jury but you don't get typically one hundred and fifty page opinions that are sort of slicing and dicing the evidence for you to read because that's what twelve people sitting in a room the getting back to the friend it feels like there was no actual standard industry practice in terms of what model of royalties there would be whether and i'm talking pure percentages of some sale price some percentage mix with caps and fours for just a straight dollar per unit is that fair to say that if it's actually a bit all over the place it is something of a mix but i think for the diptych licenses the district court found comparable the one thing that this is that every one of the negotiated licenses has either a dollars per unit piece of it or it has lump sum cash payments not one of the negotiated licenses was actually a pure percentage of price where else but there's a pretty stablished history of percentage based royalty is that fair to say yeah and i think that looking in fact that's the the developers of the standard came out of the box touting and promoting a pure percentage and i gather that's what you're relying on is th history for these for these patents is that right i think that it's correct that ports and entities that enter these net licenses will use pure percentage prices but when they do that they have destroyed in a percentage that reflects that what the contribution is of the actual license technology it's not just a raw percentage for example if you had a certain percentage for a  that weren't particularly sophisticated you wouldn't take that raw percentage just transfer it across to a very fancy i phone which has a lot of value in it it may not be traceable technology you would actually have to say ok what are the differences  the statements made by you and others that came up ultimately with the standard say ten years ago i didn't see the pronouncements couched in the way you're saying it felt much more just very simple clean straight here percentage this is what we're got done in four years the total aggregate royalty rate we have in mind that we think we're entitled to maybe you're being a little greedy who knows but it would certainly be strange to ten years later  oh the total aggregate rate actually should be double that well actually and that we haven't challenge the district court's use of the total aggregate but really look at what we said our reach should be we were saying at the time it was in the range of one five percent based on a belief that you also reflects the contribution which the respective patents make that's exactly what this court emphasized and this court set in erickson versus doing the fundamental the essential element of any reasonable royalty is that it reflects the incremental value added by the pound and that was the fundamental mistake for that reason the both parties said let's look at the value the patents out the fundamental mistake that just report ma would on average have an average value compared to all the other patents and in the standard and that was in his view a ruling that was favorable to eric's and because in his view there was evidence sufficient evidence on the record that suggests that eriksson's patents on average were valued at a low average in terms of whatever technical contribution they had to the standard judge and i actually think that's exactly backwards but isn't that what he found no it's not what he found the closest he came to finding what eriksson's value was compared to others with statements of eriksson's patent portfolio is certainly not as strong or essential as it has claim doubt it our figure that it was six dollars and fifteen cents per two particular pieces or twenty three dollars and change for the whole thing so we doubt it was as central as we claimed but there was no evidence and no finding that our patents were actually average that's critical because the district court looked at u c l seven songs and there were two methodology what i mean he didn't point to specific evidence but he rejected your evidence your expert that these are really high value patents he rejected they're  wo things that come out of that st if a district if an expert for example made his report saying you know what this method evaluation doesn't work that method evaluation can work so i'm going to just assume everybody's average and just do a mathematical equation i think this court would say that abuse is the that's an abuse of discretion to allow that expert to testify just assume that they're all average in the absence of any evidence that it doesn't get any better when the district court makes that it's rationale for the result but the nd piece of  foundation for it rather than the methodology is a hole because it seems to me that if the expert their expert if he had agreed with their expert and their survey of the patents and said these are low value patents they actually looked at patents they compare them to the portfolio and things like that then that would provide an evidentiary basis for this top down that the dollar gee i know you don't like it but i'm just trying to push out whether it's you know because i do see that there's a little bit of or especially on the evidence that there is a problem stacking it can be very useful and we would never say it's just prohibited off often you know not allowed to be used but the one thing is to be consistent with this court's precedents and to be consistent with a general coming up with a method of valuing the patents and it's not that we did also the answer would have been to enter a judgment for ericsson because they failed in their burden to show that our our method all that our patents and our offer were not friend they just didn't come forward with a possible methodology the we can demand to be paid our way out that are royalty and we would have to see if we pursue our infringement but i think the short answer is the district's minimal and i was using the rule of thumb i'm just going to use simple pattern counting because i don't have evidence of a standard way of doing this now is the st time i think a court has looked at you know how do you set up a license for a entire portfolio of patents what the court is look back at was a horst historical practice at  the i think the argument that council was making was a somehow it should've been a set that should have been a floor cap or something like that but the evidence was that that was optional was something that ericsson decided to put i after it closed its handset business and the idea was if something if a licensee came in ask for a cap then ericsson would throw in the request for a floor and that floor very in addition any a standard you know we have pretty well developed i mean it could be more develop long pattern damages and what we tend to focus on is what is the incremental value of the technical contribution of this patented technology and we try to hit some kind of economic valuation of that technical contribution and and so that does seem like some kind of fixed value and so if you have some patented technology on a muffler then whether your porsche or your kiya you're probably go the same amount for that patent patented technology on that muffler it's not going to fluctuate based on the price of the car and so that's one dollar thing that makes me wonder about the pure percentage  assessment of what the royalty is going to be when you have a great disparity in sale price of the different kinds of phones here and so why is it reasonable if one compan quarter and another company is paying four dollars for the exact same thing and i don't think it is reasonable if they are paying that for the the a fixed price for the exact same thing in fact it creates a problem  on my question is the other way why's that reasonable or fair for two different companies to be paying very very different prices for the exact same technology i get again it depends on if they're paying different prices it's depends upon what values those patents are bringing to the product the reason that the top down an alice is so appropriate here that but as i mean to put it simply isn't the question really if you're applying a pure royalty rate apple is going to pay eight dollars per phone because their phones cost more and you're going to pay two dollars a because your phones and why is that fair because you're buying the same exact no but the value the friend rate is a pleasant let's just start with this option that the patents are worth the same the patent is worth something intrinsically the added value a patent provides provides an the rest in the know on sept we're all that and then on friend world i think generally till you know you if you get a patent and you get damages it's the same damage for different companies here why isn't why should that be true here as well but we're not looking at damages we're looking at you know we're not looking at and it's just but the question is why shouldn't we be applying a flat dollar ready versus a royalty rate that varies based upon the price of the phone because then you have the other problem where  you've got a device that is less expensive the pain because in this situation we have licenses which have percentage rates and so if you have some of the folks some of your and some of your competitors because they make a lot of money because it's all expensive you may want to pay a premium to avoid litigation or whatever they can do that but the minimum is two dollars why shouldn't there are allowed to be a floor because two dollars and everybody that licenses this no matter what the terms of the license is pay at least two dollars why is it nondiscriminatory that sometimes when he's made a lot of pure royalty rate percentage agree to pay more than two dollars i mean certainly does not discriminate against you because you're paying the lowest actual dollar rate they're paying higher the task is for a friend is to look at what is the value that's an added to the product over reasons if for example you know prices in technology are always going down you pick any industry you'll find that prices will go down if you have a fixed fee for a phone that may have cost you know four hundred dollars and then all of a sudden calling for something that's nondiscriminatory and if all those things are separate thoughts then maybe we're not supposed to use customary traditional patent damages analysis when it comes to setting royalty rates for these kinds of standard central panther's other considerations that have to go into the mix i would absolutely agree with that i guess i miss but i wouldn't even know how to begin to articulate what's the right way to think about this question and i think that's what  what judge selma was wrestling with and what he had to do was look at the evidence and in this particular case what the evidence pointed to was that one way to look at the friend rate was using a top down a rate for three g and four g and that rate was to apply to all phones yes similar and so that would have been consistent if ericsson had treated it that way but what we saw on number one on a fair and reasonable site that the the representation they had made to the industry that they had twenty five percent of all l t e was completely false what they had was somewhere between four point seven and seven  percent when what we saw from the comparable license analysis was not that everybody was paying the same reference price but that there were a number of folks who had sweetheart deals and the folks who got the sweetheart deals with the ones which with more resources who can litigate who could analyze the portfolio you know who could basically resist a hold up the vast majority of licensees in this case took the rates that erickson was proposing so two percent when you look at the companies like samsung samsung and apple and wallowing they got raised that were ten times maybe more or less because they actually looked at the portfolios and attempted to figure out what was a fair and reasonable rate what we saw where they less in terms of percentage value or less in terms of dollar they were less in terms of percentage value some were less in terms of dollar value but some were correct and so the dollar value was all over the place too so if you had converted the rates that were being paid and you converted it to and at the end of the day ericsson doesn't care what the the rate is as long as it's getting the same or more dollar does that i mean if it can get give apple a smaller royalty rate and still get more actual dollars they're out ahead well they may be out ahead but if you allow the biggest players in the industry like apple and samsung for example to get the best rates because they say we're go structure it on a lump sum basis and then what happens is the competitors your competitors smaller players are never able to compete and want to standard was supposed to do was protect those small and medium sized players but the game that's being played by ericsson doesn't allow that because what they did is they modified the you're either asking for a privilege rate or you're asking similar a higher percentage of apple's pay but if apple is paying a higher dollar of about they're still ericsson still getting more so if apple has it if you all pay the same small percentage because you want to pay have mid level phones and we have so and then apple is moving downwards with less expensive phones so what ericsson are represented to the industry is that we would apply this rate to the end product and that's the way they structured your licenses so in this case when you look at what how do you figure out what's fair and reasonable and how do you figure out what's discriminatory we looked at the evidence that was presented in this case and the way ericsson had  the way ericsson had structured its licenses is that they varied and they they would create these business cases where they would as for example they take a lump sum and they would project sales being very small and so it looked like the what they were paying was going up the rates were up in reality the number of sales that a company like apple or samsung was making was significantly more and all they were paying was a very low rate as we see in the record so but right now i mean the record is mixed on the types of licenses they were or if correct is it was not or all pure percentage what the court had to do in this case was establish a way to do an apples to apples comparison which you can't do is switch back and forth between you know a dollar per unit and then a percentage rate it's just you have a race to the bottom and so what the court did was look at the historical practice that ericsson was making and how it was licensing his vices or licensing its patents and then apply modified all of the unpacked all of the licenses  so that we had an apples to apples comparison so soem of the questions that you're pointing out to us are traditional questions of fact are they not what's right what's fair issues and whether you have an equitable determination or legal determination your little one on it will claim damages are one of the primary aspects as far as i can tell from my reading that juries are primarily there that are primarily jury questions every question of fact has an equitable foundation of what's right and what's roll what's fair and not damages it was one of the many terms in the license to be determined by the court to say no damages what else do you have an injunction what what we were seeking in this case was a declaratory judgment of specific performance that erickson had not complied with its legal obligation under its at sea contract and then a specific performance of the court with the court creating a friend license  you know specific performance and the friend license is issued in the form of an injunction specific performance in the issuance issuance of an injunction or equitable determinations both parties are saying that retrospect relief was part of the overall fred license yes in the sense that what the court did was form this license this friend license it then figured out the forward looking royalty for the license it then took an accounting and applied the floor looking rate backwards when you have a payment of money and all of that was inside in order style that injunction correct and that's exactly where everything got rolled up into what you would call equitable believe exactly ron or i think number one determining what eriksson's rights were or whether or to comply with his obligations and then having them perform specific performance or having them issue a friend a license is equitable having the court forming a license is equitable a jury does not pick and choose what terms will go into a contract or a license here that release payment was ancillary to the injunction that the court was issuing it wasn't the game and i mean were it all depends on how you look at it because as i was just saying earlier with the posing counsel i mean that the substance of it looks a lot like think that everybody understands that these terms of the lease payment infringement damages are really interchangeable they're the they're the same thing there isn't any daylight between the two yet they're not the same thing you honor so why is the reason they're not the same things because there was no legal claim tried there were no pat infringements tried in this case why because erickson chose to stay those pattern infringement claims this is not a situation i think you would ask if they had waived their right i would say they way that they chose not to pursue their pat infringement claims in in order to focus on a different framework and the framework they wanted was fo determination as to whether or not they had complied with their friend obligations were options a or b friend if it turned out that they were erickson wanted that imposed on t c l if it turned out that they weren't brought against us which was a patent separately correct ok but that doesn't decide jurisdiction as we know from a lot would depend if if you have a patent infringement wasn't a basis for jurisdiction what was the basis for of a hypothetical pattern for each class my point was i'm sorry was that the whether or not there was this hypothetical pan claim wouldn't be decisive of whether there was a sorry i have a couple more question oh ok percy maybe more than a couple but i'll try to keep the floor first of all the amended final judgment doesn't it characterize the release payment as release or claims for past infringement you know you're on as a matter of fact we've got to address that  yes but i think what the court is referring to here is the release payment which was kikes based upon a forward looking royalty the release payment was a term that he had included going to assign an average value to all of ericsson's patents patent families in terms of their relative contribution compared to all the other families in the standard and to me i couldn't see the analysis in the opinion anywhere or what justified that understanding finding whatever you want to call it it appeared to be him relying on t c and without actually doing a sufficient meaningful comparison of eriksson's battens against all the other patents of the standard so right now i can't see into this opinion what the justification is for assigning average after the court's assessment and review of or of evidence that p c i had presented as to the contribution in importance of every single one of erickson's standard essential pat  of these fatal flaws of that importance and contribution so and then you ultimately use it that's why i completely lost well two things number one he didn't use the quantitative adjustments he accepted the notion that there was no evidence of any above average patents it was number one what erik what erikson failed to do was to present evidence to say look you know these particular patents increase the value of our portfolio and that's something that licensees do and license words do in every license negotiation so again based upon the evidence that was presented to the court  or the lack of evidence coming from erickson the court determined that it was going to use a one to one count but keep in mind i think the court would have been just as justified to apply a less than one to one count based upon the evidence that it presented that he had presented but when you think about a portfolio that has hundreds of patents i mean in reality i think you're looking at you know some may be more valuable than others some may be minor improvements i think it is reasonable to assume that you can do a one to one analysis when all you try to do is get data points the court didn't say hey i'm going to use this and this is how he came up with the friend with the court did his take data points based upon the evidence that was available to an event of data points from the comparable license analysis based upon the data that was available to him and the court said the fact that the that i have two different approaches from two different partings and my assessment of them are results in rates that are so similar convinces him that he found a friend rate so i think on this record you know there is no evidence it was any kind of clear error or that the court abuse its discretion the parties came to him and said we want to worldwide license both of us do we want this dispute resolved world wide we want to friend license please created for us we come or with one set of standards so when you're asking the courts to stop you're asking us to provide which is a legal framework to what should be a business problem i think that's an accurate statement your honor here the parties just weren't able to reach that determination and we see that as a huge problem in the industry cell phone industry automotive industry and there is a relatively small amount of precedent out there as to what the party should and shouldn't be doing so again you know judge some to look at what was the evidence presented to him what were the parties asking him to do how did we handle this in the past you know what did erickson say was the prevalent way to analyze  know friend and was using the top down analysis but the court recognized that that might only get you half way there because you have to decide the discrimination prong and so he also looked at the comparable license  requirement that it be based on the incremental value that the patent invention adds to the product that was a random case didn't have the f in france but it had reasonable and nondiscriminatory and so that requirement extends across royalties whether you call them friend rand or simply a damages well it has to be based on the incremental addition of the internet to a value added patent and that was just the one thing the district court left out here the district court just assume that all patents are equal and they're all of equal value after having rejected the parties just so i understand your position you're not suggesting that if your percentage rates is as a matter of law now i think courts can actually do your percentage rates correctly but there's two things you have to make sure you do is you have to be careful to exclude value that isn't added by the technology so if you're looking at the rate on an i phone you don't assume that the thirty dollars doesn't mean you pay only a penny when apple will pay many many times that because it has a really expensive phone and i think that was the fundamental error that the court made here is that it was discriminatory for people who paid different percentage rates for very different  exclude the value that the parties like ericsson are claiming royalty on because it comes from for example example brand value i think if i could just address very quickly the notion that they're somehow a sweetheart deal for other people who are in discrimination in that respect one of the questions was asked on cross examination as and this is on page fifty two thousand your court didn't make a finding on this right well the district court didn't fight make a finding on sweetheart deals and it couldn't be because there was a question asked which was look if i offered you the deal apple has been scaled down to your lower volume and your lower volume would you accept it and the answer was no because the lump sum payment they didn't want to make they want to smaller payment because it's a cheaper phone and that simply isn't discrimination that's asking for discrimination in no jurisdiction and if you focus only on the the the texas action part of which was tried so that would have to be dismissed if you focused on the tech on the texas action that just underscores the th amendment violation because that was  action for infringement for damages when the distro part did its out i will to or i to myself not to a jury in defense st the friend offense then i will limiting your right to a jury trial based on the findings i made that's