Opinion ID: 4461580
Heading Depth: 3
Heading Rank: 1

Heading: The release payment provides legal relief.

Text: The parties dispute whether the relief provided by the release payment is legal or equitable. Ericsson focuses on the substance of the relief, arguing that the release payment is legal because it is compensation for TCL’s past patent infringement of Ericsson’s SEPs. Appellants’ Br. at 35–37. TCL, on the other hand, argues that the release payment is equitable based on the form the relief takes. As a term included in an injunction order, TCL argues that the release payment constitutes specific performance for a term in a contract. Appellees’ Br. at 19. TCL also separately argues that the release payment is equitable because it was ordered as restitution for TCL’s past unlicensed sales. Id. at 26–27. According to TCL, the release payment was a “way to retroactively restore to Ericsson that which it would have already received if the FRAND terms and conditions had previously been set, and a license not delayed.” Id. at 27. That the release payment was ordered in the form of an injunction does not necessarily make it equitable. See, e.g., Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 208, 214 (2002) (holding an injunction ordering money funds to be legal relief because it sought to “impo[se] personal liability for the benefits that they conferred upon respondents”). Nor is the monetary nature of the release payment dispositive of legal relief. See, e.g., Bowen v. Massachusetts, 487 U.S. 879, 893 (1988) (holding that monetary relief was equitable because it sought reimbursement to which the State was allegedly already entitled, rather than money in compensation for losses suffered); Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315–16 (Fed. Cir. 2007) (holding that the court did not violate patent owner’s right to a jury trial by calculating an “ongoing royalty rate” for patent infringement in a bench trial). Indeed, not all payments of money constitute legal “damages.” Paice, 504 F.3d at 1316. And even if the monetary relief can be characterized as restitution, as TCL advocates here, 22 TCL COMMC’N TECH. v. TELEFONAKTIEBOLAGET LM that does not end the inquiry, because restitution can be either legal or equitable. Great-West Life, 534 U.S. at 212 (“In the days of the divided bench, restitution was available in certain cases at law, and in certain others in equity.”). To determine which type of common law restitution the release payment is more analogous to, we focus on “the basis of [Ericsson’s] claim” and “the nature of the underlying remedies sought.” See id. at 213. We agree with Ericsson that the release payment term is legal in nature and thus entitled to a jury trial determination. Ericsson’s offers to TCL refer to the release payment term as “release payment for past unlicensed sales,” but the court consistently treated this payment as retrospective compensation for TCL’s past patent infringement. It is a “well-settled principle that jury trials are available for damages for patent infringement.” 9 C. WRIGHT & A. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2312 (3d ed. 2018); see also Markman v. Westview Instruments, Inc., 517 U.S. 370, 377 (1996) (analogizing “today’s patent infringement action” to “the infringement actions tried at law in the 18th century,” which “must be tried to a jury”). For example, in its bench trial decision, the court defined the function of the release payment as compensation, explaining that both of Ericsson’s offers “specify a release payment intended to compensate Ericsson for TCL’s unlicensed use of Ericsson’s SEPs . . . .” J.A. 33 (emphasis added). In its March 9, 2018 Amended Final Judgment and Injunction, which was subject to both parties’ review, the court elaborated that the compensatory relief was for past patent infringement. It ordered: “Upon the receipt by Ericsson of the release payments set forth in Clause E by TCL, Ericsson shall release TCL . . . from claims for past patent infringement . . . .” J.A. 14 (emphasis added). Most tellingly, the court dismissed Ericsson’s counterclaims of patent infringement as moot in light of the release payment. J.A. 23. Thus, the court’s own actions confirm that TCL COMMC’N TECH. v. TELEFONAKTIEBOLAGET LM 23 the release payment functions as a substitute for patent infringement damages. 9 TCL’s attempt to recharacterize the release payment as restitution for “TCL’s past unlicensed sales” is unavailing because it improperly focuses on the form of the relief, rather than its underlying substance. As the Supreme Court has explained, “for restitution to lie in equity, the action generally must seek not to impose personal liability on the defendant, but to restore to the plaintiff particular funds or property in the defendant’s possession.” GreatWest Life, 534 U.S. at 214. In contrast, if the basis of the release payment is to provide a “substitute” remedy for “benefits” conferred to TCL, then the claim is legal. See Bowen, 487 U.S. at 895 (“Damages are given to the plaintiff to substitute for a suffered loss, whereas specific remedies ‘are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled.’”) (internal citations omitted); see also Great-West Life, 534 U.S. at 214 (“The basis for petitioners’ claim is . . . that petitioners are contractually entitled to some funds for benefits that they conferred. The kind of restitution that petitioners seek, therefore, is not equitable . . . but legal—the imposition of personal liability for the benefits that they conferred upon respondents.”). 9 In dismissing Ericsson’s patent infringement claims and TCL’s related counterclaims of invalidity and non-infringement, the court explained that they were “moot in light of the equitable relief granted in the release payment.” J.A. 24 (emphasis added). The court’s label of “equitable relief” does not impact our conclusion that the release payment is in substance compensation for past patent infringement for the reasons discussed in this opinion, especially since the court itself characterized the release payment as releasing TCL from “claims for past infringement” in the same order. J.A. 14. 24 TCL COMMC’N TECH. v. TELEFONAKTIEBOLAGET LM Here, the “basis” of the release payment is not that TCL holds “particular funds” that a court could then restore to the possession of its “true owner,” Ericsson. See Great-West Life, 534 U.S. at 213–14. Nor is it a “reimbursement” of funds to which Ericsson was already entitled, akin to the equitable relief in Bowen. See 487 U.S. at 895. Rather, as payment for “TCL’s past unlicensed sales,” the release payment seeks to estimate the benefits conferred to TCL from selling products that practiced Ericsson’s SEPs without a license. See Great-West Life, 534 U.S. at 214. And given that TCL does not dispute infringement of Ericsson’s SEPs, 10 it is hard to see how a payment for TCL’s past unlicensed sales is in substance materially different from damages for past patent infringement. At bottom, regardless of whether we characterize the release payment term as compensation for “past patent infringement” or restitution for “TCL’s past unlicensed sales,” the underlying nature of the relief is legal. Accordingly, we conclude that Ericsson was entitled to a jury trial on the determination of the release payment amount under the Seventh Amendment. 2. Ericsson did not waive its right to a jury trial on the release payment term. TCL suggests that Ericsson waived its right to a jury trial by consenting to a bench trial on the release payment term. Appellees’ Br. at 16. In support, TCL points to a single statement made by Ericsson in its August 15, 2016 response to TCL’s ninth set of interrogatories. Id. Therein, Ericsson stated: “The release payment that TCL owes Ericsson for its past unlicensed sales of 2G, 3G, and 4G 10 Indeed, TCL alleged that its products “complied” with the 2G, 3G, and 4G standards, J.A. 444 ¶ 3, and conceded that Ericsson’s SEP families were “essential” to those standards. J.A. 63. TCL COMMC’N TECH. v. TELEFONAKTIEBOLAGET LM 25 devices will be determined by the Court at the conclusion of this litigation.” J.A. 38867. When read in context of the record as a whole, we de- cline to interpret this isolated statement as a waiver of Ericsson’s constitutional right, because the more reasonable reading is to view this statement as conditioned upon an initial jury determination of whether Ericsson’s offers were FRAND. See Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393 (1937) (“[A]s the right of jury trial is fundamental, courts indulge every reasonable presumption against waiver.”). On January 20, 2015, the parties filed a joint report agreeing to a two-stage adjudication process where: (1) the jury would decide whether Ericsson’s offers were FRAND and (2) if not, the court would conform the offer terms to be compliant with FRAND. J.A. 1892. As the joint report explained, the reason why the jury had to decide the first issue was because that issue was the “key factual dispute underlying all of” the legal (e.g., “money damages”) and equitable claims that were then live in the case. Id. Because Dairy Queen requires common issues to legal and equitable claims to be tried to a jury first, the parties stipulated that this common issue “must therefore be decided by a jury.” Id. Admittedly, TCL’s claims and counterclaims seeking damages (e.g., infringement of its own patents, breach of contract) had been dismissed by the time Ericsson filed its interrogatory response. Because the parties’ original reason for requiring a jury determination no longer existed, TCL argues that the court properly decided the case in a bench trial consistent with the rationale underlying the stipulated plan. Appellees’ Br. at 17–18. We are unpersuaded. Just because the originally articulated basis for requiring a jury disappeared does not mean that Ericsson waived its jury trial right resting on other bases. Indeed, on August 15, 2016, Ericsson filed a “courtrequested submission regarding remaining claims and 26 TCL COMMC’N TECH. v. TELEFONAKTIEBOLAGET LM requirement of a jury trial,” Ericsson explicitly identified the “release payment” term as an alternative basis for a jury trial: [T]he nature of the remedy sought by the parties— a binding payment obligation that requires TCL to pay royalties to Ericsson on a going forward basis and to make a release payment of money for its past patent infringement—entitles Ericsson to a jury on all asserted claims . . . . The nature of this binding payment obligation, i.e., the payment of money as compensation to Ericsson for past and future in- fringement by TCL, is decidedly legal. But even if the remedy was a mix of equitable and legal reme- dies, the legal remedies sought confer a jury trial right. J.A. 38827–33 (emphases added). Notably, this submission was filed on the same day Ericsson filed its interrogatory response upon which TCL relies on as a waiver. Even the court did not treat Ericsson as having waived its jury trial right. In a January 30, 2017 final pre-trial conference order, the court explicitly acknowledged that “Ericsson has requested a jury trial of all issues” and that it “overruled Ericsson’s request for a jury trial of all issues, which request Ericsson hereby preserves.” J.A. 48694 (internal citation omitted). Ericsson renewed its objection to the bench trial right before it commenced: Your Honor, just an administrative point. Ericsson just wants to make a non-waiver point. Of course, we’re proceeding with the bench trial. We don’t want to be deemed to have made an election or to have waived our right to a jury trial as reflected in our earlier motion which was denied. J.A. 51642. In light of the record as a whole, we reject TCL’s contention that Ericsson waived its jury trial right. TCL COMMC’N TECH. v. TELEFONAKTIEBOLAGET LM 27