Ericsson – the TCL/Ericsson decision and more!

Some big decisions have come out this year that really have put a value marker on Ericsson’s portfolio – Interestingly both courts (in the California, vs. TCL, and in the UK in the Unwired Planet decision) which have provided portfolio rates utilized a top down approach (some version of proportionality) to determine the royalty  (for the fair and reasonable part) and crosschecking the rates with comparable licenses (for the non-discriminatory part – which in the Cali decision argues that smaller competitors likes TCL must be treated the same as larger competitors lick Apple).

That said, using very similar methodology for the number crunching, the UK decision found a “Major Market” rate of 0.8% for multimode LTE handsets (applied to the entire device) for Ericsson, and the Cali decision for a US rate (as opposed to other jurisdictions which were less) for 4G devices of 0.45%.

This does not appear to be that huge of a variance in the grand scheme of things – and in both cases much less than the $3/device floor that is apparently Ericsson’s opening ask.

An interesting project for licensing geeks would be to compare the terms of the two licenses ordered – the UK license in the Unwired Planet cases and the Cali license in the TCL cases to see what the differences are.

Far more interesting is how will be to see how the recent case Ericsson brought against TCL in EDTX where Ericsson received a judgment for $75M for infringement of a single non-SEP, meshes with these two cases – especially since the order for past damages in the California case is for $16.4M for the whole portfolio.  Also, it is odd to note that Ericsson was only asking for $97M in the Cali case for the entire portfolio but was asking(? or received?) $75M for a single non-SEP patent in the EDTX case.  I wonder what that is about and whether there is an inconsistency there which will cause Ericsson problems.


The Recorder article summarizing the California TCL case can be found here:

Main point in the article is that the judge “set a FRAND 4G rate at 0.45 percent of TCL’s U.S. sales and 0.31 percent for overseas sales. Ericsson had been looking for an effective rate of between 0.87 and 1.01 percent based on its two best offers before TCL sued in 2014. Selna also ordered TCL to pay Ericsson $16.4 million for past unlicensed sales from 2007 through 2014, much less than the $97 million Ericsson had been seeking.”

The findings of fact and conclusions of law in the Selma decision can be found here

The Declaratory judgment/license can be found here

A great summary of the decision by Prof Contreras can be found here:

Bottom line of the summary is:

On the basis of these findings, the court prescribes that the parties enter into a 5-year license agreement reflecting the FRAND rates described above (p. 115). In addition, TCL must pay Ericsson approximately $16.5 million for past unlicensed sales.

While the outcome of this case will likely make it easier for firms such as TCL to compete in the U.S. and other major markets, it also establishes several important guideposts for future FRAND license negotiations. First, the case establishes that, for non-discrimination purposes, even low end vendors like TCL will be considered “similarly situated” to high end vendors like Apple, giving them the benefit of the rates that high end vendors negotiate with SEP holders for much more expensive products. Equally importantly, it highlights the growing predominance of top-down royalty calculation methodologies for FRAND licenses.

For contrast, the Birss decision in the UK in Unwired Planet (UPIP) can be found here

See paragraph 464 where he finds Ericsson’s rate for multimode handsets to be 0.8%

The declaratory judgment/license issued can be found here:

A great summary of the UPIP decision by Prof Contreras can be found here:

And here:

I would note, in an interesting development, contrary to the top-down approach favored by Birss and Selman, a recent EDTX judgment awarded $75M for infringement of just ONE patent by TCL – judgment can be found here: