Case 2:19-cv-00066-JRG Document 585 Filed 04/14/21 Page 1 of 11 PageID #: 45109
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`OPTIS WIRELESS TECHNOLOGY, LLC,
`OPTIS CELLULAR TECHNOLOGY, LLC,
`PANOPTIS PATENT MANAGEMENT,
`LLC, UNWIRED PLANET, LLC,
`UNWIRED PLANET INTERNATIONAL
`LIMITED,
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`v.
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`APPLE INC.,
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`Plaintiffs,
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`Defendant.
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`ORDER
`Before the Court is Defendant Apple Inc.’s (“Apple”) Motion for New Trial On All Issues
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`CIVIL ACTION NO. 2:19-CV-00066-JRG
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`Due to Improper Preclusion of Evidence of Plaintiff’s FRAND Obligation (the “Motion for New
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`Trial”). (Dkt. No. 549.) In the Motion for New Trial, Apple requests a new trial under Federal Rule
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`of Civil Procedure 59, arguing that the verdict is not fair, reasonable, and non-discriminatory
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`(“FRAND”) in accordance with the contractual terms surrounding the asserted standard essential
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`patents (“SEPs”). Having considered the Motion for New Trial and for the reasons set forth herein,
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`the Court is of the opinion that the Motion should be GRANTED-IN-PART and
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`DENIED-IN-PART.
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`I.
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`Background
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`Plaintiffs Optis Wireless Technology, LLC; Optis Cellular Technology, LLC; PanOptis
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`Patent Management, LLC; Unwired Planet, LLC; and Unwired Planet International Limited
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`(“UPIL”) (collectively, “Optis”) filed the above-captioned case against Apple on February 25,
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`Case 2:19-cv-00066-JRG Document 585 Filed 04/14/21 Page 2 of 11 PageID #: 45110
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`2019, asserting infringement of seven patents under the laws of the United States. (Dkt. No. 1 ¶
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`1.) Prior to trial, two of the asserted patents were dropped by Optis. The Court conducted a jury
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`trial with respect to the remaining five patents (U.S. Patent No. 8,019,332; U.S. Patent No.
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`8,385,284; U.S. Patent No. 8,411,557; U.S. Patent No. 9,001,774; and U.S. Patent No. 8,102,833
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`(collectively, the “Asserted Patents”)) from August 3, 2020 through August 11, 2020. (Dkt. Nos.
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`460, 461, 466, 474, 482, 485, 486.) On August 11, 2020, the jury returned a verdict that Apple
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`willfully infringed certain claims of the Asserted Patents. (Dkt. No. 483.) The jury awarded
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`$ 506,200,000 as a reasonable royalty for such infringement. (Id.)
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`The Court entered Final Judgment on February 25, 2021, memorializing the jury’s findings
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`but electing not to enhance damages for willful infringement under 35 U.S.C. § 284. (Dkt. No.
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`544.)
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`a. FRAND Litigation History
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`Optis filed its First Amended Complaint on May 13, 2019. (Dkt. No. 26.) As a part thereof,
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`Optis set forth that the Asserted Patents were SEPs, and alleged that the original assignees of the
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`SEPs—including LG, Panasonic, Ericsson, and Samsung—offered licenses under FRAND terms
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`consistent with their obligations as part of the European Telecommunications Standards Institute’s
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`(“ETSI”) standard-setting organization, thereby forming a FRAND contract under French law.1
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`(Dkt. No. 26 ¶¶ 136–141.) It is uncontested that the Asserted Patents are FRAND-encumbered
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`SEPs. (See Dkt. No. 1 ¶ 22–36; Dkt. No. 360 at 17; Dkt. No. 549 at 5.) Optis alleged that Apple’s
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`bad faith conduct and holdout during pre-suit negotiations caused Apple to forfeit any FRAND
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`defense. (Dkt. No. 360 at 5.)
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`1 Optis argued that under French law, the existence of a FRAND contract triggered a duty by Apple to negotiate in
`good faith. (Dkt. No. 436 at 39:1–40:8; Dkt. No. 169 at 18.)
`2
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`In Count VIII of its First Amended Complaint, Optis alleged that “[t]here is a dispute
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`between the Plaintiffs and Apple concerning whether the Plaintiffs’ history of offers to Apple for
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`a global license to the Plaintiffs’ essential patents complies with Plaintiffs’ commitment to license
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`their essential patents on FRAND terms and conditions pursuant to ETSI and ETSI’s IPR Policy.”
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`(Dkt. No. 26 ¶ 143.) Count VIII sought “[a] declaration that Plaintiffs, in their history of
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`negotiations with Apple in regard to a global license to the Plaintiffs’ essential patents, have
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`negotiated in good faith and otherwise complied with FRAND . . . .” (Dkt. No. 26 at 109.) Apple
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`filed a Motion to Dismiss Count VIII of Plaintiffs’ Complaint for Lack of Subject Matter
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`Jurisdiction (Dkt. No. 16), which the Court granted-in-part and denied-in-part. (Dkt. No. 102.) The
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`Court granted the motion and dismissed “any portion of Count VIII that seeks a declaration that
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`Plaintiffs have complied with their obligations under foreign laws or as they relate to foreign
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`patents, or that Apple may not raise a FRAND defense in a foreign jurisdiction.” (Id. at 6.) The
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`Court explained that “[l]ike claims for foreign patent infringement, claims asking the Court to pass
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`upon foreign obligations under foreign laws related to foreign patents are best left to the courts of
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`those foreign countries.” (Id.) However, the motion was denied “as to Plaintiffs’ request to declare
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`the parties’ rights with respect to U.S. patents or under U.S. state or federal law,” which the Court
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`declined to dismiss. (Id. at 9.) Nevertheless, the Court cautioned that “[w]hether or not Plaintiffs
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`can prove these allegations in a manner sufficient to allow this Court to issue declaratory relief is
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`a separate issue more appropriately analyzed under Rule 56 or at trial.” (Id. at 8.) The Court further
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`concluded that it “remains under ‘a continuing obligation to examine the basis of [its] jurisdiction’
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`and will not issue an advisory opinion if it becomes clear that there is no justiciable controversy
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`before the Court.” (Id. (citation omitted).)
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`3
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`b. Pretrial Proceedings
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`During pretrial proceedings before the Court, Optis deliberately elected to try what
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`remained of its declaratory judgment claim to the bench, not the jury. Apple raised no objection to
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`this decision. In the Joint Pretrial Order, the parties included “Plaintiffs’ claim for a declaratory
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`judgment” as an “issue[] to be tried to the Court in a bench trial immediately following the jury
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`trial.” (Dkt. No. 360 at 4.) The Court confirmed this fact with both sides on July 27, 2020 at the
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`pretrial conference:
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`THE COURT: Let me ask my question again. When you filed your most recently
`amended complaint, you inserted Count 8 that sought declaratory relief to find that
`Optis had complied with its FRAND obligation and that Apple had acted in bad
`faith and engaged in holdout. You sought a declaratory judgment to that effect. Did
`you then at the time of that amendment intend to try that issue to the jury or to the
`bench?
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`[Optis’s Counsel] MR. SHEASBY: No, Your Honor, it was our expectation that
`we try it to the bench.
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`(Dkt. No. 435 at 54:17–55:1; see also Dkt. No. 436 at 60:22–62:15 (Apple’s counsel explaining
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`that the issue of Plaintiff’s FRAND compliance should be tried to the bench).)
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`Nonetheless, during trial Optis sought to separate the issue of its own FRAND compliance
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`from the alleged misdeeds by Apple which Optis alleged caused Apple to forfeit its right to raise
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`a FRAND defense. (Dkt. No. 435. at 55:5–62:23.) Under the guise of evidence relevant to willful
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`infringement, Optis argued that evidence of Apple’s bad faith and holdout during pre-suit
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`negotiations should still be presented to the jury. (Id. at 67:12–68:6.) Specifically, despite the
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`existence of a non-disclosure agreement covering licensing negotiations between the parties, Optis
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`sought to introduce evidence from internal Apple documents showing that Apple’s representations
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`during negotiations were inconsistent with Apple’s own licensing practices. (See Dkt. No. 436 at
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`36:2–23.) The Court rejected Optis’s attempt to have it both ways—i.e., to use FRAND as both a
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`sword (in the jury trial against Apple) and a shield (in a subsequent bench trial as to Optis’s own
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`conduct). (Dkt. No. 435 at 55:5–62:23.) However, doing so necessarily meant that the jury was
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`not presented with evidence regarding Optis’s FRAND commitment or whether the requested
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`reasonable royalty was FRAND-compliant. (See Dkt. No. 435 at 56:10–58:9.)
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`c. Bench Trial
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`Following the jury trial, on August 11, 2020, the Court conducted a bench trial regarding
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`the issues of Optis’s Count VIII and Apple’s waiver defense. (Dkt. No. 487.) Having previously
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`dismissed Optis’s Count VIII as to foreign patents (Dkt. No. 102), the Court analyzed the evidence
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`presented for any offers relating solely to U.S. patents. (Dkt. No. 538 at CL7.) The Court found
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`that “Optis never made an offer specifically for or limited to its U.S. Patents,” and accordingly
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`declined to exercise jurisdiction over Count VIII. (Id. at CL4, CL7.) The Court further held that
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`by failing to raise a counterclaim or affirmative defense, Apple waived its right to challenge the
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`verdict as noncompliant with FRAND. (Id. at CL8.) Finally, the Court held that Apple failed to
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`show the Asserted Patents were unenforceable due to late disclosure to the ETSI standard-setting
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`organization. (Dkt. No. 538.)
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`II.
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`Applicable Law
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`A new trial may be granted on all or part of the issues on which there has been a trial by
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`jury for “any reason for which a new trial has heretofore been granted in an action at law in federal
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`court.” Fed. R. Civ. P. 59(a). Notwithstanding the broad sweep of Rule 59, “courts do not grant
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`new trials unless it is reasonably clear that prejudicial error has crept into the record or that
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`substantial justice has not been done, and the burden of showing harmful error rests on the party
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`seeking the new trial.” Metaswitch Networks Ltd. v. Genband US LLC, No. 2:14-CV-00744, 2017
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`WL 3704760, at *2 (E.D. Tex. Aug. 28, 2017); Erfindergemeinschaft UroPep GbR v. Eli Lilly &
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`Co., 276 F. Supp. 3d 629, 643 (E.D. Tex. 2017). “A new trial may be granted, for example, if the
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`5
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`district court finds the verdict is against the weight of the evidence, the damages awarded are
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`excessive, the trial was unfair, or prejudicial error was committed in its course.” Smith v.
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`Transworld Drilling Co., 773 F.2d 610, 612–13 (5th Cir. 1985); see also Laxton v. Gap Inc., 333
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`F.3d 572, 586 (5th Cir. 2003) (“A new trial is warranted if the evidence is against the great, and
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`not merely the greater, weight of the evidence.”). Furthermore “[u]nless justice requires otherwise,
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`no error in admitting or excluding evidence—or any other error by the court or a party—is ground
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`for granting a new trial . . . . the court must disregard all errors and defects that do not affect any
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`party’s substantial rights.” Fed. R. Civ. P. 61.
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`III. Discussion
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`Apple argues it is entitled to a new trial because the jury trial was held without evidence
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`regarding Optis’s obligation to license the patents on FRAND terms. (Dkt. No. 549 at 9.) The
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`jury’s verdict in this case, Apple argues, is not compliant with FRAND terms and stands in
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`violation of the FRAND limitations on reasonably royalty awards for standard essential patents.
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`(Id. at 13–14.) Apple contends that at a minimum, damages should be retried, while maintaining
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`that a new trial regarding all issues is appropriate given that the exclusion of FRAND “had
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`prejudicial effects that went beyond damages.” (Id. at 15.) Apple further argues that by failing to
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`plead an affirmative FRAND counterclaim or defense, it did not waive its right to challenge the
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`verdict as not being FRAND-compliant. (Id. at 15–19.)
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`Optis responds that the jury’s verdict is FRAND-compliant, despite the lack of any mention
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`of FRAND principles or obligations before the jury. (Dkt. No. 577 at 6.) Optis argues that FRAND
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`obligations need not specifically be mentioned, so long as the jury was instructed on the principles
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`embodied by FRAND. (Id. at 5–6.) Specifically, Optis argues that the jury was properly instructed
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`regarding the standard for a reasonable royalty, including that the jury “must not award Optis more
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`damages than are adequate to compensate for the infringement.” (Id. at 5 (citing Dkt. No. 520 at
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`985:23–24).) Optis further points to the SEP-related instructions that “the patented feature must
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`be apportioned from all the unpatented features reflected in the standard,” and “the patent owner’s
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`royalty must be premised on the value of the patented feature, not any value added by the
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`standard’s adoption of the patented technology.” (Id. at 5–6 (citing Dkt. No. 520 at 991:6–14).)
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`Optis argues that these collective instructions—accompanied by expert testimony regarding the
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`same—adequately tether the jury’s verdict to the FRAND framework set forth in Ericsson, Inc. v.
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`D-Link Sys., Inc., 773 F.3d 1201, 1232 (Fed. Cir. 2014). (Dkt. No. 577 at 5–8.)
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`To be clear, the unique posture of the jury trial followed by the bench trial with respect to
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`FRAND issues resulted from a series of intentional decisions made by both parties. Pursuant to
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`Count VIII of the First Amended Complaint, Optis initiated the request for FRAND relief which
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`it affirmatively sought in this case. However, Optis could not simply wish away the intertwined
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`nature of its own purported FRAND compliance with various allegations of bad acts and bad faith
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`by Apple. (Dkt. No. 26 ¶¶ 140–46.) Said another way, Optis intentionally placed itself in a position
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`to tell the jury only about Apple’s bad acts without telling them of their own obligations to act in
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`good faith. Optis created this disjointed predicament by electing to try its declaratory judgment
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`claim to the bench instead of the jury. At the pretrial conference, the Court repeatedly sought to
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`confirm Optis’s intentions with respect to its declaratory judgment claim, and Optis unequivocally
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`stated that it intended to try the FRAND issues to the bench. (Dkt. No. 435 at 54:5–55:3.) At this
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`same time, Apple said nothing and did nothing—almost as if they were not there.
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`It was this interchange during the pretrial conference which caused the Court to exclude
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`FRAND evidence from the trial altogether. Freed from telling the jury of its affirmative FRAND
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`duties and obligations, Optis attempted to leverage its willfulness claim to introduce evidence
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`before the jury of bad faith and bad acts by Apple during pre-suit licensing negotiations. (Dkt. No.
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`435 at 57:13–58:9; Dkt. No. 436 at 36:2–23.) The Court recognized, however, that this was core
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`FRAND evidence relating to Optis’s declaratory judgment claim, which both parties had seemed
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`to agree at pretrial should be tried solely to the bench. As a result, the Court ruled that the
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`declaratory judgment claim as to FRAND could not be treated in this way. (Dkt. No. 435 at
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`62:14–23.) The Court noted that had Optis chosen to present its declaratory judgment claim to the
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`jury, it would have been able to present evidence of Apple’s alleged bad faith and holdout, and
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`“all the testimony about whether the damages are or are not FRAND would have come in before
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`the jury.” (Dkt. No. 435 at 57:18–25.) As a result, Optis cannot now be heard to argue that its
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`decision to consciously take FRAND evidence away from the jury has no impact on the
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`FRAND-compliance of the jury’s verdict.
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`For its part, Apple agreed in the Joint Pretrial Order that Optis’s declaratory judgment claim
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`was to be tried to the bench. (Dkt. No. 360 at 4.) After the Court clearly detailed the roadmap for
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`trial as to the outstanding FRAND issues, Apple failed to object. In fact, Apple was wholly mute.
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`(Dkt. No. 435 at 56:25–57:9; Dkt. No. 437 at 20:23–21:2; Dkt. No. 538 at CL12 n.4.) The Court
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`repeatedly emphasized that by acquiescing in Optis’s request that Count VIII be tried to the bench,
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`Apple would not be able to present its damages analysis regarding FRAND to the jury. (Dkt. No.
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`435 at 56:25–57:9, 59:4–61:7.) Again, Apple was mute. As a result, the Court’s ruling was
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`structured to ensure that neither side could unfairly capitalize on the structure of the trials with
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`respect to FRAND. Despite Apple’s post-trial epiphany regarding the absence of FRAND evidence
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`from the jury trial, Apple received a significant benefit by staying strategically silent during pretrial
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`proceedings, preventing the jury from hearing potentially harmful evidence regarding Apple’s
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`alleged bad faith conduct or holdout. This reasonably explains Apple’s muteness at pretrial. As
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`noted during the pretrial conference and in the Court’s Findings of Fact and Conclusions of Law
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`following the bench trial, if Apple wanted to ensure its ability to introduce a FRAND-related
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`damages analysis to the jury, it could (and should) have brought a counterclaim or even raised an
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`affirmative defense to that effect. (Dkt. No. 435 at 56:25–57:9; Dkt. No. 538 at CL8–13.) It did
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`not.2 (Dkt. No. 538 at CL 12.)
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`Despite the resulting structure of the two trials (jury and bench) that have now taken place
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`in this case, the Court is persuaded that the FRAND-compliance of the damages awarded by the
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`jury has legitimately been called into question. Given that the patents found to be infringed are
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`FRAND-encumbered SEPs, any royalty awarded must be FRAND. (Dkt. No. 26 ¶ 142; Dkt. No.
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`360 at 17); Ericsson, 773 F.3d at 1229–31. To be sure, the jury’s verdict may be consistent with
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`FRAND terms. However, the jury never had any evidence that Optis’s patents were in fact
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`FRAND-encumbered, nor did the jury hear any evidence as to what royalties would or could be
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`FRAND. As a result, the verdict does not necessarily represent a FRAND royalty. Consequently,
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`the absence of FRAND evidence and instructions to the jury casts serious doubt on the reliability
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`of the verdict, and a new trial regarding damages is warranted. This is the case notwithstanding
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`the culpability of both parties in this matter. While the Court is very much aware of the strategic
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`choices made by Optis and Apple as to how the FRAND issues would be adjudicated, the Court’s
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`primary duty is to see that justice is done. In large part because of the conscious acts of both parties,
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`the Court now finds itself left with a very large damages award made as to SEPs where the jury
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`never heard the acronym FRAND or heard evidence about how that concept impacted a fair
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`damages award in this case. In the Court’s view, this requires a new trial on damages.
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`2 With the benefit of hindsight, it is apparent to the Court that both sides played fast and loose with the FRAND issue
`before the jury for their own strategic reasons.
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`The Court is not persuaded, however, that a new trial on the entirety of the case is
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`warranted. Apple argues that Optis improperly “argued that Apple had willfully infringed the
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`Asserted Patents as part of a strategy to delay making royalty payments.” (Dkt. No. 549 at 14.)
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`Apple claims that the exclusion of FRAND evidence from the jury trial precluded it from rebutting
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`this narrative. (Id.) The Court does not find this to be an adequate basis for a new trial regarding
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`liability. The Court instructed the jury separately regarding the issues of willfulness and damages
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`(Dkt. No. 520 at 64:24–66:9), and the Court must presume that the jury correctly followed the
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`Court’s instructions. See Zafiro v. United States, 506 U.S. 534, 540–41 (1993). Further, even
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`though the jury found that Apple’s infringement was willful, the Court declined to enhance
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`damages under 35 U.S.C. § 284, negating any tangible impact to Apple from the jury’s willfulness
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`finding. (Dkt. No. 544.) The Court concludes that the issues relating to willful infringement are
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`separate and distinct from those relating to damages, and a new trial regarding liability is neither
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`necessary nor warranted.
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`IV. Conclusion
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`Based on the foregoing, the Court finds that Apple’s Motion for New Trial should be and
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`hereby is GRANTED as to damages. In all other respects, including as to liability, Apple’s Motion
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`for New Trial is DENIED. Accordingly, the Judgment against Apple in this case (Dkt. No. 544)
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`is VACATED as to damages. The parties are ordered to meet and confer and within two weeks
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`from this date submit a jointly proposed docket control order providing for a new trial as to
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`damages only.
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`____________________________________
`RODNEY GILSTRAP
`UNITED STATES DISTRICT JUDGE
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`So ORDERED and SIGNED this 14th day of April, 2021.
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