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District Court of Delaware Awards an Ongoing Royalty that applies not just to Adjudicated Products but also to Non-adjudicated Products That are “Not Colorably Different.”

Recently, in Godo Kaisha IP Bridge 1 v. TCL Commc’n Tech. Holdings Ltd., the Delaware District Court awarded the prevailing plaintiff in a patent infringement suit an ongoing royalty that covers not only the products adjudicated to infringe but also non-adjudicated products that were “not colorably different” from the adjudicated products.  The court noted that the patent claims asserted by the plaintiff, IP Bridge, were found to be essential to the LTE standard because LTE phones do not operate on the LTE network without infringing the asserted claims.  It also noted that the record had established that there was no colorable difference between the accused LTE products and other products sold by the defendant, TCL, that were able to use and communicate over LTE networks.  The court therefore concluded that the ongoing royalty should cover all of TCL’s LTE products, and not just those adjudicated to infringe the asserted claims.

On November 8, 2018, the jury found that TCL infringed all four of IP Bridge’s asserted claims—two each from two patents—and awarded $950,000 in total damages.  The damages award was based on the determination that a royalty of four cents per patent for each infringing product was an appropriate royalty rate given that the patents were subject to an obligation that they be licensed on FRAND (fair, reasonable and non-discriminatory) terms.  Following the verdict, IP Bridge filed a motion under Federal Rule of Civil Procedure 59(e) to amend the judgment to have the ongoing royalties encompass other LTE products made or sold by TCL that had not been at issue in the case and therefore had not been adjudicated to infringe.  TCL opposed the motion on the grounds that the court lacked the authority to impose an ongoing royalty on non-adjudicated products.

In granting IP Bridge’s motion, the court explained that it may provide several forms of relief for continuing (or post-verdict) infringement, including injunctive relief.  The court went on to explain that injunctive relief typically encompasses both adjudicated products and non-adjudicated products that are not colorably different from the products found to infringe.  It then noted that under the facts of the case, IP Bridge would ordinarily be entitled to an injunction against TCL’s continued infringement, but that injunctions are generally not appropriate in actions involving standard essential patents.  Therefore, the court concluded, the appropriate relief for such continued infringement is an ongoing royalty, but, like an injunction, such a royalty should also encompass non-adjudicated products that are not colorably different from the products found to infringe—in the case at hand, all of TCL’s LTE products.

The court’s opinion should be noted by manufacturers and sellers of products that read on standard essential patent claims who are or may be involved in litigation involving such claims.  If the court finds that the claims are valid and infringed, it may award an ongoing royalty that, like the injunction to which the plaintiff might otherwise be entitled, will apply not only to the products that were found to infringe but also to non-adjudicated products that are not colorably different.  To the extent the products found to infringe represent only a small sample of a defendant’s products that practice the same standard to which the patent claims at issue have been found to be essential, a defendant in such a lawsuit may find itself with a much larger ongoing royalty obligation than it may have anticipated at the outset of the litigation. 

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About this Author

Michael T. Renaud, IP Litigation Attorney, Mintz Levin Law Firm
Member

Michael’s practice is focused on patent litigation and also includes licensing, patents, copyrights, trademarks or trade secrets, and other intellectual property matters. His work in patent litigation primarily involves technologies such as electromechanical systems, digital cameras, embedded microprocessors, telecommunications and network software, cellular phones, and e-commerce, among others. Michael has also advised clients in regards to patent portfolios and IP diligence, and has counseled venture capital funds on their IP assets and patent value.

Michael rejoins Mintz Levin...

617-348-1870
Associate

Sandra Badin focuses her patent practice on appeals before the Federal Circuit and high-priority motions in the federal district courts and the U.S. International Trade Commission.  She has represented clients in many different technology fields with patents covering radio frequency transceivers, graphics processing units, LCD displays, medical records processing systems, electronic point-of-sale systems, high-density plasma cutting torches, dental materials and processes, specialty fabrics, and financial and business methods.  Sandra crafts winning appellate briefs and dispositive motions by translating complex technical information into simple, clear prose lay readers can understand, and by presenting difficult, fact-intensive arguments cogently and persuasively. 

Sandra also maintains an active pro bono practice.  She serves as co-chair of the Amicus Committees of both the Boston Patent Law Association and the Women’s Bar Association and has co-authored amicus briefs to the United States Supreme Court and state supreme courts across the country on behalf of non-profit organizations including the ACLU, the ASPCA, the BPLA, the National Network to End Domestic Violence, the American Jewish Congress, the Anti-Defamation League, and US Inventor, Inc.

While in law school, Sandra held an Edmond J. Safra Graduate Fellowship in Ethics at Harvard University’s Kennedy School of Government, and served as a judicial extern to Justice Lorene B. Ferguson of the Navajo Nation Supreme Court.  She also served as a teaching assistant to Professors Frank Michelman, Alan Dershowitz, Stephen J. Gould, and Heather Gerken, as a research assistant to several of her professors, and as a senior thesis adviser to undergraduates in the Government and Social Studies Departments at Harvard College.

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Rithika Kulathila, Mintz Levin Law Firm, Litigation Law Attorney, Boston
Associate

Rithika is a litigator with a technical background in biochemistry and molecular biology. Rithika uses her technical and legal experiences when working with companies in the life sciences, biotechnology, health care, and technology sectors.

Rithika earned her JD from UC Berkeley Law School, while also serving as a judicial extern to the Hon. Susan Y. Illston of United States District Court for the Northern District of California and a legal intern for the medical-legal partnership at the East Bay Community Law Center in Berkeley, California....

617-210-6874