Standard Essentiality Is a Question for the Fact Finder
Affirming a jury verdict of infringement, the US Court of Appeals for the Federal Circuit concluded that the question of whether patent claims are essential to all implementations of an industry standard should be resolved by the trier of fact. Godo Kaisha IP Bridge 1 v. TCL Comm. Tech. Holdings Ltd., Case No. 19-2215 (Fed. Cir. Aug. 4, 2020) (O’Malley, J.).
IP Bridge owns patents that it contends are essential to the Long-Term Evolution (LTE) standard, and accused TCL of infringing the patents based on the sale of LTE-compliant mobile phones and tablets. Relying on the Federal Circuit’s 2010 decision in Fujitsu Ltd. v. Netgear Inc., IP Bridge presented evidence at trial that (1) the asserted claims are essential to mandatory sections of the LTE standard and (2) the accused products comply with the LTE standard. TCL did not present any evidence to counter that showing. The jury found that TCL was liable for infringement of the asserted claims and awarded damages. Following the verdict, TCL filed a motion for judgment as matter of law, contending that IP Bridge could not rely on the methodology approved in Fujitsu because Fujitsu only approved that methodology in circumstances where the patent owner asks the district court to assess essentiality in the context of construing the claims of the asserted patents. The district court rejected TCL’s argument and concluded that substantial evidence supported the jury’s verdict. TCL appealed.
The Federal Circuit affirmed the district court’s rulings but explained that it was writing to refute TCL’s contention that whether a patent is essential to a standard is a question of law to be resolved in the context of claim construction. TCL argued that while standard compliance may be used to prove infringement, a district court must make a threshold determination as part of claim construction that all implementations of a standard infringe the claims. TCL argued that since IP Bridge never asked the district court to conduct such an analysis, the question should not have gone to the jury. IP Bridge responded by arguing that whether a patent is essential to a standard is a classic fact issue and is in the province of the factfinder.
The Federal Circuit agreed with IP Bridge and found that TCL’s appeal rested on a misreading of Fujitsu. In Fujitsu, the Court noted that if a district court finds that the claims cover any device that practices a standard, then comparing the claims to that standard is the same as the traditional infringement analysis of comparing the claims to the accused product. The Court explained that the passing reference to claim construction is a recognition that the first step in any infringement analysis is claim construction; it is not a statement that the district court must determine whether the claim covers every implementation of the standard. The Court also explained that determining standard essentiality of patent claims during claim construction does not make sense from a practical perspective because essentiality is a question about whether the claim elements read onto mandatory portions of a standard that standard-compliant devices must incorporate—an inquiry that is more closely akin to an infringement analysis. The Court concluded that substantial evidence supported the jury’s infringement verdict, and therefore the Court affirmed.