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TCL Communication Technology Holdings, Ltd v. Telefonaktienbolaget LM Ericsson

United States District Court, C.D. California

March 9, 2018

TCL COMMUNICATION TECHNOLOGY HOLDINGS, LTD., et al., Plaintiffs/Counterclaim-Defendants,
v.
TELEFONAKTIEBOLAGET LM ERICSSON, et al., Defendants/Counterclaim-Plaintiffs.
v.
ERICSSON INC., et al., Plaintiffs/Counterclaim-Defendants,
v.
TCL COMMUNICATION TECHNOLOGY HOLDINGS, LTD., et al., Defendants/Counterclaim-Plaintiffs.

          AMENDED FINAL JUDGMENT AND INJUNCTION

          HON. JAMES V. SELNA UNITED STATES DISTRICT JUDGE.

         In this consolidated action, Plaintiffs and Counterclaim Defendants TCL Communication Technology Holdings Ltd., TCT Mobile (US) Inc., and TCT Mobile Limited (collectively, “TCL”) brought claims and counterclaims against Defendants and Counterclaim Plaintiffs Telefonaktiebolaget LM Ericsson and Ericsson Inc. (together, “Ericsson”) for breach of contract; promissory estoppel; declaratory judgment; fraudulent misrepresentation; negligent misrepresentation; and violation of the California Unfair Competition Law (the “UCL”); declaratory judgment of non-infringement of U.S. Patent No. 6, 301, 556 (the “'556 patent”); declaratory judgment of invalidity of the '556 patent; declaratory judgment of non-infringement of U.S. Patent No. 6, 473, 506 (the “'506 patent”); declaratory judgment of invalidity of the '506 patent; infringement of U.S. Patent No. 7, 778, 340 (the “'340 patent”); and infringement of U.S. Patent No. 7, 359, 718 (the “'718 patent”).

         Ericsson brought claims and counterclaims against TCL for breach of the obligation to negotiate in good faith and promissory estoppel, and claims for infringement of the '556 patent; infringement of the '506 patent; declaratory judgment; declaratory judgment for non-infringement of the '340 patent; declaratory judgment of invalidity of the '340 patent; declaratory judgment of non-infringement of the '718 patent; and declaratory judgment of invalidity of the '718 patent.

         On July 1, 2015, the Court stayed the parties' claims and counterclaims relating to Ericsson's '556 and '506 patents until further Order of the Court (Dkt. 281).

         On July 24, 2015, the Court dismissed the parties' claims and counterclaims relating to TCL's '340 and '718 patents without prejudice (Dkt. 289).

         On June 17, 2016, the Court dismissed TCL's claims and counterclaims for fraudulent misrepresentation and negligent misrepresentation with prejudice (Dkt. 838).

         On June 17, 2016, the Court dismissed Ericsson's counterclaims for breach of the obligation to negotiate in good faith and promissory estoppel with prejudice (Dkt. 838).

         On August 9, 2016, the Court granted Ericsson's motion for partial summary judgment of no damages for breach of contract, promissory estoppel, or violation of the UCL (Dkt. 1061), and Ericsson's motion for partial summary judgment as to TCL's claim for violation of the UCL (Dkt. 1058).

         The Court conducted a 10-day bench trial commencing on February 14, 2017. Three claims/counterclaims were tried before the Court: (1) TCL's claim/counterclaim for breach of contract seeking specific performance; (2) TCL's claim/counterclaim for declaratory judgment; and (3) Ericsson's claim/counterclaim for declaratory judgment (Dkt. 1376-1). The Court received evidence in the form of exhibits, designated portions of deposition transcripts, and witness testimony.

         In its Memorandum of Findings of Fact and Conclusions of Law issued on November 8, 2017 (Dkt. 1778), the Court found that Ericsson's Option A and B offers were not fair and reasonable, and were discriminatory, and thereafter determined FRAND royalty rates for a license to TCL under Ericsson's 2G, 3G, and 4G standard essential patent portfolios.

         Consistent with the Court's Memorandum of Findings of Fact and Conclusions of Law (Dkt. 1778), and based on the record established in this case, the Court enters this Final Judgment and Injunction pursuant to Federal Rule of Civil Procedure 58.

         DEFINITIONS

         For the purpose of this Final Judgment and Injunction, the following definitions shall apply:

         1. “Affiliate” of a Party means a company or other legal entity which is controlled by the Party. For the purpose of this definition, “control” shall mean direct or indirect ownership of more than fifty percent (50%) of the voting power, capital, or other securities of the controlled or commonly controlled entity.

         2. “Brand Company” means a company or other legal entity, other than a Network Operator, which is active in the consumer electronics business and/or wireless communications business and/or IT industry.

         3. “Components” means any item of equipment, including, for example, a subsystem, sub-assembly or component, in software, hardware, and/or firmware form, of any TCL Product, which is sold, licensed, or supplied, or intended to be sold, licensed, or supplied, to a Third Party other than as a complete and ready to use end-use item, for example, because it requires additional industrial, manufacturing, or assembly processes before being used or sold as an end-use item, and is intended for incorporation into any product. Examples of Components include, but are by no means limited to, platforms, ASICs and chipsets, modules, printed circuit boards, integrated circuits, semiconductor devices, processors, multi-core processors, multi-chip modules, and multi-chip packages, embedded modules and core engines. This definition of “Components” shall exclude any product employed for the purpose of repair or upgrade of already sold products which are licensed under this Injunction.

         4. “Consumer” means a natural person who buys products as a final user.

         5. “Costs of Insurance and Transportation” means TCL's, as the case may be, actual direct costs of insurance and transportation to ship TCL Products to its customers. For the avoidance of doubt, Costs of Insurance and Transportation shall not include any labor fee or any overhead costs of any kind.

         6. “Effective Date” means the date of entry of this Final Judgment and Injunction.

         7. “End User Terminal” means a complete and ready to use device or Knocked Down version of such complete device with the largest of the width, length, and depth of such complete device in its most compact form being 250 mm or less, which can be directly used by a Consumer for wireless communications (i.e. to receive and transmit information over the air by means of using one or more of the Standards), without the device having to be integrated or embedded into another device or connected to another device through, for example, a USB, PCMCIA, memory card, WLAN, or Bluetooth interface. For the avoidance of all doubt, the term “End User Terminal” does not mean subassemblies or parts of products such as, but not limited to, Components, other than as sold as part of the End User Terminal or as spare parts or repair parts of already Sold End User Terminals. For the further avoidance of doubt, TCL is not required to pay any royalty to Ericsson for such spare parts or repair parts of already Sold End User Terminals.

         8. “Entity” means any individual, firm, company, corporation, or other corporate or legal entity (wherever and however incorporated or established), government, state, agency or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having a separate legal personality).

         9. “Ericsson” means Defendants and Counterclaim Plaintiffs Telefonaktiebolaget LM Ericsson, a company established under the laws of Sweden, with organization number 556016-0680, with its registered office at SE-164 83 Stockholm, Sweden; Ericsson Inc., a Delaware corporation headquartered at 6300 Legacy Drive, Plano, Texas 75024; and all of their Affiliates.

         10. “External Modem” means a separate external Consumer device which can be connected to or inserted into an external slot of another device by an individual consumer (i.e. not an entity of any kind) through, for example, a USB, PCMCIA, memory card, WiFi, or Bluetooth interface, in order to allow said another device to communicate by means of any or more of the Standards. The External Modem may not be designed for the purpose of being embedded into such other device or may not in itself include an immediate physical user- interface to an individual Consumer to transmit or receive wireless data and/or voice transmissions by means of any or more of the Standards (such a device shall fall under the definition of End User Terminal). The term “External Modem” does not include Components (other than as sold incorporated into the External Modem or sold as part of a kit of External Modem) or modules.

         11. “Future Standards” means the agreed protocols by ETSI, ARIS, T1P1, CCSA, and/or other relevant telecommunications standards setting bodies that are applicable to UMB, WiMax IEEE802.16m, and/or any other beyond 4G standards, irrespective of the transmission medium or frequency band, as well as any updates in respect of such protocols.

         12. “Have Made” means the right to have a Third Party make a product for the use and benefit of the party exercising the have made right provided all of the following conditions are fulfilled: (a) the party exercising the have made right owns and supplies the designs, specifications and working drawings supplied to such Third Party; and (b) such designs, specifications and working drawings are, complete and sufficient so that no substantial additional design, specification and working drawings are needed by any Third Party; and (c) such Third Party is not allowed to sell such product to other third parties.

         13. “Injunction” means the Injunction herein and its appendices.

         14. “Knocked Down” means a complete End User Terminal product in the form of complete knocked down or semi-knocked down kits of parts, including complete and substantially complete kits of parts, where such kit of part or knocked down product is always a complete and ready to use End User Terminal.

         15. “License Period” means the period commencing on the Effective Date and having a period of five (5) years calculated from the Effective Date.

         16. “Licensed Patents” means those Patents (in any country of the world) as to which it is, or is claimed by the owner to be, not possible, on technical grounds taking into account normal technical practice and the state of the art generally available at the time of adoption or publication of the relevant Standards, to make, sell, lease, or otherwise dispose of, repair, use, or operate equipment or methods which comply with the relevant Standards, without infringing such Patents.

         17. “Network Operator” means an Entity, including such Entity's Affiliates, that as its main business (a) owns or licenses frequency spectrum, directly or indirectly, from a government or other relevant authority or Entity, and offers wireless data- or telecommunications services to Consumers over such owned or licensed spectrum; and/or (b) offers wired data- or telecommunications services to Consumers.

         18. “Net Selling Price” means the greater of (a) the selling price actually obtained for the TCL Product in the form in which it is Sold, and (b) the selling price which a seller would realize from an un-Affiliated buyer in an arm's length sale of an equivalent product in the same quantity and at the same time and place as such Sale, whether or not assembled and without excluding therefrom any components or subassemblies thereof. In determining the “Net Selling Price, ” only the following shall be excluded to the extent actually included in the selling price obtained for such products: (i) Usual Trade Discounts actually allowed to non-Affiliated persons or entities; (ii) Packing Costs; (iii) Costs of Insurance and Transportation; and (iv) Taxes and Custom Duties. For the avoidance of doubt, allowed deductions for Usual Trade Discounts, Packaging Costs, and Costs of Insurance and Transportation shall in total not exceed eight (8) percent units of the selling price.

         19. “Packing Costs” means TCL's, as the case may be, actual direct costs of packing and/or packaging TCL Products for shipment to its customer. For the avoidance of doubt, Packing Costs shall include extra batteries, charger, ear phones, SO card, user manual (in any form including but not limited to CD- ROM), warranty card, USB cable, welcome kit, packing box, labels, protective screen cover, plastic bags, carrying kit and separate additional phone cover case. For the avoidance of doubt, Packing Costs shall not include any labor fee or any overhead costs of any kind.

         20. “Party/Parties” means Ericsson and TCL.

         21. “Patents” means patent claims (including claims of licensable patent applications), and like statutory rights other than design patents, owned, or ...


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