Context: Approximately three months ago, a jury in the Eastern District of Texas rendered a verdict in favor of G+ Communications, a licensing firm that owns 5G standard-essential patents (SEPs) formerly held by China’s ZTE, a company that has in recent years stepped up its patent monetization efforts. The original damages award over the two patents-in-suit combined was $67.5 million, or $1.50 per unit (January 2024 press release by Irell & Manella). Samsung’s FRAND defense was unavailing, and the chief judge of that district, Judge Rodney Gilstrap, determined that a licensor’s FRAND obligation can be suspended (and also noted that litigation expenses can be recovered under French law) (January 22, 2024 order). He later considered the outcome of the jury trial unreliable (there were indications that the jury got confused during deliberations over the difference between running and lump-sum royalties), and ordered a retrial.
What’s new: The retrial ended yesterday with a $142M damages verdict ($61 million for one patent, $81 million for another), which is more than twice the amount determined by the previous jury in January. Irell & Manella’s co-counsel issued a press release (April 17, 2024 McKool Smith press release).
Direct impact: Samsung may already regret not having settled sooner, but with the FRAND-related decisions that Judge Gilstrap made, it is now also possible that Samsung, one of the most frequent defendants to patent assertions in general and SEP infringement actions in particular, has a strong interest in obtaining clarification from the Federal Circuit.
Wider ramifications: In SEP policy debates, concerns over “royalty stacking” (outsized total royalty amounts) are voiced frequently. The damages award in this case (now effectively more than $3 per unit over only two 5G SEPs) is going to be used as a point of reference, as any extrapolation from the number of patents-in-suit to the total number of 5G patents will inevitably lead to absurd and economically unsustainable aggregate royalty amounts. But this is a U.S. damages case and therefore has no bearing on the question of how to address certain issues in Europe, where the focus is on injunctions and on portfolio licenses as opposed to “Texas-sized” damages awards.
Here’s the verdict form:
This is the second major damages award in favor of a patent licensing firm in U.S. federal court. In other news this week, Chicago-based Kove IO obtained a half-billion dollar verdict against Amazon (April 15, 2024 ip fray article) in its home court (Northern District of Illinois). While the Western and Eastern Districts of Texas are particularly popular among patent holders, Kove IO v. Amazon Web Services shows that patentees can also achieve major victories in other parts of the United States.
Implementers of standards primarily lobby against the availability of SEP injunctions. But G+ Communications v. Samsung serves as a reminder that patent holders can also seek substantial damages, though “only in America.”