I have multiple updates from the Ericsson v. Apple 5G patent dispute:
Apple v. Ericsson mmWave trial: Apple dropped one of its three patents-in-suit right before trial
Munich I Regional Court schedules four Ericsson v. Apple patent trials for July 2023
Ericsson v. Apple FRAND trial started in Eastern District of Texas yesterday: jury selection, opening statements, initial testimony
Apple is back in Judge Rodney Gilstrap's court on 100 E Houston St, Marshall, TX 75670 (party representative: Apple's Head of Licensing Heather Mewes). So is Ericsson (party representative: Head of Intellectual Property, Christina Petersson), but the difference is that Ericsson has repeatedly made the choice to enforce its intellectual property rights in Marshall, Texas, while Apple even closed two of its retail stores in the Eastern District of Texas in order to be able to move patent cases brought against it out of the Eastern District (as a permanent place of business weighs against a venue transfer).
I actually thought there was a high probability of a settlement at this procedural juncture, but no. It looks like Apple is still engaging in hold-out. It hasn't paid Ericsson royalties in about a year, and presumably hopes that at some point Ericsson will back down and lower its rates so much that Apple takes the deal. Apple has a history of squeezing the suppliers that make its parts, and also a history of "coerc[ing] low-ball agreements" with patent holders as Qualcomm, one of America's most innovative companies, and other industry players explained six months ago. Apple even uses astroturfers--lobbyists who are paid by Apple but claim to speak for others-- for its campaign to devalue standard-essential patents.
By contrast, the royalty rate Ericsson is seeking (they offered Apple a license at a rate of $5 per 5G iPhone, or $4 if Apple had signed up early) is not excessive when compared to the $4 per 4G phone that a jury in the very same court found reasonable in a dispute with HTC (which makes cheaper phones, and for that reason alone Apple should pay more). That jury decision was upheld not only by Judge Gilstrap but also by the court above, the United States Court of Appeals for the Fifth Circuit.
The jury will also see evidence that Apple pays Qualcomm a lot more than Ericsson (in fact, Qualcomm traditionally gets higher patent royalties from Apple than all other standard-essential patent (SEP) holders combined).
Chief Judge Gilstrap entered the following minutes of the first trial day:
I'd have liked to follow the trial in one of the world's most important patent litigation venues, but due to other obligations and plans I couldn't make it. Unfortunately I can't find any media report on the first trial day, so I don't know what the parties' lawyers said in their opening statements. I've looked at the list of counsel, and while I like and have the greatest respect for Joe Mueller (who worked on many Apple patent cases in the past) and Ruffin Cordell (who represented Apple against Qualcomm in 2019), I believe Ericsson's counsel--which won the HTC case in the same district over similar issues--will probably win. Despite the rhetorical skills of Apple's top-notch lawyers, I can't see how a jury could reasonably find that Ericsson did not live up to its FRAND (fair, reasonable, and non-discriminatory) licensing commitment: Ericsson could have asked for even more in light of the $4-for-4G outcome in the HTC "cheap phone" case as well as in light of what Apple pays to Qualcomm.
As an app developer, I know that Apple charges app developers more than 30% (which is why Apple is under antitrust investigation around the globe and ejected the popular Fortnite game from its App Store, which saddened so many kids) while paying only about 2% of its iPhone sales to SEP holders.
If it takes much longer before Apple and Ericsson agree, I may even find the time to draw up a "battlemap" like the one I created for the Nokia-OPPO dispute on Friday.
Apple v. Ericsson mmWave trial: Apple dropped one of its three patents-in-suit right before trial
For the same day--yesterday--the United States International Trade Commission (USITC, or just ITC) had scheduled the trial of Apple's countersuit against Ericsson. I assume it also kicked off as planned. There is no indication to the contrary on the ITC docket.
In that complaint, Apple initially asserted three mmWave patents against Ericsson's base stations, seeking a U.S. import ban that would hurt telecommunications carriers like Verizon but ultimately also consumers. The judge presiding over that case denied an Apple motion that would have precluded Ericsson from making a right-to-repair argument. Previously, the ITC staff also supported Ericsson at least to some extent in the public interest context.
On Saturday, Apple brought an (unopposed) motion for partial termination, withdrawing various claims of the asserted patents. U.S. Patent No, 9,882,282 on "wireless charging and communications systems with dual-frequency patch antennas" has now been withdrawn in its entirety, meaning that only two patents-in-suit remain in the case. It is the normal course of business to narrow ITC cases ahead of trial, but normally parties drop patents weeks or months ahead of trial as opposed to doing so on a Saturday before a Monday trial.
The ITC trial is the second Apple v. Ericsson trial this year. Another one was held in Germany a few months ago, and Apple lost that case.
Apple gives Colombian 5G iPhone customer refund, incredibly claims Ericsson's lifted (!) preliminary injunction made repair or replacement impossible
I just mentioned the right to repair in the previous section. A Colombian iPhone customer--José Caparroso (Forbes co-editor for Latin America) went to (presumably) an Apple Store because he needed his 5G iPhone repaired, but Apple incredibly told him--I'll explain further below why I don't buy it--that due to a preliminary injunction that Ericsson had obtained over Apple's alleged infringement of a 5G standard-essential patent, they couldn't repair or replace the gadget, giving him a refund instead and leaving him with only the choices of buying an iPhone abroad (such as in the U.S.) or switching to Android:
Por el fallo de Colombia contra Apple, Apple no me pudo reparar ni reponer un celular 5G en garantía y me devolverá la plata. Qué desgaste todo.
— José Caparroso (@JoseCaparroso) December 5, 2022
Para conseguir el nuevo celular me toca comprarlo en Estados Unidos o cambiarme a otra marca.
Actually, an appeals court in Colombia found that there was nothing wrong with the lower court having entered that preliminary injunction, but lifted the sales and import ban at this stage based on additional information that was on the table (which still doesn't mean that Apple won't ultimately be liable for infringement).
So, as we speak, Apple is absolutely free to sell, import, advertise, repair, or replace 5G iPhones in the South American country. I responded that the problem appears to be purely logistical (manufacturing issues due to a global bottleneck) than legal. José Caparroso replied to me that the case isn't closed despite the appellate decision and that he merely stated the reasons that Apple gave him for refusing to repair his iPhone, and that he doesn't rule out it could be due to a combination of factors. I acknowledged that the litigation is ongoing, but that there can be no doubt about Apple not facing any legal restrictions at the moment and that it now controls its destiny.
Munich I Regional Court schedules four Ericsson v. Apple patent trials for July 2023
It may very well be that the Ericsson v. Apple dispute will effectively be decided in Munich, the world's leading SEP enforcement venue.
The Munich I Regional Court held two Ericsson v. Apple hearings in September, and Ericsson is on the winning track in both cases. One of the cases involves a patent that is not subject to a FRAND licensing commitment, while the other one is about a SEP that the court believes (at this stage) to be infringed by Apple. After that hearing, the court threw out an Apple motion to dismiss that case.
The trials in those two cases were scheduled for April, so the decisions will most likely come down in May or June.
There will be four more Ericsson v. Apple patent trials in Munich in July 2023: two on July 7, and two on July 12. I reached out to the Munich court and obtained the following information:
Two weeks ago, the court had to cancel two hearings on short notice because someone called in sick (case numbers 21 O 1686/22 and 21 O 2922/22, as well as 21 O 1687/22 and 21 O 2925/22; there are two case numbers per case because service of process to foreign defendants takes longer, so the claims against foreign defendants are formally severed from the case, but later everything is put on the same schedule again). The court agreed with the parties not to hold those hearings, but to proceed straight to trial in July.
In two other cases (21 O 1688/22 and 21 O 2926/22, as well as 21 O 1689/22 und 21 O 2927/22), the Munich court did indeed hold hearings last week. I don't know what inclination the court indicated. Those cases, too, will go to trial in July.
On December 21--just two weeks from tomorrow--the Munich court will hold an Ericsson v. Apple FRAND hearing at 1:30 PM local time, discussing similar questions as the ones before the jury in Marshall, TX. I believe Ericsson will win the FRAND decision in Munich, and will try to find out more on or after the 21st.
