2013-1625, -1631, -1632, -1633
`
`UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`_______________________
`
`ERICSSON INC. and
`TELEFONAKTIEBOLAGET LM ERICSSON,
`Plaintiffs-Appellees,
`
`v.
`D-LINK SYSTEMS, INC., NETGEAR, INC., ACER, INC.,
`ACER AMERICA CORPORATION, and GATEWAY, INC.,
`Defendants-Appellants,
`
`and
`DELL, INC.,
`
`Defendant-Appellant,
`
`and
`TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
`and TOSHIBA CORPORATION,
`Defendants-Appellants,
`
`and
`INTEL CORPORATION,
`
`Intervenor-Appellant,
`
`and
`BELKIN INTERNATIONAL, INC.,
`Defendant.
`_______________________
`
`Appeals from the United States District Court for the Eastern District of Texas
`in case no. 10-CV-0473, Chief Judge Leonard Davis.
`_______________________
`
`NON-CONFIDENTIAL BRIEF FOR
`PLAINTIFFS-APPELLEES, ERICSSON INC. AND
`TELEFONAKTIEBOLAGET LM ERICSSON
`_______________________
`
`February 20, 2014
`
`(Counsel Listed on Next Page)
`
`McKool 969211v1
`
`1
`
`Broadcom v. Ericsson
`IPR2013-00601
`Broadcom 1014
`
`

`

`Douglas A. Cawley
`Theodore Stevenson, III
`Warren Lipschitz
`MCKOOL SMITH, P.C.
`300 Crescent Court, Suite 1500
`Dallas, TX 75201
`(214) 978-4000
`
`John B. Campbell
`Kathy H. Li
`MCKOOL SMITH, P.C.
`300 W. 6th Street, Suite 1700
`Austin, TX 78701
`(512) 692-8700
`
`John M. Whealan
`4613 Merivale Road
`Chevy Chase, MD 20815
`(202) 994-2195
`
`Attorneys for Plaintiffs-Appellees,
`Ericsson Inc. and Telefonaktiebolaget LM
`Ericsson
`
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`CERTIFICATE OF INTEREST
`
`Ericsson Inc. and Telefonaktiebolaget LM Ericsson certify the following:
`
`1. The full name of every party represented by me is:
`
`Ericsson Inc. and Telefonaktiebolaget LM Ericsson
`
`2. The name of the real party in interest (if the party named in the caption is not
`the real party in interest) represented by me is:
`
`Not Applicable
`
`3. All parent corporations and any publicly held companies that own 10 percent
`or more of the stock of the party represented by me are:
`
`Ericsson Inc. is wholly-owned by Ericsson Holding II Inc., which in turn is
`wholly-owned by Telefonaktiebolaget LM Ericsson. Telefonaktiebolaget
`LM Ericsson is publicly held and trades in the United States through
`American Depository Receipts under the name LM Ericsson Telephone
`Company.
`
`4. The names of all law firms and the partners or associates that appeared for
`the party represented by us in the trial court or are expected to appear in this
`Court are:
`
`McKool Smith P.C.: Douglas A. Cawley, Theodore Stevenson, III,
`Samuel F. Baxter, John B. Campbell, Jr., Ada E. Brown (no longer at
`McKool Smith P.C.), Ashley N. Moore, Bradley W. Caldwell (no
`longer at McKool Smith P.C.), John A. Curry (no longer at McKool
`Smith P.C.), Brandon M. Jordan, Holly E. Engelmann, Jason A.
`Blackstone, Justin T. Nemunaitis (no longer at McKool Smith P.C.),
`Kathy H. Li, Kevin L. Burgess, Ryan A. Hargrave, Travis E.
`DeArman
`
`John M. Whealan
`
`Dated: February 20, 2014
`
`
`
`
`
`/s/ Douglas A. Cawley
`DOUGLAS A. CAWLEY
`
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`TABLE OF CONTENTS
`
`CERTIFICATE OF INTEREST ................................................................................. i
`
`TABLE OF AUTHORITIES .................................................................................... vi
`
`TABLE OF ABBREVIATIONS .............................................................................. ix
`
`STATEMENT OF RELATED CASES ..................................................................... 1
`
`STATEMENT OF JURISDICTION.......................................................................... 1
`
`INTRODUCTION ..................................................................................................... 2
`
`STATEMENT OF ISSUES ....................................................................................... 3
`
`STATEMENT OF CASE .......................................................................................... 4
`
`STATEMENT OF FACTS ........................................................................................ 6
`
`I.
`
`II.
`
`Ericsson ............................................................................................................ 6
`
`Technology Overview ..................................................................................... 7
`
`A.
`
`B.
`
`C.
`
`The ’568 Patent ..................................................................................... 9
`
`The ’215 Patent ................................................................................... 10
`
`The ’625 Patent ................................................................................... 13
`
`III. Ericsson’s Licensing Program For Its Standard-Essential Patents ................ 16
`
`A.
`
`B.
`
`Ericsson’s Comparable Licenses for the Patents-in-Suit .................... 17
`
`Ericsson’s Pre-Suit Negotiations with Defendants ............................. 22
`
`IV. The Proceedings Below ................................................................................. 23
`
`SUMMARY OF ARGUMENT ............................................................................... 24
`
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`STANDARD OF REVIEW ..................................................................................... 26
`
`ARGUMENT ........................................................................................................... 28
`
`I.
`
`Defendants Infringe Ericsson’s Valid ’568, ’215, and ’625 Patents ............. 28
`
`A.
`
`The District Court did Not Err in Denying JMOL as to
`Infringement of the ’568 Patent .......................................................... 28
`
`1.
`
`2.
`
`Substantial evidence supports the jury’s finding that the
`’568 Patent is infringed ............................................................. 28
`
`The district court correctly instructed the jury that the
`accused products infringe if they are reasonably capable
`of infringement .......................................................................... 32
`
`B.
`
`The District Court did Not Err in Denying JMOL as to
`Infringement of the ’215 Patent .......................................................... 34
`
`1.
`
`2.
`
`Substantial evidence supports the jury’s finding that the
`’215 Patent is infringed ............................................................. 34
`
`The district court correctly construed “type identifier
`field” (TIF) ................................................................................ 38
`
`C.
`
`The District Court did Not Err in Denying JMOL as to
`Infringement or Invalidity of the ’625 Patent ..................................... 41
`
`1.
`
`2.
`
`Substantial evidence supports the jury’s finding that the
`’625 Patent is infringed ............................................................. 41
`
`Substantial evidence supports the jury’s finding that the
`’625 Patent is not anticipated .................................................... 45
`
`D.
`
`Substantial Evidence Supports the Jury’s Factual Finding that
`Defendants Directly Infringed and Also Induced Infringement
`of the Asserted Method Claims ........................................................... 48
`
`1.
`
`Defendants directly infringe the asserted method claims ......... 48
`
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`2.
`
`Defendants also induced infringement of the asserted
`method claims ........................................................................... 52
`
`II.
`
`The District Court Did Not Err In Denying JMOL As To Damages Because
`Substantial Evidence Supports the Jury’s Award Of Approximately $10
`Million ........................................................................................................... 55
`
`A.
`
`B.
`
`Comparable Licenses Establish the Value of the Patented
`Technology .......................................................................................... 57
`
`Ericsson’s Expert Conducted a Rigorous Apportionment
`Analysis ............................................................................................... 58
`
`C.
`
`The Jury’s Royalty Rate is Consistent with Industry Norms .............. 60
`
`D. Defendants’ Arguments Attacking the Jury’s Damages Award
`Fail ....................................................................................................... 61
`
`1.
`
`2.
`
`Ericsson did not use the entire market value rule to
`calculate damages ..................................................................... 61
`
`Damages do not need to be calculated based solely on the
`value of the chipset ................................................................... 63
`
`E.
`
`The District Court did Not Err by Refusing to Instruct the Jury
`on Patent “Hold-up” and Royalty Stacking ........................................ 65
`
`1.
`
`2.
`
`The policy behind licensing standard-essential patents on
`RAND terms ............................................................................. 66
`
`Specific jury instructions regarding patent hold-up or
`royalty stacking would have been inappropriate ...................... 68
`
`F.
`
`The District Court’s Compulsory Royalty Award, to Which
`Defendants Waived Objection, was Not Error .................................... 71
`
`1.
`
`Defendants waived any objection to the compulsory
`royalty award ............................................................................. 71
`
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`2.
`
`The district court’s compulsory royalty award is
`appropriate based on Defendants’ infringement ....................... 73
`
`III. Dell Is Not A Licensee Of Ericsson’s Patents-in-Suit .................................. 75
`
`A.
`
`B.
`
`Factual Background Regarding Dell’s License Defense .................... 76
`
`LM Ericsson (the Parent and Patent Owner) was Not an Agent
`of Ericsson AB (the Subsidiary and Non-Patent Owner) ................... 79
`
`1.
`
`2.
`
`Ericsson AB could not authorize a lawsuit on behalf of
`LM Ericsson, which already had the authority to sue .............. 80
`
`Dell failed to show that an agency agreement between
`LM Ericsson and Ericsson AB existed ..................................... 81
`
`CONCLUSION ........................................................................................................ 82
`
`CERTIFICATE OF SERVICE ................................................................................ 84
`
`CERTIFICATE OF COMPLIANCE ....................................................................... 85
`
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`TABLE OF AUTHORITIES
`
`CASES
`Absolute Software, Inc. v. Stealth Signal, Inc.,
`659 F.3d 1121 (Fed. Cir. 2011) .......................................................................... 28
`
`Page(s)
`
`ArcelorMittal France v. AK Steel Corp.,
`700 F.3d 1314 (Fed. Cir. 2012) .......................................................................... 48
`
`Ball Aerosol & Specialty Container, Inc. v. Ltd. Brands, Inc.,
`555 F.3d 984 (Fed. Cir. 2009) ............................................................................ 33
`
`Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs.,
`670 F.3d 1171 (Fed. Cir. 2012) .......................................................................... 71
`
`Catalina Mktg. Int’l v. Coolsavings
`
`289 F.3d 801 (Fed. Cir. 2002) ............................................................................ 39
`
`Commercial Union Ins. Co. v. Alitalia Airlines, S.p.A.,
`347 F.3d 448 (2d. Cir. 2002) .............................................................................. 79
`
`Digital-Vending Servs. Int’l, LLC v. Univ. of Phoenix, Inc.,
`672 F.3d 1270 (Fed. Cir. 2012) .......................................................................... 71
`
`DMI, Inc. v. Deere & Co.,
`802 F.2d 421 (Fed. Cir. 1986) ............................................................................ 68
`
`Dresser-Rand Co. v. Virtual Automation, Inc.,
`361 F.3d 831 (5th Cir. 2004) .............................................................................. 26
`
`DSU Medical Corp. v. JMS Co. Ltd.,
`471 F.3d 1293 (Fed. Cir. 2006) (en banc) .......................................................... 52
`
`Finjan, Inc. v. Secure Computing Corp.,
`626 F.3d 1197 (Fed. Cir. 2010) ........................................................ 32, 33, 34, 36
`
`Garretson v. Clark,
`111 U.S. 120 (1884) ............................................................................................ 58
`
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`Georgia-Pacific Corp. v. United States Plywood Corp.,
`318 F.Supp. 1116 (S.D.N.Y. 1970) .................................................................... 66
`
`Global-Tech Appliances, Inc. v. SEB S.A.,
`131 S. Ct. 2060 (2011) ........................................................................................ 52
`
`Hilgraeve Corp. v. Symantec Corp.,
`265 F.3d 1336 (Fed. Cir. 2001) .......................................................................... 33
`
`i4i, Ltd. P’ship v. Microsoft Corp.,
`598 F.3d 831 (Fed. Cir. 2010) ...................................................................... 39, 48
`
`Joy Techs., Inc. v. Flakt, Inc.,
`6 F.3d 770 (Fed. Cir. 1993) ................................................................................ 48
`
`LaserDynamics, Inc. v. Quanta Computer, Inc.,
`694 F.3d 51 (Fed. Cir. 2012) .............................................................................. 62
`
`Lucent Techs., Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009) .................................................................... 27, 54
`
`Microsoft Corp. v. Motorola, Inc.,
`No. C10-1823, 2013 U.S. Dist. LEXIS 60233 (W.D. Wash. Apr. 25,
`2013) ............................................................................................................. 58, 60
`
`Monsanto Co. v. McFarling,
`488 F.3d 973 (Fed. Cir. 2007) ...................................................................... 55, 57
`
`Mouawad Nat’l Co. v. Lazare Kaplan Int’l Inc.,
`476 F. Supp. 2d 414 (S.D.N.Y. 2007) .......................................................... 80, 81
`
`Munoz v. Strahm Farms,
`69 F.3d 501 (Fed. Cir. 1995) ........................................................................ 63, 65
`
`Paice LLC v. Toyota Motor Corp.,
`504 F.3d 1293 (Fed. Cir. 2007) .................................................................... 27, 74
`
`Retractable Techs. v. Becton, Dickinson & Co.,
`659 F.3d 1369 (Fed. Cir. 2011) .......................................................................... 40
`
`Ricoh v. Quanta Computer, Inc.,
`
`550 F.3d 1325 (Fed. Cir. 2008) .............................................................. 49, 50, 51
`
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`Robert Bosch LLC v. Pylon Mfg. Corp.,
`659 F.3d 1142 (Fed. Cir. 2011) .......................................................................... 27
`
`SiRF Tech., Inc. v. Int’l Trade Comm’n,
`
`601 F.3d 1319 (Fed. Cir. 2010) .............................................................. 48, 49, 50
`
`Sulzer Textil A.G. v. Picanol N.V.,
`358 F.3d 1356 (Fed. Cir. 2004) .......................................................................... 27
`
`Teleflex, Inc. v. Ficosa N. Am. Corp.,
`299 F.3d 1313 (Fed. Cir. 2002) .................................................................... 26, 27
`
`TiVo, Inc. v. Echostar Comm. Corp.,
`446 F. Supp. 2d 664 (E.D. Tex. 2006), aff’d in part, rev’d in part on
`other grounds, 516 F.3d 1290 (Fed. Cir. 2008) .................................................. 74
`
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011) .................................................................... 62, 63
`
`Versata Software, Inc. v. SAP America, Inc.,
`717 F.3d 1255 (Fed. Cir. 2013) .......................................................................... 32
`
`z4 Techs., Inc. v. Microsoft Corp.,
`507 F.3d 1340 (Fed. Cir. 2007) .................................................................... 33, 67
`
`OTHER AUTHORITIES
`
`3 American Jurisprudence 2d Agency § 9 ............................................................... 80
`
`Einer Elhauge, Do Patent Holdup and Royalty Stacking Lead to
`Systematically Excessive Royalties?, 4(3) J. of Comp. L. & Econ. 535
`(2008) .................................................................................................................. 67
`
`Federal Rule of Civil Procedure 56(a), (c)(1) .......................................................... 27
`
`Federal Rule of Civil Procedure 59(e) ..................................................................... 73
`
`Federal Rule of Civil Procedure 60 ......................................................................... 73
`
`Richard A. Epstein et al., The FTC, IP, and SSOs: Government Hold-Up
`Replacing Private Coordination, 8(1) J. of Comp. L. & Econ. 1 (2012) ........... 67
`
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`TABLE OF ABBREVIATIONS
`
`For ease of reference, Ericsson adopts the same abbreviations listed in
`
`Defendants’ Table of Abbreviations. [DefB at xiii] Ericsson uses the following
`
`additional abbreviations:
`
`Abbreviation
`Defendants’ Brief
`or DefB
`Dell’s Brief or DellB
`JMOL
`Patents-in-Suit
`FRAND
`
`Definition
`Brief for Intervenor-Appellant Intel and Defendants-
`Appellants Acer, Gateway, Netgear, D-Link, and Toshiba
`Brief for Appellant Dell Inc.
`Motion for Judgment as a Matter of Law
`the ’435, ’625, ’568, ’223, and ’215 Patents
`fair, reasonable, and non-discriminatory
`
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`STATEMENT OF RELATED CASES
`
`Plaintiffs-Appellees Ericsson Inc. and Telefonaktiebolaget LM Ericsson
`
`(collectively, “Ericsson”) agree with Defendants’ Statement of Related Cases in
`
`Defendants’ Brief except that Ericsson, Inc., et al. v. Samsung Electronics Co., et
`
`al., No. 12-cv-894; Ericsson, Inc., et al. v. Samsung Electronics Co., et al., No. 12-
`
`cv-895; and In the Matter of Certain Electronic Devices, Including Wireless
`
`Communication Devices, Tablet Computers, Media Players, and Television, and
`
`Components Thereof, No. 337-TA-862 are no longer pending.
`
`Based on this Court’s order dated December 27, 2013 [Dkt. 90], Defendants
`
`filed an opening brief with approximately 17,000 words, and Dell filed a separate
`
`brief of twenty-two pages that included approximately 2,800 words regarding
`
`issues unique to Dell. To minimize the burden on the Court, Ericsson will address
`
`the issues in both Defendants’ and Dell’s Briefs in this single brief of
`
`approximately 17,000 words.1
`
`STATEMENT OF JURISDICTION
`
`Ericsson agrees with Defendants’ Statement of Jurisdiction.
`
`
`1
`Due to the constraints of a single brief, Ericsson refers the Court to the
`district court’s partial summary judgment and post-trial opinions and orders,
`Docket Nos. 524 and 615 [A42-103], for additional citations.
`
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`INTRODUCTION
`
`Ericsson is an innovator and provider of electronic communication
`
`technology. Ericsson has been a leading contributor to a wide variety of wireless
`
`standards such as 3G, 4G/LTE, 5G, and Bluetooth. Ericsson works collectively
`
`with others to develop these technology standards, and readily licenses its
`
`standard-essential technology.
`
`The Patents-in-Suit
`
`relate
`
`to Wi-Fi
`
`technology used
`
`in wireless
`
`communications. Ericsson has licensed its Wi-Fi patents to several leaders in this
`
`field, including Hewlett-Packard and Blackberry. Ericsson attempted to license the
`
`Patents-in-Suit to Defendants on similar terms, but they refused.
`
`In this appeal, Defendants challenge nearly every adverse finding against
`
`them. Defendants largely ignore the fact that most of the issues they appeal are
`
`factual findings (e.g., infringement, anticipation, damages) that are reviewed under
`
`the heightened substantial evidence standard. Further, Defendants tell this Court
`
`only part of the story, essentially omitting any discussion of Chief Judge Davis’s
`
`opinion explaining his rejection of many of the same arguments they now make to
`
`this Court.
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`STATEMENT OF ISSUES
`
`1.
`
`Liability: Whether the district court correctly found that substantial evidence
`
`supported the jury’s finding of infringement of three of Ericsson’s patents,
`
`given that:
`
`a) ’568 Patent: Defendants’ products infringe because they were
`proven to be capable of performing all limitations and when
`running certain applications actually do perform the functional
`limitations;
`
`b) ’215 Patent: Defendants’ products infringe because they were
`shown to comply with the 802.11(n) standard, which requires all
`feedback responses to include a type identifier field;
`
`c) ’625 Patent: (1) Defendants’ products infringe because their
`products were shown to command a receiver to receive a packet
`out of sequence using a method that is nearly identical to the
`preferred embodiment; and (2) substantial evidence supports the
`jury’s finding that Defendants failed to prove that Petras
`anticipates, given that Petras discloses a discard message and not a
`command to receive an out-of-sequence packet.
`
`2.
`
`Damages: Whether the district court correctly found that substantial
`
`evidence supported the jury’s damages award of approximately $10 million,
`
`given that:
`
`license agreements with
`into arms-length
`a) Ericsson entered
`numerous companies in the industry for the Patents-in-Suit, and
`conducted a two-level apportionment analysis;
`
`b) The district court did not err when its jury instructions specifically
`required the jury to consider Ericsson’s RAND obligations; and
`
`c) The district court did not abuse its discretion in setting an ongoing
`royalty rate of 15¢ per unit when the ongoing royalty it set was
`
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`agreed to by all parties and never challenged on the grounds now
`raised by Defendants.
`
`3.
`
`Dell: Whether the district court correctly found that Dell was not licensed
`
`given that:
`
`a) LM Ericsson, a plaintiff in this case and the owner of the Patents-
`in-Suit, was not subject to the covenant not to sue; and
`
`b) Defendants failed to demonstrate an agency relationship because
`there is no evidence that Ericsson AB, the party to the contract,
`granted LM Ericsson authority to sue, nor that LM Ericsson
`accepted authority from Ericsson AB.
`
`STATEMENT OF CASE
`
`Ericsson filed this case, alleging that three laptop manufacturers—Dell,
`
`Toshiba, Acer—and three router manufacturers—D-Link, Netgear, Belkin—
`
`infringed Ericsson’s Patents-in-Suit that are essential to practicing the 802.11(n)
`
`Wi-Fi standard. [A5001; A5030; A5043-66] Intel, a Wi-Fi chip maker that
`
`supplies chips to Defendants, intervened. [A5070]
`
`On June 13, 2013 after a nearly two-week trial, the jury found infringement
`
`of three Ericsson patents—the ’568, ’215, and ’625 Patents—and validity of the
`
`’625 Patent. [A231-33] The jury also found that two of Ericsson’s Patents-in-Suit
`
`were not infringed. [A231-32] The jury awarded Ericsson approximately $10
`
`million in aggregate past damages—less than one-third of what Ericsson
`
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`requested—based on over 67 million infringing products. [A234; A1440(14:15-
`
`15:18)]
`
`Defendants filed JMOLs and motions for new trial on nearly every adverse
`
`ruling. [A52] In a fifty-two page opinion, Chief Judge Davis denied their motions.
`
`[A52-103] The district court addressed every issue raised and explained why: (1)
`
`substantial evidence supported
`
`the
`
`jury’s finding of direct and
`
`indirect
`
`infringement of the apparatus and method claims of each of Ericsson’s three
`
`patents; (2) substantial evidence supported the jury’s finding of no anticipation of
`
`the ’625 Patent; (3) substantial evidence supported the approximately $10 million
`
`jury award, citing six comparable licenses and Ericsson’s two-level apportionment
`
`analysis; and (4) an ongoing royalty of 15¢ per unit is appropriate. [A55-93] In
`
`addition, following a bench trial, the district court explained why: (1) the
`
`appropriate RAND rate for Ericsson’s three infringed patents is 15¢ per unit; and
`
`(2) Ericsson had not violated its RAND obligations by offering Defendants a
`
`license to its worldwide 802.11 portfolio at a rate of 50¢ per unit.2 [A93-102]
`
`Regarding a separate issue unique to Dell, the district court held a hearing
`
`and then issued a ten-page opinion granting Ericsson’s motion for partial summary
`
`judgment that Dell was not licensed because: (1) Ericsson plaintiffs LM Ericsson
`
`
`2
`Defendants have not challenged on appeal the district court’s finding that
`Ericsson did not violate its RAND obligations.
`
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`

`(parent and owner of the Patents-in-Suit) and Ericsson Inc. (exclusive licensee of
`
`the Patents-in-Suit) were not parties to the covenant not to sue; and (2) Dell failed
`
`to show that parent LM Ericsson was the agent of Ericsson AB (subsidiary and the
`
`party to the contract). [A42-51; A1882-88(6:18-30:18)]
`
`STATEMENT OF FACTS
`
`I.
`
`Ericsson
`
`Ericsson is one of the world’s leading providers of cellular infrastructure
`
`equipment, with over 110,000 employees in 180 countries. [A1264(98:24-99:9)]
`
`Ericsson currently employs approximately 24,000 research engineers, and spends
`
`$5 billion annually on research and development. [A1266(107:5-7;107:12-22)]
`
`Ericsson is also one of the leading contributors to a variety of wireless standards,
`
`including 3G, 4G/LTE, 5G,
`
`and Bluetooth.
`
`
`
`[A1265(104:8-104:13);
`
`A1268(114:18-114:24)] As a result of Ericsson’s extensive research and standard
`
`development efforts, Ericsson currently owns approximately 33,000 active patents.
`
`[A1285(17:3-17:8)] Ericsson’s research has made it one of the leading wireless
`
`infrastructure manufacturers, with forty percent of the world’s cellular traffic
`
`traveling through Ericsson network equipment at some point. [A1264(98:20-
`
`98:23)]
`
`Rather than keep all of its innovations proprietary, Ericsson actively
`
`publishes many of its inventions by filing for patents and making contributions to
`
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`standard-setting organizations. [A1266-67(108:12-109:12)] In the cellular field,
`
`Ericsson has contributed many of
`
`its
`
`innovations
`
`to
`
`the European
`
`Telecommunications Standards Institute (“ETSI”) and other standard-setting
`
`bodies, and has committed to grant licenses to its cellular standard-essential patents
`
`on FRAND terms. [A1268(116:9-25)] Similarly, in the Wi-Fi field, Ericsson has
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`committed to the Institute of Electrical and Electronic Engineers (“IEEE”) to
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`license its 802.11 standard-essential patents on RAND terms.3 [A1271-72(127:1-
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`127:15;131:18-131:24); A17249-51] As the district court found, “Ericsson is a
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`sophisticated licensing entity, with over 100 outstanding patent licenses.” [A99]
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`As both a licensee and licensor of standard-essential patents, Ericsson “has an
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`incentive to establish a reasonable licensing rate to maintain credibility in the
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`licensing community.” [Id.]
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`II.
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`Technology Overview
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`IEEE 802.11 is a standards document for implementing wireless local area
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`network computer communication, commonly referred to as “Wi-Fi.” The IEEE
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`802.11 standard is created and maintained by the IEEE Standards Committee.
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`[A1353-54(124:25-125:9)] Each amendment to the IEEE 802.11 standard is
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`assigned a new letter. So, for example, past versions of the standard have been
`
`
`3
`RAND terms are similar to FRAND terms and describe participants’
`commitments to license in different standards-setting organizations.
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`labeled 802.11(a), 802.11(b), 802.11(g), etc. [A1354(125:16-126:10)] The
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`version of 802.11 at issue in this case is IEEE 802.11(n). [Id.] To ensure
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`operability between different manufacturers, the Wi-Fi Alliance, an industry trade
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`group, tests products for compliance with this standard. The technology at issue in
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`this case relates to the messages sent between a transmitter and receiver, such as a
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`wireless router and a personal computer,4 under the IEEE 802.11(n) Wi-Fi
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`standard.
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`Devices on a network communicate by breaking up the data files being
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`transmitted into smaller pieces called “packets.” [A1347(97:15-100:1)] Each
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`packet contains a portion of a data file and is assigned a “sequence number” that
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`enables the receiver to reassemble the data file upon reception. [Id.]
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`In an ideal setting, data packets are transmitted from the transmitter to the
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`receiver in sequential order without errors. But in real-world operation, errors can
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`and do occur. For example, wireless communication networks experience
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`obstructions, loss of signal, interference, and many other problems. [A1347(97:7-
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`12); A1350(110:4-15)] As a result, transmitted packets are often lost or corrupted
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`in transmission. [Id.]
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`4 When a client device, like a laptop computer, is connected to a router, both
`act as transmitters and receivers depending on the direction of the data flow at any
`moment, and thus both contain transmitter and receiver circuitry.
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`Ericsson’s patents improve reliability and throughput in these imperfect
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`wireless networks. [A1349(107:20-108:5)] Wi-Fi networks and cellular networks
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`have many similarities, including that they both: (1) are packet based; (2) have a
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`central base station or access point that controls the network; (3) have multiple
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`mobile terminals that communicate with the base station or access point; and (4)
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`use Automatic Repeat Request protocols to handle packet errors. [A1346(96:3-
`
`14); A1367(9:5-10:23); A1389(99:9-100:1)] That is why two of Ericsson’s
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`patents—which were invented in the context of advanced cellular telephone
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`systems—are practiced in Wi-Fi networks.
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`A.
`
`The ’568 Patent
`
`The ’568 Patent teaches a service type identifier (“STI”) that identifies the
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`type of information conveyed in the payload (such as video, voice, data, and
`
`multimedia). It is often helpful for the transmitter and receiver to know and
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`identify the type of information it is sending. [A1389(99:20-100:13)] For
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`example, video and voice payloads are more sensitive to delay than data payloads.
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`[Id.] While a computer user will not notice a five second delay in receiving an
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`email, she will notice a five second pause in a streaming video. [Id.] The ’568
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`Patent teaches adding a label (e.g., video, voice, or data) to the packet so that the
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`network may know the content of the payload and prioritize the packet
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`accordingly.
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`Claims 1 and 5 of the ’568 Patent state:
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`1. A communication station comprising:
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`a processor for arranging information for transmission including
`providing at least one first field in which payload information is
`disposed and providing at least one second field, separate from said
`first field, which includes a service type identifier which identifies a
`type of payload information provided in said at least one first field;
`and
`
`a transmitter for transmitting information received from said processor
`including said at least one first field and said at least one second field.
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`. . .
`
`station of claim 1, wherein
`5. The communication
`communication station is a base station.
`
`said
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`[A272(13:11-22; 14:13-14) (emphasis added)] The district court construed the
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`“service type identifier” limitation as:
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`an identifier that identifies the type of information conveyed in the
`payload. Examples of types of information include, but are not limited
`to, video, voice, data, and multimedia.
`
`[A19]
`
`B.
`
`The ’215 Patent
`
`The ’215 Patent covers a mechanism, called a “type identifier field” (“TIF”),
`
`that lets the receiver tell the transmitter the format of the message it is using to
`
`identify packets that were lost in transmission. A protocol, or standard, is the set
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`of rules that govern a network. [A1348(104:10-25)] An Automatic Repeat
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`Request (“ARQ”) protocol contains rules that govern how transmitters and
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`receivers communicate with each other about the identity of lost packets.
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`[A1367(9:5-10:4)] IEEE 802.11(n) is an ARQ protocol. [Id.]
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`In an ARQ protocol, the transmitter periodically asks the receiver to identify
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`packets it has received and has not received, and the receiver responds. [Id.]
`
`Based on this response, the transmitter can decide which packets should be
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`retransmitted. [Id.] According to standard ARQ protocols, the response sent by
`
`the receiver to the transmitter that identifies lost packets is called a “feedback
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`response.” [A277(1:14-18;2:37-42)]
`
`The ’215 Patent improved upon existing ARQ protocols by adding a TIF to
`
`the feedback response. The TIF allows devices in the network to employ different
`
`formats, or types, of feedback messages. [A1366(7:17-8:23); A1624(105:4-12)]
`
`For example, one typ