`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`ERICSSON INC. AND
`TELEFONAKTIEBOLAGET LM ERICSSON,
`
`Plaintiffs,
`
`v.
`
`SAMSUNG ELECTRONICS CO., LTD.,
`SAMSUNG ELECTRONICS AMERICA, INC.,
`AND SAMSUNG RESEARCH AMERICA,
`
`Defendants.
`
`Civil Action No. 2:20-cv-380
`
`ORIGINAL COMPLAINT
`
`Plaintiffs Ericsson Inc. and Telefonaktiebolaget LM Ericsson (“Ericsson” is used herein
`
`to collectively refer to Telefonaktiebolaget LM Ericsson and/or Ericsson Inc.) file this Complaint
`
`against Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung
`
`Research America (“Samsung” is used herein to collectively refer to Samsung Electronics Co.,
`
`Ltd., Samsung Electronics America, Inc., and/or Samsung Research America) and hereby allege
`
`as follows:
`
`NATURE OF ACTION
`
`1.
`
`For more than four decades, Ericsson has pioneered the development of the
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`modern cellular network. Ericsson develops infrastructure equipment that makes up the
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`backbone of modern networks; that is, the base stations and cell tower equipment that mobile
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`phones communicate with. Major mobile network operators all over the world buy solutions
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`and/or services from Ericsson, and Ericsson manages networks that serve more than one billion
`
`1
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`SAMSUNG 1028
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`Case 2:20-cv-00380-JRG Document 1 Filed 12/11/20 Page 2 of 22 PageID #: 2
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`subscribers globally. Ericsson’s equipment is found in more than one hundred and eighty
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`countries.
`
`2.
`
`Ericsson is widely viewed as one of the leading innovators in the field of cellular
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`communications. Due to the work of more than twenty-five thousand Ericsson research and
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`development (R&D) employees, Ericsson’s inventions are a valuable part of the fundamental
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`technology that connects phones, smartphones, and other mobile devices seamlessly using
`
`cellular networks worldwide and provides increased performance and new features for the
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`benefit of consumers. As a result of its extensive research and development efforts, Ericsson has
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`been awarded more than fifty-four thousand patents worldwide. Many of Ericsson’s patents are
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`essential to the 2G (GSM, GPRS, and EDGE), 3G (UMTS/WCDMA and HSPA), 4G (LTE,
`
`LTE-Advanced, and LTE-Advanced Pro) and/or 5G (NR, New Radio) telecommunications
`
`standards, which are used by Samsung’s products. Ericsson’s infrastructure products likewise
`
`utilize these standards.
`
`3.
`
`Ericsson has voluntarily and publicly committed that it is prepared to grant
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`licenses under its portfolio of patents that are essential to practice the 2G, 3G, 4G, and/or 5G
`
`standards (Essential Patents) on fair, reasonable, and non-discriminatory (FRAND) terms.
`
`Ericsson’s FRAND commitment is set forth in its intellectual property right (IPR) licensing
`
`declarations to the European Telecommunications Standards Institute (ETSI) in accordance with
`
`ETSI’s IPR Policy. Ericsson’s commitment is subject to reciprocity—Ericsson can, and does,
`
`insist on a reciprocal license to a potential licensee’s Essential Patents to cover Ericsson’s
`
`cellular equipment. Consistent with its FRAND commitment, Ericsson has widely licensed its
`
`portfolio of Essential Patents in over one hundred agreements with members of the
`
`telecommunications industry who have agreed to pay royalties to Ericsson for a global portfolio
`
`
`
`
`2
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`license. Ericsson reinvests much of the licensing revenue it receives under these global
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`agreements into inventing future generations of standardized telecommunication technologies,
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`spending nearly five billion dollars annually on research and development.
`
`4.
`
`The popularity and proliferation of cellular smartphones, tablets, watches, and
`
`other connected devices is based on the development of the 2G, 3G, and especially the 4G, and
`
`now 5G, communication standards. Without 4G and 5G technology and Ericsson’s inventions
`
`incorporated therein, smartphones and other mobile devices would not be able to provide the
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`constant on-the-go access to video, streaming media, and gaming that consumers expect today.
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`Furthermore, the widespread adoption of large screen smartphones, tablets, and corresponding
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`applications are dependent on the performance that 4G and 5G technology—and Ericsson’s
`
`inventions—provide.
`
`5.
`
`Samsung is the largest smartphone manufacturer in the world, and also
`
`manufactures cellular network infrastructure equipment. Samsung is also involved in
`
`standardization, and through its own research and development efforts, has a portfolio of patents
`
`that it contends are essential to the 2G, 3G, 4G, and 5G communications standards. Samsung,
`
`like Ericsson, has committed that it is prepared to grant licenses under its Essential Patents on
`
`FRAND terms. Samsung’s FRAND commitment is set forth in its IPR licensing declarations to
`
`ETSI in accordance with ETSI’s IPR Policy.
`
`6.
`
`Samsung and Ericsson have in the past executed global cross-licenses, covering
`
`both parties’ patents related to the 2G, 3G, and/or 4G cellular standards. Most recently,
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`Samsung and Ericsson executed a multi-year agreement in January 2014. In February 2019, in
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`advance of the expiration of the existing cross-license, Ericsson took steps to initiate negotiations
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`with Samsung towards a new license.
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`
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`3
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`7.
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`To renew the existing license upon expiration, Ericsson proposed a global cross-
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`license, with Samsung taking a license to Ericsson’s Essential Patents and with Ericsson taking a
`
`license to Samsung’s Essential Patents. Both Samsung and Ericsson understood that Samsung
`
`would owe Ericsson a substantial balancing payment as part of the cross-license. Ericsson made
`
`a cross-license offer under which Samsung would make a balancing payment consistent with the
`
`value of Ericsson’s Essential Patents as compared to Samsung’s. All of the terms of Ericsson’s
`
`offer, including the balancing payment component, were consistent with Ericsson’s FRAND
`
`obligation. Samsung did not accept Ericsson’s offer, and provided a counteroffer that evidenced
`
`Samsung was not negotiating in good faith towards a cross-license on FRAND terms. Instead,
`
`Samsung insisted it would only be willing to a cross-license if Ericsson agreed to accept a
`
`royalty for Ericsson’s Essential Patents significantly below FRAND rates. By insisting Ericsson
`
`accept a balancing payment in a global cross-license substantially less than the value of
`
`Ericsson’s Essential Patents, and less than FRAND, Samsung violated its FRAND commitment
`
`by effectively depriving Ericsson of its right to a reciprocal license to Samsung’s Essential
`
`Patents on FRAND terms. At this point, it is clear that Samsung is not willing or committed to
`
`negotiating a global cross-license on FRAND terms and conditions.
`
`8.
`
`Samsung’s FRAND commitment is a contract between Samsung and ETSI, and
`
`Ericsson has the right to enforce it as a third-party beneficiary. In addition, when Samsung
`
`commenced negotiations with Ericsson, it was obligated under French law, which governs the
`
`FRAND commitment, to negotiate in good faith with Ericsson, yet Samsung has failed to do so.
`
`Ericsson has filed this suit against Samsung to remedy these breaches. Ericsson also seeks a
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`declaration that it has complied with its FRAND commitment, and that Samsung has not.
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`
`
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`4
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`PARTIES
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`9.
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`Ericsson Inc. is a Delaware corporation with its principal place of business at
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`6300 Legacy Drive, Plano, Texas 75024.
`
`10.
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`Plaintiff Telefonaktiebolaget LM Ericsson (“LME”) is a corporation organized
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`under the laws of the Kingdom of Sweden with its principal place of business at Torshamnsgatan
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`21, Kista, 164 83, Stockholm, Sweden.
`
`11.
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`Defendant Samsung Electronics Co., Ltd. (“SEC”) is a Korean company with its
`
`principal place of business in Suwon, South Korea. SEC has an “Information Technology &
`
`Mobile Communications” division that is responsible for the design, manufacture, and sale of
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`mobile devices, such as smartphones that operate on cellular networks around the world and in
`
`the United States.
`
`12.
`
`Defendant Samsung Electronics America, Inc. (“SEA”) is a New York
`
`corporation with its principal place of business in Ridgefield Park, New Jersey, and it is a
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`wholly-owned subsidiary of SEC. SEA imports into the United States and sells in the United
`
`States, including in this District, smartphones that operate on cellular networks in the United
`
`States. SEA imports into the United States and sells in the United States, including in this
`
`District, cellular network infrastructure equipment that operates on cellular networks in the
`
`United States. SEA is also responsible for research and development related to the cellular
`
`standards, smartphones, cellular network infrastructure equipment, and other mobile devices, and
`
`has many employees involved in standardization.
`
`13.
`
`Defendant Samsung Research America (“SRA”) is a California corporation with
`
`its principal place of business in Mountain View, California, and is a wholly-owned subsidiary of
`
`SEA. SRA is also responsible for research and development related to the cellular standards,
`
`
`
`
`5
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`smartphones, cellular network infrastructure equipment, and other mobile devices, and has many
`
`employees involved in standardization.
`
`14.
`
`SEA and SRA maintain an office in this District at 6625 Excellence Way, Plano,
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`Texas 75023, with more than 1,000 employees. Defendants SEA and SRA employ engineers—
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`including in this District—that attend standardization meetings and work on research and
`
`development related to the cellular standards, smartphones, and other mobile devices. These
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`engineers are the inventors on a variety of patents eventually assigned to Defendant SEC. SEC
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`has included these patents in declarations to ETSI that form the basis of SEC’s FRAND
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`commitment, contractually committing that SEC is prepared to grant licenses on FRAND terms
`
`and conditions to the extent such patents are and remain essential to the 2G, 3G, 4G, and/or 5G
`
`standards.
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`JURISDICTION AND VENUE
`
`15.
`
`This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1332 and
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`1338(a), and 1367.
`
`16.
`
`17.
`
`18.
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`The amount in controversy exceeds $75,000.
`
`Venue is proper in this judicial district under 28 U.S.C. §§ 1391 and 1400(b).
`
`This Court has personal jurisdiction over Defendants Samsung. Samsung has
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`continuous and systematic business contacts with the State of Texas. Samsung, directly or
`
`through subsidiaries or intermediaries (including distributors, retailers, and others), has
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`negotiated with Ericsson in this District, and also conducts its business extensively throughout
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`Texas, by shipping, distributing, offering for sale, selling, and advertising (including the
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`provision of an interactive web page) its products and/or services in the State of Texas and the
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`Eastern District of Texas. SEA and SRA, SEC’s wholly-owned subsidiaries, maintain an office
`
`
`
`
`6
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`in Plano, Texas, and are responsible for (1) importing and selling smartphones, tablets, other
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`mobile devices, and cellular network infrastructure equipment that operate on cellular networks
`
`in the United States, (2) research and development related to the cellular standards, smartphones,
`
`cellular network infrastructure equipment, and other mobile devices, and (3) patent development
`
`activities related to such research and development. SEC, SEA, and SRA regularly do business
`
`or solicit business, engage in other persistent courses of conduct, and/or derive substantial
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`revenue from products and/or services provided to individuals in the State of Texas.
`
`19.
`
`SEC, SEA, and SRA, directly and through subsidiaries or intermediaries
`
`(including distributors, retailers, and others), have purposefully and voluntarily placed one or
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`more products and/or services in the stream of commerce related to this dispute with the
`
`intention and expectation that they will be purchased and used by consumers in the Eastern
`
`District of Texas. These products and/or services have been and continue to be purchased and
`
`used by consumers in the Eastern District of Texas.
`
`20.
`
`Ericsson Inc. is a corporation with its principal place of business in the Eastern
`
`District of Texas. Ericsson Inc. is a wholly-owned subsidiary of LME, and is responsible, among
`
`other things, for importing and selling cellular network infrastructure equipment to cellular
`
`carriers in the United States. Ericsson Inc. requires a license on FRAND terms to the Essential
`
`Patents of Samsung.
`
`21.
`
`Samsung has purposefully directed its licensing activities into the Eastern District
`
`of Texas as to its portfolio of Essential Patents, as well as for Ericsson’s portfolio of Essential
`
`Patents. Samsung employees have communicated, met, and engaged in patent licensing
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`negotiations with Ericsson employees living and working in this District.
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`
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`
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`7
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`Case 2:20-cv-00380-JRG Document 1 Filed 12/11/20 Page 8 of 22 PageID #: 8
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`FACTUAL BACKGROUND
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`Ericsson’s Investment in Telecommunications
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`Telefonaktiebolaget LM Ericsson was founded in 1876, and Ericsson Inc. is a
`
`A.
`
`22.
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`wholly owned subsidiary of Telefonaktiebolaget LM Ericsson based in Plano, Texas. Ericsson
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`supplies the cellular network infrastructure equipment used to build mobile networks across the
`
`world, serving more than one billion mobile subscribers in over 180 countries. In the United
`
`States, Ericsson’s equipment is used by individuals utilizing AT&T, Verizon, Sprint, T-Mobile,
`
`and other cellular networks.
`
`23.
`
`Ericsson has a long history of innovation in the telecommunication industry and
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`in the creation of the cellular standards. In addition to supplying equipment for 2G, 3G, 4G, and
`
`5G networks, Ericsson was also well-known for its mobile phone business—ending in 2012 with
`
`the divestment of the popular “Sony Ericsson” brand. Years earlier, Ericsson coined the
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`“smartphone” term when unveiling its GS88 handset in 1997 and showcased an early version of
`
`a tablet with its Cordless Web Screen in 2000.
`
`24.
`
`Ericsson prioritizes innovation and has invested $4-5 billion annually in research
`
`and development. These research and development activities include participating in the
`
`development of the 2G, 3G, 4G, and 5G cellular standards over the last 30+ years. Ericsson’s
`
`engineers have attended hundreds of standardization meetings and made tens of thousands of
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`technical contributions to the standards.
`
`25.
`
`Ericsson has been at the forefront of every step of cellular standardization:
`
`Ericsson launched 2G phones on the first 2G network in 1991, Ericsson made the first 3G call in
`
`2001, and Ericsson built the first 4G network in 2009. And Ericsson continues to be at the
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`forefront: Ericsson completed the first 5G trial system in Europe in 2016, and Ericsson’s
`
`equipment has been deployed in 5G networks in the United States.
`8
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`26.
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`Ericsson protects its investments in research and development with intellectual
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`property. Ericsson owns thousands of patents related to wireless telecommunication technology,
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`and Ericsson continues to develop and secure intellectual property as it innovates in this industry.
`
`Because Ericsson chooses to voluntarily contribute many of its research and development
`
`innovations to the standard-setting process—through technical contributions in standardization
`
`meetings—Ericsson has a large number of patents essential to the cellular standards. Industry
`
`members attending the standardization meetings, including Samsung, choose to adopt Ericsson’s
`
`technology into the standard because Ericsson’s technology is the best.
`
`27.
`
`Ericsson has committed that it is prepared to grant licenses to any patents
`
`essential to the 2G, 3G, 4G, and 5G standards on fair, reasonable, and non-discriminatory
`
`(FRAND) terms and conditions. Knowing Ericsson’s commitment to FRAND licensing, other
`
`makers of cellular devices and network equipment, including Samsung, continue to include
`
`Ericsson’s technology in the 5G standard.
`
`B.
`
`28.
`
`ETSI and 3GPP
`
`The European Telecommunications Standards Institute (ETSI) is an independent,
`
`non-profit standard development organization (SDO) that produces globally accepted standards
`
`for the telecommunication industry. ETSI has more than 900 members from more than 60
`
`countries across five continents, including Ericsson and Samsung. In addition to its own
`
`activities, ETSI is also one of seven SDOs that are organizational partners of the Third
`
`Generation Partnership Project (3GPP), which maintains and develops globally applicable
`
`technical specifications for the 2G (second generation, encompassing GSM, GPRS, as well as
`
`EDGE, which is considered 2.5G), 3G (third generation, encompassing WCDMA/UMTS and
`
`HSPA), 4G (fourth generation, encompassing LTE, LTE-Advanced, and LTE Advanced-Pro),
`
`and 5G (fifth generation, encompassing NR) mobile systems. Together, ETSI and its members
`9
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`have developed open standards that ensure worldwide interoperability between networks,
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`devices, and network operators.
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`29.
`
`Patents play an important role in developing the telecommunication industry
`
`through standardization and licensing. Many SDO members, including Ericsson, own intellectual
`
`property rights (IPRs) related to technologies contributed to and standardized by SDOs. Thus,
`
`technical standards adopted by SDOs may implicate member or non-member IPRs such that a
`
`patent license is required from the IPR owner to implement the standard.
`
`30.
`
`ETSI has developed and promulgated an IPR Policy, which is a contract governed
`
`by French law. The ETSI IPR Policy is intended to strike a balance between the need for open
`
`standards on the one hand, and the rights of IPR owners on the other hand. ETSI requires its
`
`members to use reasonable endeavors to disclose patents that are essential to practice its
`
`standards or technical specifications. Clause 15.6 of the ETSI IPR Policy defines the term
`
`“ESSENTIAL” to mean that “it is not possible on technical (but not commercial) grounds, taking
`
`into account normal technical practice and the state of the art generally available at the time of
`
`standardization, to make, sell, lease, otherwise dispose of, repair, use or operate EQUIPMENT or
`
`METHODS which comply with a STANDARD without infringing that IPR.” Ericsson has fully
`
`complied with all aspects of the ETSI IPR Policy.
`
`31.
`
`The ETSI IPR Policy includes a form “IPR Information Statement and Licensing
`
`Declaration.” Ericsson owns patents that are essential to practice the 2G, 3G, 4G, and/or 5G
`
`standards (“Essential Patents”). Ericsson has declared to ETSI that it is prepared to grant licenses
`
`on FRAND terms and conditions under its Essential Patents. Ericsson has licensed the bulk of
`
`the industry under this commitment, previously including Samsung. Ericsson has offered to
`
`continue to license Samsung, but Samsung has insisted on non-FRAND rates.
`
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`10
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`32.
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`Ericsson’s commitment is subject to reciprocity, specifically, that it is prepared to
`
`grant licenses on FRAND terms and conditions under its Essential Patents subject to the
`
`“condition that those who seek licenses agree to reciprocate.” The ETSI IPR Policy explicitly
`
`provides in Clause 6.1 that “[t]he above [FRAND] undertaking may be made subject to the
`
`condition that those who seek licenses agree to reciprocate.” As a manufacturer of cellular
`
`infrastructure equipment, Ericsson typically negotiates cross-license agreements that provide
`
`Ericsson a reciprocal license to the other company’s technology. For example, Ericsson’s
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`previous licenses with Samsung were cross-licenses where Ericsson also received a cross-license
`
`to Samsung’s Essential Patents.
`
`33.
`
`Like Ericsson, Samsung participates in standardization at ETSI and 3GPP.
`
`Engineers from SEA and SRA, for example, routinely attend 3GPP meetings, and also file
`
`patents related to cellular technology (which are eventually assigned to Defendant SEC).
`
`Samsung contends that it has a portfolio of Essential Patents, and Samsung has contractually
`
`committed to ETSI that it is likewise prepared to grant licenses under any such patents on
`
`FRAND terms and conditions. Ericsson is a third-party beneficiary to this contract and can
`
`enforce it.
`
`C.
`
`34.
`
`Ericsson and Samsung’s Prior Licenses
`
`Samsung designs, manufactures, and markets a portfolio of mobile devices,
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`including in the United States and this District, that comply with the 2G, 3G, 4G, and 5G
`
`standards and utilize Ericsson’s Essential Patents. Samsung also designs, manufactures, and
`
`markets cellular network infrastructure equipment, including in the United States and this
`
`District, that complies with the 2G, 3G, 4G, and 5G standards and utilizes Ericsson’s Essential
`
`Patents.
`
`
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`11
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`35.
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`Ericsson designs, manufactures, and markets infrastructure equipment, including
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`in the United States and this District, that complies with the 2G, 3G, 4G, and 5G standards and
`
`utilizes Samsung Essential Patents.
`
`36.
`
`The parties have signed several cross-license agreements covering their respective
`
`patents, including most recently a multi-year agreement in 2014.
`
`D.
`
`37.
`
`The Parties’ Negotiations
`
` Ericsson reached out to Samsung in February 2019 to begin negotiations
`
`regarding a new cross-license, as is Ericsson’s typical practice when an existing license is
`
`expiring. Given the lengthy negotiations (and litigation) that preceded execution of the 2014
`
`license, Ericsson sought to start negotiations early. Cross-license negotiations of this magnitude
`
`typically involve both technical discussions—to evaluate and challenge the strength of the other
`
`party’s patents—and business discussions—to negotiate the terms of the agreement, informed by
`
`the feedback from the technical discussions.
`
`38.
`
`The parties agreed to the objective to conclude negotiations by the end of this year
`
`and began technical discussions in the spring of 2020. The technical discussions covered both
`
`parties’ portfolios of Essential Patents and spanned several meetings.
`
`39.
`
`Then, Ericsson provided a presentation and offer in a meeting on July 20, 2020.
`
`Ericsson’s proposal covered a global cross-license to both parties’ Essential Patents, covering—
`
`along with patents around the world—the U.S. patents held by the parties to which their
`
`respective U.S. entities potentially require licenses. This cross-license proposal contained a
`
`balancing payment from Samsung to Ericsson, reflecting the parties’ relative sales and the value
`
`of Ericsson’s Essential Patents as compared to Samsung’s.
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`12
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`40.
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`All the terms of Ericsson’s offer, including the balancing payment, were (and are)
`
`consistent with Ericsson’s FRAND commitment.
`
`41.
`
`Samsung rejected Ericsson’s FRAND offer, and did not provide a counteroffer in
`
`response to Ericsson’s offer until September 22, 2020. Samsung’s eventual counteroffer was
`
`unreasonably low. Samsung’s counteroffer evidenced that Samsung was not negotiating in good
`
`faith and not willing to enter into a cross-license on FRAND terms and, rather, would only be
`
`willing to pay Ericsson a rate for Ericsson’s Essential Patents that was significantly below
`
`FRAND. Samsung’s counteroffer and rejection of Ericsson’s FRAND offer are inconsistent with
`
`Samsung’s FRAND commitment.
`
`42.
`
`Sensing that the parties were reaching impasse in the business negotiations,
`
`Ericsson sent Samsung an arbitration offer on September 27, 2020. This arbitration offer
`
`provided the option to resolve the global dispute between the parties via a neutral, third-party
`
`determination of the appropriate FRAND rate for a global cross-license. As is typical with such
`
`offers, it included a 45-day window for Samsung to accept the offer. In parallel, Ericsson
`
`continued to attempt to engage in negotiations with Samsung in addition to providing the
`
`arbitration offer.
`
`43.
`
`Samsung did not respond to Ericsson’s arbitration offer until November 10,
`
`2020—44 days after it was made. Samsung did not accept Ericsson’s arbitration offer, despite
`
`the impasse the parties seemed to have reached on royalty terms.
`
`44.
`
`Negotiations have continued, but no progress has been made. It has become clear
`
`that Samsung had no intention of negotiating in good faith towards concluding an agreement
`
`with Ericsson on FRAND terms and conditions. Instead, Samsung has insisted on a below-
`
`
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`13
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`FRAND royalty payment in a cross-license and, by doing so, Samsung has deprived Ericsson of
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`its right to a reciprocal global license to Samsung’s Essential Patents on FRAND terms.
`
`COUNT I: BREACH OF CONTRACT
`
`45.
`
`Ericsson incorporates by reference the preceding paragraphs as though fully set
`
`forth herein.
`
`46.
`
`Samsung designs, manufactures, and markets products that comply with the 2G,
`
`3G, 4G, and 5G standards. Samsung contends it owns Essential Patents.
`
`47.
`
`Ericsson designs, manufactures, and markets products that comply with the 2G,
`
`3G, 4G, and 5G standards. Ericsson also owns Essential Patents.
`
`48.
`
`Samsung, as the owner of patents it contends are essential, and remain essential,
`
`to ETSI standards, has contractually committed to ETSI to be prepared to grant licenses to any
`
`such patents on FRAND terms and conditions to third parties, such as Ericsson, who implement
`
`equipment compliant with the standards.
`
`49.
`
`Ericsson, as the owner of patents it contends are essential, and remain essential, to
`
`ETSI standards, has likewise contractually committed to ETSI to be prepared to grant licenses to
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`any such patents on FRAND terms and conditions to third parties, such as Samsung, who
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`implement equipment compliant with the standards, subject to reciprocity.
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`50.
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`Ericsson is an intended third-party beneficiary of Samsung’s contract with ETSI.
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`Likewise, Samsung is an intended third-party beneficiary of Ericsson’s contract with ETSI.
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`51.
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`Samsung is obligated to offer a license to its essential patents consistent with the
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`ETSI IPR Policy and its contractual declarations, including that such license be on FRAND
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`terms and conditions. Samsung has breached its contractual commitment, as set forth in
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`Samsung’s IPR licensing declarations to ETSI and the ETSI IPR Policy.
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`14
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`Case 2:20-cv-00380-JRG Document 1 Filed 12/11/20 Page 15 of 22 PageID #: 15
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`52.
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`Since at least late 2019, representatives from Ericsson and Samsung have been
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`engaged in negotiations regarding a cross-license to each party’s Essential Patents.
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`53.
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`Ericsson made an offer to license its Essential Patents to Samsung on FRAND
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`terms and conditions. Consistent with the parties’ FRAND commitments, Ericsson’s offer was
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`for a global cross-license that took into account both parties’ Essential Patents and standard-
`
`compliant products and required Samsung to make a FRAND-compliant balancing royalty
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`payment to Ericsson.
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`54.
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`Samsung rejected Ericsson’s offer for a cross-license and instead insisted on an
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`unreasonably low, non-FRAND rate for the cross-license. In doing so, Samsung violated its
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`FRAND commitment by effectively depriving Ericsson of its right as a third-party beneficiary to
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`a license to Samsung’s Essential Patents on FRAND terms.
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`55.
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`Samsung’s positions are inconsistent with its contractual commitment to ETSI, as
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`set forth in Samsung’s IPR licensing declarations to ETSI and the ETSI IPR Policy. Ericsson is a
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`third-party beneficiary of that contract, which Samsung has breached in its negotiations with
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`Ericsson.
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`56.
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`This breach has caused harm to Ericsson. Samsung’s refusal to offer a cross-
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`license on FRAND terms and conditions has caused Ericsson to expend resources in futile
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`negotiations, deprived Ericsson of a FRAND cross-license, and threatens Ericsson with a gap in
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`license coverage.
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`57.
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`Samsung’s breach has caused Ericsson to suffer actual damages, such as
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`Ericsson’s costs and expenses in pursuing futile negotiations with Samsung in an amount to be
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`determined at trial. In addition, Ericsson is further entitled to obtain specific performance under
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`French law.
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`15
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`Case 2:20-cv-00380-JRG Document 1 Filed 12/11/20 Page 16 of 22 PageID #: 16
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`58.
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`Ericsson has suffered and will continue to suffer irreparable injury by reason of
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`the acts, practices, and conduct of Samsung alleged above until and unless the Court enjoins such
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`acts, practices, and conduct.
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`COUNT II: BREACH OF OBLIGATION TO NEGOTIATE IN GOOD FAITH
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`59.
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`Ericsson incorporates by reference the preceding paragraphs as though fully set
`
`forth herein.
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`60.
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`French law governs the ETSI FRAND commitment, and under French law, once
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`Samsung commenced negotiations with Ericsson for a cross-license, Samsung was obligated to
`
`negotiate in good faith. Samsung has failed to negotiate in good faith with Ericsson and thus
`
`breached its obligation. For example, rather than engage in good-faith negotiations, Samsung did
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`not seriously engage in negotiations with Ericsson with the aim of concluding an agreement, and
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`instead made an unreasonably low cross-license counteroffer, effectively depriving Ericsson of a
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`license to Samsung’s Essential Patents on FRAND terms.
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`61.
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`Samsung’s failure to negotiate in good faith constitutes a breach of its obligations
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`to Ericsson.
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`62.
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`There is a dispute between Ericsson and Samsung concerning whether Samsung
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`has complied with its obligation to negotiate in good faith, and this controversy is of sufficient
`
`immediacy and reality to warrant the issuance of a declaratory judgment.
`
`63.
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`Ericsson is entitled to a declaratory judgment that Samsung has not complied with
`
`its obligation to act in good faith during its negotiations with Ericsson in regard to FRAND terms
`
`for a cross-license to the parties’ Essential Patents.
`
`
`
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`16
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`Case 2:20-cv-00380-JRG Document 1 Filed 12/11/20 Page 17 of 22 PageID #: 17
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`64.
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`As a result of Samsung’s breach of its duty to negotiate in good faith, Ericsson
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`has been injured in its business or property, including Ericsson’s cost and expenses in pursuing
`
`futile negotiations with Samsung in an amount to be determined at trial.
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`COUNT III: DECLARATORY JUDGMENT THAT ERICSSON HAS NOT BREACHED
`ITS FRAND COMMITMENT
`
`65.
`
`Ericsson incorporates by reference the preceding paragraphs as though fully set
`
`forth herein.
`
`66.
`
`Ericsson has fully complied with the ETSI IPR Policy, its FRAND obligations
`
`and all other applicable laws by, among other things, attempting to negotiate in good faith with
`
`Samsung and offering Samsung a cross-license to Ericsson’s Essential Patents on FRAND terms
`
`and conditions.
`
`67.
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`A dispute exists between Ericsson and Samsung concerning whether Ericsson’s
`
`offer to Samsung for a global cross-license to the parties’ Essential Patents violated Ericsson’s
`
`commitment that it is prepared to grant licenses under its Essential Patents on terms and
`
`conditions consistent with Ericsson’s IPR licensing declarations to ETSI and ETSI’s IPR Policy.
`
`Samsung rejected Ericsson’s offer. There is a case or controversy of sufficient immediacy,
`
`reality, and ripeness to warrant the issuance of a declaratory judgment.
`
`68.
`
`Ericsson requests a declaratory judgment that Ericsson’s global, reciprocal cross-
`
`license offered during the negotiations with Samsung complied with Ericsson’s FRAND
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`commitment, as set forth in its IPR licensing declarations to ETSI, that Er