`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`ERICSSON INC. AND
`TELEFONAKTIEBOLAGET LM ERICSSON,
`
`Civil Action No. 2:20-cv-00380-JRG
`
`Plaintiffs,
`
`v.
`
`SAMSUNG ELECTRONICS CO., LTD.,
`SAMSUNG ELECTRONICS AMERICA, INC.,
`AND SAMSUNG RESEARCH AMERICA,
`
`Defendants.
`
`FIRST AMENDED 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
`
`modern cellular network. Ericsson develops infrastructure equipment that makes up the
`
`backbone of modern networks; that is, the base stations and cell tower equipment that mobile
`
`phones communicate with. Major mobile network operators all over the world buy solutions
`
`and/or services from Ericsson, and Ericsson manages networks that serve more than one billion
`
`1
`
`SAMSUNG 1029
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 2 of 62 PageID #: 322
`
`
`
`subscribers globally. Ericsson’s equipment is found in more than one hundred and eighty
`
`countries.
`
`2.
`
`Ericsson is widely viewed as one of the leading innovators in the field of cellular
`
`communications. Due to the work of more than twenty-five thousand Ericsson research and
`
`development (R&D) employees, Ericsson’s inventions are a valuable part of the fundamental
`
`technology that connects phones, smartphones, and other mobile devices seamlessly using
`
`cellular networks worldwide and provides increased performance and new features for the
`
`benefit of consumers. As a result of its extensive research and development efforts, Ericsson has
`
`been awarded more than fifty-four thousand patents worldwide. Many of Ericsson’s patents are
`
`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
`
`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
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 3 of 62 PageID #: 323
`
`
`
`license. Ericsson reinvests much of the licensing revenue it receives under these global
`
`agreements into inventing future generations of standardized telecommunication technologies,
`
`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
`
`constant on-the-go access to video, streaming media, and gaming that consumers expect today.
`
`Furthermore, the widespread adoption of large screen smartphones, tablets, and corresponding
`
`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, Samsung
`
`and Ericsson executed a multi-year agreement in January 2014. In February 2019, in advance of
`
`the expiration of the existing cross-license, Ericsson took steps to initiate negotiations with
`
`Samsung towards a new license.
`
`
`
`3
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 4 of 62 PageID #: 324
`
`
`
`7.
`
`To renew the existing license upon expiration, Ericsson proposed a global cross-
`
`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 and to invoke the
`
`assistance of this Court to enforce its patent rights. Ericsson also seeks a declaration that it has
`
`complied with its FRAND commitment, and that Samsung has not.
`
`
`
`4
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 5 of 62 PageID #: 325
`
`
`
`9.
`
`This is also an action for patent infringement under the patent laws of the United
`
`States, 35 U.S.C. §271. Samsung has infringed and continues to infringe U.S. Patent Nos.
`
`8,102,805 (the ’805 Patent); 8,607,130 (the ’130 Patent); 9,949,239 (the ’239 Patent); 9,532,355
`
`(the ’355 Patent); 10,454,655 (the ’655 Patent); 10,193,600 (the ’600 Patent); 10,425,817 (the
`
`’817 Patent); and 10,516,513 (the ’513 Patent) (collectively “the Asserted Patents”).
`
`PARTIES
`
`10.
`
`Plaintiff Ericsson Inc. is a Delaware corporation with its principal place of
`
`business at 6300 Legacy Drive, Plano, Texas 75024.
`
`11.
`
`Plaintiff Telefonaktiebolaget LM Ericsson (“LME”) is a corporation organized
`
`under the laws of the Kingdom of Sweden with its principal place of business at Torshamnsgatan
`
`21, Kista, 164 83, Stockholm, Sweden.
`
`12.
`
`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
`
`mobile devices, such as smartphones that operate on cellular networks around the world and in
`
`the United States.
`
`13.
`
`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
`
`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
`
`
`
`5
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 6 of 62 PageID #: 326
`
`
`
`standards, smartphones, cellular network infrastructure equipment, and other mobile devices, and
`
`has many employees involved in standardization.
`
`14.
`
`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,
`
`smartphones, cellular network infrastructure equipment, and other mobile devices, and has many
`
`employees involved in standardization.
`
`15.
`
`SEA and SRA maintain an office in this District at 6625 Excellence Way, Plano,
`
`Texas 75023, with more than 1,000 employees. Defendants SEA and SRA employ engineers—
`
`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
`
`engineers are the inventors on a variety of patents eventually assigned to Defendant SEC. SEC
`
`has included these patents in declarations to ETSI that form the basis of SEC’s FRAND
`
`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.
`
`JURISDICTION AND VENUE
`
`16.
`
`This is an action for patent infringement under the patent laws of the United
`
`States, 35 U.S.C. §271. These claims also arise under the Declaratory Judgment Act, 28 U.S.C.
`
`§§ 2201 and 2202 and under the patent laws of the United States, Title 35, United States Code,
`
`Sections 1 et seq. This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1332 and
`
`1338(a), and 1367.
`
`17.
`
`The amount in controversy exceeds $75,000.
`
`
`
`6
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 7 of 62 PageID #: 327
`
`
`
`18.
`
`Venue is proper in this judicial district under 28 U.S.C. §§ 1391 and 1400(b).
`
`Samsung has committed acts of patent infringement within the State of Texas and, more
`
`particularly, within the Eastern District of Texas. SEA maintains a corporate office at 6625
`
`Excellence Way, Plano, TX 75023 in this District.
`
`19.
`
`This Court has personal jurisdiction over Defendants Samsung. Samsung has
`
`continuous and systematic business contacts with the State of Texas. Samsung, directly or
`
`through subsidiaries or intermediaries (including distributors, retailers, and others), has
`
`negotiated with Ericsson in this District, and also conducts its business extensively throughout
`
`Texas, by shipping, distributing, offering for sale, selling, and advertising (including the
`
`provision of an interactive web page) its products and/or services in the State of Texas and the
`
`Eastern District of Texas. On information and belief, SEA’s business operations relating to
`
`cellular mobile devices and cellular network infrastructure equipment, which are devices accused
`
`of infringement in this Action, are conducted at its Texas facilities, located at: 6625 Excellence
`
`Way, Plano, Texas; 1100 Klein Road, Plano, Texas; and 1301 East Lookout Drive, Richardson,
`
`Texas. SEA and SRA, SEC’s wholly-owned subsidiaries, maintain an office in Plano, Texas, and
`
`are responsible for (1) importing and selling smartphones, tablets, other 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 revenue from products
`
`and/or services provided to individuals in the State of Texas.
`
`
`
`7
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 8 of 62 PageID #: 328
`
`
`
`20.
`
`SEC, SEA, and SRA, directly and through subsidiaries or intermediaries
`
`(including distributors, retailers, and others), have purposefully and voluntarily placed one or
`
`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.
`
`21.
`
`On information and belief the Samsung products accused of infringement in this
`
`case are manufactured, in whole or in part, by Samsung Electronics Thai Nguyen Co. Ltd. and
`
`Samsung Electronics Vietnam Co., Ltd., which are subsidiaries of Defendant Samsung
`
`Electronics Co., Ltd.
`
`22.
`
`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
`
`negotiations with Ericsson employees living and working in this District.
`
`23.
`
`In other patent infringement matters involving Samsung’s mobile products, such
`
`as Clear Imaging Research, LLC v. Samsung Electronics Co., Ltd. et al., Samsung has admitted
`
`that for patent infringement actions involving mobile products, venue is proper in this District
`
`and that this Court may exercise personal jurisdiction over SEC and SEA. Clear Imaging
`
`Research, LLC v. Samsung Electronics Co., Ltd. et al., No. 2:19-cv-326, Samsung Defendants’
`
`Answer at ¶8, Dkt. No. 23 (EDTX Jan. 22, 2020).
`
`24.
`
`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
`
`
`
`8
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 9 of 62 PageID #: 329
`
`
`
`carriers in the United States. Ericsson Inc. requires a license on FRAND terms to the Essential
`
`Patents of Samsung.
`
`FACTUAL BACKGROUND
`
`Ericsson’s Investment in Telecommunications
`
`Telefonaktiebolaget LM Ericsson was founded in 1876, and Ericsson Inc. is a
`
`A.
`
`25.
`
`wholly owned subsidiary of Telefonaktiebolaget LM Ericsson based in Plano, Texas. Ericsson
`
`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.
`
`26.
`
`Ericsson has a long history of innovation in the telecommunication industry and
`
`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
`
`“smartphone” term when unveiling its GS88 handset in 1997 and showcased an early version of
`
`a tablet with its Cordless Web Screen in 2000.
`
`27.
`
`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
`
`technical contributions to the standards.
`
`28.
`
`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
`
`
`
`9
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 10 of 62 PageID #: 330
`
`
`
`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.
`
`29.
`
`Ericsson protects its investments in research and development with intellectual
`
`property. Ericsson owns thousands of patents related to wireless telecommunication technology,
`
`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.
`
`30.
`
`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.
`
`ETSI and 3GPP
`
`31.
`
`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
`
`
`
`10
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 11 of 62 PageID #: 331
`
`
`
`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
`
`have developed open standards that ensure worldwide interoperability between networks,
`
`devices, and network operators.
`
`32.
`
`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.
`
`33.
`
`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.
`
`34.
`
`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
`
`
`
`11
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 12 of 62 PageID #: 332
`
`
`
`the industry under this commitment, previously including Samsung. Ericsson has offered to
`
`continue to license Samsung, but Samsung has insisted on non-FRAND rates.
`
`35.
`
`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
`
`previous licenses with Samsung were cross-licenses where Ericsson also received a cross-license
`
`to Samsung’s Essential Patents.
`
`36.
`
`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.
`
`37.
`
`Ericsson and Samsung’s Prior Licenses
`
`Samsung designs, manufactures, and markets a portfolio of mobile devices,
`
`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
`
`
`
`12
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 13 of 62 PageID #: 333
`
`
`
`District, that complies with the 2G, 3G, 4G, and 5G standards and utilizes Ericsson’s Essential
`
`Patents.
`
`38.
`
`Ericsson designs, manufactures, and markets infrastructure equipment, including
`
`in the United States and in this District that complies with the 2G, 3G, 4G, and 5G standards and
`
`utilizes Samsung Essential Patents.
`
`39.
`
`The parties have signed several cross-license agreements covering their respective
`
`patents, including most recently a multi-year agreement in 2014.
`
`D.
`
`40.
`
`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.
`
`41.
`
`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.
`
`42.
`
`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.
`
`
`
`13
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 14 of 62 PageID #: 334
`
`
`
`43.
`
`All the terms of Ericsson’s offer, including the balancing payment, were (and are)
`
`consistent with Ericsson’s FRAND commitment.
`
`44.
`
`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.
`
`45.
`
`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.
`
`46.
`
`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.
`
`47.
`
`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-
`
`
`
`14
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 15 of 62 PageID #: 335
`
`
`
`FRAND royalty payment in a cross-license and, by doing so, Samsung has deprived Ericsson of
`
`its right to a reciprocal global license to Samsung’s Essential Patents on FRAND terms.
`
`E.
`
`48.
`
`The Asserted Patents
`
`On January 24, 2012, the U.S. Patent and Trademark Office duly and legally
`
`issued U.S. Patent No. 8,102,805 (the ʼ805 Patent), entitled “HARQ in Spatial Multiplexing
`
`MIMO System,” to inventors Bo Göransson, Per Johan Torsner, and Stefan Parkvall. Ericsson
`
`owns all rights to the ʼ805 Patent necessary to bring this action.
`
`49.
`
`On December 10, 2013, the U.S. Patent and Trademark Office duly and legally
`
`issued U.S. Patent No. 8,607,130 (the ’130 Patent) entitled “Computationally Efficient
`
`Convolutional Coding with Rate-Matching,” to inventor Jung-Fu Cheng. Ericsson owns all rights
`
`to the ’130 Patent necessary to bring this action.
`
`50.
`
`On April 17, 2018, the U.S. Patent and Trademark Office duly and legally issued
`
`U.S. Patent No. 9,949,239 (the ’239 Patent), entitled “Uplink Scrambling During Random
`
`Access,” to inventors Stefan Parkvall, Erik Dahlman, and Tobias Tynderfeldt. Ericsson owns all
`
`rights to the ’239 Patent necessary to bring this action.
`
`51.
`
`On May 7, 2013, the U.S. Patent and Trademark Office duly and legally issued
`
`U.S. Patent No. 9,532,355 (the ’355 Patent), entitled “Transmission of System Information on a
`
`Downlink Shared Channel,” to inventors Erik Dahlman and Vera Vukajlovic Kenehan. Ericsson
`
`owns all rights to the ’355 Patent necessary to bring this action.
`
`52.
`
`On October 22, 2019, the U.S. Patent and Trademark Office duly and legally
`
`issued U.S. Patent No. 10,454,655 (the ’655 Patent), entitled “Wireless Terminals, Nodes of
`
`Wireless Communication Networks, and Methods of Operating the Same,” to inventors Mattias
`
`Tan Bergstrom and Magnus Stattin. Ericsson owns all rights to the ’655 Patent necessary to bring
`
`this action.
`
`
`
`15
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 16 of 62 PageID #: 336
`
`
`
`53.
`
`On January 29, 2019, the U.S. Patent and Trademark Office duly and legally
`
`issued U.S. Patent No. 10,193,600 (the ’600 Patent), entitled “Codebook Subset Restriction
`
`Signaling” to inventors Sebastian Faxér, Mattias Frenne, Simon Järmyr, George Jöngren, and
`
`Niklas Wernersson. Ericsson owns all rights to the ’600 Patent necessary to bring this action.
`
`54.
`
`On September 24, 2019, the U.S. Patent and Trademark Office duly and legally
`
`issued U.S. Patent No. 10,425,817 (the ’817 Patent), entitled “Subscription Concealed Identifier”
`
`to inventors Noamen Ben Henda, David Castellanos Zamora, Prajwol Kumar Nakarmi, Pasi
`
`Saarinen, and Monica Wifvesson. Ericsson owns all rights to the ’817 Patent necessary to bring
`
`this action.
`
`55.
`
`On December 24, 2019, the U.S. Patent and Trademark Office duly and legally
`
`issued U.S. Patent No. 10,516,513 (the ’513 Patent), entitled “Controllable CSI-RS Density” to
`
`inventors Stephen Grant and Mattias Frenne. Ericsson owns all rights to the ’513 Patent
`
`necessary to bring this action.
`
`F.
`
`56.
`
`Claims for Patent Infringement and Declaratory Judgment
`
`Samsung has directly and indirectly infringed and continues to directly and
`
`indirectly infringe each of the Asserted Patents by engaging in acts constituting infringement
`
`under 35 U.S.C. § 271(a), (b), (c) and/or (f), including but not limited to one or more of making,
`
`using, selling, offering for sale, importing, exporting, and inducing and contributing to
`
`infringement by others, in this District and elsewhere in the United States. Samsung imports,
`
`owns, operates, and/or sells wireless communications products, including products that Samsung
`
`represents
`
`support
`
`“4G,”
`
`“5G,”
`
`and/or
`
`“LTE”
`
`connectivity.
`
`See,
`
`e.g.,
`
`https://www.samsung.com/us/mobile/galaxy-a51). Samsung’s Accused Products infringe each of
`
`the Asserted Patents based on at least their practice of 4G standards (including the 3GPP 4G LTE
`
`Standard) and/or their practice of the 5G standards (including 3GPP 5G NR Standard). Samsung
`
`
`
`16
`
`
`
`Case 2:20-cv-00380-JRG Document 17 Filed 01/01/21 Page 17 of 62 PageID #: 337
`
`
`
`instructs its customers to use the Accused Products in manners that infringe the Asserted Patents.
`
`For example, Samsung provides instruction manuals for the Accused Products and describes,
`
`markets, and/or advertises the Accused Products on its website. On information and belief,
`
`Samsung tests each of the Accused Products in the United States, thus infringing the Asserted
`
`Patents.
`
`57.
`
`Samsung’s infringement of the Asserted Patents has been, and continues to be,
`
`willful. In accordance with 35 U.S