The Jury Is "In" On Standard Essentiality

As recently explained by the Court of Appeals for the Federal Circuit in Godo Kaisha IP Bridge 1 v. TCL Comm’n Tech. Holdings Ltd., the question of whether a defendant’s standard-compliant product infringes a Standard Essential Patent (“SEP”) merely because it is standard-compliant may be submitted to a jury.  It is not necessary in every case involving SEPs to ask the jury to compare the patent claims to the accused infringing product.  Moreover, there is no requirement of any prior ruling by the district court that compliance with mandatory sections of the standard necessarily results in infringement.

In Godo Kaisha IP Bridge 1 v. TCL Comm’n Tech. Holdings Ltd.,[1] the Court of Appeals for the Federal Circuit (“CAFC”) decided that the question of whether a defendant’s standard-compliant product infringes a Standard Essential Patent (“SEP”) merely because it is standard-compliant may be submitted to a jury.  It is not necessary in every case involving SEPs to ask the jury to compare the patent claims to the accused infringing product.  Moreover, there is no requirement of any prior ruling by the district court that compliance with mandatory sections of the standard necessarily results in infringement.

At trial, the jury rendered a verdict that the claims of the SEPs asserted by Godo Kaisha were, in fact, essential to the Long Term Evolution (“LTE”) standard and covered mandatory elements or portions of the standard.  As a result, the jury concluded that TCL’s products implementing the LTE standard necessarily infringed the claims of Godo Kaisha’s SEPs.  There was no doubt, and TCL did not deny, that TCL’s products implemented or were compliant with the LTE standard.

TCL argued on appeal that the district court had never decided whether a product’s compliance with mandatory portions of the LTE standard necessarily compelled a finding of infringement, and thus it was improper for the trial judge to allow the jury to use this approach to deciding the ultimate fact question of infringement.  TCL relied on the CAFC’s approval of a district court’s making that sort of pre-trial ruling during claim construction – i.e., that compliance with the mandatory portions of a standard was necessarily with the scope of the asserted claims – ten years ago in Fujitsu Ltd. v. Netgear Inc.,[2] but the Court of Appeals explained that such reliance by TCL was unjustified.  As explained by the CAFC, the mere fact that it had previously approved such an approach did not mean that it required that same approach or procedure for determining infringement in every case involving SEPs.  Affirming the judgment of the district court which was entered upon the jury’s verdict of infringement, the CAFC clarified and explained that the issue of whether patent claims read on an industry standard is not solely the province of the district court during claim construction as a matter of law, but instead may be a fact question based on the evidence presented and properly decided by a jury in an appropriate case.

The CAFC further explained precisely how TCL’s argument was flawed.   Specifically, TCL had cited the following passage from the Fujitsu decision: “If a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement.”  Based on this statement alone, and taking it out of its original context, TCL reasoned that the court must decide the issue standard essentiality during claim construction as a question of law.  The Fujitsu decision says no such thing, however, and did not create a “narrow exception” to traditional infringement analysis that would require the trial judge to decide on standard-essentiality of the claims during the claim construction phase of the litigation.  The CAFC disagreed with this argument by TCL and correctly noted that, when read in its full context, the Fujitsu decision simply says that standard-essentiality may be decided during claim construction, but not that it must be so decided.

However, in the Godo Kaisha case the determination of infringement turned on whether or not the evidence supported a finding that the patent claims read on essential and mandatory elements of the LTE standard – an entirely fact-driven exercise.  Thus, the CAFC concluded that the district court’s rationale for submitting such questions to the jury was appropriate under the circumstances.  Indeed, the Court of Appeals noted that where “there are material disputes of fact regarding whether asserted claims are in fact essential to all implementations of an industry standard, the question of essentiality must be resolved by the trier of fact in the context of an infringement trial.”  The “trier of fact” in a jury trial is the jury, not the judge.

Neither Godo Kaisha nor TCL had ever asked the district judge to decide the standard-essentiality question during claim construction.  It seems reasonable to conclude that neither party was completely confident in how the judge would answer that critical question.  As has been affirmed by the CAFC, TCL cannot complain that the district judge failed to make a claim construction ruling that TCL never asked to be made, when the judge instead submitted the un-asked and then un-answered question of standard-essentiality to the jury.

[1] Appeal No. 2019-2215, ___ F.3d ___, 2020 WL 4459004 (Fed. Cir. Aug. 4, 2020).

[2] 620 F.3d 132 (Fed. Cir. 2010).