Court Sides with Apple, Partly Grants New Trial Following $506M Patent Infringement Jury Verdict

Apple Inc. will be able to retry the issue of damages in a patent infringement trial it defended against Optis Wireless Technology LLC and four affiliated companies. According to the Eastern District of Texas opinion delivered Wednesday, the jury returned the verdict after finding that Apple willfully infringed on five of Optis’s patents, but did so without the benefit of evidence explaining that the verdict must be fair, reasonable, and non-discriminatory (FRAND) in accordance with the contractual terms surrounding the asserted standard essential patents (SEPs).

Judge Rodney Gilstrap reported the case’s history, starting with Optis’ complaint in February 2019. When it came time for trial, the court bifurcated the issues into two trials, first before a jury then before the court at Optis’ request, to which Apple acquiesced. The parties tried issues of infringement and damages to the jury and Optis’ declaratory judgment claim to the bench.

According to the court, this created a unique situation that ultimately rendered the trial unfair. Judge Gilstrap explained that “Optis intentionally placed itself in a position to tell the jury only about Apple’s bad acts without telling them of their own obligations to act in good faith,” while Apple, for its own tactical reasons, “was mute.”

After the verdict was rendered and entered, Apple reportedly experienced a post-trial “epiphany,” claiming that the jury’s verdict was not “compliant with FRAND terms and stands in violation of the FRAND limitations on reasonably royalty awards for standard essential patents.” Optis responded that the jury’s verdict was FRAND-compliant, even though they did not hear evidence about the plaintiffs’ obligations thereunder.

In his analysis, Judge Gilstrap wrote that he was “persuaded that the FRAND-compliance of the damages awarded by the jury has legitimately been called into question.” He reasoned that though the jury’s verdict may be consistent with FRAND terms, it “never had any evidence that Optis’s patents were in fact FRAND-encumbered, nor did the jury hear any evidence as to what royalties would or could be FRAND.” As a result, the court concluded, the jury verdict “does not necessarily represent a FRAND royalty.”

The court noted that while it was keenly aware of the strategic choices made by Optis and Apple as to how the FRAND issues would be adjudicated, its main role is “to see that justice is done.” After acknowledging the “very large damages award made as to the SEPS, where the jury never heard the acronym FRAND or evidence about how that concept impacted a fair damages award in this case,” the court granted a retrial on damages.

Finally, the court declined to grant Apple’s request for a new trial regarding liability. Judge Gilstrap determined that the issues relating to willful infringement, on which the jury was instructed separately, were sufficiently distinct from those relating to damages and therefore did not warrant a do-over.

Optis is represented by Irell & Manella LLP, McKool Smith P.C., and Gray Reed & McGraw LLP. Apple is represented by Wilmer Cutler Pickering Hale and Dorr LLP and Gillam & Smith LLP.