By Craig Clough

Law360 (December 14, 2020, 8:11 PM EST) -- A California federal judge on Monday vacated an upcoming trial date set for patent licensing litigation between Ericsson and Chinese smartphone maker TCL, citing the COVID-19 pandemic as the reason for the delay.

In a brief order, U.S. District Judge James V. Selna set a status conference for January to discuss further scheduling while vacating all other filing deadlines. He also ordered that the trial be bifurcated to first determine whether Ericsson offered TCL a license on fair, reasonable and nondiscriminatory terms, and, if not, then what the royalty rate should be.

Both parties requested the delay earlier this month, but disagreed on the bifurcation, with TCL asking for the split trial while arguing that having a jury decide both issues at once would confuse them.

Counsel for the parties did not immediately respond to requests for comment.

Back in 2017, Judge Selna initially ruled on both questions, finding that Ericsson was not offering to license its patents to TCL on fair, reasonable and nondiscriminatory terms, known as FRAND, compared to other companies in the marketplace, and he had set the rates himself. By his own estimation, Ericsson had to sell the rates to TCL for $16.5 million instead of the nearly $100 million that Ericsson wanted to charge.

Selna's FRAND ruling came after a bench trial, and he said that the royalty rates Ericsson offered to TCL were "radically divergent" from those it offered to other smartphone makers and thus were not FRAND, and he specifically objected to a "floor" on royalties Ericsson included in its offer to account for the lower price of TCL's products.

It was the first time a district court had determined a FRAND rate for an entire standard-essential patent portfolio. 

But the Federal Circuit reversed Selna's decision late last year and said that such a ruling had to come from a jury.

A trial was set for April before Monday's ruling pushed it back and comes after both parties earlier this month this it is "essentially inevitable" that a jury still won't be able to convene in five months because of the ongoing pandemic to decide on the six-year legal battle.

The companies also noted that a mediation session scheduled for December has already been pushed to early January "to account for a need to reschedule a time-sensitive arbitration wherein one of the parties' lawyers had contracted COVID."

An order back in May by Judge Virginia A. Phillips had ordered jury trials in the district only to resume in the final phase of the court's reopening plan.

In their filing, both companies said that point still seems pretty far off, citing the "current trajectory of various metrics related to COVID-19."

The companies added that they also don't want to bother complying with the process of pretrial disclosure yet either, since there's also a chance the case could settle early next year. Pointedly, they requested Judge Selna not push forward the already rescheduled mediation session, which is now set for early January, before retired Judge Andrew Guilford.

"The parties believe it makes sense that they be able to defer the burden of complying with the pretrial deadlines until closer to the actual trial date, and after such time as it becomes clear that the case will not be resolved via settlement," they said in the filing.

Ericsson is represented by Chase A. Scolnick at Keller/Anderle LLP.

TCL is represented by Stephen S. Korniczky at Sheppard Mullin Richter & Hampton.

The case is TCL Communication Technology Holdings Ltd. v. Telefonaktiebolaget LM Ericsson et al., case number 8:14-cv-00341, in the U.S. District Court for the Central District of California.

--Additional reporting by Andrew Karpan. Editing by Jay Jackson Jr.

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