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Best of FRANDs: Judge allows Apple retrial following $506m patent infringement ruling

PanOptis was obliged to provide 4G LTE licences – but no one mentioned it

A federal judge in Texas has allowed Apple a limited retrial [PDF] in its battle with PanOptis, which stung the iPhone maker for $506m in damages over claims it infringed the company's 4G LTE patents.

Although Apple was not permitted to relitigate the question of its liability, the retrial will determine how much it's on the hook for.

This decision has likely proven bittersweet for Apple, which had been looking for a broader retrial, arguing the jury was not instructed about PanOptis's obligation to license its patents to the company on a fair, reasonable and non-discriminatory (FRAND) basis.

Since the patents subject of this trial are known to be standards essential patents (SEPs), PanOptis was legally obliged to make them available to Apple on FRAND terms.

Judge Gilstrap, of the US District Court for the Eastern District of Texas Marshall Division, said: "The absence of FRAND evidence and instructions to the jury casts serious doubt on the reliability of the verdict, and a new trial regarding damages is warranted.

"In large part because of the conscious acts of both parties, the Court now finds itself left with a very large damages award made as to SEPs where the jury never heard the acronym FRAND or heard evidence about how that concept impacted a fair damages award in this case. In the Court's view, this requires a new trial on damages."

Nonetheless, he was scathing about both Apple and PanOptis, neither of which raised the thorny issue of FRAND terms during the jury trial. Doing so prevented the jury from determining whether PanOptis's licensing terms were FRAND compliant, and whether Apple engaged with the licensing process in good faith.

"The unique posture of the jury trial followed by the bench trial with respect to FRAND issues resulted from a series of intentional decisions made by both parties," Gilstrap said.

Acquired by investment firm Brevet Capital in 2019, PanOptis owns a significant chunk of patents pertaining to wireless and cellular communications, which are held by three subsidiaries: Optis Cellular Technology, Optis Wireless Technology, and Optis Unwired Planet.

Panoptis had previously sparred with Apple, securing an undisclosed settlement in a 2017 patent battle. It has also won cases against Samsung and Huawei, to name but a few.

This isn't the only recent patent loss for Apple. In March 2020, the company paid $454m to VirnetX over allegations the FaceTime video chat software infringed intellectual property following a nearly decade-long legal slog.

FaceTime has also been the focus of another brutal patent fight with Japanese electronics manufacturer Maxell, which in February accused Apple of violating 12 of its patents following similar suits in 2019 and 2020.

And that's without mentioning the ongoing legal catfight with Fortnite dev Epic over Apple's stewardship of the App Store, which continues to rumble on. Earlier this week, Epic raised a $1bn funding round, giving the partially Tencent-owned developer an equity valuation of $28.7bn. Of this, $200m came from Sony, with the rest provided by a smattering of pension funds and investment houses.

Epic could conceivably use this to continue its fight until the bitter end, as well as support lobbying efforts in statehouses in order to pass legislation that would force Apple to open up its control of the App Store. ®

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