Case 2:21-cv-00460-JRG Document 71 Filed 05/04/22 Page 1 of 7 PageID #: 602

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION

APPLE INC.,

Plaintiff,

v. Civil Action No. 2:21-cv-00460-JRG

TELEFONAKTIEBOLAGET LM
ERICSSON AND ERICSSON INC.,

Defendants.

ERICSSON’S OPPOSITION TO APPLE’S MOTION STAY

Apple makes the highly unusual request of seeking a stay of patent claims that it

affirmatively filed. Although Apple asserted that the patent claims are now “moot” because of the

claims pending in Ericsson Inc. v. Apple Inc., No. 2:21-CV-00376-JRG (the “-376 action”), the

landscape changed after Apple filed its motion. The Court ruled, on May 3, 2022, that even if

Ericsson’s offer is found to be FRAND, Apple is not required to accept it: “Apple may accept

[Ericsson’s offer if found to satisfy FRAND] and create a binding contract; Apple may reject it

and not implement Ericsson’s patented technology; or Apple may reject the FRAND offer,

implement Ericsson’s technology without the benefit of a license and subject itself to actions for

infringement.” See Dkt. 89, -376 action, at 4 (emphasis added). As a result, the -376 action will

not inevitably result in a license agreement between the parties and, therefore, this patent action is

not moot. The only thing that could render the litigation moot is a “meeting of the minds evidenced

by acceptance of an [actual, pending] offer.” Id. at 4 n.2. For that reason, Apple’s motion should

be denied.

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I. Background and Procedural Posture

Ericsson filed a declaratory proceeding to establish that its licensing offer to Apple satisfied

FRAND in the -376 action. Rather than litigate the FRAND dispute in the -376 action, Apple filed

a parallel FRAND case of its own and added claims for a declaration of both non-essentiality and

non-infringement on three Ericsson patents out of the 300 claim charts that Ericsson presented to

Apple in negotiations. This Court dismissed Apple’s FRAND claims without prejudice on March

23, 2022, and ordered them to be refiled as compulsory counterclaims in the -376 action. Dkt. 37.

The patent claims were severed and remain pending in this action. The -376 action was set for

trial in December of this year, and this action was set for trial in July of 2023. Dkt. 38.

Two weeks after the severance order, Ericsson filed its answer in this case on April 6, 2022.

Dkt. 55. Ericsson included counterclaims for infringement of the same three patents from Apple’s

declaratory counts. Ericsson’s prayer for relief included a request that if “Apple declines a

FRAND-compliant offer to license Ericsson’s standard-essential patent portfolio,” Ericsson should

be entitled to “an injunction prohibiting Apple . . . from making, using, selling, offering for sale,

or importing” infringing products. Dkt. 55 at 24.

On April 19—exactly 13 days after Ericsson filed its answer and Apple lost its ability to

unilaterally file a notice of dismissal without prejudice under Fed. R. Civ. P. 41(a)(1)(A)(i)—

Apple filed its Motion to Stay this entire case, arguing that the -376 action will invariably “moot”

the relief sought in this proceeding. Then, on April 27—eight days after seeking to stay this case

as purportedly “moot”—Apple filed three additional “counterclaims” to Ericsson’s counterclaims,

alleging that the three patents at issue are invalid. Dkt. 68.

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II. Argument

Apple asks this Court to “stay” this action—an action that would address the essentiality

and potential infringement of three Ericsson patents. Apple’s purported justification is that

the -376 action “will resolve the dispute between the parties as to the terms of a FRAND cross-

license.” Dkt. 65 at 2 (emphases added). According to Apple, “[a]ny relief in this case will be

mooted by the result in the -376 case as Apple will be licensed to the three asserted patents.” Id.

at 3 (emphasis added).

But Apple ignores the “black letter contract law” establishing that—even if Ericsson’s offer

is found to satisfy FRAND in the -376 action—Apple “may reject the FRAND offer, implement

Ericsson’s technology without the benefit of a license and subject itself to actions for

infringement” like the one pending here. See Dkt. 89, -376 action, at 4. The Court’s May 3 Order

in the -376 action confirms that Apple retains the option to reject Ericsson’s offer, even if it is

adjudicated to be FRAND, in which case Apple assumes the risk of patent infringement remedies

worldwide.

Given that fact, Apple’s request to stay this case would greatly prejudice Ericsson’s right

to pursue relief, including injunctions, if Apple is found to infringe and is unwilling to take a

license. Apple’s request should be seen for what it is—yet another procedural maneuver with the

goal of forestalling Ericsson from enforcing its patent rights. The Court should deny Apple’s

motion for multiple reasons.

First, since January of this year, Apple has been manufacturing, importing, and selling

products that incorporate Ericsson’s patented technology on a massive scale without a license from

Ericsson. Ericsson filed multiple enforcement actions, including its counterclaims for

infringement in this case, to ensure prompt payment and/or the ability to enjoin Apple’s unlicensed

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conduct if Apple chooses not to accept Ericsson’s FRAND offer—an outcome this Court expressly

contemplated. If the Court grants Apple’s requested stay, then Ericsson would be unable to

substantively begin infringement proceedings on the patents-in-suit until more than a year after the

prior license expired, with Ericsson receiving no payment during that period for Apple’s use of

Ericsson’s technology.1 However, if the Court allows this action to proceed, and Apple refuses

to take a license, the question of whether Ericsson is entitled to its requested injunctive relief for

the patents in suit could be quickly and efficiently resolved. At that point, Apple would be left

with the decision of either (a) accepting a license on adjudicated FRAND terms and compensating

Ericsson for its technology; or (b) foregoing a FRAND license, depriving Ericsson of

compensation, and risking the fallout from enforcement proceedings. In that scenario, it is not

difficult to contemplate that the “balance of hardships” would weigh in favor of injunctive relief.

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).

Second, Apple argues that Ericsson’s licensing offer includes all patents that “Ericsson

claims are essential” so there should be no need for Apple to stipulate that the three patents at issue

are essential since they will fall within the license in any event. Dkt. 65 at 3 (emphasis in original).

Apple’s reasoning is incorrect. The Court already has acknowledged that Apple may reject

Ericsson’s offer even if it is found to satisfy FRAND in the -376 action.

Third, the procedural leadup to Apple’s Motion to Stay belies Apple’s assertions that it

seeks a stay because of its belief that the patent claims are moot. When Apple filed this case, it

asserted its patent claims and its FRAND claims at the same time. Apple alleged that because

1
Regardless of the outcome of this case, there would still be the issue of continued delay from
appeals, petitions for rehearing, and potential requests for certiorari. By any measure, Apple will
be using Ericsson’s technology without compensation for a lengthy period of time. Ericsson is, of
course, focused on minimizing that period of unpaid and infringing use.

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Ericsson “is contractually bound by its voluntary FRAND commitments, Apple also seeks [] a

binding judicial determination of FRAND terms for Apple to license Ericsson’s SEPs globally.”

Dkt. 2 at ¶ 5 (emphasis added). If Apple contends that a binding determination in the -376 action

would “moot” the relief sought in this case, the same would have been true the day it chose to file

its patent claims. Nothing has changed other than the severance of Apple’s patent claims from its

FRAND claims.2

So why would Apple now seek to stay the very claims that it asserted together with its

FRAND claims? One explanation is that Apple was trying to forum-shop its appeal. Before the

Court’s March 23, 2022, Order, Apple’s patent claims and its FRAND claims—brought together—

would have fallen within the Federal Circuit’s appellate jurisdiction. See, e.g., USPPS, Ltd. v.

Avery Dennison Corp., 647 F.3d 274, 282 n.5 (5th Cir. 2011) (“[E]very appeal in

which jurisdiction is based ‘in whole or in part’ on § 1338 must be heard exclusively in the Federal

Circuit.” (emphasis in original)). That changed once Apple was forced to file its FRAND claims

as compulsory counterclaims in the -376 action—a breach of contract action appealable

exclusively to the Fifth Circuit. After its FRAND claims were severed, and the patent claims no

longer helped Apple select its appellate forum, Apple apparently lost its appetite to litigate its

patent claims. But this Court should not let Apple set the table only to walk away. Apple’s request

for a stay should be denied.

2
And even then, Apple chose not to voluntarily dismiss its purportedly “moot” claims without
prejudice before Ericsson filed its counterclaims and answer. See Fed. R. Civ. P. 41(a)(1)(A)(i)
(providing that a plaintiff may file a notice of voluntary dismissal without prejudice “before the
opposing party serves either an answer or a motion for summary judgment”); see also Dkt. 37
(March 23 Order severing patent claims); Dkt. 55 (Ericsson’s April 6 Answer).

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Dated: May 4, 2022 Respectfully Submitted,

/s/ Ross R. Barton Nicholas Mathews

Theodore Stevenson, III (Lead Attorney) Texas State Bar No. 24085457
Texas State Bar No. 19196650 nmathews@[Link]
[Link]@[Link] Alexander Chern
ALSTON & BIRD Texas State Bar No. 24109718
2200 Ross Avenue, Suite 2300 achern@[Link]
Dallas, TX 75201 MCKOOL SMITH, P.C.
Telephone: (214) 922-3507 300 Crescent Court Suite 1500
Facsimile: (214) 922-3899 Dallas, TX 75201
Telephone: (214) 978-4000
Ross R. Barton Facsimile: (214) 978-4044
North Carolina State Bar No. 37179
[Link]@[Link] Blake Bailey
ALSTON & BIRD Texas State Bar No. 24069329
101 S. Tryon St., Suite 4000 bbailey@[Link]
Charlotte, North Carolina 28280 MCKOOL SMITH, P.C.
Telephone: (704) 444-1000 600 Travis Street, Suite 7000
Facsimile: (704) 444-1111 Houston, TX 77002
Telephone: (713) 485-7300
Bryan Lutz (pro hac vice) Telecopier: (713) 485-7344
Georgia Bar No. 915395
[Link]@[Link] John Holley
ALSTON & BIRD Texas State Bar No. 24078678
1201 West Peachtree Street jholley@[Link]
Atlanta, GA 30309-3424 MCKOOL SMITH, P.C.
Telephone: 404-881-7000 1999 K Street, NW Suite 600
Facsimile: 404-881-7777 Washington, DC 20006
Telephone: (202) 370-8300
Christine Woodin Facsimile: (202) 370-8344
Texas State Bar 24199951
cwoodin@[Link] Samuel F. Baxter
HUESTON HENNIGAN LLP Texas State Bar No. 01938000
523 West 6th St., Suite 400 sbaxter@[Link]
Los Angeles, CA 90014 MCKOOL SMITH, P.C.
Telephone:(213) 788-4099 104 E. Houston Street, Suite 300
Facsimile: (888) 775-0898 Marshall, TX 75670
Telephone: (903) 923-9000
Telecopier: (903) 923-9099

ATTORNEYS FOR PLAINTIFFS

ERICSSON INC. AND
TELEFONAKTIEBOLAGET LM
ERICSSON

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CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the above and foregoing document has

been served on all counsel of record via the Court’s ECF system on May 4, 2022.

/s/ Ross R. Barton

Ross R. Barton

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