California Courts Push Back Patent Trials as COVID-19 Winter Wave Continues

December 18, 2020

As the COVID-19 pandemic forces California into a second lockdown, courts in two of the state’s federal districts have pushed back scheduled patent trials. On December 14, District Judge James V. Selna of the Central District of California vacated a jury trial previously scheduled for April in litigation between TCL and Ericsson over a standard essential patent (SEP) licensing dispute. Two days later, District Judge Beth Labson Freeman postponed a Northern District of California trial from January to June in litigation filed by NPE Finjan Holdings, Inc. against Cisco following a series of prior continuances entered due to the pandemic. These delays come as other top patent venues contend with the impact of the novel coronavirus: while Chief District Judge Rodney Gilstrap of the Eastern District of Texas recently halted all jury trials before him after an outbreak in a nearby division, District Judge Alan D. Albright of the Western District of Texas has indicated that he may still continue to hold trials.

The Central District of California Delays a Notable SEP Trial

The nation’s most popular patent venues have varied widely in their approach to jury trials during the pandemic, as noted in RPX’s prior coverage, with some districts giving judges the discretion over whether to hold trials in light of local conditions. However, the Central District of California—which includes the state’s four hardest-hit counties, Los Angeles, San Bernardino, Riverside, and Orange—has never greenlit the resumption of jury trials, which have remained suspended with no room for discretion since the court imposed its first COVID-19 restrictions in March. The district has since established a three-stage reopening plan, under which jury trials are not to be resumed until the third stage, based on 14-day infection trends; such trials remain suspended until further notice. Additionally, on December 9—shortly after the state imposed a regional stay-at-home order based on dwindling ICU capacity—Chief District Judge Philip S. Gutierrez activated the district’s Continuity of Operations plan, closing all courthouses to the public except for certain criminal matters and leaving civil trials suspended.

On December 14, Judge Selna cited the pandemic in a two-page order that vacated the April 6 trial date scheduled in TCL v. Ericsson. That decision came at the joint request of the parties, which in a December 2 status joint report cited the “current trajectory of various metrics related to COVID-19, the fact that Orange County moved into the Purple Tier on November 17, 2020, and the Court’s prior comments about the logistical issues associated with conducting a civil trial and summoning a jury panel (e.g., that Orange County be well-established in the Orange Tier prior to summoning a jury, which in turn requires 49 days of lead time)”. (The cited tiers are part of California’s COVID-19 mitigation plan, with purple representing the highest COVID-19 risk level based on a county’s new infection rates.)

That newly delayed trial in the TCL v. Ericsson litigation will be the second time that the SEP issues at play come before the district court, following a notable trip back from the Federal Circuit. Judge Selna had previously issued a bench trial order establishing that certain licensing offers made by Ericsson to TCL had purportedly not been fair, reasonable, and non-discriminatory (FRAND), further setting the terms of a FRAND license—just the fourth US ruling in which a court has determined a FRAND rate for a SEP portfolio. Significantly, the court also denied Ericsson’s request for a jury trial on the claims decided. However, in December 2019, the Federal Circuit overturned that decision, ruling that the lower court had deprived Ericsson of its constitutional right to a jury trial by deciding a key license term from the bench.

In setting a new trial as a result of that opinion, Judge Selna indicated to the parties in April 2020 that under the Federal Circuit’s ruling, the “key error” was failing to “afford a jury trial on the release payment” (the license term previously decided from the bench) because that payment is best characterized as “patent damages”—i.e., damages for past patent infringement. Such a determination is both “intertwined” with the determination that Ericsson’s offers to TCL were not FRAND and “inextricably tied” to the determination of a forward royalty rate. As a result, Judge Selna held, the entire prior judgment must fall and a jury must be seated.

More recently, in August, the Federal Circuit further established that the question of whether a patent is essential to a standard should also be determined by a jury—upholding an infringement ruling for a subsidiary of IP Bridge, Inc. against TCL.

For more on the appeal ruling in TCL v. Ericsson, see “California FRAND Ruling Deprived Ericsson of Right to Jury Trial, Holds Federal Circuit” (December 2019).

Finjan’s Trial Against Cisco Gets Delayed Following Spring Setback in Another Case

Meanwhile, the Northern District of California’s penultimate coronavirus order, dated September 16, cleared the way for civil and criminal jury trials, to be conducted “in accordance with the logistical considerations necessitated by the Court’s safety protocols”, following prior suspensions of all such trials. However, as a result of state and local shelter-in-place orders, the court subsequently updated its website to state that “the court will suspend all in-person, in-court proceedings at all Northern District of California courthouses. This suspension will remain in effect through January 10, 2021, with a planned resumption of some limited proceedings, if possible, on January 11, 2021”.

The trial continuance that Judge Freeman entered in the Finjan v. Cisco litigation pushes back a trial previously set to begin on January 11 to June 4. While the order does not specifically cite COVID-19 as the reason, the court had already thrice delayed the case as a result of the pandemic. After reportedly stating in April that she was “fairly confident” the trial could be held on its originally scheduled date in June 2020, Judge Freeman continued the trial the following month—moving it to October 19 to allow the court to clear its backlog of criminal cases. Judge Freeman then delayed the case again to November 2 after Cisco raised additional public health concerns, and postponed the case one more time on October 26 to the just-vacated date of January 11. This Finjan lawsuit was the second to see a trial undercut by COVID-19: the NPE’s Southern District of California case against ESET (3:17-cv-00183) made its way to trial in March, but District Judge Cathy Ann Bencivengo declared a mistrial on the fifth day, with the agreement of counsel, in light of the pandemic.

Texas Judges Have Begun to Diverge on Jury Trials

Worsening COVID-19 infection rates have also led formerly bullish courts to walk back earlier efforts to proceed with patent trials. Among the most notable examples is Judge Rodney Gilstrap of the Eastern District of Texas, who resumed jury trials this past August, holding the nation’s first patent jury trial since the start of the pandemic—resulting in one notable verdict—after coronavirus infection rates in and around his district began to drop. However, as the pandemic’s second wave began to worsen, a trial in a breach of contract case in a nearby division under District Judge Amos L. Mazzant III ended in a mistrial after a COVID-19 outbreak struck the participants—with 15 people, including multiple jurors, members of the plaintiff’s and the defendant’s legal team, and court staff, getting infected. In light of that outbreak and rising case numbers nearby, Judge Gilstrap took the significant step of halting all jury trials before him. Judge Gilstrap stated that he was doing so “reluctantly” but asserted that he had no alternative—arguing that the face-to-face aspect of in-person trials is essential for due process. Judge Mazzant, for his part, has since cancelled a retrial previously scheduled for January 25 in the aforementioned breach of contract case, providing no reason for doing so.

In contrast to Judge Gilstrap, District Judge Alan D. Albright of the Western District of Texas appears to be moving forward with his next trial—at least, for now. In late November, in litigation filed by Fortress Investment Group LLC subsidiary VLSI Technology LLC (1:19-cv-00977), defendant Intel asked to push back a trial scheduled for January 11 to March, observing that “[c]ase and death numbers in McLennan County and in Texas now mirror or are approaching those from July 2020, when the Waco Division was closed to jury trials” and further warning that “those numbers are only expected to continue to rise after the holidays”. A hearing was held on Intel’s requested continuance on December 15; while the minutes for that hearing are unavailable, Judge Albright’s calendar still lists the trial as scheduled on January 11—suggesting that Judge Albright did not grant the motion (or at least, has not yet decided it). That hearing comes shortly after Judge Albright, speaking at a recent IP conference, reportedly expressed confidence about his court’s ability to safely conduct IP trials, following what he described as a positive experience conducting a patent trial this past October.

For details on that October trial, see “Roku Wins Noninfringement Verdict in Judge Albright’s First Patent Trial” (October 2020).