WI-LAN Inc. v. Alcatel-Lucent USA Inc. et al

Filing 422

Joint MOTION to Sever and, Joint MOTION to Stay THE ERICSSON DEFENDANTS LICENSE DEFENSE by Ericsson Inc., Telefonaktiebolaget LM Ericsson, WI-LAN Inc.. (Attachments: # 1 Text of Proposed Order)(Weaver, David)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION

WI-LAN INC.,
Plaintiff,
v.

CIVIL ACTION NO. 6:10–CV–521–LED

ALCATEL–LUCENT USA INC., et al.,
Defendants.

JOINT MOTION OF WI-LAN INC. AND THE ERICSSON DEFENDANTS TO SEVER AND STAY
THE ERICSSON DEFENDANTS’ LICENSE DEFENSE

In this action, Defendants Telefonaktiebolaget LM Ericsson (“LME”) and Ericsson Inc.
(collectively, “Ericsson”) have asserted as an affirmative defense that LME is licensed to the
patents-in-suit and that Ericsson Inc. also benefits from that license as an Affiliate of LME. This
claimed defense arises from LME’s acquisition of all shares of BelAir Networks, Inc. (“BelAir”).
BelAir signed a license with Wi-LAN Inc. in December 2009 (the “BelAir Patent License”).
Ericsson alleges that BelAir and LME signed an agreement transferring the BelAir Patent
License to LME on October 23, 2012.
STATEMENT OF THE ISSUE
Wi-LAN denies inter alia that the purported assignment of the BelAir Patent License to
LME was valid and that Ericsson has obtained broad rights covering all its products under the
BelAir Patent License. The BelAir Patent License contains an arbitration provision for disputes
arising under the agreement. As such, a Notice of Arbitration and Statement of Claim has been
filed in Ontario, Canada. The parties agree that the questions of inter alia whether LME has any
rights under the BelAir Patent License and whether that License covers the accused products in
this suit must be determined in arbitration.
Ericsson contends that its rights under the BelAir Patent License would have a significant
impact upon the issue of damages in this case, and thus, this issue cannot be simply severed
without a mechanism to adjust any damages that may be awarded in this action for any alleged
patent infringement by Ericsson. Specifically, Ericsson contends that Wi-LAN’s damages expert
opined that as part of the hypothetical negotiation, Wi-LAN and Ericsson would have agreed to a
fully paid up, lump-sum payment, for a license to the patents-in-suit for the time period
beginning on the date the lawsuit was filed (October 5, 2010) through the expiration of the
patents. If LME did, in fact, obtain a valid license from BelAir covering the accused products,

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Ericsson asserts that the license will be effective from the date of the license assignment through
the expiration of the patents. Ericsson contends that because the patents-in-suit do not expire
until November 2017, the unlicensed period (October 2010 to October 2012) represents only a
small fraction of the damages period (October 2010 to November 2017) used by Wi-LAN’s
expert to arrive at his lump sum damages calculation for the life of the patents. Therefore, the
resolution of whether the BelAir Patent License applies impacts only the total damages, if any, to
be awarded. While expressly denying that injunctive relief would be appropriate, Ericsson
further asserts that the applicability of the BelAir Patent License would also impact the
availability of injunctive relief, if any, upon a finding of infringement of the patents-in-suit by
Ericsson.
PROPOSED AGREED SOLUTION
Because resolution of the above BelAir Patent License dispute impacts only the damages
to be awarded in this matter and the availability of injunctive relief, the parties have conferred
and reached an agreement on how to resolve the BelAir Patent License dispute regarding the
issue of arbitration and damages. Without prejudice to any positions, motions, or arguments
made in this action or the pending arbitration, and expressly reserving all rights to object to or
otherwise appeal any jury or Court findings or judgments, Wi-LAN and Ericsson present their
proposed agreement to the Court as follows:
1.

That the Court sever Ericsson’s license defense into a separate action for

declaratory judgment that LME is licensed under the BelAir License;
2.

That the Court stay that separate action pending resolution of the Canadian

arbitration proceeding relating to the license issue;
3.

In the event that following the jury trial in this action, (1) any patent-in-suit is

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found valid and infringed by the accused Ericsson products, (2) the Court awards damages to
Wi-LAN for infringement by Ericsson, and (3) the arbitration results in a determination that
LME did obtain a valid license to the patents-in-suit covering the accused products, that the
Court lift the stay of the severed action for further proceedings in accordance with the following
paragraph;
4.

Upon the lifting of the stay in the severed action upon satisfaction of all

conditions in paragraph 3 above, the parties have agreed to submit to the Court, and expressly
waive the right to a jury trial for, the issue of whether and how the damages awarded to Wi-LAN
should be adjusted as a result of the arbitration determination.

In so doing, the parties

acknowledge that the Court will retain jurisdiction over the severed action to order any such
adjustment regardless of whether a final judgment has been entered in this action, and the parties
stipulate that the severed action includes a separate and independent cause of action over which
the Court will have jurisdiction notwithstanding the entry of any judgment in this action.
5.

If any of the foregoing conditions in Paragraph 3 does not occur, then the Court

should dismiss the severed action.
6.

In the event that the Court deems it appropriate to grant an injunction against

Ericsson following a jury trial of this action, such injunction shall be stayed pending resolution
of the arbitration.
CONCLUSION
For the reasons stated, Plaintiff Wi-LAN Inc. and Defendants Telefonaktiebolaget LM
Ericsson and Ericsson Inc. respectfully request that the Court grant this Agreed Motion to Sever
and Stay the Ericsson Defendants’ License Defense in accordance with the agreed terms set forth
herein.

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Respectfully submitted,

Respectfully submitted,

/s/ David B. Weaver
David B. Weaver (TX Bar 00798576)
Lead Attorney
Avelyn M. Ross (TX Bar 24027817)
Ajeet P. Pai (TX Bar 24060376)
Syed K. Fareed (TX Bar 24065216)
Jeffrey T. Han (TX Bar 24069870)
Seth A. Lindner (TX Bar 24078862)
VINSON & ELKINS LLP
2801 Via Fortuna, Suite 100
Austin, TX 78746
Tel: [phone]
Fax: [phone]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]

/s/ Richard L. Wynne, Jr. (by permission)
Bruce S. Sostek (TX Bar 18855700)
Lead Attorney
[e-mail]
Richard L. Wynne, Jr. (TX Bar 24003214)
[e-mail]
Adrienne E. Dominguez (TX Bar 00793630)
[e-mail]
J. Michael Heinlen (TX Bar 24032287)
[e-mail]
Timothy E. Hudson (TX Bar 24046120)
[e-mail]
Justin S. Cohen (TX Bar 24078356)
[e-mail]
THOMPSON & KNIGHT LLP
1722 Routh Street, Suite 1500
Dallas, Texas 75201
Tel: [phone]
Fax: [phone]

Steve R. Borgman (TX Bar 02670300)
Gwendolyn Johnson Samora
(TX Bar 00784899)
VINSON & ELKINS LLP
1001 Fannin Street, Suite 2500
Houston, TX 77002-6760
Tel: [phone]
Fax: [phone]
[e-mail]
[e-mail]

Local Counsel
William J. Cornelius (TX Bar 04834700)
[e-mail]
Jennifer Ainsworth (TX Bar 00784720)
[e-mail]

Local Counsel
Johnny Ward (TX Bar 00794818)
Wesley Hill (TX Bar 24032294)
WARD & SMITH LAW FIRM
111 W. Tyler Street
Longview, TX 75601
Tel: [phone]
Fax: [phone]
[e-mail]
[e-mail]

ATTORNEYS FOR DEFENDANTS
TELEFONAKTIEBOLAGET LM ERICSSON and
ERICSSON INC.

WILSON ROBERTSON & CORNELIUS PC
909 ESE Loop 323, Suite 400
P.O. Box 7339
Tyler, TX 75711-7339
Tel: [phone]
Fax: [phone]

Attorneys for Plaintiff Wi-LAN Inc.

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CERTIFICATE OF SERVICE
The undersigned certifies that on June 29, 2013, counsel of record who are deemed to
have consented to electronic service are being served with a copy of this document by electronic
mail.
/s/David B. Weaver
David B. Weaver

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