Patents

TCL v. Ericsson: The Seventh Amendment Collides With Judge-Set FRAND Rates

The Federal Circuit vacated a global FRAND license set in a bench trial, holding that a 'release payment' for past infringement triggered the constitutional right to a jury.

October 13, 2025
Empty jury box in a courtroom symbolizing the Seventh Amendment right to a jury trial
TCL v. Ericsson held that compensation for past SEP infringement is legal relief a jury must decide. Shutterstock
Educational content, not legal advice. This article explains general legal concepts. It does not create an attorney–client relationship. For your specific situation, consult a licensed attorney.

For years, the most ambitious experiment in standard-essential patent litigation was the court-set global FRAND license: a single district judge, after a bench trial, fixing the worldwide royalty terms that should govern an SEP holder and an implementer. In TCL Communication Technology Holdings Ltd. v. Telefonaktiebolaget LM Ericsson, Nos. 2018-1363, -1732 (Fed. Cir. Dec. 5, 2019), the Federal Circuit dealt that model a serious constitutional blow. The court vacated Judge James V. Selna’s painstakingly constructed FRAND judgment, holding that one component — a lump-sum “release payment” for TCL’s past infringement — was legal relief that the Seventh Amendment reserved for a jury.

The precedential opinion was authored by Judge Raymond Chen, joined by Judges Pauline Newman and Todd Hughes, on appeal from the U.S. District Court for the Central District of California.

At a glance

  • Case: TCL Communication Technology Holdings Ltd. v. Telefonaktiebolaget LM Ericsson, Nos. 2018-1363, -1732 (Fed. Cir. Dec. 5, 2019); appeal from the Central District of California (Selna, J.).
  • Panel: Newman, Chen, and Hughes, JJ.; opinion by Chen, J.
  • Posture: Cross-appeals from a bench-trial judgment that set worldwide FRAND terms and ordered TCL to pay Ericsson a release payment for past unlicensed use.
  • Holding: The release payment was in substance compensatory relief for past patent infringement — a legal remedy. Ericsson was therefore entitled to a jury trial under the Seventh Amendment, and the bench-trial adjudication violated that right.
  • Consequence: The Federal Circuit vacated the release payment and, because the prospective FRAND-rate determination rested on issues common to it, vacated the prospective rate and the finding that Ericsson’s offers were not FRAND, remanding for further proceedings.
  • Why it matters: It establishes that compensation for past SEP infringement is legal, jury-triable relief, constraining how courts can package a comprehensive FRAND judgment.

The bench-trial gamble

The dispute followed the now-familiar SEP arc. Ericsson held patents declared essential to 2G, 3G, and 4G cellular standards under the ETSI regime and committed to license them on FRAND terms. After years of failed negotiations with the handset maker TCL, the parties asked the district court to resolve their global licensing impasse. Judge Selna conducted a ten-day bench trial and issued an exhaustive opinion setting worldwide FRAND royalty rates for Ericsson’s portfolio.

Critically, the judgment had two temporal halves. Looking forward, it fixed prospective FRAND rates that would govern TCL’s future sales. Looking backward, it imposed a lump-sum “release payment” — roughly $16.5 million — to compensate Ericsson for the years in which TCL had sold standard-compliant phones without a license. The court structured the release as a one-time payment computed to make the overall license terms equivalent, whether TCL chose a running-royalty or lump-sum option going forward. Both sides appealed; Ericsson’s lead argument was that it had been denied a jury.

The Seventh Amendment preserves the right to a jury trial “in Suits at common law.” The Supreme Court’s test asks whether the claim and the remedy sought are legal (jury-triable) or equitable (for the court). Ericsson argued that the release payment was, at bottom, damages for past patent infringement — the paradigmatic legal remedy — and that dressing it up as a term of a court-decreed license could not strip it of its legal character.

The Federal Circuit agreed. Judge Chen’s opinion looked past the label to the substance of the relief: “the release payment is in substance compensatory relief for TCL’s past patent infringing activity.” Compensation for past infringement is a legal remedy historically tried to juries; the district court could not convert it into an equitable matter merely by folding it into the architecture of a prospective FRAND license. Because the court adjudicated that legal claim without a jury, it deprived Ericsson of a constitutional right.

The decisive move is the court’s refusal to let the comprehensive, equity-flavored framing of a global FRAND judgment swallow the legal nature of its backward-looking component. A FRAND rate-setting exercise may have strong equitable features — it resembles specific performance of a contractual licensing duty — but money owed for sales already made before any license existed is damages by another name.

The ripple through the FRAND rate

Vacating the release payment did not leave the rest of the judgment standing. The Federal Circuit explained that the prospective FRAND determination and the release payment rested on overlapping factual and methodological foundations — the same comparable licenses, the same portfolio valuation, the same apportionment analysis. Because the improperly bench-tried release-payment issues were “common to” the prospective rate and to the court’s conclusion that Ericsson’s Option A and Option B offers were not FRAND, those determinations could not be salvaged in isolation. The court vacated them as well and remanded.

Notably, the Federal Circuit expressly declined to reach the merits of the district court’s FRAND methodology. It did not bless or condemn Judge Selna’s modified valuation approach, his use of comparable licenses, or his non-discrimination analysis. The reversal was constitutional and procedural, not substantive — leaving the substantive FRAND questions formally open even as the practical model of an all-in bench-set global license was destabilized.

The Supreme Court denied certiorari, leaving the Seventh Amendment holding intact and binding within the Federal Circuit.

Open questions

  • Can a global FRAND license still be set by a court? The decision does not forbid judicial rate-setting, but it requires a jury for any past-infringement compensation, complicating one-stop bench adjudication.
  • How should courts bifurcate? Whether to try the legal release-payment question to a jury and the prospective equitable terms to the bench — and how to keep overlapping evidence consistent — remains to be worked out.
  • What counts as “past infringement” versus a license term? The line between compensating prior unlicensed sales and structuring a lump-sum prospective royalty can blur, and the opinion gives only a substance-over-form principle.
  • Does this push parties toward arbitration? Confidential FRAND arbitration sidesteps the jury-trial problem entirely, and the decision may accelerate that trend.

Implications

  • Past-infringement compensation is jury-triable. Any backward-looking SEP payment styled as a release or catch-up royalty likely carries a Seventh Amendment right.
  • All-in bench judgments are fragile. A single legal component can unravel an entire global FRAND judgment on appeal.
  • Substance controls over labels. Courts will look past how relief is packaged to whether it compensates for past infringement.
  • Bifurcation is now a design problem. Litigants must plan how juries and judges divide the legal and equitable pieces of a comprehensive FRAND case.
  • Arbitration gains appeal. Private FRAND arbitration avoids the jury-trial constraint and offers a cleaner path to a global rate.

Frequently asked questions

Did the Federal Circuit decide whether Ericsson’s offers were actually FRAND? No. It expressly declined to reach the merits of the district court’s FRAND analysis. It vacated the not-FRAND finding only because that determination shared common issues with the improperly bench-tried release payment.

What is a “release payment” in an SEP case? It is a lump sum compensating the patent holder for an implementer’s past sales of standard-compliant products made without a license. The court held that such a payment is compensation for past infringement — a legal remedy a jury must decide.

Does this mean judges can no longer set FRAND rates? Not exactly. Courts may still adjudicate prospective FRAND license terms, which have an equitable character. But any award compensating for past infringement triggers the Seventh Amendment right to a jury, so a single all-bench global judgment is no longer safe.

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