The patent infringement case of Barcelona, Spain-based Fractus against cell phone giants, AT&T, Verizon, T-Mobile, AT&T and intervenor-defendant CommScope continued in Marshall’s federal court Tuesday over antenna technology that allows cellular companies and smartphone makers to deliver high-speed Internet access to their customers.
In the case, Fractus — an early pioneer in the development of internal antennas for smartphones, tablets and wireless devices — filed suit in April 2018, accusing the companies of using its patented technology that covers its invention of based station antennas, without paying royalties. Fractus is suing CommScope for making and using antennas that incorporate the Fractus patented invention that is described in the suit, and selling the antennas to carrier customers: Verizon, AT&T and T-Mobile.
The case kicked off last Thursday in Marshall’s federal court with US District Court for the Eastern District of Texas Chief Judge, Rodney Gilstrap, presiding.
Fractus is seeking more than $500 million in the case.
“Fractus’s cellular phone antenna designs have been licensed by all of the world’s largest smartphone manufacturers, including Samsung, LG, Blackberry and Motorola,” the lawsuit states. “Together, phone manufacturers have paid Fractus more than $100 million in licensing fees for the right to use its smartphone antenna designs.”
The lawsuit contends that while Verizon, AT&T and T-Mobile have saved hundreds of millions of dollars by deploying base station antennas across the United States using Fractus’s patented technology, they have never paid any royalties for the right to do so.
“Fractus is entitled to compensation for (the defendants’) use of its inventions. It brings this lawsuit to recover that fair share,” the lawsuit states.
The plaintiff contends that the success of the companies is built on the quality of their nationwide network, and the ability to provide high-speed connections to hundreds of millions of users across the entire country, with Verizon, particularly proudly asking customers: “Can you hear me now?” and T-Mobile proudly announcing to customers: “Welcome to America’s best unlimited network”; and AT&T proudly telling customers: “AT&T has the nation’s largest and most reliable network.”
“To deliver that capacity, (the defendants) and the other major U.S. carriers have invested billions of dollars in successive generations of cellular standards that utilize increasing numbers of frequency bands. They source the highest-performance antennas from manufacturers like Amphenol, Kathrein, CommScope, and RFS that are capable of multiband communications,” the lawsuit states.
“Virtually every one of those antennas infringes Fractus’ patent rights,” the lawsuit contends.
Defense damages expert
On Tuesday, the jury heard from the CommScope’s expert witness, Julie Davis, who was hired at $925 an hour to make a determination of what intellectual property damages would be appropriate to award in the case if the jury found that the patent was infringed.
“My objectives were to determine the amount of damage, assuming it was damaged and infringed,” she said, noting everything is based off of a hypothetical negotiation that would’ve taken place between the parties in suit.
The patent was issued in July 2012.
Davis, author of “Edison in the Boardroom: How Leading Companies Realize Value from Their Intellectual Assets,” said she’s testified as a damages expert in patent infringement cases relating to all sorts of inventions from golf clubs to pharmaceutical products to kitty litter.
Davis noted that while Fractus has a number of licensees with various parties, only two have base station antennas; the rest have hand-held.
Davis said the Commscope sales for base station antennas average 78,000 units a year. She concluded that damages should range between $5.7 million and $22.4 million if infringement is determined.
Making her case, she noted that Fractus’ invention boasts RET (Remote Electrical Tilt) technology that provides cost savings.
“It saves the carrier costs (whereas) they don’t have to send out a crew to crawl up an antenna tower and tilt those antennas,” she explained.
She said while Fractus has RET technology, testimony in the case, so far, revealed that the carriers seldom use the RET technology.
“The carriers don’t often use this technology in the way Mr. (Robert) Mills have assumed,” she said of the plaintiff’s damages expert witness.
She said even if they had the capability, they just aren’t using it in a way to generate the cost savings it is designed for.
And because there is a dispute in the case on whether Fractus required its licensees to mark the product, Davis said damages awarded would be lower if the jury did find a marking violation.
“If you determine you find a marking violation that decreases the damages period and shortens the amount,” she said, estimating the damages to be between $2.3 million and $9.2 million in that scenario.
In his cross examination, Attorney Thomas Ward, representing Fractus, pointed out the significant contrast in the parties’ damages experts. The plaintiff’s expert estimated $500 million in damages on the high end.
“Are you advocating on behalf of CommScope,” Ward, of Ward, Smith & Hill, PLLC in Longview, asked Davis.
“I’m advocating on behalf of my opinions because I think they’re right,” Davis responded.
“Can we agree there’s some reason that these carriers are buying hundreds of thousands of these antennas?” Ward asked.
Davis did not respond.
In addition to Davis, CommScope also played a video deposition of Sileiro Flores, Fractus technology expert since 2017, testifying that Fractus’ job is to litigate.
“We do litigation,” Flores testified, confirming he hasn’t developed or designed any products since he’s been at Fractus.
Rubén Bonet, co-founder, President and CEO of Fractus, also took the stand Tuesday as the corporate representative for the company. Bonet co-founded Fractus 20 years ago with Dr. Carles Puente. As a shareholder in the company, Bonet stands to get 12 percent of any damages awarded in the case.
Bonet testified that although Fractus is not an American company, the company has taken the opportunity to acquire a lot of US patents because they respect the US Patent system and considers it one of the best, if not the best.
Eric Findlay, representing CommScope, asked Bonet why they were seeking $500 million on just one patent for the base station antennae patent when the range to licensees for their hand-held sets was between $750,000 and $25 million and included world-wide rights to all of Fractus’ 100-plus patents.
“…but you want this jury to award $500 million for just this one patent in this whole bunch?” Findley, with the Tyler-based law firm Findlay Craft PC, asked.
“That’s correct,” said Bonet.
The trial continues today in Judge Gilstrap’s courtroom in the Sam B. Hall Jr. Federal Building and United States Courthouse.