A federal court of appeals last week upheld a jury’s finding that LG Electronics infringed on certain Constellation Designs patents in its NextGen TVs and affirmed the jury’s $1.68 million award for past damages as well as a $6.75 per TV royalty for future set sales.

The U.S. Court of Appeals for the Second Circuit issued its ruling April 28 after considering the findings of a jury trial before Judge J. Rodney Gilstrap of the U.S. District Court for the Eastern District of Texas. That court found LG willfully infringed upon certain Constellation Designs patents.

The appeals court affirmed some of the lower court’s findings, vacated others related to “optimization claims” and sent the case back to the original district court to re-evaluate the case with the optimization claims removed or reconsidered under the guidance of the appeals court.

Regarding penalties, the appeals court found LG willfully infringed on Constellation’s patents. Frequently, willful infringement can lead to greater damages, but the appeals court made no such recommendation.

LG Electronics announced it would stop selling televisions with NextGen TV support in September 2023, following its loss of the patent dispute with Constellation Designs. Currently, Sony, Samsung, Hisense, Panasonic, TCL and RCA offer NextGen TVs in the United States. Vendors offering NextGen TV set-top boxes include ZapperBox, ADTH, Zinwell, SiliconDust and GTMedia offer NextGen TV set-top boxes or dongles.

An LG spokesman said the company does not comment on “such legal matters.” As of this writing, Constellation Designs has not responded to a request for comment. Other requests for comment are out but have not yet received a response.

The ATSC 3 Signing Authority said last month that nearly 40 NextGen TV models from Hisense, Panasonic, Samsung, Sony and TDL, account for the “vast majority” of the 18.5 million A3SA-enabled TVs sold to date.

“We have to keep in mind that this happens in the C.E. space,” said Anne Schelle, managing director of the Pearl TV business organization representing many of the country’s largest broadcast groups. “That said, the other thing to note is these patents do expire in 2028.”

“From our perspective, the market from the development side of NextGen is moving along,” she said. “We are still continuing to work on the converter box program, and if you look at the overall trend, you can’t blow this out of proportion.”

"When you look at the timing of a Report and Order [advancing the transition from 1.0 to 3.0], there is plenty of time to get devices out there regardless of whatever the outcome is."

The appeals court ruling is available online.

Pearl TV told a U.S. Court of Appeals this week that it has “deep concern” over the future availability of TV sets and devices that support the ATSC 3.0 standard because of LG’s exit from the 3.0 market in the U.S. last year after it lost a court case against Constellation Designs over a patent dispute.

In an amicus brief filed with the U.S. Court of Appeals in the case of “Constellation Designs, LLC v. LG Electronics Inc.,” Pearl, a consortium of broadcasters, manufacturers and associations promoting ATSC 3.0 (aka “NextGen TV”) told the court that it feared that “other major TV manufacturers will follow LG and pull their products off the market, if the decision on damages from the trial court is allowed to stand.”

In 2023, LG Electronics, which, along with Samsung, was one of the companies that worked on developing the ATSC 3.0 standard—a next generation broadcast standard that combines traditional broadcast with IP—announced that it would no longer manufacture or sell TV sets that receive NextGen TV in the U.S. because it lost a patent dispute with Constellation Designs.

LG filed its appeal in May.

That decision, LG said at the time, “was not made lightly, because LG has been a vocal ATSC 3.0 advocate, a strong supporter of local broadcasters, and a leading developer of television products with the latest NextGen TV technologies.”

Transition to 3.0 'Could End in Futility'
LG still sells 3.0 sets in South Korea, one of several other countries that has adopted the standard. In the U.S., consumers can still purchase 3.0 sets from Sony, Samsung, Hisense and TCL. However, in Pearl’s amicus, it feared that these companies could follow suit if the appeal stands.

“[A]ll this effort by the broadcast industry to deploy NextGen TV and by the Federal Communications Commission to approve the standard and guide the industry through the transition, will end in futility if consumers cannot purchase ATSC 3.0-equipped TV receivers,” Pearl said.

Pearl told the court that while the industry took steps to guard against such patent disputes in advance of the rollout of consumer TV sets starting in 2020, Constellation Designs’ actions went against the norm.

“[T]his patent pool system is working to facilitate the deployment and transition of NextGen TV,” Pearl said. “Pearl TV . . . views the patent pool system for NextGen TV as well functioning, and has observed no significant issues or complaints by key members of the ecosystem. “Until the Constellation Designs decision on appeal here, the patent pool system led to dozens of TV set models being introduced into the market at multiple price points (many well below $999) and widespread adoption of the NextGen TV technology by the broadcast industry.

“The decision at issue in this case disrupted that functioning market in a manner that greatly concerns the broadcast industry and any person interested in seeing the transition to NextGen TV be successful and completed.”

Judgment Was 'Skewed and Exorbitant'
Pearl also took issue with the financial arrangements, noting that the size of the judgment prompted LG’s immediate exit from a burgeoning market.

“[The trial court] returned a verdict in favor of Constellation Designs, awarding it $1,684,469.00 U.S. Dollars for past infringement,” Pearl said. “More troublingly, the judgment also ordered LG to pay Constellation Designs $6.75 for every future LG TV that used Constellation’s patents. This result immediately halted LG’s NextGen TV enterprise.”

Pearl noted that the judgment was “skewed” and “exorbitant,” distorting the SEP process. “Standard Essential Patents” are those patents identified as crucial to the deployment of a particular technology standard.

“The largest patent pool, Avanci Broadcast, charges $2 to $3.00 for 11,000 patents, including nine hundred SEPs which are critical to NextGen TV,” Pearl said. “Another patent pool charges roughly $.30, twenty-two times less than Constellation’s rate, while offering 90 SEPs, more than twenty-two times the number of SEPs. The jury’s verdict on damages is extreme and risks disrupting the entire patent pool market for ATSC 3.0, which otherwise has functioned smoothly for broadcasters, receiver manufacturers, and consumers.

"The consequences of the judgment may reverberate beyond one manufacturer. The verdict may encourage patent holders to leave patent pools,” Pearl continued. “Instead of negotiating with manufacturers for competitive rates and waiting for their assets to appreciate as NextGen TV takes off, some may prefer to charge higher fees now. Doing so would deter manufacturers from making TVs that are compatible with NextGen TV.”

With the future viability of ATSC 3.0 on the line, Pearl warned that the verdict could discourage further development of new 3.0 products and the standard itself.

“Without NextGen TV-television sets in the market, viewers will not be able access NextGen TV, nor will broadcasters have any incentive to implement the myriad improvements that the new standards boast.”

“Thus, the judgment’s ripple turns into a cascade,” Pearl concluded.

LG Electronics Inc. has told the FCC that it would suspend manufacturing and marketing of next year’s NextGen TV models for the U.S. due to an unfavorable patent dispute verdict rendered in July. 

The move, first reported by CordCutterNews.com, is seen as a blow to the maturing of NextGen TV in the United States; however, there is a range of opinion whether the suspension is simply a temporary setback or a move with potentially more far-reaching implications. 

The decision “was not made lightly, because LG has been a vocal ATSC 3.0 advocate, a strong support of local broadcasters, and a leading developer of television products with the latest NextGen TV technologies,” the company said in its Sept. 15 filing with the FCC.

In July, the jury hearing the patent infringement case brought in the Marshall Division of U.S. District Court for the Eastern District of Texas by Constellation Designs LLC concluded LG willfully infringed on the company’s patents. It recommended the consumer electronics giant compensate the patent holder in the amount of $1.68 million. A press release issued following the verdict pegged the per unit compensation at $6.75—as did LG’s FCC filing.

A spokesperson for LG could not be reached, and others at the company did not respond to a request for additional comment before publication.

At the moment, the case has moved to a post-judgment phase during which the judge will decide on future royalty payments –in the event the company resumes NextGen TV production, said Jason Cassady, Constellation Designs’ lead trial counsel and a partner at Dallas-based intellectual property and business litigation firm Caldwell, Cassady & Curry. The firm is requesting $6.75 per unit going forward.

No other NextGen TV vendors have licensed Constellation Designs patents, he added, although at press time it was unclear whether other NextGen TV makers use technology that relies on the company’s patents.

Members of the TV industry contacted for this story rallied around LG, expressing the hope the royalty issue could be resolved so the company would continue its long-standing support for NextGen TV market and technology development. 

“LG’s decision to suspend support for NextGen TV products in 2024 because of an ongoing patent dispute is unfortunate, but we are hopeful that the matter can be resolved,” said Anne Schelle, managing director of the Pearl TV broadcast group. “In the meantime, we continue to project that total NextGen TV sales will cumulatively top 10 million units by year end.”

Madeleine Noland, president of the Advanced Television Systems Committee, referenced the cooperation patent holders normally exhibit in creating licensing programs that provide access to inventions and promote broad deployment of products conforming to its standards. “While we cannot comment on the specifics of the LG case, we trust that all parties involved are actively pursuing solutions to bring the benefits of next-generation broadcasting on future LG television models to U.S. viewers,” she said.

The Public Media Venture Group, a nonprofit business development group with 32 public media members, remains a strong proponent of 3.0 despite LG’s decision. “PMVG continues to believe that ATSC 3.0 and NextGen TV dramatically increase the potential for public service, and we and our stations will continue to deploy this technology to service our viewers,” said PMVG CEO Marc Hand. “Given the enormous public service potential of NextGen TV, we remain hopeful that the forward momentum will continue.”

Jerald Fritz, executive vice president for strategic and legal affairs, at ONE Media, a wholly owned subsidiary of Sinclair Broadcast Group, echoed points LG raised in its FCC filing.

“We are obviously disappointed at LG’s decision, but we firmly believe that this is an outlier-decision that will be reversed on appeal,” said Fritz. “The per-unit price for this one patent family is more than double the rate for close to 1,000 Standard Essential Patents [SEPs] in the Avanci patent pool. We believe that dramatic difference will be addressed on appeal and bring back LG as a significant supplier of ATSC 3 televisions.”

LG pointed out in its FCC filing that the Avanci patent pool accounts for 80% of all 3.0 SEPs, which currently commands a royalty fee of $2.75 and is capped at $3.00. Similarly, the license fee for the VIA LA patent pool involving other 3.0-relevant patents that “improve the television viewing experience” is set at $2.75 per unit, LG said in the filing.

“CD [Constellation Designs] has not made a commitment to license its patents under RAND [reasonable and non-discriminatory] conditions and has not contributed its patents to any patent pool,” the company said in its filing.

CHESEAUX, SWITZERLAND and SAN FRANCISCO – The Kudelski Group announced Monday that its OpenTV, Inc. subsidiary has filed a patent infringement suit against NFL Enterprises, LLC in the United States District Court for the Eastern District of Texas.

The lawsuit alleges that NFL infringes seven U.S. patents owned by OpenTV and identifies the infringing products and services as NFL’s streaming, interactive video content experience provided on NFL.com and other NFL services, including NFL Network/NFL Redzone, NFL Now, NFL Game Pass, NFL Mobile, the NFL App, and NFL Fantasy Football.

Kudelski took control of OpenTV in November of 2009. In December, 2012, the subsidiary filed an infringement lawsuit against Netflix in U.S. District Court in Delaware. A parallel suit against Netflix in The Netherlands was rejected by a court in The Hague, according to Broadband TV News. The U.S. version of the suit was settled in January of 2015 with an agreement by Netflix to use Open TV technology.

Imagine Communications took the OpenTV Eclipse advertising software in 2014. That same year, Apple was sued in a San Francisco federal court. A German court ruled against Apple in a parallel suit, and Apple ultimately settled in August of last year with a “comprehensive patent license agreement,” Reuters said. That same year, Open TV and Nagra went after Verizon and AOL, also in the U.S. District Court foe the Eastern District of Texas. Verizon settled last February in a multi-year patent cross licensing agreement.

Last June, Kudelski announced plans to a U.S. headquarters in Phoenix, Ariz.