Adaptive Spectrum and Signal Alignment Inc. v British Telecommunications Plc
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Falk |
| Judgment Date | 06 July 2022 |
| Neutral Citation | [2022] EWHC 1707 (Ch) |
| Docket Number | Case No: HP-2020-000039 |
| Court | Chancery Division |
[2022] EWHC 1707 (Ch)
Mrs Justice Falk DBE
Case No: HP-2020-000039
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
James Segan QC and Carmine Conte (instructed by Kirkland & Ellis International LLP) for the Claimant
Nicholas Saunders QC and Gideon Shirazi (instructed by Bird & Bird LLP) for the Defendant
Hearing dates: 15 and 16 June 2022
APPROVED JUDGMENT
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Covid-19 Protocol: This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 2pm 6 July 2022.
Introduction
This is my decision on a Part 8 claim for declaratory relief in respect of the proper interpretation of a clause in a patent licence dated 27 July 2015 (the “Licence”) entered into between the Claimant, Adaptive Spectrum and Signal Alignment Inc (“ASSIA”) and the Defendant, British Telecommunications plc (“BT”). Under the Licence each party granted the other a licence in respect of certain patents, the relevant licence being that granted by ASSIA to BT. Also relevant is a settlement agreement and release entered into by the parties on the same date (the “Settlement Agreement”).
ASSIA is a California incorporated corporation that was founded by the inventor Professor John Cioffi. It holds a number of patents in the field of Digital Subscriber Line (“DSL”) technology, which it has licensed to a number of communications providers (“CPs”). Until May 2022 ASSIA's primary business was the provision of technology, including software solutions, to CPs. It has now sold that business but retains most of its patent portfolio, including patents relevant to this dispute.
DSL technology is the technology that enables copper wires originally intended for voice telephony to support high volumes of data and deliver broadband internet access, using higher frequencies than those used for voice communication. DSL technology requires there to be a modem at each end of the copper line. It is relevant where premises are connected to local exchanges entirely via copper wires and (as is now more often the case) where the copper line is used only between the premises and the relevant street cabinet, with the distance between the street cabinet and the exchange being covered by optical fibre (Fibre to the Cabinet, or “FTTC”). FTTC allows for faster data transmission, simply because a smaller distance is dependent on copper wiring.
The particular subject matter of the dispute is Dynamic Line Management technology (“DLM”). This is technology that monitors the performance of DSL lines and, based on that performance, applies re-profiling to improve performance. ASSIA's products included a product called DSL Expresse®, which performs DLM functions.
BT, through its division (now subsidiary) Openreach, controls most of the UK's telecommunications network infrastructure. Openreach sells access to its network and/or more extensive services both to third party CPs and internally to other divisions of BT. Those divisions comprise BT's own CP in the form of BT's retail division, now called BT Consumer, and a wholesale division now called BT Enterprise. BT Enterprise supplies both certain third party CPs and BT Consumer. BT also holds a number of patents, including in respect of DSL technology. BT's own DLM controllers are known as Rate Adaptive Monitoring Boxes, or “RAMBos”.
For ease of reference, I will use the current names of the various BT divisions and also refer to persons to whom CPs make supplies (who may be consumers or businesses) as “end users”.
The Licence was entered into as part of the settlement terms of a dispute which had been initiated in 2011 by ASSIA commencing proceedings against BT in this jurisdiction for infringement of certain patents, but which was subsequently expanded by each party commencing opposition proceedings in the European Patent Office (EPO) and by BT commencing its own infringement proceedings against ASSIA and one of ASSIA's customers in the Delaware District Court.
At the point of settlement, BT had been found by the Court of Appeal, on appeal from Birss J, to have infringed ASSIA's patents in respect of one version of its RAMBos, and BT had made two different modifications that it claimed addressed the infringement. Birss J had rejected BT's claim for a declaration of non-infringement in respect of the first modified version (albeit that decision was subject to appeal). However, BT was seeking summary judgment in respect of the second modified version, and expressed confidence in it on the basis that it used a mechanism employed in BT's other networks that ASSIA was not challenging. In the meantime, a damages inquiry had been initiated by ASSIA. The relevant reported decisions are ASSIA v BT [2013] EWHC 3768 (Pat); [2014] EWCA Civ 1462, and (for Birss J's decision in respect of the first modification) ASSIA v BT No 2 [2014] EWHC 4194 (Pat).
There were several elements to the overall settlement, which are discussed further below. Broadly, each of BT and ASSIA granted a royalty free licence to the other in respect of their relevant patents and agreed to discontinue the various proceedings. BT also agreed to make certain payments to ASSIA and ASSIA agreed to provide certain public support and assistance to BT. They agreed a mutual covenant not to sue.
Preliminary points
There are three preliminary points. First, both parties asserted before me that they were in a strong negotiating position in respect of the settlement. I am not in a position to assess the strength of their respective positions, beyond the findings that I have just set out as to the history of the dispute and the fact that they reached agreement on the terms that they did. In particular, I am not in a position to assess the value of the respective licences granted by the parties, or to compare the monetary amounts that BT agreed to pay with the value to BT of the support and assistance that ASSIA committed to provide.
The second preliminary point relates to confidentiality. Some of the evidence that I was taken to is commercially sensitive. From BT's perspective this includes in particular the quantum and breakdown of the monetary consideration it provided to ASSIA under the terms of the settlement. I accepted that there was sensitivity and made an interim order at the trial to preserve confidentiality, notwithstanding that the relevant documents were referred to and read by the court. However, I also requested written submissions about the approach that should be taken in this judgment in relation to the detail of the monetary consideration, having regard to the requirement for open justice. I am grateful for those submissions.
In the result, and applying the principles in Dring v Cape Intermediate Holdings [2019] UKSC 38; [2020] AC 629, I have concluded that there is no need to refer to the amount or precise details of the monetary consideration in order for the reasons for my decision to be fully understood. Taking account of the point made at [10] above, those details are simply not material to my reasoning. I have therefore not included them. As regards both that information and other commercially sensitive information identified by BT, namely sums that BT has obtained from licensing certain patents, I propose to make an order that will ensure that third parties are prevented from obtaining copies of the relevant documents, or at least unredacted versions of them, without the approval of the court. I will also invite submissions to determine whether there should be any continuing order to prevent the collateral use of confidential information by the parties.
The third preliminary point to make is that both Mr Segan for ASSIA and Mr Saunders for BT rightly proceeded on the basis that a substantial amount of the evidence that had been served by both parties was inadmissible, because it concerned the parties' subjective intentions or related to the negotiations that led up to the entry into of the Licence and the Settlement Agreement. For present purposes it is not necessary to attribute blame for that state of affairs, but I should record that I have reached my conclusions by reference to the other factual evidence and by reference to the submissions received, excluding consideration of the offending material.
The relevant technology
BT has three different DSL networks, known as 20CN, 21CN and NGA (referring to the 20th Century, 21st Century, and “Next Generation Access” networks respectively). The 20CN and 21CN networks use versions of DSL technology called ADSL (Asymmetric Digital Subscriber Technology), and operate where FTTC is not available or is not used by the customer in question. The NGA network operates where FTTC is in use. The majority of lines in the NGA network use a different type of ADSL technology called VDSL2, and the remainder use a type called G.Fast, which started to be introduced in around 2018 (following a pilot in 2017) and which facilitates ultrafast broadband. BT operates DLM controls via a single RAMBo for each of the three DSL networks. In the previous English proceedings it was the NGA RAMBo that was found to infringe two of ASSIA's patents.
As already mentioned, for DSL technology to work there must be a modem at each end of the copper line. The modem at the customer's premises is referred to as the Customer Premises Equipment (“CPE”). Whilst it can be provided separately...
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Adaptive Spectrum and Signal Alignment Inc. v British Telecommunications Plc
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