Conversant Wireless Licensing S.à.r.l (a company incorporated under the laws of Luxembourg) v Huawei Technologies Company, Ltd (a company incorporated under the laws of the People's Republic of China)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Birss |
| Judgment Date | 10 February 2020 |
| Neutral Citation | [2020] EWHC 256 (Pat) |
| Docket Number | Case No: HP-2017-000048 |
| Court | Chancery Division (Patents Court) |
| Date | 10 February 2020 |
[2020] EWHC 256 (Pat)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr. Justice Birss
Case No: HP-2017-000048
Mr. Thomas Hinchliffe QC and Mr. Thomas Moore (instructed by EIP Legal) for the Claimant
Mr. Andrew Lykiardopoulos QC (instructed by Allen & Overy LLP) for the First and Second Defendants
Mr. Daniel Piccinin (instructed by Bristow LLP) for the Third and Fourth Defendants
Approved Judgment
This is an application for disclosure in a FRAND case. The applicants are Conversant, who have a portfolio of patents declared essential to 2G, 3G and 4G standards. The defendants are companies in the groups known as Huawei and ZTE. No relevant distinction applies to the individual companies. The defendants are all parties in the same case. The way this case has been managed, subject to confidentiality terms, means that the evidence relating to all three parties Conversant, Huawei and ZTE is available for use in relation to either group.
The case management conference took place in July 2019. Not long before that, Huawei had re-pleaded its case, and I will come back to that. Broadly, at the cmc the parties' positions were clear. Conversant's case was that the way to arrive at an appropriate royalty rate in this case was to follow the numbers in the Unwired Planet case ( [2017] EWHC 2988 (Pat)) and scale from that. Huawei's case was to take a 2017 Huawei-Nokia licence and use that as a comparable. The 2017 licence was said to be relevant because the Conversant patent portfolio which is in issue in this case came from Nokia. In fact, the portfolio came from Nokia in 2011, so the 2017 licence does not licence any of the patents in this case. However, it is the successor to previous licences which are now available. In fact they were not available at the cmc but nothing turns on that. They are dated 2007 and 2003. That is Huawei's case. ZTE's case is that a top down approach should be taken – what a top down approach means is explained in Unwired Planet. Amongst other things, ZTE contend that one can also take into account numbers in other judgments including the judgment of Judge Selna in the USA in TCL v Ercisson, and therefore also the Unwired Planet judgment as well as other judgments. ZTE argues that one can take these judgments into account as a matter of fact because parties would do that in a negotiation. Huawei and ZTE also refer to a judgment of the Nanjing court in which a rate was set for the Chinese patents in the Conversant portfolio.
The cmc was before HHJ Hacon. Conversant sought disclosure of further licences from Huawei and ZTE. Essentially the request for disclosure was of the same scope as the one before me now. It was a little bit wider but the distinction really does not make any difference. The proposal was that ZTE and Huawei should list all the licences to which they are parties relating to 2G, 3G and 4G. I think it was not limited to SEPs at that time, but, as I say, that does not matter. Then a process of selection would go on, rather like the one that was done in the Unwired Planet litigation, where each party would select something like three or four licences from those groups. Then those selected licences would be disclosed and they could be used in evidence in the proceedings. Judge Hacon refused that application. His judgment is at [2009] EWHC 1982 (Pat). I can set it out in full:
“1. There is an application for disclosure. The claimant seeks disclosure by the defendants of licence and assignment agreements to which 3G and/or 4G patents comprise a significant element of the licensed rights entered into on or after 1st January 2011.
2. In relation to the Huawei defendants, the point made by the claimant is that Huawei have relied on a licence granted by Nokia in December 2017 as being a comparable licence relevant to the FRAND trial. The claimant's point is that there is no way of telling whether the licence is truly comparable to the licence to be settled at the trial or whether it is a complete outlier and thus of no comparative use. The claimant argues that the only way of resolving this is to look at other licences, that is to say licences granted to Huawei by other licensors.
3. There must be a realistic degree of proportionality when it comes to orders for disclosure like this one.
4. I was shown sections of the judgment of Birss J in Unwired Planet [2017] EWHC 2988 (Pat). It seems that the judge's experience in that litigation was that licences granted by third parties were of no help to him in resolving the issues he had to decide. There also seems to be a virtual certainty that an order for disclosure of licences and assignments as sought by the claimant would give rise to a significant increase in costs. It would likely involve, among other things, applications by the third parties who are party to the relevant agreements, making submissions about how the disclosure of confidential agreements should be handled.
5. With regard to the ZTE defendants, the point was taken that ZTE has raised an argument that bundling licences granted under SEPs with licences granted under non-SEP patents is contrary to EU competition law. I am not persuaded that looking at other ZTE licences will help the trial judge resolve the issue as pleaded.
6. It of course will remain open to the claimant at trial to make all the arguments it wishes about whether the licence relied on by Huawei is truly comparable given its content and for ZTE to argue about the lawfulness of bundling licences.
7. For those reasons, I will not order the disclosure sought.
So, the judge was refusing the disclosure on a number of grounds, first because his interpretation of my judgment in Unwired Planet was that licences granted by third parties were of no help in that case and second on proportionality grounds about the amount of work that it would be required to deal with those licences. That is the essence of it.
Just to pause, the point is that none of the licences which were sought would have been licences from Nokia or from Conversant. Necessarily the patents being licensed in the portfolios which those licences would relate to would all be different patents from the ones in issue in this case. That is what the judge is referring as licences granted by third parties which were of no help in Unwired Planet.
That was in July 2019. At that time, Huawei had just amended its pleading to include a new point. The new point was a submission that following the rule in Hollington v Hewthorn the approach that Conversant were taking to the use of the Unwired Planetjudgment was wrong in principle and barred by the rule in Hollington v Hewthorn. That point was not drawn to the judge's attention in July, and Conversant, who were probably the party who would have relied on it, did not rely on it at that time. It cannot be said that they were not aware of it. Nevertheless I think the essence of the submission that is being put to me today is that it did not occur to Conversant at that time to do so or did not occur to them what its significance could ultimately be.
I note in passing that ZTE contend that their way of relying on other judgments does not breach the rule in Hollington v Hewthorn because they say they are not using judgment as proof of their contents, rather they are taking them into account in the same way that negotiating parties would.
It is now early February 2020 and the case is listed to be tried floating from, I think, 27th April, that is in about 11 weeks from now. Conversant have made a fresh application for essentially the same disclosure which was refused by HHJ Hacon. As I have said already there are minor differences but, in my judgment the differences really do not matter.
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