InterDigital Technology Corporation v Nokia Corporation (Multiple Hearings)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JACOB,Lord Justice Rix,LORD JUSTICE RIX,LORD JUSTICE MUMMERY,Lord Justice Jacob,Lord Justice Carnwath,Lord Justice Waller |
| Judgment Date | 05 December 2006 |
| Neutral Citation | [2006] EWCA Civ 1618,[2005] EWCA Civ 614 |
| Docket Number | Case No: A3/2006/0948,A3/2004/2639 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 December 2006 |
[2005] EWCA Civ 614
Lord Justice Mummery
Lord Justice Rix
Lord Justice Jacob
A3/2004/2639
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
(MR JUSTICE PUMFREY)
Royal Courts of Justice
Strand
London, WC2
MR GUY BURKILL QC (instructed by Milbank Tweed Hadley McCloy) appeared on behalf of the Appellants
MR MICHAEL SILVERLEAF QC and MR HENRY WHITTLE (instructed by Bird & Bird) appeared on behalf of the Respondents
This is an adjourned application for permission to appeal from a judgment of Mr Justice Pumfrey. He gave that in an action for the revocation of three patents and for certain declarations. I ordered the application to be adjourned to be heard by a full court with the respondents present in view of the significance of some of the points raised. In any event we have had the benefit of written original and supplementary written skeleton arguments from both sides. In view of that and because some of what I say may have more general importance, I think it desirable that permission be granted, though in the event it was not necessary to hear oral submissions on behalf of the respondents.
There are four points under appeal. Before I go into them it is necessary to set out the background. The defendants ("Interdigital") hold a substantial array of patents around the world. They say that these patents give them a controlling position over the Global System for Mobile Communications ("GSM"). Nokia deny this. They say that the patents are really for a different and obsolete system called wireless local loop. Nokia say that Interdigital are "stretching" their patents to cover what is really very different technology—technology which owes nothing to Interdigital's contribution.
The GSM operates according to internationally agreed technical rules. Interdigital say that some of their patents cover what is essential to comply with those standards. There is an internationally agreed definition of what is meant by "essential". Informally from about 1992 Interdigital were claiming that they held essential patents. In 2001 they formally notified the relevant standards institute (the ETSI) that, inter alia, the three UK patents the subject of the action were "essential" within that definition.
After some years of discussion between the parties, in 1999 Nokia took a licence, although at the time they maintained none was needed. The reason was two-fold—partly a desire to avoid lengthy and costly world patent litigation and partly for the commercial reason that they wanted to enter into a research and development agreement with Interdigital about certain technology. At that point one of Nokia's main rivals, Ericsson, had been in litigation with Interdigital in the US for some six years, one may surmise, at vast expense.
The licence granted has two periods, the second (on Interdigital's case) starting at the beginning of 2002. The royalty for the first period was a fixed sum of US$31.5 million. That, for the second, is in dispute in an ICC arbitration. Nokia maintain that nothing is due. Interdigital say that several hundred million dollars is due. In part, they base their claim on the terms of settlement they have reached with Ericsson as some sort of a comparable. Nokia suggest in fact that the Ericsson licence had been structured so as to distort the commercial position. They say that the high rate which Ericsson apparently agreed to pay is particularly surprising in view of the fact that interlocutory decisions in what are called "Markman" hearings in the US seem to have gone Ericsson's way.
The arbitrators have held that they will not determine validity completely, but that the general validity and strength of Interdigital's patent portfolio is relevant to their considerations. This determination seems reasonable. A man would not pay much for an obviously invalid patent, but would certainly pay if the patent appeared watertight and, more so, if it covered what he had to do to comply with standards.
With a view to influencing the arbitrators to consider the patent portfolio to be of no or little value, Nokia commenced these revocation proceedings, now due to be heard in October 2005. Though Interdigitial maintain that the patents are valid as they stand, they are seeking to restrict their scope by amendment proceedings which will be heard at the same time. That is at least an acknowledgment that all may not be well with the unamended patents. In these proceedings Nokia also seek a determination that the patents are not within the meaning of "essential" as defined, that you do not need to use the patented inventions to practise GSM technology.
In the US Nokia commenced proceedings against Ericsson for discovery of documents pursuant to a useful US statute provision known as 28 USC 1782. This is a provision by which US courts can be asked to give assistance to foreign and international tribunals.
Nokia also invoked a subpoena procedure against Ericsson in the US for documents which might be relevant to the arbitration.
It was against this background that the applications before Mr Justice Pumfrey were made. They consisted of three applications by Interdigital and one by Nokia. The Interdigital applications were for —
"1 That the claimant be restrained from pursuing its applications under the 28 USC 1782.
2 Further and alternatively it be clear that the discovery sought in these applications is relevant to any issue herein.
3 Those parts of the claimant's pleadings herein relating to the relevant issue of whether some 'unspecified' GSM equipment may fall within the scope of the patents herein be struck out.
4 Save as aforesaid all further proceedings in this action be stayed pending the conclusion of the pending arbitration between the parties or further order in the meantime."
Nokia's application was to add the claim for a declaration that the patents are not "essential".
Mr Justice Pumfrey refused the stay, refused the injunction and allowed the amendment. He did not deal with Interdigital's application for a strike-out explicitly although when one reads his reasoning it is quite clear that he covered it. He took the view, as Mr Burkill accepted, that if the amendment was allowed there was no point in a strike-out.
The stay
Mr Justice Pumfrey dealt with this in just five paragraphs. In my judgment, he was quite right. Five paragraphs was, if anything, prolix. The only reason suggested was that Nokia's motive was to influence the arbitration, as indeed they freely admitted. That is no reason whatever for a stay. No doubt anyone who applies for revocation of a UK patent has a motive for so doing. It will normally be for some commercial purpose, though it need not be. Sometimes the motive may be to influence or partly to influence some other tribunal. If the court revokes the patent here the other tribunal will (without of course in any way being bound) probably look at the reasons given. If they are well expressed and appear sound, they could well have an influence. It often happens, for instance, that revocation actions here are started with a view to influencing the rather slower procedures in the European Patent Office. There is nothing wrong in any of that. The Act says that "any person" may apply for revocation. For the court to stay proceedings therefore there must be a really good reason.
I would add this. The Courts of England and Wales are open to anyone who wishes to attack the validity of a patent, just as they are open to anyone who wants to enforce one. It is just as important that bad patents are knocked out as that good ones are upheld. In an ideal world patent offices would only grant valid patents, but that is not the way of this world. Hard pressed patent examiners may miss a piece of prior art altogether or, faced with a determined patentee and no one to present a contrary argument, have insufficient time to consider or work up objections. There can hardly be a patent agent who, privately, will not readily admit that he or she has got lots of things "past the office" on flimsy grounds. In the nature of things a patent office, however hard it tries, can only be a coarse filter. Patents that pass the filter cannot be taken as necessarily valid. So it is important and in the general public interest that there be ready access to the courts for those who wish to challenge validity. Their private motives simply do not come into it.
It is noticeable in this connection that the Act says that any person can apply for revocation by way of contrast to the previous Act that used to say "persons interested".
Another suggested basis for a stay is that if granted it may be that the proceedings would prove unnecessary. Much play is made of the public interest in a possible saving of court time, and reference was made to CPR Part 1.2 (?), the particular reference to the requirement that the court should have regard to the saving of possible court time. It is said that after all Nokia have a licence. So if the arbitration is over with no possibility of appeal (which is not currently the case) then what is the point? That is a matter for Nokia, not for this court. Proceedings are properly on foot. The licence agreement expressly contemplates that Nokia can attack the licensed patents. This is not a case to which the power to stay pending arbitration applies. The proceedings are not an abuse of process. The judge has made a case management decision not to stay, and I can see no basis whatever for saying...
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