Interdigital Technology Corporation v Lenovo Group Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mellor |
| Judgment Date | 04 July 2023 |
| Neutral Citation | [2023] EWHC 1583 (Pat) |
| Court | Chancery Division (Patents Court) |
| Docket Number | Case No: HP-2019-000032 |
[2023] EWHC 1583 (Pat)
THE HON Mr Justice Mellor
Case No: HP-2019-000032
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
Rolls Building Fetter Lane, London, EC4A 1NL
Adrian Speck KC, Mark Chacksfield KC, Isabel Jamal, Thomas Jones and Edmund Eustace (instructed by Gowling WLG) for the Claimants
Daniel Alexander KC, James Segan KC, Ravi Mehta and William Duncan (instructed by Kirkland & Ellis International LLP) for the Defendants
Hearing dates: 13 th–14 th, 17 th–21 st, 24 th–28 th & 31 st January, 2 nd–3 rd, 8 th–11 th February 2022
Further evidence 7 th & 13 th December 2022. Further submissions 13 th January 2023.
Draft Judgment sent to the parties 1 st March 2023
APPROVED JUDGMENT – REVISED PUBLIC VERSION
Remote hand-down: This judgment will be handed down remotely by circulation to the parties or their representatives by email and release to The National Archives. A copy of the judgment in final form as handed down should be available on The National Archives website shortly thereafter but can otherwise be obtained on request by email to the Judicial Office (press.enquiries@judiciary.uk).. The deemed date of hand down is 10.30 am on Tuesday 4 th July 2023.
This is my judgment from the FRAND trial in this action. It is organised as follows:
Notes concerning this Judgment
| Topic/Heading | Page |
| Notes concerning this Judgment | 4 |
| INTRODUCTION | 5 |
| The scope of this dispute | 9 |
| The Trial | 15 |
| THE EVIDENCE of fact | 16 |
| Observations on the witnesses of fact | 19 |
| THE EXPERT EVIDENCE | 20 |
| Accountancy | 20 |
| Patent Counting and Patent Counting Studies | 21 |
| SEP Licensing | 21 |
| Hedonic Regression | 23 |
| French law | 24 |
| Chinese law | 24 |
| US Law | 24 |
| FACTUAL BACKGROUND | 25 |
| InterDigital | 25 |
| The development of InterDigital's licensing ‘program’ | 26 |
| Lenovo | 34 |
| Overview of licensing discussions | 34 |
| Lenovo's position in the Global Market for mobile handsets | 36 |
| APPLICABLE PRINCIPLES | 37 |
| Previous Case Law | 37 |
| PRINCIPLES APPLICABLE TO CONDUCT | 39 |
| The ETSI IPR Policy | 39 |
| The Unwired Planet Judgments | 40 |
| UPHC | 47 |
| Optis F | 48 |
| Optis F CA | 50 |
| Other ETSI materials: The ETSI Guide | 51 |
| Other ETSI Materials: the FAQs page | 53 |
| How The Issues on Clause 6.1 and French Law Evaporated | 53 |
| Other proceedings between these parties | 54 |
| Chinese and US Law | 59 |
| PRINCIPLES APPLICABLE TO THE COMPARABLES & TOP-DOWN CASES | 60 |
| UPHC | 60 |
| TCL v Ericsson | 63 |
| THE COMPARABLES CASE | 68 |
| The SEP Licensing Landscape | 69 |
| Unpacking of the allegedly comparable licences | 76 |
| THE INTERDIGITAL/BEZANT APPROACH TO UNPACKING AND COMPARISON | 76 |
| Mr Meyer's criticisms of Mr Bezant's approach | 86 |
| The effects of Mr Bezant's treatment of past sales | 87 |
| Mr Bezant's unpacking of the Lenovo 7 | 94 |
| Mr Bezant's derivation of separate rates per standard | 94 |
| HEVC and Wi-Fi | 95 |
| Non-handset sales | 95 |
| Early termination of Samsung 2014 | 96 |
| The Overall Effect | 96 |
| THE LENOVO/MEYER APPROACH TO UNPACKING AND COMPARISON | 97 |
| The emergence of LG 2017 as an ‘awesome’ comparable. | 105 |
| THE APPROACH TO PAST SALES | 106 |
| My analysis | 113 |
| FRAND – GENERAL PRINCIPLES | 115 |
| My analysis | 116 |
| Points of Principle which arise in this case | 118 |
| 1) Value to the SEP licensor vs royalty payments | 118 |
| 2) Volume Discounts | 119 |
| Discussion | 126 |
| InterDigital's Other Discounts | 128 |
| My Analysis | 132 |
| 3) Do Limitation Periods have a role to play? | 133 |
| 4) How to eliminate or discourage hold-out | 136 |
| 5) The treatment of and InterDigital's discounting in relation to past sales. | 138 |
| Should interest be awarded on past royalties? | 138 |
| 6) The role of subjective and/or ex post facto views, more generally | 139 |
| The Effects of my findings on the points of principle | 140 |
| 7) Is the effect discriminatory against Lenovo? | 141 |
| FRAND – LICENSING TERMS | 143 |
| The general features of the licence required by Lenovo | 143 |
| The cases on comparable licences | 143 |
| The Lenovo 7 | 149 |
| The InterDigital comparables | 150 |
| InterDigital's alternative case based on LG 2017 | 151 |
| MY ANALYSIS OF THE LENOVO 7 | 153 |
| Samsung 2014 | 154 |
| My analysis. | 159 |
| Huawei 2016 | 159 |
| Apple 2016 | 161 |
| LG 2017 | 162 |
| ZTE 2019 | 165 |
| Huawei 2020 | 167 |
| Xiaomi 2021 | 169 |
| Two other PLAs relied upon | 171 |
| RIM 2012 | 171 |
| Innovius 2019 | 172 |
| Were the Lenovo 7 all the result of hold-out? | 172 |
| Mr Meyer's three economic adjustments | 175 |
| (1) Adjusting for sales distribution by cellular standard. | 176 |
| (2) Adjusting for sales distribution by geography relative to emerging markets | 177 |
| (3) Sales distribution by geography relative to patent coverage | 182 |
| My request for further analysis | 184 |
| Weighting | 185 |
| Mr Meyer's weighting process(es) | 186 |
| My assessment of Mr Meyer's three adjustments | 187 |
| Conclusions on the comparable licences | 188 |
| INTERDIGITAL'S TOP-DOWN CROSS-CHECK | 191 |
| The patent counting studies | 193 |
| Hedonic Regression | 197 |
| THE RESPECTIVE CASES ON CONDUCT | 206 |
| The Negotiations | 207 |
| The Offers made by the Parties | 209 |
| Did InterDigital act as a Willing Licensor? | 219 |
| Did Lenovo Act as a Willing Licensee? | 220 |
| Consequences | 221 |
| OVERALL CONCLUSIONS | 222 |
| Case Management of FRAND Trials | 222 |
| POSTSCRIPT | 224 |
| ANNEX | 225 |
There are two versions of this FRAND Judgment: the full version [2023] EWHC 538 (Pat), which comprises 225 pages, is available only to the parties and those in the appropriate level of the confidentiality regime because it contains a considerable amount of information confidential to one of the parties and/or third parties. It was handed down on 16 th March 2023, along with an initial public version of that Judgment [2023] EWHC 539 (Pat). Subsequently, I received submissions from the parties and a wide range of interested parties, resulting in my judgment on the confidentiality issues [2023] EWHC 1577 (Pat). This revised public judgment implements the decisions I made in that judgment on the confidentiality issues. There are two points I should mention. First, as I explained in that Judgment at [12] and [52], before issuing the 539 Judgment, I took a robust view of claims to confidentiality to ensure that the public version of my FRAND Judgment set out the important parts of my reasoning, with the consequence that I have removed relatively few of the redactions in this revised version. Second, there was particular attention paid to one particular diagram (X1) at [586] and various tables, including one at [577]. Although the full diagram and table remain confidential, I decided I could reveal some limited information without causing harm to those claiming confidence. In relation to X1 at [586] and the table at [577], added text is set out in italics. That apart, redactions made to various diagrams are evident. Redactions in the text are indicated (for the National Archives) [REDACTED] or by the abbreviation [RED] to preserve formatting. Any attempts to estimate or reverse-engineer figures by reference to the size of the redaction would be unwise since there is no correspondence.
To aid understanding, in the Annex I have set out the paragraph in the Judgment where various terms and abbreviations used by the experts in the comparables analysis are defined.
INTRODUCTION
This litigation is essentially a dispute between the Claimants (who I shall refer to as InterDigital 1) and the Defendants (Lenovo) as to the terms on which Lenovo should take a licence to InterDigital's portfolio of Patents which have been declared essential (i.e. Standard Essential Patents or SEPs) to the European Telecommunications Standards Institute (ETSI) 3G, 4G and 5G Standards. The proceedings were case managed into 6 trials: five technical trials and this FRAND trial. The purpose of this FRAND trial is to identify what terms are Fair, Reasonable And Non- Discriminatory.
When this FRAND Trial occurred, two out of the five planned Technical Trials had taken place. InterDigital prevailed in Trial A and the Court of Appeal has recently dismissed Lenovo's appeal: [2023] EWCA Civ 34. Lenovo prevailed initially in Trial B, although my decision in that trial has very recently been overturned: see [2023] EWCA Civ 105. Three further Technical Trials were scheduled after this FRAND/Non-Technical Trial, and indeed I have heard Trials C and D. InterDigital have prevailed in Trial C and no appeal has been filed. I aim to deliver judgment in Trial D shortly. It remains to be seen whether Trial E is required. At the time of the trial, InterDigital had established their right to a FRAND determination and their position has only been strengthened by subsequent events.
The parties identified two headline issues for me to determine:
i) The first was whether InterDigital's January 2020/5G Extended Offer is FRAND and if not, what terms are FRAND for a licence to Lenovo of the InterDigital patent portfolio? This headline issue resolved into two major parts: first, the comparables case and second, the top-down cross-check. These are familiar concepts.
ii) The second was what remedy is appropriate and in particular, whether InterDigital is entitled to an injunction in respect of the ‘Asserted Patents’ (and...
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