IPCom GMBH & Company KG v HTC Europe Company Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Floyd,Lady Justice Rafferty,Lord Justice Patten |
| Judgment Date | 21 November 2013 |
| Neutral Citation | [2013] EWCA Civ 1496 |
| Docket Number | Case No: A3/2013/2140 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 November 2013 |
[2013] EWCA Civ 1496
Lord Justice Patten
Lady Justice Rafferty
and
Lord Justice Floyd
Case No: A3/2013/2140
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Mr Justice Roth
Royal Courts of Justice
Strand, London, WC2A 2LL
Adrian Speck and James Abrahams (instructed by Hogan Lovells) for the Appellants
Henry Carr QC and Brian Nicholson (instructed by Bristows) for the Respondents
Approved Judgment
Hearing date: 29 October 2013
This appeal concerns the circumstances in which it is appropriate for a court in this jurisdiction considering combined patent infringement and revocation proceedings to grant a stay of its proceedings pending the outcome of co-pending opposition proceedings in the European Patent Office ("EPO"). By his order of 13 June 2013 Roth J, sitting in the Patents Court, declined to order such a stay on the application of the defendants in the action (collectively "HTC"). The stay was resisted by the claimant patentee, IPCom. HTC appeal, with the permission of the judge. We heard the appeal as a matter of urgency because the trial of the action is fixed to commence in the Patents Court in an eight day window commencing on 9 December 2013.
We were assisted by the able written and oral submissions of Mr Adrian Speck QC and Mr James Abrahams for HTC and Mr Henry Carr QC, Mr Brian Nicholson and Ms Kathryn Pickard for IPCom.
In reaching his decision to refuse a stay, Roth J was referred to and relied on the guidance given by this court in Glaxo Group Ltd v Genentech Inc [2008] EWCA Civ 23; [2008] FSR 18 ("the Glaxo guidance"). After the judge had announced his decision, but before he had given his reasons, the Supreme Court handed down its judgment in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2013] 3 WLR 299 (" Virgin"). In the course of their judgments in that case, Lord Sumption JSC and Lord Neuberger PSC both questioned the correctness of the Glaxo guidance. Those observations were drawn to the judge's attention and formed the basis of his decision to give permission to appeal to this court. In the course of this appeal, therefore, we heard submissions on whether the Glaxo guidance needed revision in the light of the Supreme Court's observations. Permission to appeal to this court would not normally be given where the question at issue involves a discretionary case management power, such as the grant or refusal of a stay, when the judgment involves no error of principle or is not plainly wrong.
The appeal arises in a case where IPCom, a patentee which does not itself manufacture or market products in accordance with its patent, seeks to cause HTC to enter into a licence rather than, on IPCom's case, to continue infringing by selling its mobile telephones. It is accepted that this is a case where no injunction will be granted: the patent is said by IPCom to be essential to the UMTS mobile telephony standard, and IPCom have undertaken to grant licences on fair, reasonable and non-discriminatory ("FRAND") terms. HTC characterises the case as just being about money, whereas IPCom maintains that its whole business depends on the exploitation of its patents, and a stay would prevent it moving towards a position where it can enforce them.
The procedural history
There is a complicated procedural history to this case which involves not only the present action ("the HTC action"), but proceedings in relation to the same patent between Nokia and IPCom ("the Nokia action"). The two actions have, to an extent, become entwined. The essentials are as follows.
EP (UK) 1,841,268 ("the patent") was granted on 17 March 2010. It relates to a method of controlling access to the random access channel or RACH in a wireless telecommunications network. During the nine month period allowed for opposition in the EPO, four companies launched oppositions, including Nokia on 18 August 2010 and HTC on 17 December 2010, the last day of the period allowed.
In addition to its opposition in the EPO, on 9 April 2010 Nokia commenced the Nokia action in the Patents Court. The Nokia action was an action for revocation of the patent. IPCom denied that the patent was invalid and counterclaimed for infringement. The pleadings also raised non-technical issues concerned with IPCom's obligation to grant licences on FRAND terms arising out of the inclusion of the patented technology in the UMTS standard. By an order made on 7 July 2010 the technical patent issues of validity and infringement were ordered to be tried first, with a trial on non-technical issues to follow if necessary. I will refer to this deferred trial as "the FRAND trial".
The technical patent issues in the Nokia action came to trial before me in April 2011. In my judgment dated 16 June 2011 I held the patent valid (subject to an amendment to the claims which I allowed). I also held that the patent was infringed by some Nokia devices. Certain other Nokia devices the subject of applications for declaratory relief were held not to infringe. I also held that the patent was essential to the UMTS standard. Although the parties have adopted a different nomenclature, I will refer to the claims held valid and infringed by Nokia as "the June 2011 claims". My June 2011 judgment was upheld by this Court on 10 May 2012. The Supreme Court subsequently refused permission to appeal. In July 2011 I gave procedural directions for the FRAND trial in the Nokia action. As will be seen, HTC later joined in to the proceedings to determine the FRAND royalty.
In the light of their success against Nokia, IPCom wrote to HTC inviting them to take a licence under the patent. They enclosed proceedings for infringement and asked whether HTC's solicitors were instructed to accept service. They were not, and so steps were taken to serve the proceedings out of the jurisdiction on HTC Corporation, the third defendant. The dispute about service out of the jurisdiction was compromised in April 2012. In August 2011 HTC attempted the so-called "Italian torpedo". This was a procedural step designed to obtain a stay of all proceedings in this country on the basis that the courts of Italy are first seised. The idea was to slow the litigation down to the pace of one of the slowest jurisdictions in Europe. For a full description of the Italian torpedo see Research in Motion (UK) Limited v Visto Corp [2008] EWCA Civ 153; [2008] F.S.R. 20 at [12] to [14]. The Italian torpedo was eventually withdrawn, and on 20 January 2012 directions were given for trial of the technical issues in the HTC action. HTC were of course not bound by the decision in the Nokia trial.
In the meantime the EPO opposition proceedings had been continuing. On 25 April 2012 the Opposition Division ("OD") of the EPO decided that the patent was invalid for added matter. In accordance with EPO practice, none of the other objections to validity were considered. IPCom launched an appeal from that decision to the Technical Board of Appeal ("TBA").
On 11 May 2012 HTC applied to stay all aspects of the HTC action until the TBA handed down its written decision in the appeal.
On 30 May 2012 Roth J made an order in both the Nokia and HTC proceedings embodying agreed directions pursuant to which both HTC and Nokia were to participate in the FRAND trial. That order was made notwithstanding the fact that there had as yet been no finding either as to validity or infringement of the patent as between HTC and IPCom. HTC were understandably interested in participating in a trial which would enable them to know the cost of the licence to which they would be entitled under the patent if it was otherwise valid and infringed by them.
In addition to allowing the FRAND trial to go forward on this consensual basis, Roth J dealt with HTC's stay application. He granted a stay of the technical issues in the HTC action pending the TBA's decision in the opposition proceedings. HTC undertook that it would take a FRAND licence, and in the meantime restrict its commercial activities to one of the variants declared not to infringe in the Nokia action ("approved variants").
Despite the stay, matters did not stand still in relation to technical issues in the Patents Court. HTC was directed to produce product and process descriptions, and further disclosure was ordered of source codes. This was rendered necessary because of uncertainty over precisely what methods of controlling RACH access HTC was using. In order to prevent matters drifting, Norris J fixed the trial of the technical issues for a window commencing in December 2013 as by that stage it was known that the TBA's hearing would take place in March 2013. It is the normal practice of the TBA to announce its decision at the conclusion of the hearing.
On 7 March 2013 the TBA heard IPCom's appeal against the OD's decision revoking the patent. The result of the appeal was that the decision of the OD was set aside. The added matter objection was held to be overcome by an amendment put forward by IPCom. The TBA remitted the matter to the OD for consideration of the remaining issues: lack of novelty and lack of inventive step, issues which neither the TBA nor the OD had thus far addressed. The amended claims (which I will call "the March 2013 claims") were not the same as the June 2011 claims. They contained an additional feature. On 21 May IPCom applied in the Patents Court to amend...
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