Koninklijke Philips NV v Asustek Computer Incorporation and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Arnold |
| Judgment Date | 09 September 2016 |
| Neutral Citation | [2016] EWHC 2220 (Pat) |
| Court | Chancery Division (Patents Court) |
| Docket Number | Case No: HP-2015-000063 |
| Date | 09 September 2016 |
[2016] EWHC 2220 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Rolls Building
Fetter Lane, London EC4A 1NL
Mr Justice Arnold
Case No: HP-2015-000063
Mark Vanhegan QC and Adam Gamsa (instructed by Bristows LLP) for the Claimant
James Abrahams QC and Joe Delaney (instructed by Hogan Lovells International LLP) for the Fourth and Fifth Defendants
Hearing dates: 27–28 July 2016
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Contents
| Topic | Paragraphs |
| Introduction | 1–5 |
| The witnesses | 6–18 |
| Californian law experts | 6–9 |
| Technical experts | 10–12 |
| Factual witnesses | 13–18 |
| Californian law | 19–29 |
| Californian Civil Code | 19 |
| General principles | 20 |
| Agreement as a whole | 21 |
| Extrinsic evidence | 22–23 |
| Conduct of the parties | 24 |
| Absurd results | 25 |
| The contra proferentem rule | 26–29 |
| Multiple access techniques | 30–34 |
| Access control mechanisms | 35–38 |
| The UMTS standard | 39–45 |
| The ETSI and TIA IPR policies | 46–52 |
| ETSI | 47–51 |
| TIA | 52–57 |
| The negotiation of the 1998 Agreement | 58–63 |
| Relevant provisions of the 1998 Agreement | 64–73 |
| The issues | 74 |
| Issue 1: Is HSPA covered by a CDMA Wireless Industry Standard? | 75–107 |
| The wording of the definition | 76 |
| The opening words | 76 |
| IS-95A | 77 |
| IS-96A | 78 |
| IS-127 | 79 |
| ANSI J-STD-008 | 80 |
| The proposed ETSI UMTS standard | 81–84 |
| Subsequent releases, revisions and derivations | 85 |
| Local and regional standards substantially based thereon | 86 |
| The closing words | 87–90 |
| Other provisions of the 1998 Agreement | 91–96 |
| The proviso to clause 4.3 | 91 |
| Clause 5.1.3 | 92–94 |
| The definition of TDMA Technically Necessary Patents | 95–96 |
| Extrinsic evidence | 97–104 |
| Construction contra proferentem | 105–106 |
| Conclusion | 107 |
| Issue 2: Is HSPA within the proviso to clause 4.3? | 108–114 |
| The wording of the proviso | 109–111 |
| Extrinsic evidence | 112 |
| Construction contra proferentem | 113 |
| Conclusion | 114 |
| Issues 3: Are the Patents CDMA Technically Necessary Patent? | 116–120 |
| Issue 4: Does clause 4.3 extend to chipsets purchased from third parties? | 121–123 |
| Overall conclusion | 124 |
Introduction
In these proceedings the Claimant ("Philips") alleges infringement of three patents ("the Patents") that are said by Philips to relate to a technology used in so-called "3.5G" mobile telephone systems known as High Speed Packet Access (HSPA). HSPA comprises High Speed Downlink Packet Access (HSDPA) and High Speed Uplink Packet Access (HSUPA). The Defendants fall into two groups: the First, Second and Third Defendants ("ASUS") and the Fourth and Fifth Defendants ("HTC").
Philips has declared that the Patents are essential to the European Telecommunications Standards Institute (ETSI) Universal Mobile Telecommunications System (UMTS) standard, in particular the sections of the standard that relate to the operation of HSPA, and they are therefore referred to as "standard essential patents" or "SEPs". Philips' case on infringement is based exclusively on this assertion of essentiality.
HTC do not admit that the Patents are essential to UMTS. HTC contend, however, that they have the benefit of a covenant by Philips not to sue licensees of Qualcomm Inc ("Qualcomm") under any of Philips' patents that are, or are claimed to be, essential to UMTS contained in clause 4.3 of an agreement between Qualcomm, Philips, US Philips Corp. and Philips Consumer Communications LP ("PCC") dated 26 February 1998 ("the 1998 Agreement"). Philips accepts that HTC are licensees of Qualcomm and are entitled to the benefit of the covenant, but Philips disputes that the covenant extends to HTC's acts complained of for the four reasons identified below. Philips also contends, if necessary, that the covenant is void on competition law grounds. On 21 April 2016 John Baldwin QC sitting as a deputy Judge of this Court ordered the trial of a preliminary issue as to whether the covenant extends to HTC's acts complained of. If it is concluded that the covenant does not extend to HTC's acts complained of, then the competition law issues will fall away. The preliminary issue does not concern ASUS.
It is common ground that the interpretation of the 1998 Agreement is governed by the law of the State of California in the United States of America. It is also common ground that, as explained below, under Californian law extrinsic evidence is admissible as an aid to interpretation to a greater extent than under English law.
Qualcomm contends that some of the terms of the 1998 Agreement are confidential, but has not objected to the provisions which are central to the preliminary issue being discussed in open court and in this judgment.
The witnesses
Californian law experts
Philips' Californian law expert was Prof Jeffrey Lefstin. Prof Lefstin obtained a Bachelor's degree in Biology from Brown University in 1989, a PhD in Biochemistry from the University of California in 1997 and a JD from Stanford University in 2000. He has been a member of the State Bar of California since 2000, and he is also admitted to practice before the Court of Appeals for the Federal Circuit and the Ninth Circuit. He is currently Professor of Law and Associate Academic Dean at the University of California, Hastings College of the Law. He has taught patent law and contract law since he joined the Hastings faculty in 2003, and those subjects are also the focus of his research. He has co-directed and taught at the UC Hastings-Bucerius Law School Program in International Intellectual Property Transactions since its inception in 2014.
HTC's California law expert was Eric Bensen. Mr Bensen obtained a Bachelor's degree in Marketing from Hofstra University in 1988 and a JD from the same university in 1996. From 1996 to 2008 he was in private practice at Dewey Ballatine LLP and then Paul, Hastings, Janofsky & Walker LLP, specialising in intellectual property litigation and licensing. Since 2008 he has been an independent consultant on intellectual property issues. He is admitted to the State Bar of New York and to practice before the Supreme Court, Court of Appeal for the Federal Circuit and the District Courts for Southern and Eastern Districts of New York. He is the author or co-author of four leading multi-volume intellectual property treatises, including Milgrim on Licensing and Patent Licensing Transactions.
It was sensibly agreed between the parties that there would be no cross-examination of the experts as to the Californian law and that the court should give such weight to their reports as the court deemed appropriate, having regard to their experience and the underlying materials exhibited to their reports.
Counsel for Philips submitted that greater weight should be given to the evidence of Prof Leftsin than to the evidence of Mr Bensen, because Mr Bensen was lacking in expertise in Californian contract law as distinct from New York contract law. In support of this submission counsel for Philips pointed out that Mr Bensen had always practised in New York, albeit sometimes on matters involving the laws of other States. Moreover, he submitted this relative lack of expertise was manifested in Mr Bensen's reports. For example, in his first report, Mr Bensen had failed to mention the decision of the California Supreme Court in City of Good Hope on the scope of the contra proferentem rule (as to which, see below). I accept this submission, but what matters most is the cogency of the experts' opinions and the extent to which they are supported by the materials they relied upon. Furthermore, other than with respect to the scope of the contra proferentem rule, there was relatively little disagreement between the experts.
Technical experts
Philips' technical expert was Liam Wickins. Mr Wickins obtained a BSc in Mathematics and Computer Science from the University of Bath in 1996. He was employed as a software engineer by MPC Data Ltd from 1996 to 1998 and by STMicroelectronics from 1998 to 2001. From 2001 to 2012 he was employed by PicoChip Designs Ltd successively as an embedded software engineer, senior applications engineer, WCDMA Development Manager and Director of Engineering. Following the acquisition of PicoChip by Mindspeed Technologies Inc, he oversaw the 3G engineering activities for Mindspeed's wireless business unit. Since 2014 he has been Director of Engineering for Icoteq Ltd, which provides wireless systems consultancy and product development services.
HTC's technical expert was Dr David Cooper. Dr Cooper obtained a degree in Mathematics from Imperial College, University of London in 1978. He has been involved in the field of telecommunications since 1987, when he joined Coherent Research, a communication and engineering consultancy, as a Software Manager. From 1994 to 1999 he was employed by NEC Technologies successively as Digital Signal Processing Group Leader, Systems Group Leader and Assistant Manager of UMTS Standardisation. While at NEC he represented the company within both ETSI and 3GPP in the development of both the GSM and UMTS standards. In 1998 he was appointed as Vice-Chairman of the 3GPP standards committee SA1, which was responsible for the definition of UMTS services, and also served as temporary secretary of the 3GPP RN4 committee, which was responsible for wireless performance specification. From 1999 to 2008 he...
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