Optis Cellular Technology LLC v Apple Retail UK Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Meade |
| Judgment Date | 27 September 2021 |
| Neutral Citation | [2021] EWHC 2564 (Pat) |
| Docket Number | Case No. HP-2019-000006 |
| Court | Chancery Division (Patents Court) |
[2021] EWHC 2564 (Pat)
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
Mr Justice Meade
Case No. HP-2019-000006
Sarah Ford QC, Isabel Jamal and Jennifer Dixon (instructed by EIP Europe LLP and Osborne Clarke LLP) for the Claimants
Marie Demetriou QC, Meredith Pickford QC, Sarah Love and Ligia Osepciu (instructed by WilmerHale LLP) for the Defendants
Hearing dates: 19–22 and 26–27 July 2021
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
| Introduction | 4 |
| Conduct of the trial | 7 |
| The legal context in outline | 8 |
| UK SEP litigation and FRAND | 10 |
| “Happenstance” | 11 |
| The issues | 11 |
| First issue – clause 6.1 | 12 |
| Second issue – competition law | 13 |
| Third issue – discretion | 14 |
| Fourth issue – the Contingent Undertaking | 14 |
| The witnesses | 14 |
| The key case law | 15 |
| The Supreme Court's Decision in Unwired Planet | 15 |
| Matters that the Supreme Court was not deciding | 38 |
| Kitchin LJ's judgment in UPCA | 38 |
| Birss J's decision in Unwired — UPHC | 39 |
| UP Remedies | 44 |
| Other aspects of Huawei v ZTE | 46 |
| Other European materials referred to | 47 |
| Authorities on withholding an injunction in cases of abuse of dominance | 48 |
| First issue – the meaning of clause 6.1 | 48 |
| Summary of the key agreed French law | 48 |
| Further aspects of French law | 49 |
| Context for the interpretation of clause 6.1 | 52 |
| Economics evidence | 52 |
| Delay | 56 |
| “Accuracy” of FRAND determination | 57 |
| Risk of sub-FRAND and supra-FRAND rates | 57 |
| Licensee's perspective | 57 |
| Inference of hold-out | 57 |
| Possibility of implementers' exit from the UK market | 58 |
| Exit by Apple? | 61 |
| Risk of the UK Court making an error | 61 |
| Licensing Expert Evidence | 62 |
| Committing to licence terms unseen | 62 |
| Hold-out and delay | 64 |
| Conclusion on the expert evidence as a whole | 65 |
| The words of clause 6.1 | 66 |
| “Irrevocable” | 66 |
| The list of acts to be licensed | 67 |
| “those who seek licences” | 67 |
| Clear and precise? | 67 |
| Apple's argument on UPSC at [151] | 68 |
| Interpretation | 71 |
| Optis' case on timing and permanent loss of the right to a FRAND licence | 74 |
| Second issue — abuse of dominance sub-issue | 75 |
| Apple's allegations of abuse | 75 |
| Analysis | 77 |
| Second issue — refusal of injunctive relief sub-issue | 78 |
| Third issue – discretion | 81 |
| The Court cannot compel the taking of a licence | 82 |
| UPSC at [151] maintains the balance between SEP owner and implementer .. 82 Premature to exercise the discretion; SEP owner not prejudiced by waiting | 82 |
| Implementer forced to make a decision without full information | 83 |
| Novelty | 83 |
| Conclusion on discretion | 83 |
| Fourth issue – contingent undertaking | 83 |
| Relief | 84 |
| Unqualified injunction or FRAND injunction — pleading | 84 |
| Conclusions | 85 |
INTRODUCTION
This is the latest in a series of trials in this multi-patent action between these parties. It is referred to as “Trial F”. I shall refer to the Claimants collectively as “Optis” and to the Defendants collectively as “Apple”.
In Trial F, Optis seeks an injunction to restrain Apple from infringing Optis' patent that I identify below. Optis also seeks related declarations.
The procedural background to the dispute is long and convoluted and it is not necessary to set it out at great length; a short summary will suffice.
In the wider English proceedings, which commenced in February 2019, Optis alleges that Apple has infringed 8 telecommunications patents which form part of its wider portfolio of patents (the “ PO Portfolio”) by Apple's 3G and 4G connected devices (iPhone, iPad + Cellular, etc.). Each patent is said to be a standard essential patent (“ SEP”) and has been declared to the European Telecommunications Standard Institute (“ ETSI”) as essential under clause 4.1 of the ETSI IPR Policy. The parties are also involved in parallel litigation in the United States, the details of which are largely irrelevant for present purposes, save to note that global FRAND terms are not to be determined there.
In the English proceedings, four technical patent trials (Trials A – D) were listed between October 2020 and January 2022. Two of those technical trials have now been determined, with two more pending.
In Trial A, Birss J (as he then was) found a patent, which subsequently expired, to be valid, essential and infringed: [2020] EWHC 2746 (Pat). In Trial B, I found another patent, European Patent (UK) No. 2 229 744 B1, which has not expired, to be valid, essential and infringed: [2021] EWHC 1739 (Pat). I gave permission to appeal in relation to validity on certain grounds. Essentiality and therefore infringement were conceded by Apple at the last minute (in this SEP/FRAND related type of litigation findings of essentiality and infringement are for many purposes synonymous, and I have used the expressions interchangeably in this judgment). Apple did not seek from me permission to appeal on an estoppel defence which it had run but which had failed comprehensively on the facts, but I have been told since the conclusion of this trial that it has now applied to the Court of Appeal for permission. As I understand it, it seeks to challenge my analysis but does not say that the defence in question can succeed given the facts I found. This is not relevant to my task at this trial.
In the course of my judgment dealing with Apple's estoppel defence in Trial B, I had to consider the nature and history of ETSI and its IPR Policy, and the French law applicable to determining the proper interpretation of the IPR Policy. Those matters are also relevant to Trial F. As I will explain below, certain additional points of French aw arise in this trial, and the provision of the ETSI IPR Policy that I have to interpret is a different one.
The further technical trials will determine whether there are other patents in the PO Portfolio that are valid, essential and infringed. As is usual in this kind of litigation, not all the patents in the portfolio will be tried individually.
Trial E, which will determine the terms of a FRAND licence and rule on various allegations made by Apple of anti-competitive behaviour by Optis, has been listed for a long trial in June and July 2022, before Marcus Smith J. I will return below to the issues to be dealt with at Trial E because they are relevant, at least potentially, to my determination of the matters in this Trial F (indeed, part of Apple's case is that I cannot grant the injunction sought by Optis in these proceedings until Trial E is resolved). I will also return below to the relevance of the structure of patent disputes involving FRAND issues in this jurisdiction; for present purposes, I simply note as a matter of chronology that it will have been more than three years since the claim was commenced before this Court determines FRAND terms at Trial E. There will have been almost a year between Trial B and Trial E, and even longer between Trial A (where judgment was given in October 2020) and Trial E.
The parties have pleaded out for the purpose of Trial E their position on what licence terms would be FRAND. They are far apart on the rates, for reasons which include a fundamental disagreement about whether royalties should be assessed on the whole phones or on the baseband chips only, and arguments over the right methodology. However, subject to reserving the right to revisit Unwired Planet in the Supreme Court (as to which, see further below) Apple accepts that the terms set will be global.
Apple points out that because global rates will be set the decision in Trial E as to FRAND is highly geared. It will, by definition, affect what Apple has to pay for the PO Portfolio worldwide. It may also, Apple says, affect what it pays to other licensors, but I find that less convincing. It will not be a comparable in the sense of an agreement freely negotiated between the parties. Also, Apple says it is already licensed to most patents covering 4G. Nonetheless, the Trial E decision will clearly be very important on any view.
Trial E is, as matters stand, the only way by which a global FRAND rate for the PO Portfolio can be set by a Court anywhere in the world. I asked Counsel for Apple a number of times what other option there might be for bringing the global dispute between the parties to a resolution, but Apple made no suggestion in response. It has argued that Optis can move matters on by bringing other individual national infringement proceedings, but Apple has no proposal that any of them might set global FRAND rates. Optis has proposed arbitration; Apple says that it has engaged with the proposal but that the details are confidential. What is clear is that arbitration has not happened.
The dispute before me for the purposes of Trial F crystallised in summer 2020. By that stage of the proceedings, Trial E had already been fixed, but there was no finding that any of the patents in dispute was valid and infringed.
Optis raised before Birss J, by way of an application to amend its pleaded case, the question of whether Apple is an “unwilling licensee” (in the sense discussed below)...
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