Tesla, Inc & Anor v Idac Holdings, Inc & Ors
| Court | Chancery Division (Patents Court) |
| Judge | Mr Justice Fancourt |
| Neutral Citation | [2024] EWHC 1815 (Ch) |
| Date | 15 July 2024 |
| Year | 2024 |
| Counsel | James Segan Kc,Ligia Osepciu,Thomas Raphael Kc,Maxwell Keay,Brian Nicholson Kc,Kathryn Pickard |
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
Rolls Building
Fetter Lane
London, EC4A 1NL
Monday, 15 July 2024
Before :
MR JUSTICE FANCOURT
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Between :
(1) TESLA, INC.
(2) TESLA MOTORS LIMITED
Claimants
- and -
(1) IDAC HOLDINGS, INC.
(2) INTERDIGITAL PATENT HOLDINGS,
INC.
(3) INTERDIGITAL HOLDINGS, INC.
(4) AVANCI, LLC
Defendants
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James Segan KC and Ligia Osepciu (instructed by Powell Gilbert LLP) for the Claimants
Thomas Raphael KC and Maxwell Keay (instructed by Gowling WLG (UK) LLP) for the
Second and Third Defendants
Brian Nicholson KC and Kathryn Pickard (instructed by Osborne Clarke LLP and EIP
Europe LLP) for the Fourth Defendant
Hearing dates: 23, 24 May, 4 June 2024
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APPROVED JUDGMENT
(draft provided 5 July 2024)
High Court Approved Judgment Tesla v IDAC
Mr Justice Fancourt:
Introduction
1. This is a claim by an implementer for declarations of invalidity and non-essentiality of
3 UK designated patents, and revocation (“the patent claims”), with, in the alternative, a
claim for (a) declarations about availability and terms of a licence for standard essential
patents (“SEPs”) relating to the 5G telecommunications standard promoted by ETSI,
the European Telecommunications Standards Institute, and (b) a determination of fair,
reasonable and non-discriminatory (“FRAND”) terms for such a licence (“the licensing
claim”).
2. The claimants (“Tesla”) avowedly seek to pursue the licensing claim first, and not
progress the patent claim until after the licensing claim has been disposed of, if at all.
3. Permission to serve the claim on all the Defendants out of the jurisdiction was granted
by Mellor J on 7 December 2023, on paper, without notice. In fact, the patent claim was
also served on the First and Second Defendants in England, as of right, under CPR rule
63.14(2), but permission to serve out was needed and granted for the licensing claim,
pursuant to a combination of gateways (3) (in relation to the Third Defendant and the
Fourth Defendant), (4A) (in relation to the Third Defendant) and (11) (in relation to all
Defendants) in Practice Direction 6B of the Civil Procedure Rules (“PD 6B”).
4. The First to Third Defendants (collectively, “InterDigital”) are Delaware corporations
with a principal place of business in Delaware. After service, it was discovered that the
First Defendant had in fact been dissolved and all its property had passed to the Second
Defendant (“IDPH”), but nothing turns on that: the parties are agreed that the Second
Defendant should be regarded for current purposes as standing in the First Defendant’s
shoes in relation to its patents.
5. The Fourth Defendant (“Avanci”) is a Delaware company, with its principal place of
business in Texas. The business includes administering platforms for the worldwide
licensing of patents for telecommunications technology. It has a long-established
automotive platform licence for 2G, 3G and 4G SEPs and now offers an automotive
platform for licensing 2G, 3G, 4G and 5G SEPs (“the 5G Platform”). There are in the
region of 170,000 declared SEPs on the 5G Platform belonging to about 66 patentees
and their affiliates.
6. On 8 March 2024, InterDigital and Avanci separately applied pursuant to Part 11 of the
CPR to challenge the Court’s jurisdiction to hear the claims, or for an order that it
should decline to exercise its jurisdiction. On 8 May 2024, InterDigital also applied to
strike out the claim, without prejudice to their jurisdiction challenge. (This ultimately is
only relevant to those claims that were served on the Second Defendant under rule
63.14(2).)
7. On 16 May 2024, in light of these applications, Tesla applied to amend its Particulars of
Claim in a way that I will describe later.
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High Court Approved Judgment Tesla v IDAC
Background to the 5G technology
8. Tesla is a well-known manufacturer of electric vehicles. Its claims relate to its intended
installation of 5G technology capability in its cars. Tesla cars are currently
manufactured with up to 4G capability and Tesla has purchased a worldwide licence
from Avanci for use of the 2G/3G/4G SEPs in its cars produced to date. Within a
reasonable time, Tesla intends to manufacture its cars with 5G capability – it says
solely in order to future-proof them, not to introduce different applications of the
technology.
9. For that purpose, Tesla recognises that it needs to have licences for the 5G SEPs. It has
made no claim to a bilateral licence from InterDigital. It has accepted from the outset
that the licence that it wants is a licence to all the 5G SEPs available on Avanci’s 5G
platform (“the Avanci Licence”). Regardless of the position in respect of the validity or
essentiality of InterDigital’s UK patents, three of which are put in issue in the patent
claim, in practice it needs a worldwide licence for all the 5G SEPs and it wishes to take
one, but not on the terms that Avanci offers.
Technologies (UK) Co Ltd [2020] UKSC 37; [2020] Bus LR 2422 (“Unwired Planet”)
at [60], and well understood in the industry, many of the SEPs on the 5G Platform
could turn out, if challenged, to be invalid, or non-essential; nevertheless, in practice,
implementers tend to take a licence of all the available SEPs that have been declared for
the standard.
11. Avanci is willing – and has been authorised by each of the 65+ 5G Platform patentees
(“the Patentees”) – to grant a worldwide licence of all the relevant 5G SEPs. Pursuant
to agreement reached with each of the Patentees and formalised in an overarching
master agreement (“the MLMA”), Avanci offers the Avanci Licence at a fixed price of
US$32 per vehicle. Avanci says that the rate offered is its decision, which it takes in
light of discussions or agreements made with the Patentees and the MLMA made with
them all, to which a standard form licence agreement is annexed. Avanci says (and
InterDigital confirms) that the individual Patentees do not know the terms of any
agreements that may exist with other Patentees. But the terms of the MLMA and
standard Avanci Licence are known to all of them, and they are content for Avanci to
offer a 5G Platform licence on their behalf at the rate of $32.
12. Avanci maintains that its terms for the Avanci Licence are in fact FRAND, but that it is
not itself legally obliged to offer a licence on FRAND terms. The Patentees are each
bound to offer a FRAND licence of their SEPs to a willing licensee, as a result of the
declaration of the patents as being essential to the 5G standard and their undertakings to
ETSI. InterDigital is ambivalent (perhaps deliberately so) about whether the terms of
the Avanci Licence are FRAND.
13. Some of the Patentees, including InterDigital, have no programme for granting bilateral
licences for vehicle licensing, but others have. Tesla has taken a bilateral licence from
one of the Patentees. The reason for that was not explained, and its identity is ELEO
confidential. In practice, however, automotive implementers of 5G standard
technology seek to purchase a licence for the whole or substantially the whole stack of
SEPs at a single price, as it is expensive and time-consuming to have to negotiate a
large number of bilateral licences individually. In practice, many of the Patentees will
Page 3
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