Unwired Planet International Ltd v Huawei Technologies Company Ltd and Another Unwired Planet LLC (Tenth Party)
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Birss,Mr Justice Birss |
| Judgment Date | 05 April 2017 |
| Neutral Citation | [2017] EWHC 711 (Pat) |
| Docket Number | Case No: HP-2014000005 |
| Court | Chancery Division (Patents Court) |
| Date | 05 April 2017 |
[2017] EWHC 711 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
The Hon. Mr Justice Birss
Case No: HP-2014000005
and
Adrian Speck QC, Sarah Ford, Isabel Jamal and Thomas Jones (instructed by EIP and Enyo Law) for the Claimant
Andrew Lykiardopolous QC and James Segan (instructed by Powell Gilbert) for the First and Second Defendants
Hearing dates: 24th, 25th, 31st October, 1st – 4th, 9th – 11th, 14th, 15th, 21st – 24th November, 5th – 8th December 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.
| Introduction, the issues, confidentiality, evidence and factual background | 1 |
| FRAND | |
| The applicable principles | |
| (i) What is FRAND and what principles apply to it | 83 |
| (ii) The history and purpose of FRAND | 89 |
| (iii) Enforceability of the ETSI FRAND undertaking and French law | 98 |
| (iv) Can there be more than one set of FRAND terms? | 147 |
| (v) Can the court set a FRAND rate or other FRAND terms? | 169 |
| (vi) How to assess what is FRAND | 170 |
| (vii) A hard-edged non-discrimination aspect of FRAND | 177 |
| (viii) Concepts used to derive a FRAND rate with telecoms standards | 178 |
| FRAND on the facts of this case | 197 |
| (i) Relevant SEPs – shares and ratios | 198 |
| (ii) The parties' rival submissions on royalty rates | 232 |
| (iii) The MNPA and HPA techniques | 273 |
| (iv) Findings about the strength of Unwired Planet's portfolio | 372 |
| (v) The comparables in this case | 382 |
| a. Unwired Planet – Lenovo 2014 | 383 |
| b. Unwired Planet – Samsung 2016 | 390 |
| c. Ericsson — Huawei 2016 | 410 |
| d. Ericsson — Samsung 2014 | 414 |
| e. Ericsson — Huawei 2009 | 421 |
| f-m. other licences | 433 |
| (vi) Other indications relating to rates | 469 |
| (vii) What is the benchmark FRAND rate for Unwired Planet? | 475 |
| (viii) Impact of hard-edged non-discrimination on the FRAND rate | 481 |
| (ix) Rates — conclusions | 522 |
| (x) The other disputed terms | 523 |
| a. What licence scope is FRAND – UK or worldwide? | 524 |
| b. Should the court settle the FRAND rates in a worldwide licence | 573 |
| c. FRAND rates in a worldwide licence | 582 |
| d. Other terms in a worldwide licence | 593 |
| e. The terms of a UK only portfolio licence | 596 |
| COMPETITION LAW | 627 |
| (i) Dominant position | 630 |
| (ii) Abuse of dominance | 671 |
| a. Premature litigation: Huawei v ZTE | 674 |
| b. Unfair excessive pricing | 756 |
| c. Bundling/ tying-in SEPs and non-SEPs | 785 |
| REMEDIES | 792 |
| (i) Should an injunction be granted | 793 |
| (ii) Damages | 796 |
| (iii) Declarations | 803 |
| Summary of conclusions | 805 |
| Annex 1 – Unwired Planet's declared SEPs by country |
Introduction
Unwired Planet have a worldwide patent portfolio which includes numerous patents which are declared essential to various telecommunications standards (2G GSM, 3G UMTS, and 4G LTE). Most of the relevant portfolio was acquired from Ericsson. Unwired Planet's business is licensing those patents to companies who make and sell telecommunications equipment such as mobile phones and infrastructure. This action began in March 2014 when Unwired Planet sued Huawei, Samsung and Google for infringement of six UK patents from their portfolio. Five were claimed to be SEPs (see below). Unwired Planet contended their patents were infringed and (so far as relevant) essential.
The dispute was managed to consist of a series of trials, docketed to me. First would be five "technical" trials relating to the validity and infringement/essentiality of the six patents (two patents are divisionals). These were called trials A to E and were to run from October 2015 to July 2016. The patent in trial A was patent EP (UK) 2 229 744 which is for an invention concerning poll triggers, the patents in trial B were divisionals EP (UK) 2 119 287 and EP (UK) 2 485 514 which are for an invention related to self-configuring networks, the patent in trial C was EP (UK) 1 230 818 which relates to inter-RAT handover, the patent in trial D was EP (UK) 1 105 991 which related to Hadamard codes, and the patent in trial E was EP (UK) 0 989 712 which relates to network messaging. The 712 patent was not said to be a SEP.
After the five technical trials would be a non-technical trial in autumn 2016. The non-technical trial was to address all the competition law issues as well as the FRAND issues (see below), injunctive relief (if any) and, by a later direction, damages for past infringements. Finally, and only if necessary, there might be a further trial to deal with some outstanding questions including pass through licences.
This judgment arises from the non-technical trial and relates to the patents which are or are said to be Standards Essential Patents or SEPs. Part of the process of standardisation involves holders of patents which are essential to an international telecommunications standard declaring them as essential to the relevant standards body. In this case that body is the European Telecommunications Standards Institute (ETSI). The ETSI IPR Policy requires that a patentee declaring patents as essential to a standard commits to licensing those patents on FRAND terms. FRAND stands for Fair Reasonable And Non-Discriminatory. The judgment mostly concerns FRAND.
After proceedings began, in April 2014, Unwired Planet made an open offer to the defendants to license its entire global portfolio (SEPs and non-SEPs). The defendants denied infringement/essentiality and contended the patents were invalid, counterclaiming for revocation. So, they said, no licence was needed. They also contended that Unwired Planet's offer was not FRAND. In addition, Huawei and Samsung raised defences and counterclaims based on breaches of competition law. This involved both arguments about Art 101 of the Treaty on the Functioning of the European Union (TFEU) relating to the Master Sale Agreement (MSA) whereby Unwired Planet acquired patents from Ericsson and arguments about Art 102 TFEU concerning abuse of dominant position. The allegation that the offer was not FRAND was pleaded as a breach of competition law. These allegations were the subject of counterclaims against other companies in what was then the Unwired Planet group (the ninth and tenth defendants) as well as against Ericsson, who were joined as the eleventh party to the proceedings. Various other defences were also raised. After the April 2014 offer Unwired Planet made a further offer in July 2014. That offer related only to Unwired Planet's SEPs. That is also said not to be FRAND by the defendants. The terms of these and other licensing offers are difficult to summarise but at this stage it can be said that the SEP royalty rates in the July 2014 proposals were global rates of 0.2% for 4G/-LTE and 0.1% for other standards (i.e. GSM/UMTS). The percentages related to average selling price (ASP) for mobile devices and revenue for infrastructure. These offers and other of Unwired Planet's offers also contained US dollar or sterling alternative figures which operated as a cap if the royalty expressed as a share of ASP would be a higher sum. This is the last time I will mention them. The caps did not play a significant part in this case.
Sometimes in this case the terms 2G, 3G and 4G are used to refer to different standards and sometimes GSM, UMTS (or WCDMA) and LTE respectively. They are not the same but the distinction rarely matters. In this judgment I have tried to use the terms which reflect the way the argument and evidence went in any given context but it is impossible to be consistent. A complication is multimode handsets. A 4G/LTE handset will usually be able to work on earlier standards (2G/GSM and 3G/UMTS). It is therefore "multimode". There can be exceptions and so calling a handset 4G or LTE can be ambiguous since it probably refers to a multimode device but might not. Again it is impossible to be consistent.
In June 2015 as a result of directions from the court which are considered further below, each side made certain open offers of licensing terms. Unwired Planet's June 2015 proposals included offers of a worldwide SEP portfolio licence, a UK SEP portfolio licence (the UK portfolio consists of more patents than just the five SEPs in suit) and per-patent licences for any SEPs the licensee chose. The details do not matter at this stage but one point to note is that the royalties claimed for per-patent licences or a UK portfolio were higher than the global rate on offer. The rates all scaled by reference to the same global rate proposals as in 2014, i.e. a global rate of 0.2% for LTE and 0.1% for GSM/UMTS.
Huawei's June 2015 proposal was for a per-patent licence limited to the UK SEPs in suit. The rates for all five SEPs together were 0.034% for LTE, 0.015% for UMTS and zero for GSM.
In the summer of 2015 and before trial A, Google settled as regards the SEPs. From then on they would only have played a role in the fifth technical trial (E) since that related to the implementation patent. By about April 2016 three technical trials had been completed and the parties agreed to postpone any further technical trials indefinitely. By that stage Unwired Planet had won two and lost one of the technical trials. Two of Unwired Planet's patents had been found to contain claims which were valid and were essential to the relevant standards while the other two patents were held invalid. The results of all three technical...
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