Unwired Planet International Ltd v huawei technologies Company Ltd and Others Unwired Planet Inc. (Ninth Party) Unwired Planet LLC (Tenth Party) Telefonaktiebolaget L M Ericsson (Eleventh Party)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Birss,Mr Justice Birss |
| Judgment Date | 21 July 2015 |
| Neutral Citation | [2015] EWHC 2097 (Pat) |
| Court | Chancery Division (Patents Court) |
| Date | 21 July 2015 |
| Docket Number | Case No: HP 2014 000005 |
[2015] EWHC 2097 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Birss
Case No: HP 2014 000005
and
Jemima Stratford QC and Sarah Ford for the Claimant and the Ninth and Tenth Parties (instructed by Enyo Law)
James Segan (instructed by Powell Gilbert) for the First and Second Defendants
Jon Turner QC, James Bourke and James Walmsley (instructed by Bristows) for the Third and Fourth Defendants
Mark Brealey QC and Daniel Piccinin (instructed by Freshfields Bruckhaus Deringer) for the Eleventh Party
Hearing date: 14th July 2015
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.
This is an application by Ericsson, the Eleventh Party, to strike out allegations of breaches of Article 101 TFEU which are made against it by the defendants in this action or for summary judgment in its favour on the points. In addition Ericsson applies to stay a counterclaim brought by one of the defendants, Samsung, under s9 of the Arbitration Act 1996.
The claimant is Unwired Planet International Ltd. I will refer to the claimant and the Ninth and Tenth parties together as Unwired Planet unless it is necessary to distinguish between them. Unwired Planet's business is licensing. It holds a portfolio of patents related to telecommunications. Many of the patents in Unwired Planet's portfolio are declared essential to various telecommunications standards including 2G standards (such as GSM/GPRS), 3G standards (such as UMTS) and 4G standards (such as LTE). The patents which have been declared as essential to a standard can be called SEPs. Most of the patents were acquired from Ericsson pursuant to an agreement called the Master Sale Agreement (MSA) dated 10 th January 2013. The MSA transferred patents to Unwired Planet and includes terms in which Ericsson shares in the revenue earned by Unwired Planet from licensing the patents.
The defendants are companies forming part of major telecommunications equipment businesses: Huawei and Samsung. Both groups sell mobile devices and infrastructure equipment such as base stations. When the action began Google was also a defendant but recently the proceedings between Google and Unwired Planet have settled.
On 10 th March 2014 Unwired Planet brought proceedings for patent infringement in this jurisdiction. It contends that the products sold by the defendants which are compliant with the standards infringe its SEPs. The proceedings involve five SEPs. They are EP (UK) 1 230 818, EP (UK) 2 229 744, EP (UK) 2 119 287, EP (UK) 2 485 514, and EP (UK) 1 105 991. The 514 patent is a divisional of 287. All five SEPs in this case were acquired from Ericsson. The proceedings include one further patent which is not a SEP: EP (UK) 0 989 712. That patent did not come from Ericsson; the invention was made by Unwired Planet. In addition to the conventional allegations of patent infringement, the Particulars of Claim also assert that Unwired Planet has pursued negotiations to license the patents to the defendants on FRAND terms but thus far has been unsuccessful.
The defendants' position as explained in their Defences is that none of the patents are valid or infringed. This includes (where relevant) a denial that any given SEP is in fact essential to the relevant standard. The defendants have all stated expressly that they are willing licensees. They are prepared to take a licence under any Unwired Planet patent which has been found to be valid and infringed.
The defendants also make allegations about competition law and FRAND. The detailed positions of the defendants vary but at this stage the matter can be summarised broadly. Ericsson participated in the standard setting process in Europe involving ETSI. Ericsson therefore declared its SEPs to ETSI as essential under the ETSI IPR policy and gave a FRAND undertaking. The breaches of Art. 101 TFEU which fall to be considered on this application relate to the MSA whereby Ericsson transferred the patents to Unwired Planet. I will return to them below. On the basis of the breaches of Art 101, the transfer of the patents is said to be void and so Unwired Planet has no title to sue. Samsung has a patent licence from Ericsson which was entered into in 2014. Samsung contends that since the patents which came from Ericsson in fact still belong to Ericsson, they are covered by the 2014 licence. The proceedings include a counterclaim by Samsung for an indemnity under the 2014 licence to cover any sums due to Unwired Planet. Samsung also alleges that the patents are still under Ericsson's control even if not owned by it (the "control defence"). By that alternative route Samsung contends the patents are licensed under the 2014 licence, alternatively that Ericsson has a duty to procure a licence, even if they are owned by Unwired Planet.
There are also allegations of breaches of Art 102 TFEU (abuse of a dominant position). Here it is alleged that the terms offered by Unwired Planet are not FRAND. Another allegation is that in seeking an injunction in these proceedings Unwired Planet has acted contrary to Art 102 TFEU.
Since the competition law arguments involve more parties than the claimant company, Ericsson and two other Unwired Planet companies have been joined to the proceedings. Ericsson and Unwired Planet deny any breaches of competition law and any breach of a FRAND obligation. Unwired Planet denies its offers are not FRAND.
This is a complex and multi faceted dispute and I was docketed to deal with it. The first CMC was in July 2014 and there have been a number of further hearings. The case has been divided into five technical trials in sequence a few months apart and a single non-technical trial. Technical trial A starts on 5 th October 2015 and deals with 744. The last technical trial, trial E, starts on 27 th June 2016. The non-technical trial will deal with competition law and FRAND. It is due to start in October 2016. It is scheduled for 13 weeks.
With that introduction I can turn to the applications.
Ericsson's application to strike out / for summary judgment
In its Re-Re-Amended Defence and Counterclaim (RRADCC) Samsung contends that Ericsson has breached Art 101 TFEU in three ways. First, that in transferring patents to Unwired Planet, there was a failure to ensure the complete, proper and effective transfer of an enforceable FRAND obligation. Second, that by dividing Ericsson's patent portfolio into two parts (Ericsson retains patents itself and transferred some to Unwired Planet) in the way that it did a breach of competition law has taken place in that unfair higher royalties will be earned and competition will be restricted or distorted. Third, that certain terms in the MSA are stand alone infringements of Art 101. Samsung also argues that these three breaches interact with each other and exacerbate the distortions of competition which arise. Huawei advances the third breach but not the first or second.
Ericsson submits that each of these three allegations has no realistic prospect of success. Unwired Planet supports Ericsson. Samsung contends each is properly arguable and should go to trial. Huawei supports Samsung (on the third point). I will take each point in turn, reminding myself that Samsung contends they interact.
The law relating to striking out and summary judgment was not in dispute. As on the previous occasion in which I heard an application for striking out and summary judgment in this action, the parties argued this issue on the footing that in this case the test for summary judgment and the test for striking out were the same and could be summarised as the existence or not (as appropriate) of a real prospect of success. Samsung also reminded me of the judgment of Roth J in Sel-Imperial v British Standards Institution [2010] EWHC 854 (Ch) at paragraphs 16–18. The aspect emphasised by Samsung is the point made by the learned judge, now President of the Competition Appeal Tribunal, that, particularly in competition law claims, where the area of law is developing the court should be cautious to assume that the case law will not develop further than it has already. I also note the point made by Roth J at paragraph 17 that a contention of infringement of competition law is a serious allegation of breach of quasi-public law and that such allegations are notoriously burdensome. I respectfully agree with Roth J.
Commercial background
To put the applications into context, Ericsson explained that it is a major innovator in the mobile telecommunications sector investing about $5 billion per annum (15% of its net sales) in R&D. It holds a portfolio of over 37,000 patents with roughly 2,000 new patents being granted each year. It sells telecommunications equipment and software in over 180 countries. It does not make mobile handsets. Many of its patents are declared as essential to various telecommunications standards.
The MSA dated 10 th January 2013 transferred 2,185 patents to Unwired Planet. The licence between Samsung and Ericsson on which Samsung relies in this case was entered into afterwards on 1 st February 2014. Ericsson says that Samsung knew and understood that the patents transferred to Unwired Planet were...
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