Fetter Lane, London, EC4A 1NL
B e f o r e :
| UNWIRED PLANET INTERNATIONAL LIMITED
|- and -
|(1) HUAWEI TECHNOLOGIES CO. LIMITED
(2) HUAWEI TECHNOLOGIES (UK) CO. LIMITED
(3) SAMSUNG ELECTRONICS CO. LIMITED
(4) SAMSUNG ELECTRONICS (UK) LIMITED
(5) GOOGLE INC.
(6) GOOGLE IRELAND LIMITED
(7) GOOGLE COMMERCE LIMITED
|UNWIRED PLANET INC.
|UNWIRED PLANET LLC
|TELEFONAKTIEBOLAGET L M ERICSSON
Pushpinder Saini QC and James Segan (instructed by Powell Gilbert) for the First and Second Defendants
Jon Turner QC, Meredith Pickford QC and James Bourke (instructed by Bristows) for the Third and Fourth Defendants
Paul Harris QC and Robert O'Donoghue (instructed by Bristows) for the Fifth, Sixth and Seventh Defendants
Mark Brealey QC and Daniel Piccinin (instructed by Freshfields Bruckhaus Deringer) for the Eleventh Party
Hearing dates: 19th & 20th March 2015
Crown Copyright ©
Mr Justice Birss:
"The claimant claims:
(5) Save insofar as the defendants and each of them are entitled to and take a licence to the Declared Essential Patents on FRAND terms (in accordance with the claimant's undertakings and the ETSI IPR Policy) and insofar as the claimant is and remains required to grant such a licence:
b. [removal from channels of commerce]
c. [delivery up]"
i) The April proposal was for a worldwide licence under all Unwired Planet's patents, SEPs and non-SEPs. The proposal was divided into three parts, (i) cloud and server methods and equipment, (ii) mobile devices and (iii) infrastructure. For mobile devices the proposed royalty rate was US $0.75 per major market end user device and US $0.50 per other end user device. For infrastructure the proposed royalty rate was 0.45% of infrastructure revenue. A 20% prepayment discount was also offered.
ii) The July proposal was for a worldwide licence under Unwired Planet's SEPs only. The cloud and server aspect was not applicable in that case. The proposed royalty for mobile devices was 0.2% of Average Selling Price (ASP) for multi mode LTE end user devices and 0.1% of ASP for other end user devices. For infrastructure the proposed royalty rate was 0.2% of revenue for LTE based infrastructure and 0.1% for other standards.
Huawei's application to strike out and for summary judgment
Law and background
44. This case is a long way from having to consider whether to grant injunctive relief; after all, according to ZTE, the patents are all invalid and/or not infringed. However, in any case I reject the idea that the stance being taken by ZTE in this jurisdiction can fairly be said to mean that ZTE is not a willing licensee. ZTE has said it is willing to take a FRAND licence on any patent found valid and infringed. In my judgment, a defendant accused of patent infringement by a patentee who claims to have a standards essential patent is and must be entitled to say, "I wish to know if this patent is valid or infringed or not before I take a licence". Such a stance cannot fairly be described as unwillingness.
45. So here the defendant is entitled, in my judgment, to adopt a contingent position. In a contingent case like this, there is no basis on which the court could compel the defendants to accept a licence arrived at by approaching the matter as if the licensee was willing to take a licence without having a judicial determination of validity and/or infringement.
46. Looking at it the other way, if, once the patent trials are heard, for example, say Vringo's alleged SEPs were found invalid, it would be absurd for Vringo to say it still wanted to have a trial to determine a FRAND royalty rate applicable in the United Kingdom. The rate would be zero. Equally, say Vringo won all the patent trials hands down and then conducted a FRAND trial, it would equally be absurd for ZTE at that trial to say, "Oh but these are weak patents likely to be invalid or not infringed and the royalty should correspondingly be less".
107. […] I suspect the fallacy in the reasoning of Vringo at this stage may be that just because it may be so that the global portfolio offer is a FRAND offer, it does not follow that the global portfolio licence on offer is the only set of terms which could be FRAND. It seems to me that there is likely to be a FRAND rate for [the patent in suit]. I can see that the aggregate of individual FRAND rates for patents taken alone and on a territorial basis may well be far more than global portfolio rates and so a rational defendant may well prefer to take a global portfolio licence rather than a series of individual ones. Moreover I accept, as Vringo urges on me, that global portfolio licences are the kinds of licences industry normally enters into.
108. However this is very different from saying that somehow the fact that a global licence on a portfolio of patents is FRAND necessarily means that a defendant in one jurisdiction faced with one patent is forced to take a global portfolio licence in order to stave off a national injunction on that one patent.
109. I could see a very different circumstance if Vringo had made a FRAND offer for the patent [...] itself and that offer had not been accepted. Then an injunction might well follow. In that sort of case, unlike the one based on the global portfolio licence, the threat of the injunction, which is after all a territorial remedy, would not be being used to create some sort of international coercion or coercion about other patent rights.
The grounds on which Huawei contends Unwired Planet's offers are not FRAND
i) The claimant is obliged to offer single patent licences if requested;
ii) The claimant is obliged to offer a licence under all SEPs essential to a particular standard;
iii) The claimant is required if requested to offer a licence under SEPs relating to a particular territory.
i) Both offers demand a royalty for acts and/or territories and/or standards in respect of which the claimant does not even claim to enjoy any relevant patent protection. That can never be acceptable.
ii) The April Proposal bundles non-SEPs together with SEPs.
iii) The April and July Proposals both bundle all telecommunications standards together.
iv) The April and July Proposals both fail to offer a FRAND rate of the five alleged SEPs in suit and each of them.
v) The April and July Proposals both bundle all territories of the world together.
vi) The April and July Proposals both fail to stipulate (1) the full list of patents in respect of which a licence was being proposed; (2) which of those patents were said to be essential and to which standard; (3) in which territory or territories each patent was in force; (4) the term of each of those patents; (5) how the proposed royalty fee had been calculated (including whether it had been calculated on the assumption that all of the patents within the scope of the licence proposal were valid and infringed, or on some other assumption); or (6) why each offer was said to be FRAND.
vii) The April Proposal was made on the basis that "the parties will complete a licence arrangement before June 30, 2014" otherwise the claimant "will require reimbursement of attorney fees and costs, as well as 8% interest….".
viii) The April and July Proposals both state that "standard terms and conditions …. including assignment and subsidiary coverage" are "to be agreed". The April and July Proposals were not therefore offers capable of acceptance, rather merely invitations to commence negotiations.
Construction of the ETSI IPR Policy and Declaration
(i) single patent licences
(ii) particular standards
(iii) particular territories
Could the April and July proposals ever be FRAND?
(i) Both offers demand a royalty for acts and/or territories and/or standards in respect of which the claimant does not even claim to enjoy any relevant patent protection.
(iii) The April and July Proposals both bundle all telecommunications standards together.
(v) The April and July Proposals both bundle all territories of the world together.
(ii) The April Proposal bundles non-SEPs together with SEPs.
"Next there is the important question of whether a patentee can comply with his FRAND obligation by offering his entire portfolio of patents or just his entire portfolio of SEPs for licence as a package. I think the answer here is that he can do the latter (all SEPs) but not the former (all SEPs with all non-SEPs):
(iv) The April and July Proposals both fail to offer a FRAND rate of the five alleged SEPs in suit and each of them.
(vi) The April and July Proposals both fail to [address certain points of detail]
(viii) The April and July Proposals were not offers capable of acceptance, rather merely invitations to commence negotiations
(vii) The April Proposal [sought attorney fees, costs and 8% interest]
Conclusion on summary judgment
The strike out and Unwired Planet's application to amend to include declaratory relief
"A declaration … as to the terms or range of terms that would be FRAND for a licence to use (i) the claimant's portfolio of Standard Essential Patents and/or (ii) the claimant's portfolio of patents."
The terms on which the first declaration amendment will be allowed