England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

		The Rolls Building 7 Rolls Buildings Fetter Lane London EC4A 1NL
		Date: Thursday, 12th September 2013

MR JUSTICE NORRIS :

1. HTC challenges the validity of two of Nokia's patents. Nokia counterclaims that HTC phones, which utilise chipsets from Qualcomm and Broadcom, infringe their patents. The trial of these issues is at present set to commence on 1st October 2013, and there is a very tight timetable (reviewed in July) intended to lead to that trial.
2. In this case disclosure has been by way of documentary disclosure rather than by way of the preparation of a "product and process description". To make good their case on infringement, Nokia need certain documents from Qualcomm and from Broadcom, who are not parties to this litigation. They are based in the United States.
3. Nokia brought a third party disclosure application against Qualcomm in the United States, (which I will refer to as the "1782 application"). On that application the District Court for Southern California made a protective order which provided for Qualcomm to hand over certain documents, but subject to the protections which were imposed by the order.
4. To put the matter very shortly (for the protective order is detailed and complex) the order provided, by paragraph 19, that the relevant designated documents of Qualcomm should not, unless otherwise ordered by the US Court, be shown to anyone other than a list of named persons or categories of person. Amongst those permitted to see the documents were "Counsel of Record". This was a defined term. According to paragraph 10 of the protective order, "Counsel of Record" are attorneys who had either (a) appeared in the 1782 application or (b) had both executed a document in a prescribed form and either appeared in or been retained to represent or advise in proceedings defined as "Foreign Litigation". That is also a defined term, and the definition include the present proceedings now before me.
5. The prescribed form was found in Exhibit A to the order. It was an acknowledgement and agreement to be bound by the protective order. Paragraph 3 contained a promise by the signatory that he or she would use information provided under the protective order "only in a manner authorized by the Protective Order, and only to assist counsel in the Foreign Litigation".
6. Paragragh 4 of the proposed acknowledgement contained a promise not to discuss the designated material "with anyone other than the persons authorized under the Protective Order".
7. Paragraph 5 then contained a submission to the jurisdiction of the District Court for the Southern District of California with respect to enforcement of the order.
8. Paragraph 6 contained an acknowledgement that if information was used in a manner contrary to the provisions of the protective order, then the signatory might be subject to sanction for contempt of court.
9. The protective order had been negotiated between the parties to the 1782 application, namely Nokia and Qualcomm. But it was something of an accident that it was Nokia that made the 1782 application, it being known that HTC and its advisers would also be concerned as to the terms of the protective order. Accordingly, there was an opportunity, though it should be noted only a short opportunity, for HTC's legal team to review the terms of the protective order before it was made. When they reviewed the terms of the protective order, it appears that they did not understand or appreciate that "Counsel of Record" would have to enter into an agreement in the form set out in Exhibit A to the protective order (or if they did then that it did not unduly trouble them).
10. I should refer to two other provisions in the protective order. Paragraph 22 of the order begins with these words:

"Absent written permission ... from QUALCOMM, persons not permitted access to Designated QUALCOMM Material under the terms of this Protective Order shall not be present while Designated QUALCOMM Material is discussed or otherwise disclosed."

11. The paragraph then goes on to provide that pre-trial and trial proceedings shall be conducted in such a manner, subject to the supervision of the relevant court, as to protect the designated material from disclosure to persons who are not authorised to have access to it under the protective order.

The paragraph then continues:

"To the extent that this provision is inconsistent with German, English, or other procedural law governing the Foreign Litigation, each Party shall, in connection with the Foreign Litigation: (a) comply with the provisions of this Paragraph 22 to the extent permissible under applicable procedural law; and (b) formally request the Court hearing the Foreign Litigation restrict third party access to the Designated QUALCOMM Material to the greatest extent permissible under applicable law."

12. Paragraph 28 is headed "Protected Materials Subpoenaed or Ordered [to be] Produced In Other Litigation". It says that if a party receiving designated material is served with a subpoena or court order that would compel disclosure of information which has been provided under the protective order, then that party must notify Qualcomm of that demand promptly and provide a copy of the subpoena or the order. The receiving party must also immediately inform the person who sought the subpoena of the existence of the protective order. The paragraph then recites that the purpose of imposing these duties is to alert the interested parties to the existence of the protective order.

The paragraph concludes:

"Nothing in these provisions should be construed as authorizing or encouraging any Authorized Reviewer(s) in this action to disobey a lawful directive from another court."

13. An order in that form was made on 5th August 2013; and on 22nd August the relevant Qualcomm documents were simultaneously provided to Nokia's solicitors and to HTC's solicitors by Qualcomm's solicitors. The documents have been referred to as the "crown jewels". As I understand it, they are design drawings for Qualcomm chips which disclose what Qualcomm says is the competitive advantage of its chip set over other chips, hence Qualcomm's desire to impose the most stringent limits on who could see it.
14. It has lately become apparent that counsel retained by HTC, Mr. Speck QC and Mr. Nicholson, are not prepared to sign an agreement in the form of Exhibit A to the protective order. Their concern is not with the nature of the obligations as regards confidentiality to which they would be subjected. As I understand it, they are perfectly prepared to comply with the restrictions in the protective order (which are in some respects less demanding than the terms of many a confidentiality club formed in litigation of this sort in this jurisdiction). Their concern is that they are obliged to submit to the jurisdiction of the District Court of Southern California and to acknowledge that they may be personally liable to proceedings for contempt of that court's order.
15. One of the factors, but by no means the only factor, which has caused them to form that view is the availability of insurance in respect of any inadvertent breach of the protective order.
16. I intend to express no view about the reasonableness or otherwise of the attitude taken by Counsel. It is simply a given in the scenario with which I have to deal. But it has placed HTC's legal team in considerable difficulty, in that individuals in HTC's solicitors (Hogan Lovells) have signed up to an agreement in the form of Exhibit A. They have promised, in accordance with paragraph 19 of the order, that they will not show any of the protected material to any third party; that is to say, anyone who is not authorised under paragraph 19 themselves to view the material. This means that there is a prospect of the case going to trial without HTC's counsel being able to see the Qualcomm designated material or even to be present in court when it is discussed or disclosed. That is clearly not a tenable position, and the prospect is raised that they must be dis-instructed in relation to the trial and a fresh team instructed, or that they must be dis-instructed in relation to that part of the infringement claim which relates to the Qualcomm chips (even if they remained instructed in relation to the validity issues and in relation to the infringement claim so far as it relates to the Broadcom chips, where appropriate arrangements have been made). This has accordingly led to the issue of the application notice now before me whereby HTC seeks an order that Nokia does forthwith give specific disclosure and specific inspection of the Qualcomm documents.
17. It is common ground that for such an order to be made I would have to be satisfied that it is appropriate to make an order under CPR 31.8, both because jurisdiction exists and because, as a matter of discretion, it is appropriate to exercise that jurisdiction. CPR 31.8 says that a party's duty to disclose documents is limited to documents which are or have been in his "control". CPR 31.8(2) is then in these terms:

"For this purpose a party has or has had a document in his control if -

"(a) it is or was in his physical possession;

"(b) he has or has had a right to possession of it; or

"(c) he has or has had a right to inspect or to take. copies of it."

18. It is common ground that the Qualcomm designated documents are not in the physical possession of Nokia. Those documents are in the hands of its lawyers. The issue has really been whether Nokia "a right to possession" of the documents or "a right to inspect" them or whether, notwithstanding the strict legal position as regards right to possession or right to inspect, they in fact have substantial control over the documents (since it is common ground that CPR 31.8(2) does not set out an exhaustive list of the circumstances in which a party may have control of the documents). My attention was drawn to the notes to the rule in 31.8.2 of the White Book and to North Shore Ventures Limited v Anstead Holdings Inc [2012] EWCA Civ 11 at paragraph 40 where Toulson LJ held as follows:

"In determining whether documents in the physical possession of a third party are in a litigant's control for the purposes of CPR 31.8, the court must have regard to the true nature of the relationship between the third party and the litigant. The concept of 'right to possession' covers ... a situation where a third party is in possession of documents as agent for a litigant……

But even if there were on a strict legal view no 'right to possession', for example, because the parties to the arrangement caused the documents to be held in a jurisdiction whose laws would preclude the physical possessor from handing them over to the party at whose behest he would be truly acting, it would be open to the English court in such circumstances to find that as a matter of fact the documents were nevertheless within the control of that party within the meaning of CPR 31.8(1). CPR 31.8(2) states that for the purpose of CPR 31.8(1) a party has or has had a document in his control if the case falls within paragraphs (a) to (c). It does not state that a party has or has had a document in his control if but only if the case falls within one of those paragraphs."

19. None of that law is contentious on this application. The real issue is whether in the circumstances which I have outlined it is correct to say that Nokia has control of Qualcomm documents provided to it under the terms of the protective order in the 1782 application.
20. In essence, the primary argument of Mr. Speck QC and Mr. Nicholson is that the documents are held by Nokia's solicitors, those solicitors must act on the instructions of Nokia, and the situation is akin to one of agency. This is one of those cases where although strictly there may be no "right to possession", none the less in reality it is open to the Court to find that as a matter of fact the documents are in the control of Nokia.
21. On the other side Mr. Bloch QC submits that the reality of the matter is that Nokia does not have control in the sense in which that is used in CPR 31.8 of any of the Qualcomm documents. The Qualcomm documents were provided under the terms of the protective order. The protective order carefully defines who may look at the documents and in whose presence the documents may be discussed. It is simply not open to Nokia to say to its solicitors "Hand over the documents so that we may disclose them to HTC". Nor is it open to them to tell their solicitors to disclose the documents to HTC's solicitors directly. That is because on receipt of instructions of that sort the solicitors will be entitled to refer to the order and to say that to act in accordance with the instructions they were receiving would be to act in breach of the protective order, and that those solicitors who had access to the designated documents because they had signed Exhibit A would be exposed to claims for breach of contract and contempt of Court Nokia therefore cannot control the documents. It can make requests, but the solicitors are not obliged to comply with those requests (any more than HTC's own solicitors would be obliged to hand HTC the documents provided to them on 22 August 2013 simply because HTC demanded them). The solicitors are only obliged to comply with the request if the documents are to be disclosed to any of the persons named in paragraph 19 of the protective order, but to no other persons.
22. The threat that Qualcomm may enforce the protective order against anyone who complied with a request from Nokia to hand over the documents is a real one. On 11th September, solicitors for Qualcomm notified Nokia and also HTC that if Nokia or its agents breached the protective order by providing access to the designated material to any individuals not permitted access to the same under the terms of the protective order, Qualcomm would consider this a breach of the protective order and reserve all its rights to seek relief in respect of that breach.
23. They went on to say that the Qualcomm designated material contained some of Qualcomm's most confidential information and that Qualcomm would vigorously have opposed the production of anything if it had any reason to believe that HTC or Nokia would argue that the protective order was somehow inappropriate or did not cover access to the Qualcomm confidential information.
24. In the face of that e-mail, Mr. Speck QC recognises that if I make an order in the terms which he seeks, it must follow that before that order is actually carried into effect there would have to be an application in the California court for the American courts to modify the protective order or otherwise to approve compliance with the order of the English court so as not to place the individuals complying with the English order in jeopardy of sanction by way of contempt proceedings or liability or breach of contract in relation to highly valuable information. None the less, he says I should proceed to make the order and that application should then follow. He recognises that there will of course be delay in pursuing that course which may well prejudice the trial date anyway.
25. There is in fact already before the American courts an application to vary the protective order at the suit of HTC to enable HTC's counsel to see the relevant material without having to comply with the obligation to which everyone else is subjected to sign up to an agreement in the form of Exhibit A.
26. Mr Speck QC has a secondary argument based on paragraphs 22 and 28 of the protective order which he said recognised that the English courts could make a procedural order that was at variance with the protective order. But that argument was (rightly) not pressed. The interpretation of the protective order is a matter for the American court. There is a real argument (which I cannot determine) that paragraph 22 is addressing what happens at hearings and that paragraph 28 is addressing the situation in which Nokia is the subject of a subpoena in "other proceedings" (i.e neither the 1782 application nor the "Foreign Litigation") by a third party who wants to see what Nokia has obtained under the protective order. In any event, the reality is that however I was to interpret the protective order in the course of deciding the disclosure application Qualcomm has made its position clear. It plainly does not accept that the English Court can (in effect) vary the application of the protective order.
27. I propose to refuse to grant the relief sought, first, on the grounds that I do not consider that the jurisdiction under CPR 31.8 is available in the circumstances and, secondly, even if it were, as a matter of discretion I would not make an order which had the effect of varying a United States order possibly to the prejudice of Qualcomm whose confidential information this is and who has had no real opportunity to address the court.
28. Qualcomm has appeared at this hearing and has sought an adjournment of it so that full argument could be addressed. It seems to me inappropriate to take that course. The timetable is such that I ought to decide the issue now and give the parties the chance either to pursue the relevant applications in the American courts or to appeal my decision. Simply to put off the decision will use up time and engage resources that might prejudice the preparation for the trial.
29. I do not think I have jurisdiction because I do not consider that the Qualcomm documents are in the circumstances I have outlined under the "control" of Nokia. Nokia is neither in law nor in fact able to compel anybody to deal with the documents otherwise than in accordance with the protective order of the United States court. That, it seems to me, is the beginning and the end of it.
30. As a matter of discretion, I would not seek to vary the terms of the US court order, possibly to the prejudice of Qualcomm.
31. I realise that this now places the trial in jeopardy. It is possible that the trial might limp along as a trial on invalidity to be followed by a trial on infringement issues. It is possible that one of the infringement issues (relating to Broadcom) might have to be addressed, leaving the other (relating to Qualcomm) to come on at a later stage, possibly with a different legal team who are prepared to sign up to the protective order. It is possible that the United States court would be satisfied (and that Qualcomm would be satisfied) with a variation to the protective order which permits Mr. Speck QC and Mr. Nicholson to have access to the designated documents (a) on the basis of the usual professional obligations which English Counsel owe in relation to the production of such material, or (b) possibly because they could be governed by the terms of a specific confidentiality agreement: or (c) possibly because they would give an undertaking to the English Court to comply with the terms of the protective order,
32. Of course any of those arrangements would mean that proceedings against Counsel in respect of any breach would have to be brought in England rather than in the United States, but that may be something which the US court and Qualcomm might contemplate.
33. The possible outcomes are such that it would be quite wrong for me to adjourn the trial at this stage. I think one must wait to see how matters develop, particularly in America where the hearing is set for 16th September, though when judgment would be given is entirely unclear. It may possible for a protocol to be agreed between an English judge and the United States judge as to how the protective order might be varied so as to permit the trial to proceed according to its tight timetable. All these are possibilities, but they must proceed on the footing that I am not prepared to make the order sought in the application.
(For proceeding after judgment see separate transcript)