England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
PATENTS COURT

		The Rolls Building, 7 Rolls Buildings, London EC4A 1NL
		30th January 2015

MR. JUSTICE BIRSS :

1. On 28th November 2014 I handed down judgment concerning patent EP 1,212,919 (UK), following a six day trial in October and November of that year. The judgment finds the patent is valid and is essential to the relevant UMTS and LTE telecommunications standards. In this judgment today I will use the same terminology as was used in that trial judgment ([2014] EWHC 3924 (Pat)).
2. On 19th December I dealt with costs but it was agreed that consideration of other remedies, particularly an injunction, would require more time so that matter was adjourned. One of the issues today is to give directions relating to the resolution of the question of injunctive relief in this case, which in turn involves questions about FRAND licences.
3. The other matter I need to resolve first arose at the December hearing. Just before that hearing ZTE issued an application for permission to reopen the trial, to amend the pleadings to plead new prior art against the validity of the patent and then to have a further trial about that new prior art. It was clear that that application could not be heard in December and ZTE sought an order suspending sealing of the order due to be made on 19th December until the application was heard. That was because it was clear that the court has jurisdiction to entertain such an application before the order is sealed; whereas, there is at least a real question whether the first instance court has such a jurisdiction after the order has been sealed. I directed that the order not be sealed to facilitate the orderly resolution of this application and in fairness to ZTE. Neither side had the chance on that occasion to do anything other than a very quick review of the authorities and the views I expressed on that occasion about the test to be applied in considering ZTE's application were expressed without the full consideration of the relevant cases, which has been possible today.
4. I will consider ZTE's application first.

Circumstances

5. This patent is about relocation of a protocol termination point in a mobile phone system. It is declared essential to the relevant UMTS standard. A key aspect of the invention and a key feature of the claim dealt with at trial is the use of something called protocol transparency. ZTE's case was that the patent was invalid. ZTE originally pleaded four citations against this patent when the case began in 2012. One was dropped before trial. The other three were different documents forming part of the working papers in the working group which were part of the 3GPP project to set up the standards for the UMTS system. The working group was concerned with architecture and interfaces in the standards. The particular working papers were concerned with the relocation of a protocol termination point in the context of handover of a phone between one cell and another. At trial the documents were referred to as 359, 413 and A61.
6. Following the exchange of pleadings in late 2012 and early 2013, the parties could not agree whether to deal with so-called FRAND issues first or deal with the technical patent trials first. I resolved that dispute at a CMC in May 2013. The patent trials were to be scheduled first. A statement of case on common general knowledge was filed by ZTE in December 2013 and a response from Vringo was filed shortly thereafter but no other significant steps were taken by either party at that stage to clarify their opponent's case. In particular a step often taken in patent cases, in which the person challenging validity breaks the claims down to features and asks the patentee to admit which claimed features are present in a given item of prior art, was not taken.
7. The exchange of expert reports was due in the summer of 2014. At that stage ZTE's case was that A61, and the other two documents, disclosed all the features of all the relevant claims. In particular, ZTE's case was that the reference to transparency in all three documents, A61, 359 and 413, was a reference to, and disclosure of, protocol transparency as required by the claims. Also part of ZTE's case was that protocol transparency was known in any event. This case was supported by the opinion of Dr Brydon.
8. In the first expert's report of Vringo's expert, Mr. Townend, which was served on 5th September 2014, an important point was explained as part of Vringo's case. Mr. Townend's opinion was that the transparency referred to in the three cited prior art documents, A61, 359 and 413, was not protocol transparency. Mr. Townend's opinion was that it referred to and disclosed only network transparency and was therefore not a disclosure of the claimed invention at all. For a discussion of protocol and network transparency see paragraphs 34-38 of the main judgment.
9. In Dr Brydon's report in reply to Mr. Townend, ZTE's expert maintained his view that the prior art documents disclosed protocol transparency but also explained his opinion that if even if they disclosed network transparency, the claim was obvious because it was obvious to a person skilled in the art to employ protocol transparency in the relevant context. That context was the relocation of a protocol termination point.
10. These issues were all discussed in detail at trial. ZTE, supported by Dr. Brydon's opinions, relied on two other instances of protocol transparency which they said were relevant. One was during handover in the pre-existing and well-known GSM system. This involved looking at the BSSMAP protocol in GSM. The other was based on the OSI model of a protocol layer stack.
11. At trial I held that neither A61 nor the other two cited prior art documents disclosed protocol transparency. Therefore, I rejected the allegation of lack of novelty. I also rejected ZTE's obviousness case over the three prior art documents. Although both the GSM handover BSSMAP example and the OSI protocol layer stack model do involve protocol transparency, I held that neither of those cases was an instance of protocol transparency being used in the relevant context (trial judgment paragraphs 130-133, 141 and 142).
12. After the judgment was circulated, ZTE's employees looked for examples of protocol transparency in the context of relocation of a protocol termination point. They found an example and within two weeks of the judgment being handed down, ZTE's lawyers had raised it with Vringo. The new example is part of the process for handover a mobile phone system called IS-95. The prior art which ZTE now wishes to rely on consists of three IS-95 standards documents. The particulars relied on relate to handover. The documents are:

i) TIA/EIA Standard MC-BS Interface for Public Wireless Communications Systems TIA/EIA-634-B, March 18^th 1999 ("634");

ii) American National Standard for Telecommunications – Personal Station - Base-Station Compatibility Requirements for 1.8 to 2.0 GHz Code Division Multiple Access (CDMA) Personal Communications Systems ANSI J-STD-008-1996 ("008"); and

iii) TIA/EIA Telecommunications Systems Bulletin Support for 14.4 Kbps Data Rate and PCS Interaction for Wideband Spread Spectrum Cellular Systems TSB74 December 1995 ("TSB74").

13. There is no doubt that these documents were made available to the public before the relevant date. ZTE contends that the documents show the use of protocol transparency in the context of relocation of a protocol termination point. ZTE contends that the documents deprive the claim of '919 of novelty and also wishes to argue that even if that is not right, the '919 patent is obvious over these IS-95 documents.
14. As regards novelty, an expert report's report dated 9th January 2015 Dr. Brydon expresses his opinion that the IS-95 documents anticipate the '919 patent. Mr. Townend has prepared a report in reply, Dr. Brydon has responded to that and Mr. Townend has replied to that as well. So now there are two reports from each expert. They disagree whether the IS-95 documents disclose protocol transparency at all and they disagree on other matters too, which I will return to. It is fair to say that the parameters of the dispute about novelty relating to the IS-95 documents are tolerably clear. As regards obviousness, nothing has been said so far. ZTE seeks permission to amend to plead both lack of novelty and obviousness. Vringo says that the application to raise these issues should be refused.

Principles

15. I start of the decision of the Supreme Court in In re L and another (Children) (Preliminary Finding: Power to reverse) [2013] UKSC 8. In that case, the Supreme Court considered the power of the judge to reverse his or her decision before the order was drawn up and sealed. They held that the jurisdiction to do this does exist and, importantly, they disapproved of statements in two earlier cases In re Barrell Enterprises [1973] 1 WLR 19 and Stewart v. Engel [2000] 1 WLR 2268, to the effect that exceptional circumstances were required before such a jurisdiction should be exercised. The Supreme Court explained that every case must depend on its circumstances and that the starting point was the overriding objective in CPR Part 1 to deal with cases justly. I was not aware of In re L when I heard ZTE's application in December and when, on that occasion, I said words to the effect that exceptional circumstances were required, that was wrong. It also means that care needs to be taken with other cases dealing with this issue in so far as they take In re Barrell or Stewart v. Engel into account.
16. There are two major differences between the circumstances of In re L and this case. First, as counsel pointed out, In re L was a case concerning the care of children. That is true but it is clear that the Supreme Court were considering the legal principles from the point of view of civil and family law in general and not just in children cases.
17. The second difference is important. In re L was concerned with a judge changing her mind. It was not a case, like this one, about an application by the losing party to raise a new, hitherto unpleaded issue, call more evidence and have a new point decided. This case is not one in which I am being invited to change my mind about a point I have decided based only on what I heard at the time. Nevertheless, it seems to me that this difference does not mean that the general principle articulated by the Supreme Court is inapplicable. By that I mean that the overall guiding principle here is the overriding objective to deal with cases justly, or, in terms of the CPR Part 1 as it is today, to deal with cases justly and at proportionate cost. It must be applied in different factual circumstances and the fact that this application involves amended pleadings and new evidence is an element, no doubt an important one, in the relevant circumstances.
18. Applications of the particular kind in this case have come before the courts before. What I am referring to is an application by the losing party in a patent case in which their challenge to validity has been rejected and the patent found valid at a full trial, to then rely on new prior art and to make a new case that the patent is invalid. They have not met with much success. I will mention two of them below.
19. I start with the decision of Neuberger J in Charlesworth v. Relay Roads [2000] RPC 9 and [2000] 1 WLR 230. Here, Neuberger J heard an application by the defendant to reopen the trial, amend the pleadings to raise two new points on prior art and then have new evidence and a fresh trial, at least on these new points. The first point was about an item of prior art already in the case called Cheney. The application was not seeking to add new prior art but to call new evidence about this existing prior art. The judge had considered Cheney at trial and rejected the invalidity case based on it. The new evidence dealt with the point considered by the judge. The second new point that the applicant sought to raise was to raise a new item of prior art altogether, a prior use which had been carried out by the patentee.
20. The judge decided that he had jurisdiction to make the order before the sealing of the order following trial. In that sense he was dealing with the same point as was confirmed in In re L.
21. In terms of the exercise of his discretion, the judge considered the discretion applicable to amending pleadings under the CPR, i.e. the overriding objective. He considered cases dealing with amending pleadings, especially late pleading amendments and referred to cases such as Worldwide Corporation v GPT (unreported, Court of Appeal 2008) and Ketteman v. Hansel Properties [1987] AC 189. At p306 ln 42 (of the report in the RPCs) Neuberger J (as he then was) noted the observation of Lord Griffiths in Ketteman as follows:

"Furthermore, to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence."

22. And then Neuberger J added:

"even more so when the amendment is sought to be made after judgment."

23. Neuberger J noted that important considerations were the interests of conducting the litigation efficiently and, in the end, the balance of the interests of a litigant in the instant case, justice to other litigants and a fair allocation of the court's resources.
24. The judge also considered Ladd v. Marshall [1954] 1 WLR 1489 and the conditions which have to be satisfied in the Court of Appeal before it would receive new evidence. That question naturally arises in a case like this since the applicant is the party who would otherwise be an appellant seeking to rely on fresh evidence after judgment. The Ladd v. Marshall factors are as follows:

"First, it must be shown that the evidence could not have been obtained without reasonable diligence for use at the trial. Secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive. Thirdly, the evidence must be such as is presumably to be believed or, in other words, it must be apparently credible, though it need not be incontrovertible."

25. After referring to them Neuberger J then said:

"While I think that these three factors should be in the forefront of the mind of the court when considering an application to admit new evidence after judgment has been handed down, but before the order has been drawn up, I am inclined to the view that the court must be somewhat more flexible and not to proceed on the strict basis that each of these three conditions always has to be satisfied before fresh evidence can be admitted before judgment."

26. In his judgment the judge also referred to a passage from the judgment of Stuart-Smith LJ in the Court of Appeal in ICI v. Montedison, as follows:

"It is incumbent upon a party to adduce such evidence as he considers relevant and persuasive relating to the findings of fact which the judge may make. He cannot wait for the findings and then say, 'Oh well, I could have called more evidence on that point'."

27. Neuberger J summarised the principles to be applied as follows (p308 ln 49 of the RPC report):

1. The court has jurisdiction to grant an application to amend the pleadings to raise new points and/or to call fresh evidence and/or to hear fresh argument;

2. The court must clearly exercise its discretion in relation to such an application in a way best designed to achieve justice;

3. The general rules relating to amendment apply so that:

(a) While it is no doubt desirable in general that litigants should be permitted to take any reasonably arguable point, it should by no means be assumed that the court will accede to an application merely because the other party can, in financial terms, be compensated in costs;

(b) As with any other application for leave to amend, consideration must be given to anxieties and legitimate expectations of the other party, the efficient conduct of litigation, and the inconvenience caused to other litigants;

4. Quite apart from, and over and above, those principles, because it is inherently contrary to the public interest and unfair on the other side that an unsuccessful party should be able to raise new points or call fresh evidence after a full and final judgment has been given against him, it would generally require an exceptional case before the court was prepared to accede to an application where the applicant could not satisfy the three requirements in Ladd -v- Marshall;

5. Almost inevitably, each case will have particular features which the court will think it right to take into account when deciding how to dispose of the application before it.

6. The court should be astute to discourage applications which involve parties seeking to put in late evidence, but cases where new evidence is found after judgment is given and before the order is drawn up will be comparatively rare.

28. It seems to me that those principles remain relevant today but I note that the word "exceptional" is used in point 4. Although the word is not there used in exactly the same sense as was disapproved by the Supreme Court in In re L, nevertheless I note that that part of Neuberger J's formulation was itself approved in Stewart v. Engel, (I derive that from the judgment of Pumfrey J in Navitaire v EasyJet [2006] RPC 4 at p231). Of course Stewart v. Engel has now been disapproved.
29. The point which Neuberger J in Charlesworth was seeking to express was that in a case like the one before him, with an application to raise a new point, call new evidence and have a new trial, that if the applicant does not meet the Ladd v. Marshall test, it is hard to see how, in most cases, it would be permitted. I respectfully agree with that sentiment although I think it is right to say that to characterise any element of the test by using the word "exceptional" is not now correct in the light of In re L.
30. For the outcome of Charlesworth itself, one needs to look at the version of the report of that case which is to be found in the RPCs. In relation to the Cheney prior art, although the judge could not be certain that the new evidence would lead to the invalidity of the relevant claim and that it was conceivable that the claim was valid as held at trial, Neuberger J clearly thought this new evidence gave rise to a strong case of invalidity. At page 310, line 40 to page 311, line 10 of the RPCs, the judge held that there was a good chance of persuading the Patents Court that the claim was invalid. However, he refused to admit the evidence, essentially because the point to which it was relevant was quite clear in advance of the hearing and the applicant could have raised it earlier. The applicant had the relevant drawings and chose or neglected to look at them. So given that Ladd v Marshall was not satisfied and there were no special factors, the judge refused the application.
31. The other application was about a prior use by the claimant. The claimant denied that it had taken place at the relevant time. A key factor which the judge considered was the first Ladd v Marshall question concerned with whether the evidence could have been found with reasonable diligence. The judge was satisfied that the defendant could not have found the material with reasonable diligence. Although the investigations which led to the evidence could have been conducted before trial, there was no evidence or reason to think that the claimant had carried out the prior use and so the judge found in the applicant's favour and admitted the Charlesworth prior use.
32. I turn to deal with the other important case in this area, the judgment of the Court of Appeal in Coflexip v. Stolt Comex [2001] RPC 9. That was an application to raise new art on appeal. Here the patent was found valid at trial and on appeal the applicant sought permission to amend the pleadings to add a new item of prior art, a US Patent and base a challenge to validity on that. At paragraph 6 of his judgment, Aldous LJ referred to Ladd v. Marshall. He rejected the argument from the applicant that somehow one could circumvent the Ladd v. Marshall principles by characterising the application as one to amend pleadings, rather than admit fresh evidence. In paragraph 7, Aldous LJ referred to CPR Part 1, the overriding objective and the considerations that involves. He held that the application to re-amend did not satisfy the overriding objective and rejected it.
33. Aldous LJ made further observations (in paragraphs numbered 8 and 9 in the RPC report), as follows:

"8. To ensure expeditious and fair resolution retrials must be avoided. Thus a defendant in a patent action must decide the extent of any search he wishes to make and, except in very unusual circumstances, will be held by this Court to the decision he takes. To conclude to the contrary would encourage applications to introduce fresh prior art to meet conclusions reached by the trial judge with consequent delay and increased cost. Further a retrial cannot be an acceptable allotment of an appropriate share of the court's resources except in very unusual circumstances. None arise in this case.

9. It is not for the court to decide whether a search for prior art carried out by a defendant was reasonable. What is reasonable depends on a variety of factors, such as cost, importance of the result to the defendant, and its resources. To ensure that litigation is carried out efficiently and fairly parties must bring before the court the case that they wish to rely on. That Stolt did in this case. They carried out searches which they believed were appropriate and which they believed and still believe were reasonable. It was their decision not to search more widely and it is not right to allow them to reopen their case in this Court. There are no exceptional circumstances which would make this an appropriate case for amendment requiring a new trial."

34. I also refer to what Chadwick LJ said in the paragraphs numbered 25 to 28 in the RPC version of the report:

"25. In deciding whether or not to make an order which would have that effect, the court must have regard to the overriding objective set out in CPR 1.1. In particular, the court must have regard to the need to allot to this case an appropriate share of the court's resources while taking account of the need to allot resources to other cases. Where the court's resources have already been allotted to one trial of the issues between the parties, a party seeking a second trial to raise new issues has a heavy burden to discharge if he is to persuade the court that further resources should be allotted for that purpose. The court is entitled to expect that parties will bring before it for trial, at one and the same time, all the issues upon which they wish to have a decision. Two bites at the cherry is wasteful of resources.

26. I agree with Lord Justice Aldous that it is not enough for a party in a patent action to say that he acted reasonably in deciding what limit to place upon his searches for prior art when preparing for a trial. It is accepted by the appellants, as I understand it, that more extensive searches than those actually carried out would have revealed the additional prior art upon which they now seek to rely. Such an acceptance is inevitable, as it seems to me, where it cannot be disputed that the additional material was there to be found. In such a case the test is not whether a party did what was reasonable; it is whether he did what was necessary.

27. It is no answer for the appellants to say that the respondents would not be prejudiced if there were to be retrial. That is to ignore the interests of other court users; who will be prejudiced if time and resources which could be used to hear and dispose of their cases have to be devoted in the re-trial of a case which has already been heard. The limited number of nominated patent judges, and the heavy demands on the Patents Court, gives the point particular force in patent cases.

28. Nor is it any answer for the appellants to say that if, as they contend, the respondents' patent is invalid, it is in the public interest that it be revoked as soon as possible. The court cannot assume that, if there were to be another trial on the new material, the respondents' patent would be held invalid. The appellants are driven to say that, because they might succeed at a retrial, it is in the public interest (as well as in their own private interests) that they should be given that opportunity. But, if the monopoly conferred on the respondents by the continued registration of the patent is really operating to the public detriment, then it may be expected that the patent will be challenged by another party in other proceedings. If that were to be the effect of refusing the appellants' present application, then the refusal of that application in order to avoid a waste of resources would have been pointless. The resources which would be expended on a retrial would be expended in any event; because (absent a retrial) they would have to be allotted to the other proceedings But that is not this case. The appellants have made no attempt to establish that (absent a retrial) the respondents' patent will be challenged by another party in other proceedings. In those circumstances the court must address the appellants' present application on the basis that there is a real risk that to allow the application will lead to a waste of resources, contrary to the public interest; and that there is no public interest in giving the appellants a further opportunity to test the validity of the respondents' patent at a retrial sufficient to justify taking that risk. Unless the court can see that (absent a retrial) it is really inevitable that there will be a challenge by another party in other proceedings, it should leave events to take their course. The court should not allow a party to pursue its own private interests in a way which is wasteful of the court's resources under the guise of promoting an alleged public interest in challenging the monopoly conferred by the patent."

35. These considerations show why the Court of Appeal refused the application to amend the pleading to add new prior art in Coflexip.
36. Another case cited before me was EI Du Pont de Nemours & Co v. ST Dupont [2003] EWCA Civ 1368. It is trade mark appeal case. It stands for the proposition that the public interest is a factor to take into account when applying Ladd v Marshall albeit I believe the court in that case decided that Ladd v. Marshall was still the relevant applicable principle. I also note what Chadwick LJ said about the public interest in the passage I have quoted above from Coflexip (paragraph 28).
37. Another case referred to which I have mentioned already was Navitaire v EasyJet. That is a case not concerned with exactly the same circumstances as I have. It was a copyright case and the fresh evidence which was being sought to be allowed after judgment was aiming to falsify what a witness had said in court, a denial of copying. It is not as close to the facts of the case I have to decide as the others and I note also that in dealing with the principles the learned judge there did refer there to In re Barrell and Stewart v. Engel. I do not propose to say any more about Navitaire.
38. I can summarise the principles in this way. The court has a jurisdiction, at least before the order is drawn up, to entertain an application of this kind as in here. The principle to be applied generally is the overriding objective to deal with cases justly and at proportionate cost. This involves dealing with cases expeditiously and fairly and allocating an appropriate share of the court's resources to a dispute. In a case like this one, in which the application is to amend the statement of case, call fresh evidence and then have a further trial, the principles relevant to amending pleadings have a role to play but the Ladd v. Marshall factors are also likely to have real significance.
39. As regards principles applicable to amendments, the modern view is probably the Court of Appeal in Swain v. Hillman 2001] All ER 91 If the court would not have permitted the amendment before trial, it is hard to see how it is likely to be admitted after trial, apart from some very unusual circumstances. Nevertheless, just because a court would have permitted the amendment sought before, or even during the trial, if it had been raised at that stage, it does not mean that it should be permitted after judgment.
40. As to Ladd v. Marshall, the trial judge is in some ways in a better position than the appellate court to assess the significance of a new point and new evidence. In any case, at this stage the Ladd v. Marshall factors should be applied more leniently to an applicant than they might be applied in an appellate court; but, all the same, the Ladd v. Marshall factors are clearly relevant because the application is an attempt to call new evidence after judgment. If those factors, even applied more leniently, are against the applicant, it is likely that powerful factors in the applicant's favour will be needed to justify the application.
41. There are particular characteristics of cases like this about patents in which a challenger to validity has lost. A key one is that the prior art relied on by the challenger to the validity of a patent is a matter of their free choice. The challenger always has to select the prior art to rely on.
42. Moreover, in almost all cases, there will have been other prior art which is different from the prior art ultimately relied on at trial and which, once the judgment has been read, would allow one to say, "Oh well, the judgment does not deal with these other points." Very many inventions are new combinations of old features. One item of prior art may disclose all but one of the claimed features, while another possible citation may disclose a different combination in which the missing feature is different. It is a commonplace in patent cases that there will be other possible prior art citations in which different differences exist between that other citation and the invention, as compared to the art relied on at trial. Part of the process of preparing a patent case as a challenger to validity is to identify this kind of art and make choices assisted by experts as to what citations to press at trial.
43. There are other particular circumstances of patent cases which play a role in this question as well. The public effect of patents is a factor, as are the other factors mentioned in Coflexip. Third parties can always challenge validity themselves later if they wish.
44. In the end, however, although Ladd v Marshall and the principles applicable to amendments to statements of case should be considered and provide a useful framework, it is important to look at the matter overall and consider the overriding objective to do justice.
45. Mr. Alexander's submitted that Ladd v Marshall is not a straitjacket. I hope I have explained that I accept that submission at least up to a point.
46. I turn to assess the facts and I will start with the first Ladd v Marshall factor. The question is, could these IS-95 documents have been found with reasonable diligence before trial?
47. ZTE says its evidence shows that it carried out reasonable searches before trial. This is addressed by Mr. Cordina of Olswang, the Defendant's solicitors and Mr Wang of ZTE, who describes what the staff there did. Mr Cordina explains that the legal team looked into 3GPP documents, i.e. such as the working papers for UMTS which I have referred to already and looked at the art cited in prosecution of this patent family around the world. ZTE staff also looked for prior art and a patent search firm, Landon IP, was employed and given reasonable search parameters. None of these searches found the documents now sought to be used. It is true that an IS-95 document turned up but it was irrelevant and it did not put the team on to the 634 and other documents which are now sought to be relied on.
48. Mr. Wang of ZTE explained what the staff there did. Mr. Cordina's evidence was that the ZTE legal team thought that they had art which demonstrated that the '919 patent was invalid. All the features of all the claims were in the prior art. In effect, the point being made by Mr. Cordina is that at that stage it was reasonable not to look any further. Essentially he is saying that diligent steps were taken before trial.
49. At one stage I was concerned about something in the way in which the Grounds of Invalidity from ZTE were drafted concerning claim 6 which appeared to contradict Mr. Cordina's evidence. However, I am satisfied by Mr. Alexander's explanation on instructions that the pleading does not falsify Mr. Cordina's evidence, although it does show that the pleaded validity case was rather formulaic in nature. It is fairly clear, it seems to me, that no real attention was paid to the detail.
50. Mr. Wang deals with the position in the summer up to trial once they had seen Mr. Townend's opinion that A61 did not disclose protocol transparency. He refers to the short time between then and the trial and explains that no further instances of protocol transparency were found. So, Mr. Alexander submits this shows that the court can be satisfied that ZTE could not have found the new art with reasonable diligence.
51. Mr. Carr for Vringo submits to the contrary. He says it is clear what really happened. ZTE thought that their case was good enough before trial, they expected to win and they chose to go with the art they pleaded. Only when they lost did things change.
52. Mr. Carr submits that reading Mr. Wang's evidence carefully it is clear that ZTE did not look for documents relating to protocol transparency in the context of relocation of a protocol termination point in the period between the point arising from Mr. Townend's first report and the trial. They only focussed on that after trial and found the IS-95 documents within a very short time. They are not hard to find if you look.
53. He said it is plain that ZTE could and should have looked earlier. If they had looked in September/October, they would have found the documents well before trial. I accept that submission. Based on the evidence from ZTE, I find that ZTE only focussed on protocol transparency in the context of relocation after judgment. However it was plain from at least 5th September, the date of exchange of the relevant evidence, that this was a potentially relevant issue and really of some importance.
54. In fact, there was more to it than that. As the evidence from Mr. Laakkonen for Vringo explains, IS-95 is a very well-known system. Just as GSM was the 2G system in Europe and elsewhere in the world, IS-95 was the 2G system for mobile phones in the USA and other important states. The two things, IS-95 and GSM, were the predominant mobile phone systems before UMTS. It was plainly worth looking at IS-95. The standards are public. The fact that protocol transparency is not a term you can use doing a text search is neither here nor there.
55. I am not persuaded the position in parallel litigation elsewhere assists ZTE on this application but I have some sympathy with ZTE to this extent. It is clear that the issues crystallised in this case very late, by the exchange of expert's reports starting in September before the trial at the end of October. These things could have been clarified earlier and ZTE might well have found out by a Notice to Admit Facts or a Request for a Statement of Case or both that the patentee did not agree that the reference to transparency in A61 and the other documents was a reference to protocol transparency at all.
56. However a point which always was relevant for ZTE was to locate and consider examples of protocol transparency in the context of handover. Proof of this is the GSM example which was a significant issue at trial. Although in that example the protocol transparency identified was not used in the same way as in the invention, it was certainly used as part of handover. It is not difficult to find the relevant bit of IS-95 which corresponds to the bit of GSM which was fought over in some detail at trial. Given the relevance of this point and the prominence of IS-95 itself as a telecommunications system, in my judgment it was plainly worth looking at.
57. I also refer to the Statement of Case on Common General Knowledge. That actually referred to handover in IS-95 as well as GSM. Since serving that document, as far as I can tell, it appears ZTE only focussed on GSM, but the document highlights the plain relevance of IS-95 handover. It seems to me that ZTE must simply have forgotten about what was said in their Statement of Case.
58. Overall I am not satisfied that the first Ladd v Marshall factor is satisfied even on a more lenient basis as applicable at first instance rather than on appeal.
59. The second question is the second Ladd v Marshall factor. The question is: would the evidence, if given, probably have an important influence on the results of this case?
60. The relevant part of document 634 is page 21 of the document at paragraph 3.5.2.1.1, about hard handoff. "Handoff" is IS-95 speak for handover. There is a diagram in 634 showing signalling which is very like the GSM BSSMAP handover signalling considered at trial and set out in the trial judgment at paragraph 122. In the course of this signalling, the source BS (the IS-95 equivalent of GSM BSS-A in the diagram at paragraph 122 of the judgment) sends a HANDOFF REQUIRED message to the MSC and the MSC then sends a HANDOFF REQUEST message to the new target BS (which is the equivalent of BSS-B in the judgment at paragraph 122).
61. These messages are defined in the standard at 6.1.5.4 and 6.1.5.5. Both contain an optional Information Element called Service Configuration Record. The Information Element is defined at 6.2.2.109. The definition explains that the Information Element identifies common attributes used by the MS (i.e. the phone) and the BS to build and interpret traffic channel frames. The Information Element consists of three fields: an identifier, a length field and a variable length "Service Configuration Record" field. The document states as follows:

"The encoding of the Service Configuration Record field is the same as that of Service Configuration Record in TSB74 and J-STD-008."

62. If one turns to TSB74 and 008, each document contains a definition of the Service Configuration Record. It is at paragraph 3.7.5.7 in 008 and paragraph 7.7.5.7 in TSB74.
63. Dr. Brydon's evidence is that document 634 in IS-95, and the documents referred to, disclose all the claimed features. He says it involves protocol transparency just like the examples in UMTS found to fall within the claims of 919 at trial because the field is defined in the 634 standard in a protocol transparent manner and the actual contents are defined in the other standards: 008 and TSB74. Also his view is that this is happening in the context of the relocation of a protocol termination point.
64. In that sense the Service Configuration Record (SCR) here in IS-95 is different from the examples in BSSMAP in GSM which were discussed at trial and are dealt with in the judgment from paragraph 122 onwards. As the trial judgment explains, there were two aspects of the case about BSSMAP in handover in GSM. There was an Information Element called "Old BSS to New BSS Information". That was part of the relocation of a protocol termination point, but I held it was not an example of protocol transparency. (That was paragraph 122).
65. Then there was another Information Element called "Layer 3 Information". That was an example of protocol transparency but was used in a different context than the relevant one about relocation of the RRC protocol termination point. (See the conclusion in the trial judgment at paragraph 133).
66. By contrast here in IS-95, ZTE says they have an example of protocol transparency being used in the context of the relocation of a protocol termination point. However, Mr. Townend does not agree and he takes three points in summary.
67. The first, he says, is that this is not in fact an example of protocol transparency at all. It is a different thing also discussed at trial called "incorporation by reference". Vringo says that at trial it was common ground that mere incorporation by reference was not protocol transparency. An example of incorporation by reference discussed at trial was option (2) proposed by Nokia in the 3GPP working group and referred to in the trial judgment at paragraphs 50-52. Dr. Brydon does not agree. He maintains it is protocol transparency and is the same as what happens in the UMTS system found to infringe.
68. My view about this as follows. It is clear that incorporation by reference arose at trial and my recollection is that ZTE and Dr. Brydon accepted that incorporation by reference was not something within the claim. The mention of Nokia's option (2) proposal was not the only example of incorporation by reference which was discussed. There was another one. To decide if this IS-95 example is a matter of incorporation by reference, as opposed to protocol transparency, would involve resolving the rival views of the experts and may also involve an issue of claim construction which has not yet been decided.
69. The second point made by Mr. Townend is this. He says that in any case the SCR in IS-95 is not a protocol initialisation unit (PIU) whereas the claim requires a PIU. That is mentioned in features (b), (c), (d) and (e) of claim 1 set out in the trial judgment at paragraph 78. As it is not a PIU, it cannot be transferred from one protocol termination point to another. Again, Dr. Brydon does not agree. He maintains it is within the claim and draws an analogy with UMTS.
70. My view of this is that it is a new point. It will involve again the characterisation of the prior art and then a new question of construction of the claim.
71. The third point raised by Mr. Townend is as follows. He says that the SCR in the IS-95 example is read and acted upon by the MSC which, it will be recalled, sits for this purpose in-between the two BSs. If it was protocol transparency, says Mr. Townend, then the MSC would not do that. It is common ground, as I understand it, that in the example in IS-95 the MSC does or at least can read and act on the content of the SCR. But Dr. Brydon does not accept that that means it is not protocol transparency.
72. This is also a new point and again it will require, no doubt, a debate on construction and I suspect a dispute about the proper characterisation of this element of IS-95.
73. Bearing in mind these three points, Mr. Carr submits that it is not possible to say that this evidence would probably have an important influence on the result. All one can say is that there will need to be a new trial and the result is uncertain.
74. ZTE's case set out in the skeleton is that the evidence is highly likely to have an important influence on the outcome of this case. It has direct relevance to the claims. It submits that the points taken by Mr. Townend are extremely unlikely to be successful.
75. I do not accept ZTE's characterisation of the merits of this case. It seems to me that each side has a properly arguable case on novelty. Each side has a real prospect of success. The case could not be struck out, nor do I think that either side could obtain summary judgment. The outcome would depend on a proper trial with full argument and the cross-examination of experts. ZTE's novelty argument is one which undoubtedly would require serious consideration but it is not more likely than not that the new art would have an important influence on the case.
76. I cannot predict anything about the merits of an obviousness case if the art does not deprive the claim of novelty.
77. I do not accept the suggestion that this matter could be dealt with in a single day. It will require proper skeletons, cross-examination and proper speeches. Whether as much as three days of court time suggested by Mr. Carr is necessary I am not so sure, but I am sure it will require at least two days.
78. I turn to the third Ladd v Marshall question which I can deal with very shortly. The evidence on the face of it is entirely credible and it is not a factor against ZTE.
79. In conclusion, considering the Ladd v Marshall factors, the first factor is firmly against ZTE, the second factor is, at best for ZTE, evenly balanced and the third factor is in ZTE's favour.
80. I will now turn and mention briefly the principles applicable to amendment. It seems to me that it is not certain that an application to raise these documents as new prior art in September or October would have been permitted. The amendments would have been very late. But it is, I think, more likely than not that the court would have permitted a late amendment. It may have led to adjourning the entire trial at very significant cost and inconvenience which may have had to be paid by ZTE, but in my judgment that is a fair summary of the position relating to amendment.
81. I will now consider the wider issues.
82. Wider factors in favour of the application to reopen the case are these:
83. First, neither party has acted to their detriment in reliance on the judgment. No irreparable harm in that sense will be caused by reopening the trial.
84. Secondly, this patent has been found to be a standards essential patent or SEP. It therefore affects access to the UMTS and the LTE telecommunications systems as a whole. So unlike some patent cases in which it may be that the only two undertakings who really care about a particular technology are before the court, in this case we know that many in industry will be affected.
85. Thirdly, this patent had been declared to be FRAND, in the sense that the patentee has given an undertaking to offer licences on a FRAND basis. So that means that really this case is only about money. Although at some level, every patent case is only about money, in many other cases there is a real dispute about injunctive relief. I also recognised that in this case there is a dispute about injunctive relief and that relates to the other matter I have to decide. But in truth in this case what is at the heart of it is licensing and money. So reopening the trial, while it will undoubtedly increase the costs, is something where the costs can always be compensated for.
86. Fourthly, by the same logic, there is not a specific financial prejudice to Vringo which could not be compensated in costs. If the case is fought for another two days and Vringo wins, it will be compensated.
87. Fifthly, ZTE submits that Vringo relies on the victory on '919 in a disproportionate way, that now it has established that '919 is a standard essential patent, that is said to have a major effect on the FRAND licensing debate. This also arises on the other matter below.
88. In response to this Vringo submits I should not permit the application. It emphasises that there is really no excuse for ZTE's conduct. They chose to fight on prior art they had selected. They could have found these IS-95 documents if they had wanted them and there is no justification to reopen the trial now. The trial will be at least two days, the parameters of it are not clear, obviousness has not been developed at all and even the novelty issues, although they have been canvassed, are not complete.
89. Also, Vringo also refer to evidence which ZTE gave on the question of costs which sought to downplay the significance of this patent and suggested that the costs which had been incurred so far were disproportionate. That is inconsistent, says Vringo, with ZTE's desire to reopen this case now.
90. Further, Vringo emphasises the significance of finality and Vringo's legitimate expectation that the trial would be the end of the matter. Moreover they emphasize the significant impact that reopening the trial would have on other court users and on the court's resources.

Conclusion on the first matter

91. I am not going to accept ZTE's application. It is for these reasons.
92. First, the fact that the patent is an SEP is not irrelevant but I do not believe it is a strong factor. Others in the telecommunications industry can look after themselves if they wish. It is a sophisticated industry. Still, this is a patent for which, unlike some, it is manifest that others will be interested. That takes me to the next point.
93. I am not satisfied that the strength of this case is so clear that I am leaving a patent on the register which I think is probably invalid. If I did think that was what I was doing in rejecting this application, then given the possible impact on third parties, it might be a weightier factor in favour of the application but the merits are not sufficiently strong for me to take that view. This is just an arguable piece of prior art.
94. I do not place much weight on either side's assertions about the value of this invention or the value of the patent either relating to costs or in relation to the FRAND issues.
95. I do recognise that neither side has acted to their detriment in relation to the judgment and so to some extent it could all be compensated in costs. As I think I have said already, that is a factor in favour of the application.
96. I also recognise that because this patent is covered by a FRAND undertaking, the action is less about injunctive relief than many patent cases, but at the end, as I think I have also mentioned, injunctive relief is still at large. I do not regard that as a strong point either way.
97. The key issue, in my judgment, is about finality and the nature of the new evidence. This is a patent case in which the challenger wants to advance a new case based on a new item of prior art. It is an item of prior art which ZTE could readily have found earlier. It is not clear to me why they did not look for it much, much earlier, given the reference to IS-95 handover in the common general knowledge document.
98. But much more importantly, once they had seen Mr. Townend's expert report on 5th September it was plain that something of this kind was worth looking for and as the debate developed between that time and the trial, the significance of instances of protocol transparency in protocol relocation points increased.
99. Challengers to validity know that they have to make a careful selection of the prior art to rely on. I can see no justification why this application only arose after trial. Given the significance of the GSM handover arrangement at trial, it is frankly incomprehensible that the handover in IS-95 was not looked at before trial too.
100. This is an application which could and should have been made before trial and then it would not have had the serious consequences for the resources and finality which it now has and it would not have the serious impact on other court users which it now would have. To have a further trial witnesses will have to be cross-examined and there will be a significant usage of time and cost. There is simply no good reason why the court and third parties should be inconvenienced in any way as a result of this.

The second matter

101. I turn to consider the other matter I have to decide, which is the question of the patent trial in June. The parties are agreed that there is to be a so-called FRAND "trial" in 2016. Currently it is said to be a nine-day trial in length but there is to be a review hearing in May once it has been pleaded out. There are very real questions about what exactly is or ought to be in issue.
102. The issue I have to decide today is the following. Vringo says that now there is to be that FRAND hearing, the existing scheduled patent case, which is to be heard in June 2015, should be stayed until after that FRAND trial. It may not be necessary and so to stay it would save costs. ZTE does not agree. It says the patent trial should remain in June as scheduled over a year ago.
103. To address this I need to explain a bit more about the trial now to be held in early 2016. Vringo has offered ZTE a licence under its patents. The licence is a global portfolio licence. In other words, it is for all countries and all relevant patents in its portfolio.
104. ZTE has not accepted that offer. It does not want it. One of the things ZTE says is that it is prepared to take a FRAND licence under any patent which is truly a valid SEP. This patent, EP 1,212,919 (UK), has now been shown to be such, but ZTE says Vringo refuses to offer an individual patent licence for it. That is, says ZTE, because Vringo wants to impose the global portfolio licence.
105. Vringo argues that its global portfolio licence is the kind of thing which industry normally enters into. It argues that its offer is FRAND and contends that once the court has decided that the global offer is indeed FRAND then unless ZTE takes the global offer, Vringo will be entitled to an injunction under patent EP 1,212,919 (UK) against ZTE. So Vringo wants a trial (which will take quite a long time) to establish that the global portfolio licence is FRAND and other matters. Then, as I say, if ZTE will not take that global licence, Vringo says that ZTE will be injuncted under the patent. Vringo also contends that this logic flows from the opinion of Advocate General Wathelet in Huawei v ZTE Case C-170/13 (20^th November 2014) currently before the CJEU.
106. I am bound to say I am sceptical about Vringo's argument. Even if the portfolio global licence is FRAND and it is not an abuse of a dominant position to make the offer, it is not obvious to me why that means that the only options to ZTE in this case are being injuncted under EP 1,212,919 (UK), a territorial patent covering only the UK and only covering one aspect of the standard, or signing up to a global portfolio licence, in effect on all patents (within some relevant class) and for all countries, which ZTE does not want.
107. I will say no more than this. 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 EP 1,212,919 (UK). 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 EP 1,212,919 (UK) 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.
110. There may be all kinds of other issues at play. Perhaps the court should consider damages in lieu of an injunction. In any case, the argument I need to address is simply this. Now that we have a FRAND trial it is said there is no need to spend the costs on a patent trial. The rationale for the patent trial has gone now that Vringo has disproved ZTE's contention that Vringo did not have a single patent in its portfolio which was a valid SEP.
111. ZTE does not agree and points out that Vringo's own case is that in addressing FRAND one of the issues would be to consider the significance of the patents. The patent trial is the place to do that properly.
112. Both sides also refer to the international position. Vringo says it shows what a waste of costs all this is. Vringo is prepared to be bound by foreign decisions. ZTE says to the contrary, it is subject to infringement actions abroad which have not considered validity and it wants to demonstrate that these patents are invalid.

Decision on the second matter

113. I do not accept that the existence of the FRAND trial renders this patent trial a waste of time and a waste of costs in the meantime and I will not adjourn it. My reasons are as follows.
114. First, exactly what the shape of the FRAND trial is going to be is very unclear at this stage. By the time it is clear, probably in May, the trial will be in June. If I thought it was clear now that it would make the patent trial a waste of costs, that would be a different matter.
115. I am also sceptical that a patentee who wants to enforce his patents by licensing seems to be trying to avoid having the patents tried and tested. It is notable that in the case I already tried there were originally to be three patents. One was dropped altogether in that Vringo accepted that the patent (I believe the number was '589) was not infringed. That is an important result and it clearly only happened because of pressure on the patentee to come to court and justify its position. For the other patent (029) Vringo dropped a major part of its infringement case but raised another infringement issue to be decided along with validity and consideration of that patent had to be adjourned.
116. Also, this is not a situation in which I am scheduling matters from scratch. The application is to seek to alter existing arrangements in a radical way. Although preparation for the June trial in terms of exchanging things between the parties has not been advanced much past the stage of exchanging Statements of Case, nevertheless the evidence from Mr. Burdon for ZTE explains that some work, significant work, has been done in the preparation of the case up till now. I would be surprised if Vringo's team have not also been preparing for the June trial; indeed, if they have not, then they only have themselves to blame.
117. I will mention the size of the June trial. As listed, it is there to deal with three patents ('933, '212 and '119). That is the maximum number of patents which the trial should consider. Four would be too many. The trial will not include the '919 patent, which it might otherwise have done if I had acceded to the application I have already dealt with. As for the other candidate patent which it might be said to be including, 029, that was adjourned from October. Consideration of that patent depends on a summary judgment application, which should be resolved fairly soon but will need to be kept under review. I will hear the parties about the status of 029 in the meantime.

Conclusion

118. I will not be reopening the '919 trial. I will seal the 19th December 2014 order and I will not order a stay of the patent trials fixed for June.
(See separate transcript for further submissions)

Costs

119. It is plain that I should make an order for costs in Vringo's favour in relation to the application to reopen. That is not disputed. I turn to deal with summary assessment. I have a bill which, excluding VAT, comes to about £130,000. Mr. Carr points out that it is close to the amount spent by the applicant on the same point, which was £122,000. In fact as he submits it even closer than it might at first seem when you take into account the way counsel's fees have been attributed. Mr. Carr submits I should assess these costs at £104,000.
120. Miss Jamal submits that I should reduce the Vringo bill by a somewhat higher sum than the amount suggested by Mr. Carr to take into account the fact that one element that ZTE had to work on which Vringo did not was to produce proper evidence in detail about the searches they had done before trial. All Vringo did in reply was a relatively short statement from Mr. Laakkonen.
121. Mr. Carr is correct that Miss Jamal's proposed way of dealing with it by looking at the Schedule of Work Done on Documents does not work. I do not accept that Miss Jamal is right that I should simply extract out from that schedule the references to Mr. Townend's reports and reviewing prior art, and then ignore everything else. That is not the correct way of doing it. However I do think there is some force in Miss Jamal's point that a little more work was required on one side than on the other. Therefore the fact that the two bills are the same does not indicate that they are both reasonable in reaching the same amount.
122. Overall, one can only ever do this on an approximate basis. It seems to me that the right sum that I should assess for Vringo's costs relating to the reopening application is £95,000. That is the sum I will award.
123. I now have to decide what to do about the costs relating to the other matter. Mr. Carr submits I should order costs in the case. Miss Jamal submits that although a significant part of the costs were incurred in relation to case management and directions which were agreed shortly before the hearing, nevertheless another significant part of the costs were incurred relating to the point which I decided in the judgment I have just given. That was decided in ZTE's favour. She submits that her clients should recover those costs and also another element relating to disclosure is a point, which was conceded during the hearing by Mr. Carr. Her clients should recover those costs as well.
124. Mr. Carr submits that it is impossible to say what proportion of ZTE's costs could be taken out in that way. I accept that it is difficult but it is the kind of assessment which the court is familiar with. One is in the end endeavouring to do justice, having heard these matters and taking that into account in coming to a fair order.
125. It would not be a fair reflection of what happened to simply to make an order for costs in the case. That would not recognise the fact that ZTE achieved an important victory in the judgment I have given this afternoon. They should recover their costs that can fairly be attributed to that. A fair figure would be 40% of the summarily assessed costs. It seems to me that the right sum in the end. This is very much a rough figure but it is the best I can do in the circumstances: the figure will be £20,000.
(See separate transcript for further submissions)