Patents - Koninklijke Philips NV. v Asustek Computer Inc. and others

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Jane Lambert

Court of Appeal (Lord Justices Patten, Floyd and Henderson)  Koninklijke Philips N.V. v Asustek Computer Inc. and others [2019] EWCA Civ 2230 (17 Dec 2019)

This was an appeal against three separate but related judgments by Mr Justice Arnold:

• Koninklijke Philips NV v Asustek Computer Inc, and others [2018] EWHC 1224 (Pat) (23 May 2018): 
• Koninklijke Philips NV v Asustek Computer Inc. and others [2018] EWHC 1732 (Pat) (10 July 2018); and 
• Koninklijke Philips NV v Asustek Computer Inc. and others [2018] EWHC 1826 (Pat) (19 July 2018).

Koninklijke Philips NV ("Philips") is the registered proprietor of the following European patents(UK): EP1440525 for a radio communication system ("525"),  EP1685659 for a radio communication system, method of operating a communication system, and a mobile station (""659") and EP1623511 for a communication system ("511"). Philips declared those patents to be essential for compliance with ETSI (European Telecommunications Standards Institute}'s UMTS ("Universal Mobile Telecommunications Systems) standard relating to high-speed packet access ("HSPA"). Each of the defendants markets and distributes mobile phones that comply with the standard without Philips's licence. Philips complained that marketing and distributing those phones infringe its patents and sued the defendants for patent infringement.

Radio Communication System 525 

In the first of the above-listed cases in which judgment was delivered on 23 May 2018, Mr Justice Arnold considered the validity of 525 and whether it has been infringed. The invention improved the flow of data between mobile phones and their base stations by using different power levels to acknowledge safe receipt and non-receipt of data packages thereby enabling the stations to recognize more accurately incorrect acknowledgements of receipt and false non-receipt messages and so reduce wastage of resources.

The defendants contended that the patent was obvious over 

• Document TSGR1/R2-12A010021 entitled "Control Channel Structure for High Speed DSCH (HS-DSCH)", a contribution submitted to the 3GPP TSG-RAN Working Group 1 and 2 ad hoc meeting in Sophia Antipolis, France on 5-6 April 2001 by Motorola ("Motorola 021");
• Document 3GPP2/TSG-C C50-20010709-024 entitled "Optimal Antipodal Signaling", a contribution submitted to the 3GPP2 TSG-C meeting in Montreal, Canada on 9-13 July 2001 by Faisal Shad and Brian Classon of Motorola ("Shad").

Mr Justice Arnold rejected the argument that the patent was obvious and held that it was valid and infringed.

On appeal, the defendants abandoned Motorola 021 but continued to rely on Shad.  Their first 9 grounds of appeal attacked the judge's identification of the skilled addressee and his or her common general knowledge but those points were not pursued.  Lord Justice Floyd listed the points in their remaining grounds as follows at paragraph [47] of his judgment.  These were condensed into four at the appeal hearing:

"i) The judge should have treated Shad and the patent at a comparable level of generality from the perspective of the skilled person, because the patent is devoid of implementation details, and concerns only the idea of setting the differential gains from the base station.
ii) The specific implementation issues which the judge considered went to the way in which the base station set the gains. This was an error because these details were not features of the claim. How the base station set the gains was a performance issue, which was not relevant to inventive step.
iii) The judge had wrongly taken into account the ability in the patent to set the gains independently. This was not a feature of all the embodiments claimed and was accordingly irrelevant to inventive step.
iv) The issues which the judge held would have deterred the skilled person from proceeding to implement Shad at the base station remained issues for the implementation of the patent, in the sense that the patent did not teach the skilled person how to overcome them."

As to the argument that the trial judge should have treated Shad and the patent at a comparable level of generality from the perspective of the skilled person, Lord Justice Floyd was unable to accept that as a general principle. "The nature of the invention claimed", he said, "cannot logically impact on the way in which the skilled person approaches the prior art, given that the prior art is to be considered without the benefit of hindsight knowledge of the invention."  His lordship held that the trial judge analysed the path which was said to be obvious from Shad and subjected it to proper analysis.  Lord Justice Floyd did not believe that Shad would lead to the invention unless the skilled addressee read the paper in a way that was not justified by the evidence,  It followed that there has been no error in the trial judge's reasoning.

The learned lord justice thought that the defendants' second point was based on an excessively literal reading of Mr Justice Arnold's judgment.  in his view, the judge did not treat the implementation requirements as if they were features of the claim. The defendants' expert had said that the skilled person who read Shad as a whole would see that there was a simple way in which Shad's approach could be implemented in the base station. The judge tested that evidence by seeing where it led, and concluded that the transfer of Shad's implementation to the base station was bedevilled by difficulties which the expert had not thought through. The judge was entitled to conclude that the logic for arriving at the inventive idea was not representative of the thinking of the skilled addressee.

With regard to the third argument, Lord Justice Floyd found that the trial judge did not treat independently settable gains as part of the inventive concept.

The answer to the fourth argument was that nobody can have a patent for doing something which the skilled person would regard as old or obvious but difficult or impossible to do if it remains equally difficult or impossible to do after the invention has been made.  A patent can be granted only of a  perceived technical problem is solved by the invention.

Lord Justice Floyd deal with two other issues that had not been dealt with elsewhere. The first was that the volume and complexity of the evidence appeared to have led the judge to believe that there must be an inventive step somewhere. Lord Justice Floyd was not persuaded that the judge had engaged in crude evidence weighing exercise.  His lordship thought the trial judge had reached his decision upon careful scrutiny of the evidence.  Secondly, there was nothing in the complaint that the judge had taken secondary evidence such as a report by Qualcomm into account. On the contrary, he had expressly rejected it.  The learned lord justice concluded at paragraph [78] that the judge's analysis betrayed no error of principle and that the Court of Appeal would not be justified n disturbing his finding.  Accordingly, the appeal in relation to 525 was dismissed.

A Radio Communication System, Method of Operating a Communication System, and a Mobile Station 659

This invention for which patent number 659  was granted is to make the most efficient use of a mobile telecommunications system's resources, such as bandwidth on the radio interface, by avoiding unnecessary data or control information in order to free up those resources.  The specification described the invention as follows:

"The invention is based on the realisation that downlink closed loop power control may be operated by measuring the quality of received downlink non-predetermined data symbols instead of predetermined pilot symbols, and that in some circumstances, separate downlink pilot symbols for each active mobile station are not necessary for channel estimation. In some circumstances, downlink channel estimation is not required at all, and in other circumstances a common downlink pilot signal transmitted at a constant power level may be used instead of separate pilot signals. In some circumstances, the base station transmits a second, non-power controlled downlink signal, or a constant power level downlink signal, the mobile station being adapted to derive a channel estimate from this signal. Consequently, operation is possible using fewer downlink system resources."

Mr Justice Arnold added this summary:

"In a nutshell, the invention is to dispense with the dedicated pilot bits in the fractional DCH and to use the common pilot signal or the TPC bits instead. This frees up system resources."

The patent was challenged on grounds of obviousness over two documents that had been contributed by Nortel to meetings of the 3GPP TSG-RAN Working Group 1 in May and October 2003 known respectively as "Nortel May" and "Nortel October"  After considering the evidence of the parties' experts and some contemporary secondary evidence, the judge concluded that 659 was invalid.

Philips appealed on the following grounds:

Ground 1:  (a) The skilled person had a mindset that dedicated pilot bits should be used such that he or she would not have been caused even to think of not using them absent specific directions to do so (and there was no such direction in Nortel).

(b) Nortel's requirement for backwards compatibility would be understood by the skilled person as a technical requirement for the use of dedicated pilot bits.
(c) To the extent that backward compatibility was to be understood as an implementation or cost issue, that remained a relevant factor in law when assessing obviousness.
(d) The skilled person reading Nortel with his or her common general knowledge would therefore not even consider removing the pilot bits from the channel and therefore not have got to the point of asking whether there was a trade off in so doing.

Ground 2: The judge's summary of Philips's case at [192] "omits consideration of Philips' mindset case".

Ground 3:  The judge misunderstood the expert evidence.

As ground 1 (c) raised an issue of law, Lord Justice Floyd addressed it first.  Relying on the dicta of Mr Jutsiice Aldous's dicta in Hallen Co and another v Brabantia (UK) Ltd [1991] RPC 195, Lord Justice Slade, Lord Justice Sedley and Lady Justice Arden, Philips contended that, even if the reasons for not pursuing a particular path are solely commercial matters, or are purely commercially driven, they ought not, in law, to be excluded from a consideration of obviousness.  Referring to those passages, Lord Justice Floyd said at [118] that a commercially driven mindset can be a relevant aspect of the skilled person's common general knowledge. He added:

"Thus, what the skilled person does in the light of a given prior disclosure has to be decided with that mindset in mind. If the technical differences from the prior art to the invention are trivial, then the mindset may not matter, but if more substantial changes are involved, the court may conclude that the reluctant and prejudiced skilled person would not make them. If the court reaches the conclusion that the claimed invention would be arrived at by the skilled person, there is no further hurdle to be crossed concerned with whether the invention would be perceived as likely to lead to sufficient commercial success to make its manufacture worthwhile."

Philips submitted that the trial judge had lost sight of the distinction in his judgment but the learned lord justice disagreed.  The judge below nay not have dealt with it expressly in his judgment but that may have been because he found against the claimant on other grounds.

Turning to ground (1) (a), the Court of Appeal could find nothing in the evidence to support such contention which Lord Justice Floyd described as "bold", He dealt with the other submissions similarly shortly and concluded that he could see no error in Mr Justice Arnold's judgment.

Communication system 511

Mr Justice Arnold found that patent 511 was valid and had been infringed,  The defendants appealed against both findings.

At paragraph [145] Lord Justice Floyd set out the technical background for an understanding of the appeal:

"i) Power control on the uplink is designed to ensure, so far as possible, that the received power at the base station from different mobiles is approximately the same. This requires mobiles which are far away from the base station to turn up their power, and those which are close to turn it down. Greater power is also desirable when other channel conditions are poor, for example when the propagation path is interrupted by buildings and other obstructions which reflect the radio waves.
ii) UMTS systems used closed-loop power control. The inner loop on such systems involves the base station making measurements of short-term signal quality and comparing these measurements with a target value. On the basis of these measurements the base station sends TPC commands to the mobile, instructing the mobile to raise or lower the power. This is done very rapidly in power control slots, some 1500 times per second, or every 670 microseconds.
iii) The effect of using closed-loop power control is that the power at the mobile will rise as channel conditions get worse, and decrease as channel conditions improve.
iv) The net effect, and the object of the exercise, is that the received power at the base station is relatively constant."

A consistory clause summarized the invention as follows:

"According to a first aspect of the invention there is provided a radio station comprising transmitter means for transmitting over a channel in a predetermined time period a data block comprising information symbols and parity check symbols and control means responsive to an indication of a reduction in channel quality according to a first criterion for decreasing the data transmit power and responsive to an indication within the predetermined time period of an increase in channel quality according to a second criterion for increasing the data transmit power."

The claim that alleged to have been infringed was claim 3:

"A radio station as claimed in claim 2, wherein the indication to increase transmit power is a received command."

That claim referred to claim 2 which in turn referred to claim 1.  Lord Justice Floyd explained at paragraph [164] that infringement turned on the construction of the term "the data transmit power" in two separate integers of claim 1. The defendants contended that "data transmit power" meant the total transmit power of the transmitter, and did not cover a situation where the transmit power on a single physical channel is decreased or increased while the total transmit power remains the same. Philips contended to the contrary. It was common ground that if Philips was correct, then, subject to the validity issue, the defendants infringed.

The judge decided the issue in favour of Philips.  The defendants submitted that the judge was wrong. The introductory passages of the specification made it clear that the patentee was setting out to solve two problems which the skilled person would recognize as genuine and real. These were the twin problems of increased use of power and interference. The patent promised a solution to these problems in which the mobile transmits at reduced power until channel conditions improve. All this only made sense if the mobile reduces the total transmission power. Merely rearranging the power levels in various channels, whilst at the same time maintaining maximum total transmit power, would not provide any of the benefits of the invention.

Lord Justice Floyd rejected that submission.  He said at [168]:

"In my judgment, the judge was right to accept Philips' construction and to reject that advanced by the defendants. In particular, he was right to approach the issue of construction by considering the entirety of the specification and not just the introductory paragraphs. When the issue is approached in that way, the skilled person would understand that the 511 patent describes a counterintuitive strategy for dealing with bad channel conditions. He or she would readily understand from the specification as a whole that the strategy could be applied to the transmit power of a single data signal. The fact that the invention permitted an overall reduction in transmission power would not drive the skilled reader to the conclusion that it was only intended to claim the use of the inventive strategy in that situation."

The defendants' validity attack was presented as an alternative to their non-infringement argument. They contended that if the 511 patent is construed so widely as to include a system in which there is a reduction in transmission power only on some channels, then the invention is obvious in the light of Physical Layer Standard for cdma2000 Release 0 version 3.0 dated 15 June 2001 ("cdma2000"). The appeal focused on the correct interpretation of an 11-line paragraph on page 2-47 of cdma2000 ("the disputed paragraph"):

"[1] For the Reverse Traffic Channel with Radio Configuration 3 through 6, if the mobile station is unable to transmit at the requested output power level, it shall reduce the data rate on the Reverse Fundamental Channel, or reduce the transmission power or terminate transmission on at least one of the following code channels that are active: the Reverse Fundamental Channel, the Reverse Supplemental Channels, or the Reverse Dedicated Control Channel. [2] The mobile station shall perform this action not later than the 20 ms frame boundary occurring no later than 40 ms after determining that the mobile station is unable to transmit at the requested output power level. [3] The mobile station should attempt to reduce the transmission power, the data rate, or terminate transmission first on the code channel with the lowest priority. [4] The mobile station shall transmit at the commanded output power level on the Reverse Pilot Channel."

It was common ground that the patent was invalid if the defendants were right and that it would be infringed if Philips was correct.

Mr Justice Arnold had set out the rival interpretations in his judgment:

"[194]. Philips contends that the skilled person reading the disputed paragraph in context as at the Priority Date would understand that there were in fact two possible courses of action for the MS:
i) the MS would ignore any further power up commands within the existing frame and freeze the existing power levels of the channels until it could make a data rate change on one or more of the three specified channels, which would take place at the next possible 20 ms frame boundary, but within the 40 ms time limit, so that at that time the commanded output power level of the Reverse Pilot Channel would be achieved; or
ii) the MS would terminate the transmission of one or more of the three specified channels, and that termination would preferably also occur at a frame boundary (although it would be possible mid-frame)."

The defendants' contention was that the skilled person would understand that there was a third possibility, namely a direct and immediate reduction in transmission gain on one or more of the three specified channels. 

The trial judge decided the issue in favour of Philips. Lord Justice Floyd analysed the judge's reasoning closely and while he departed from it slightly he reached the same conclusion as Mr Justice Arnold though for somewhat different reasons.  He, therefore, dismissed the appeal in relation to 511.

Lord Justices Henderson and Patten delivered concurring judgments in respect of each patent.  The upshot was that all three appeals were dismissed.

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