Patents - Conversant Wireless Licensing v Huawei Technologies Co. Ltd and Others

Jane Lambert

Patents Court (Mr Justice Birss) Conversant Wireless Licensing SARL v Huawei Technologies Co. Ltd and others [2020] EWHC 256 (Pat) (10 Feb 2020

This was an application by the claimant, Conversant Wireless Licensing SARL for disclosure of the licence agreements and assignments relating to 3G and 4G patents that had been entered by the defendants, Huawei Technologies Co Ltd., ZTE (UK) Limited and their British subsidiaries. Substantially the same application had been made to His Honour Judge Hacon at the case management conference in the action which took place in July 2019. The later application was heard by Mr Justice Birss who delivered judgment in Conversant Wireless Licensing SARL v Huawei Technologies Co. Ltd and others [2020] EWHC 256 (Pat) on 10 Feb 2020. The reference to the CMC in the transcript of Mr Justice Birss's judgment is [2009] EWHC 1982 (Pat) but I think that must be a misprint for [2019].

Judge Hacon refused Conversant's application on the ground that such disclosure would not assist the trial judge, it would greatly increase the evidence for the court and parties to consider and thus increase the costs of the action disproportionately.  The trial of the action which is essentially to determine fair, reasonable and non-discriminatory ("FRAND") terms is listed to float from 27 April 2020.

The relief that Conversant sought was an order for Huawei and ZTE to produce lists of all the licences to which they were parties, which relate to standard essential patents between 2011 and the end of 2017 in 2G, 3G and 4G, and then from those lists, each of the parties would select a number. What was sought is that Huawei and ZTE will each be able to select four each, and then Conversant would select four as against Huawei and a further four as against ZTE. That would bring a total of 16 licences into the case.

The judge directed himself at paragraph [15] of his judgment that the two questions that he had to consider were whether the order he had been asked to make, which would have varied the original order, was necessary for the just disposal of the proceedings, and reasonable and proportionate.  His lordship decided that it would not be reasonable and proportionate to make the order having regard to the timetable for this case.  He noted that an order requiring production of sixteen licences would add a very significant extra amount of evidence into the case. Even if inspection were pared back to six licences, which was Conversant's fall back case, it would still add significant extra evidence.

Mr Justice Birss made no criticism of Judge Hacon's decision but he did say that he might have reached a different conclusion had he conducted the CMC and heard the arguments that were before him now. He seriously doubted that disclosure of 16 licences could ever be proportionate but he was prepared to accept that disclosure of a much smaller number might have been. He explained himself as follows:

"[23] In Unwired Planet I came to the conclusion that the third party granted licences were of very little help on the facts of that case, but this case as explained before me now is different. There is much less evidence in this case of the kind that there was in the Unwired Planet case, of licences from the portfolio from which the patents are taken. In that case it was Ericsson and in this case it is Nokia. Faced with the situation as it is put before me now, if it had been possible to make an order of the kind sought without massively disrupting the timetable (which I am quite satisfied it would not be) then I can only say that I might well have made a different order and ordered some measure of disclosure of third party licences.
[24] I do not accept the submission from Huawei and ZTE that third party licences in which companies in the defendant's group are licensees in principle ought never to be disclosed in FRAND cases or are not capable of having evidential value. They are capable of having evidential value. It is secondary to the value of licences of the portfolio in issue or a larger portfolio from which that portfolio is taken, there is no doubt about that; but depending on the pleaded cases and the nature of the evidence available to the court, it may be that it would be appropriate to order a measure of that disclosure in a different case. That is all I intend to say."

As its application had been dismissed, Conversant had to bear the costs.  Huawei claimed £125,000 and ZTE £70,000. Conversant's costs would have been £107,000.  The learned judge assessed Huawei's costs at £100,000 and ZTE's at £60,000.

This case is more on case management practice than patent law and appears to have turned on costs and timetabling issues. In that regard it should be of interest to all civil litigation practitioners. Having said that it was determined on its own facts which are of course unique. Anyone wishing to discuss this case or FRAND generally is welcome to call me on +44 (0)20 7404 5252 during British office hours or send me a message through my contact form.