FRAND Case Management - Mitsubishi Electric Corporation v Archos
 |
| The Rolls Building Author Basher Eyre Licence CC BY-SA 2.0 Source Wikimedia Commons |
Patents Court (Mr Justice Mellor) Mitsubishi Electric Company and another v Archos SA and others [2021] EWHC 889 (Pat) (13 April 2021)
A FRAND case is essentially a patent infringement claim where the remedy to which a successful claimant would normally be entitled has been modified by agreement. Mr Justice Birss summarized the principle succinctly at para [83] of his judgment in Unwired Planet International Ltd v Huawei Technologies Co. Ltd and another [2017] EWHC 711 (Pat) (5 April 2017):
"The point of FRAND in standard setting is fairly easy to understand. Standards exist so that different manufacturers can produce equipment which is interoperable with the result that the manufacturers compete with one another. So the phone makers compete in the market for phones and the public can select a phone from any supplier and be sure (for example) that if it is a 4G phone, it will work with any 4G network. As a society we want the best, most up to date technology to be incorporated into the latest standards and that will involve incorporating patented inventions. While the inventor must be entitled to a fair return for the use of their invention, in order for the standard to permit interoperability the inventor must not be able to prevent others from using the patented invention incorporated in the standard as long as implementers take an appropriate licence and pay a fair royalty. In this way a balance is struck, in the public interest, between the inventor and the implementers. The appropriate licence is one which is fair, reasonable and non-discriminatory. That way a standard can safely incorporate the invention claimed in a patent without giving the inventor or his successors in title unwarranted power over those who implement the standard. Thus the public interest is served because telecommunication standards can be set using the best and most up-to-date technical expedients available and the inventor’s private interest is served because the FRAND undertaking ensures they or their successors will obtain a fair reward for their invention."
"The point of FRAND in standard setting is fairly easy to understand. Standards exist so that different manufacturers can produce equipment which is interoperable with the result that the manufacturers compete with one another. So the phone makers compete in the market for phones and the public can select a phone from any supplier and be sure (for example) that if it is a 4G phone, it will work with any 4G network. As a society we want the best, most up to date technology to be incorporated into the latest standards and that will involve incorporating patented inventions. While the inventor must be entitled to a fair return for the use of their invention, in order for the standard to permit interoperability the inventor must not be able to prevent others from using the patented invention incorporated in the standard as long as implementers take an appropriate licence and pay a fair royalty. In this way a balance is struck, in the public interest, between the inventor and the implementers. The appropriate licence is one which is fair, reasonable and non-discriminatory. That way a standard can safely incorporate the invention claimed in a patent without giving the inventor or his successors in title unwarranted power over those who implement the standard. Thus the public interest is served because telecommunication standards can be set using the best and most up-to-date technical expedients available and the inventor’s private interest is served because the FRAND undertaking ensures they or their successors will obtain a fair reward for their invention."
That is how the bargain between the standards-setting body, the patentee and implementor of the standard is intended to work. In practice, implementors challenge the validity of the patent. They question whether the patent is really essential to the standard and whether their compliance with the standard infringes the patent. If all those issues are determined in favour of the patentee the court will offer the implementor a choice. The implementor can accept a worldwide licence to the patentee's portfolio on FRAND terms or he can suffer an injunction against infringing the patent in the UK.
Those issues can take a long time to decide and case management can be difficult. Often the court directs separate trials to decide the validity of a patent, whether it is essential to the standard and whether implementation of the standard amounts to infringement. If those go in favour of the patentee there is a trial to decide the terms of the implementor's licence. There is a debate whether those terms are FRAND (fair, reasonable and non-discriminatory).
The hearing before Mr Justice Mellor on 1 April 2021 was a continuation of a case management conference on 21 March 2021 which I discussed in Practice: Mitsubishi Electric Corporation v Oneplus Technology on 25 March 2021 (see Mitsubishi Electric Corporation and another v Archos SA and others [2021] EWHC 889 (Pat) (13 April 2021)). In Mitsubishi Electric Corporation and another v Oneplus Technology (Shenzhen) Co Ltd and others (FRAND CMC Judgment) [2021] EWHC 493 (Pat) (4 March 2021) Mr Justice Mellor had ordered the 9th, 10th, 11th and 12th defendants to supply further information of their defence in response to two of a large number of other requests for further information.
In their responses to the requests for information, the 9th to 12th defendants made clear that they could only respond in general terms until they knew how the claimants intended to put their case on essentiality. A problem in this regard is that they claimed that all their patents were essential to the standard which was said to be unusually high. The 9th to 12th defendants responded with their own requests for information and requests for disclosure which the claimants resisted.
At para [25] of his judgment, Mr Justice Mellor said:
"On the current state of the FRAND pleadings, it seems to me that neither the Claimants nor the Xiaomi Defendants have yet set out their case on essentiality at a sufficient level of detail to enable the Court either (a) to case manage this part of the case effectively or (b) to make appropriate findings of fact at trial."
At para [25] of his judgment, Mr Justice Mellor said:
"On the current state of the FRAND pleadings, it seems to me that neither the Claimants nor the Xiaomi Defendants have yet set out their case on essentiality at a sufficient level of detail to enable the Court either (a) to case manage this part of the case effectively or (b) to make appropriate findings of fact at trial."
He ordered an exchange of statements of case on the allegations relating to essentiality ratios starting with the claimants. He specified that their statement of case should cover the following matters:
"i) First, the Claimants need to set out what their case is as to the essentiality rate of the MCP Pool. I add that this must include any alternative case the Claimants wish to run at trial.
ii) Second, to specify what any such case is based on in terms of the sources of analysis and the nature of the materials that they rely upon;
iii) Third, how any such case interrelates with the Claimants' case on what is called the stack, in other words, how their essentiality ratios compare with the general essentiality ratios amongst 3G and 4G technologies generally;
iv) Fourth, how any such case interrelates to the essentiality rate of any other patent holder; and
v) Fifth, the Claimants must set out details of the processes by which patents were selected for inclusion in the MCP Pool. This will include the Claimants' response to RFI Request 15 (a)."
"i) First, the Claimants need to set out what their case is as to the essentiality rate of the MCP Pool. I add that this must include any alternative case the Claimants wish to run at trial.
ii) Second, to specify what any such case is based on in terms of the sources of analysis and the nature of the materials that they rely upon;
iii) Third, how any such case interrelates with the Claimants' case on what is called the stack, in other words, how their essentiality ratios compare with the general essentiality ratios amongst 3G and 4G technologies generally;
iv) Fourth, how any such case interrelates to the essentiality rate of any other patent holder; and
v) Fifth, the Claimants must set out details of the processes by which patents were selected for inclusion in the MCP Pool. This will include the Claimants' response to RFI Request 15 (a)."
He added that the claimants' statement of case would have to set out precisely the findings of fact which the claimants would be asking the court to make at the trial. The defendants would have to reply with similar specificity and there would have to be a further case management conference.
As for the 9th to 12th defendants' requests, he allowed two but not the third as he regarded it as disproportionate.
We must now await the further CMC to find out whether those orders do clarify the claimants' case on essentiality and how the 9th to 12th defendants will respond. I have blogged about this case not because it makes any new law but because it shows how difficult issues can be managed.
Anyone wishing to discuss this case or FRAND generally can call me on 020 7404 5252 during office hours or send me a message through my contact page.
We must now await the further CMC to find out whether those orders do clarify the claimants' case on essentiality and how the 9th to 12th defendants will respond. I have blogged about this case not because it makes any new law but because it shows how difficult issues can be managed.
Anyone wishing to discuss this case or FRAND generally can call me on 020 7404 5252 during office hours or send me a message through my contact page.
Comments