Patents - Koninklijke Philips NV v Tinno Mobile Technology Corp.

Fair, Reasonable and Non-Discriminatory
Photographer Tumi-1983

 








Jane Lambert

Chancery Division (Mr Justice Mann) Koninklijke Philips NV v Tinno Mobile Technology Corporation and others [2020] EWHC 2553 (Ch) (25 Sept 2020)

This was an application and cross-application in a patent infringement case.  Koninklijke Philips NV ("Phillips") claimed that the TCL Corporation and four of its subsidiaries ("TCL") had infringed two of its patents in complying with an ETSI standard for 3G and 4G phones.  At first, TCL denied infringement, challenged the essentiality and validity of the patents and the jurisdiction of the court. Later it declared itself willing to take a licence on FRAND terms and applied to the French courts to determine them.

Phillips tried unsuccessfully to persuade the French court to stay the proceedings in France to allow its claim in  England to proceed.  By a decision dated 6 Feb 2020 (Ordonnance du Juge de la Mise en État), the French procedural judge dismissed Phillips's application on the ground that the case in France was not substantially the same as the proceedings in England.

TCL applied to Mr Justice Mann for a stay of the English proceedings on the ground that the court in France was first seised of the FRAND determination before the court in England.   Phillips applied for declarations that its patents were valid and essential and that they had been infringed.   It also applied for disclosure of TCK's sales and payment on account of its anticipated damages.  The application and cross-application were heard on 25 and 26 Jul and 6 Aug 2020 and his lordship delivered judgment on 25 Sept 2020.  In  Koninklijke Philips NV v Tinno Mobile Technology Corporation and others [2020] EWHC 2553 (Ch) (25 Sept 2020) he refused TCL's application. The parties agreed terms for the disposal of the application for a declaration and adjournment of the claim for an interim payment. However, the judge made an order for the disclosure of TCL's sales of infringing items.

Having successfully resisted Phillips's application to stay the French proceedings, TCLmust have believed that it had a good chance of staying the proceedings in England under art 29 or 30 of the Brussels 1 Regulation (Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 351, 20.12.2012, p. 1–32).  Art 29 (1) provides:

"Without prejudice to Article 31 (2), where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established."

Art 30 further provides:

"1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.
2. Where the action in the court first seised is pending at first instance, any other court may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.
3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."

TCL argued that in rejecting Phillips's procedural challenges the French judge had tacitly accepted TCL's contention that the French court had been first seised of the issues in dispute  Upon analysing her judgment, Mr Justice Mann concluded that the French judge had decided the opposite.  She had found that the causes of action were different.   The action before the English court was a claim for patent infringement whereas the French court had been asked to enforce clause 6.1 of ETSI's IP Rights Policy. Mr Justice Mann also accepted Phillips's alternative case that the English courts had been first seised of the determination of FRAND in that Phillips had sought an injunction only if TCL refused to take a licence on FRAND terms. 

The learned judge also rejected TCL's argument that FRAND was a "related issue" within the meaning of art 30 (1) and that the English court only became seised of that issue after the parties were directed to file pleadings on FRAND which happened to be after the launch of the French proceedings.  In his lordship's view, FRAND had been an issue from the very start of the proceedings in that it was mentioned in the claim form.  It followed that the court had no jurisdiction to stay proceedings under art 30 (1).

The judge declined to refer the question to the Court of  Justice of the European Union under art 267 of the Treaty on the Functioning of the European Union. The Court of Appeal had provided a clear test for determining which court was first seised of a related issue for the purposes of art 30 in Stribog Ltd v FKI Engineering Ltd 2011] 1 WLR 3264, [2011] Bus LR 1410, [2011] WLR 3264, [2011] EWCA Civ 622, [2011] 2 Lloyd's Rep 387, [2011] CP Rep 33, [2011] 1 CLC 1005.  Mr Justice Mann saw no good reason to depart from that decision.

The judge also noted that art 30 (1) conferred a discretion on the court second seised to stay its proceedings but not an obligation to do so.  If, contrary to his earlier finding, he had jurisdiction to stay the proceedings before him he would have declined to exercise that jurisdiction because the evidence of the experts on French law was that the English courts could resolve the dispute more quickly than the French courts. There was a degree of urgency in that one of Phillips's patents was due to expire in October 2022.  The countervailing arguments that ETSI's IPR Policy was governed by French law and the risk of inconsistent judgments were insufficient to persuade him otherwise.

Although the judge rejected Phillips's argument the TCL had lost its right to challenge the jurisdiction under arts 29 and 30 of the Brussels 1 Regulation, he arrived at the same conclusion at paragraph [114] on the basis that TCL had expressly consented to the court's determination of the FRAND licensing issue as well as the patent infringement issue.

TCL resisted Phillips's application for disclosure of the number of devices that it had sold worldwide or, alternatively, in the UK on the basis that no inquiry had been ordered. Phillips replied that TCL had admitted infringement and that it was entitled to damages unless and until TCL accepted a licence.  The judge agreed with Phillips:

"As things stand, there is an admission of infringement, so there is an infringement. As things stand, that entitles the owner of the patent to the usual relief, namely (in this case) an injunction and damages. Because of the agreed ETSI protocols, Philips is obliged to offer and grant a licence, but TCL does not have to accept it. At all times until it is accepted there has been infringement. The licence is the means to avoid the remedy of an injunction, and that is made clear by Philips' Particulars of Claim and FRAND statement of case, but at this stage of the reasoning there is still an infringement. If a licence is granted and taken then it becomes the case, from that point, that acts which might have been treated as an infringement can no longer be treated as an infringement, whether historic or future, but that state of affairs operates only from the date of the effective licence. That would mean that historic damages could no longer be proved or recoverable. It does not mean that legally there was no recoverable loss provable up to that point."

It followed that the disclosure sought by Phillips was relevant and that it was neither onerous nor disproportionate for him to order it.

In Patents: Supreme Court upholds Court of Appeal and Sir Colin Birss on FRAND on 27 Aug 2020, I wrote:

"it has to be remembered that the UK is a medium-size market and that quitting the UK altogether may be a lesser evil than accepting a court-imposed licence agreement. That seems to have been the conclusion of the defendants in TQ Delta LlC v Zyxel Communications Ltd and another [2019] EWHC 745 (Pat) (18 March 2019) who withdrew their undertaking to accept a FRAND licence and even agreed to pay the damages demanded by the claimant as the price for avoiding a non-technical trial on the terms of a icence (see TQ Delta, LLC v Zyxel Communications UK Ltd and another [2019] EWCA Civ 1277 (18 July 2019). The same reasoning appears to have been in the mind of the defendants in Koninklijke Philips NV v Asustek Computer Inc  and others [2020] EWHC 29 (Ch) (17 Jan 2020)."

Ir would appear that not every implementer welcomes the idea of an English court setting worldwide licence terms and will take steps to avoid such an outcome.  Paying up and quitting the UK as happened in TQ Delta is one extreme strategy.  Starting proceedings and relying on art 29 or 30 may be another provided that the timing is right.  The strategy did not work in this case because proceedings were issued in France after TCL had submitted to the jurisdiction of the English court. The outcome might have been different had proceedings been issued in France first.

Anyone wishing to discuss this case or FRAND generally should call me on 020 7404 5252 during office hours or send me a message through my contact page. 

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