IPCom GmbH & Co Kg v HTC Europe Co Ltd and others

Jane Lambert

 

Patents Court (Mr Justice Birss) IPCom GmbH & Co Kg v HTC Europe Co Ltd and others [2020] EWHC 2941 (Pat) (4 Nov 2020)

This was an application by the defendants to strike out part of the points of claim in an inquiry as to the claimant's damages for patent infringement that had been ordered by the Chancellor, Sir Geoffrey Vos, on 17 Dec 2019. The claimant claimed millions of dollars whereas the defendants contended that it was entitled only to a small percentage of that sum.

The patent in suit was EP (UK) 1 841 268 which had been declared essential to an ETSI telecommunications standard.  The claimant had given an undertaking to license the use of the patent to implementers of the standards on FRAND (fair, reasonable and non-discriminatory) terms.  The patent had been the subject of litigation for many years.  When the case came on before the Chancellor the patent had only a few more weeks to run.  The defendants withdrew their request for a FRAND licence and submitted to a final injunction for the remainder of the patent term.  Sir Geoffrey vacated the hearing to determine the FRAND licence terms and ordered the inquiry as to the damages for infringement of the patent.

The difference between the parties is summarized at paragraphs [8] and [9] of the judgment of Mr Justice Birss who heard the application to strike out on 21 Oct 2020:

"[8] The reason the number of phones is large enough to produce a figure of that magnitude is because it represents every phone sold as a 2G, 3G or 4G phone all over the world, regardless of whether those phones infringe the patent or infringe any patent held by IPCom within its portfolio. In particular the number can be broken down into three categories:
i) A big number (more than a million) of phones which were sold in the UK and infringed the patent.
ii) An enormous number (over a hundred million) of phones which fall into one of three groups:
a) Workaround phones – i.e. phones sold as 3G phones but which did not infringe the patent;
b) 2G only phones, which necessarily never infringed the patent; and
c) Phones which were never imported into the UK and therefore never infringed the patent.
[9] It does not matter how big the various sub-groups (a) to (c) in category (ii) are. If the claim was limited to category (i), then HTC contends the sum at stake is worth less than a million in pounds sterling (or dollars) although IPCom contends that claim may be worth 1 or 2 million. What is plain on any view is that category (ii), and in particular category (ii)(c), is critical to the question of whether this is a damages inquiry worth hundreds of millions of dollars or about 100 times less than that."

The claimant justified its claim to damages under category (ii) was set out in paragraph 40 of its points of claim:

"40. … by reason of the Defendants' infringement of, and failure to take a FRAND Licence, the Claimant has suffered loss and damage in the form of loss of revenues under a notional licence which a willing licensor and a willing licensee in the position of the Claimant and the HTC Defendants would have agreed immediately prior to the commencement of the Defendants' infringing activities to the Claimant's Portfolio, of which the Patent forms part, that being worldwide in scope ('the Notional Global Licence') and damage to its licensing business with other implementers as a consequence of the Defendants' very public Hold Out Behaviour. The royalty rate for the Notional Global Licence is a per device Market Rate which takes account of all relevant aspects of the Claimant's damages under section 61(1)(c) of the 1977 Act and Regulation 3 ('the Global Market Rate')."

The claimant relied on the Supreme Court's judgment in Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another [2020] UKSC 37 (26 Aug 2020) though the judge pointed out that the argument would have been the same regardless of Unwired Planet because it contended that the kind of licence that a willing licensor and willing licensee would have entered would have been a global licence.

Mr Justice Birss rejected the claimant's contention.  In his view, any argument that the failure by HTC to enter into a licence with IPCom, whether in 2007 or whenever, was somehow caused by the infringement of the UK patent, was hopeless.  He accepted the defendants' submission that the claim was an attempt to recover damages for the infringement of foreign patents by the backdoor.  The Supreme Court had reaffirmed in paragraph [58] of Unwired Planet that the recovery of damages for the infringement of foreign patents was a matter for foreign courts.  At pagraph [51] his lordship concluded that he would strike out the claim nsofar as it was based on anything other than a claim for royalties attributable to sales of or other dealings in 2G, 3G or 4G phones in the UK.

Anyone wishing to discuss this article or damages for infringement of standard essential patents where there is an undertaking to grant a FRAND licence may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.