Patents - Mitsubishi Electric Corporation v Oneplus Technology

Xiaomi Tech Park, Beijing
Author Plerxemo Licence CC BY-SA 3,0 Source Wikimedia

Patents Court (Mr Justice Mellor) Mitsubishi Electric Corporation and another v Oneplus Technology (Shenzhen) Co., Ltd and others [2021] EWHC 1541 (Pat) (8 June 2021)

Sometimes a procedural application can lead to a debate on fundamental principles of substantive law. Such was the case in Mitsubishi Electric Corporation and another v Oneplus Technology (Shenzhen) Co., Ltd and others [2021] EWHC 1541 (Pat) (8 June 2021).  The application was brought by Xiaomi Cimmunications Inc. and others ("the 9th, 10th, 11th and 12th defendants who are referred to in the judgment as "the Xiaomi defendants").  They applied for the claim in this action by Sisvel International SA ("Sisvel") (the second claimant) to be dismissed and for all future claims by Sisvel against the Xiaomi defendants to be stayed.

The Litigation

Sisvel administers a portfolio of patents for mobile telecommunications technologies known as the "Mobile Communication Program" or "MCP". Some of those patents are owned by Sisvel but others belong to other companies including Mitsubishi Electric Corporation ("Mitsubishi") (see the "Patent Owners" page on the Sisvel website).  According to the MCP page:

"Sisvel’s MCP offers a one-stop shop solution to license all standard essential patents (SEPs) for mobile communications held and/or managed under Sisvel’s various license programs, for their use in mobile communication products according to any of the mobile communication standards represented in the platform. We do this for the SEPs we own and control within the Sisvel group of companies, as well as the SEPS we administer for our partners.

As such, we offer a single solution to license the SEPs for the field of use of 3G UMTS and 4G LTE."

Mitsubishi and Sisvel attempted to persuade the Xiaomi defendants and other implementors of mobile communications technologies to take licences for the portfolio which they claim to be FRAND (fair, reasonable and non-discriminatory).  The implementors refused on the grounds that the patents were not essential to the relevant standards and that the licence terms were not FRAND.   Mitsubishi and Sisvel brought infringement proceedings for three patents in the portfolio, two of which are held by Mitsubishi and one by Sisvel.  The usual remedy for patent infringement is an injunction but Mitsubishi and Sisvel offered to grant patent licences on FRAND terms for the MCP portfolio if their infringement proceedings were successful. 

Background to the Application

As usually happens in cases of this kind, the court ordered separate trials to determine whether the patents in suit were essential to the relevant standard, valid and infringed and whether and whether the licence terms were FRAND.   In Mitsubishi Electric Corporation and another v Oneplus Technology (Shenzhen) Co, Ltd and others [2021] EWHC 1048 (Pat) (26 April 2021) which I discussed in FRAND - Mitsubishi Electric Corporation v Oneplus Technology on 31 May 2021, Mr Justice Mellor held at para [166] of his judgment that Sisvel's patent was not essential to the standard.

The Xiaomi defendants were prompted to make their application because Lord Justice Birss had said in Vestel Elektronik Sanayi Ve Ticaret A.S. and another v Access Advance LLC and another [2021] EWCA Civ 440 (26 March 2021) that there is no such thing as a free-standing FRAND claim.   In a witness statement in support of their application, the Xiaomi defendants contended:

"(a) Sisvel has no right or standing to participate in any FRAND trial that is based solely on the finding of a valid, essential and infringed patent owned by Mitsubishi and the Claimants have provided no proper basis to believe otherwise;
(b) Mitsubishi is not entitled to seek a licence to the entire MCP Pool in circumstances where no patent belonging to any other MCP Pool patent owner has been found valid, essential and infringed, and when in any event Mitsubishi has no right to grant a licence to the MCP Pool; and
(c) a bilateral FRAND licence to the Mitsubishi portfolio would be the appropriate remedy for Mitsubishi if it is found to have a valid, essential and infringed patent, and the Claimants have given no valid reason why it would not."

The Xiaomi defendants' application came on before Mr Justice Mellor at a case management conference on 21 May 2021.

The Decision

Mr Justice Mellor dismissed the application. 

He distinguished Vestel on the ground that it had been an antitrust claim based on art 102 of the Treaty on the Functioning of the European Union and s.18 of the Competition Act 1998, whereas the case before him was a patent infringement action.    I summarized the cause of action in Vestel in The Vestel Appeal: Vestel Elektronik v Access Advance on 16 April 2021:

"Vestel applied to Access Advance for a licence to use Philips's patents under Access Advance's Patent Portfolio Licence Agreement. Access Advance offered a licence at a licence fee of US$1.33 per unit. Vestel replied that that term was not FRAND because a similar licence was available from another patent pool for 20¢. Vestel brought proceedings against Access Advance and Philips for abuse of a dominant position under art 102 of the Treaty on the Functioning of the European Union and s.18 of the Competition Act 1998."

So far as the learned judge was aware, there had been no determination in the UK as to the position of an administrator of a patent pool in a FRAND case though that position had been considered in Germany. The claimants had referred to three German cases to support their propositions that offers for licences to a pool had consistently been held to be FRAND and that a licensee seeking a bilateral only offer must have some legitimate interest for so doing. The judge observed that there were obvious advantages in negotiating a licence for a portfolio and that there would not be many instances when an implementor could insist on a single bilateral patent.

His lordship considered that granting the application would be tantamount to granting the  Xiaomi defendants summary judgment which would curtail consideration of whether licences for the MCP Pool were or could ever be FRAND and confine the discussion to the terms of bilateral licences for patents held by Mitsubishi.  Such a ruling at this stage would be unwarranted and unjustifiable. Mitsubishi pointed out that there would be nothing to prevent it from joining Sisvel as a defendant if the court removed it as a claimant.  The judge said at [43] that he could see an advantage in having a pool administrator as a party in a FRAND dispute, not least for disclosure, evidence and confidentiality purposes.

Additional Directions

In Mitsubishi Electric Corporation and another v Archos SA and others [2021] EWHC 889 (Pat) (13 April 2021) Mr Justice Mellor directed the parties to file and serve statements of case on essentiality.  

In their pleading, the claimants replaced their existing case as set out in their reply with a new one based on 'essentiality claim charts' prepared for each patent family in the MCP Pool. They invited the defendants to review all these claim charts and indicate any for which essentiality was disputed.  The defendants protested that the statement of case did not comply with the judge's directions and that reviewing claim charts would be disproportionate and unworkable. 

Following correspondence and further discussions between the parties, the claimants amended their pleadings.  The judge expressed concern on 21 May 2021 and warned the claimants that they were very much in the last chance saloon and that they were fortunate that the defendants had not pressed for sanctions for non-compliance with his directions.   In the last paragraph of his judgment, Mr Justice Mellor noted that the parties had agreed the terms of an order which would implement his previous directions.  If and insofar any outstanding matters remained there would have to be yet another case management conference.

Further Information

Anyone requiring further information about this case or application should call me on 020 7404 5252 during office hours or send me a message through my contact form.


Popular posts from this blog

Copyright - Ashley Wilde Group Ltd. v BCPL Limited

Copyright in Photographs: Temple Island Collections and Creation Records

What to do about the new Practice Direction - Pre-Action Conduct