FRAND - The InterDigital v Lenovo Litigation

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Mr Justice Birss (as he then was) summarized this litigation in para [1] of the transcript in Interdigital Technology Corporation and others v Lenovo Group Ltd and others [2021] EWHC 89 (Pat) (19 Jan 2021) which was the first judgment in this litigation:

"InterDigital have a portfolio of patents declared to be essential to various telecommunication standards and Lenovo are an implementer generally entitled to a licence on FRAND terms. The issue is about the terms of that FRAND licence."

The claim form was issued on 17 Aug 2019. The claimants sought a "FRAND injunction" as defined by Mr Justice Birss in Unwired Planet International Ltd v Huawei Technologies Co. Ltd. [2017] EWHC 1304 (Pat), at [20], namely the usual injunction granted to a patentee which has established infringement of a valid patent with the proviso that it will cease to have effect if the defendants enter into a licence held to be FRAND.  As is usually the case with FRAND litigation Mr Justice Mann ordered two technical trials to determine the validity and essentiality of the patents and whether they had been infringed on 3 Feb 2020.  According to Judge Hacon, a trial to settle the terms of a licence under InterDigital's patent portfolio was due to be heard in the Patent Court in January 2022 ("the FRAND trial"). It has been listed in the Patents Court Diary.

The Previous Hearings
The following hearing transcripts have appeared on BAILII:

Date

Judge

Issue

19 Jan 2021

Mr Justice Birss

Disclosure

29 Jul 2021

HH Judge Hacon

Judgment in Technical Trial A

26 Nov 2021

Mr Justice Mellor

Restrictions on disclosure

16 Dec 2021 

HH Judge Hacon

Appropriate remedy

6 Jan 2022`

Mr Justice Mellor

Judgment in Technical Trial B


There have been other hearings but I have not found any reports or transcripts of them.

Disclosure
In  InterDigital Technology Corporation and others v Lenovo Group Ltd and others [2021] EWHC 89 (Pat) (19 Jan 2021), Mr Justice Birss had to consider an application by the defendants for the disclosure of full royalty reports in respect of 23 licences and an application by the claimants for the disclosure of a schedule of the licences to which the defendants were a party. The learned judge refused both applications.

The defendants had sought the royalty reports because there was an issue on whether 17 licences relied on by the claimants or 6 relied on by the defendants were FRAND. The defendants argued that the licences could only be understood if the royalty rates were known.  The claimants replied that there was sufficient information in the public domain to form a view on the issue.  Also, at least one of the licensees objected to the disclosure of the reports.  The judge agreed that a better view of the issue could be formed with the royalty reports but the view that could be formed from the publicly available information would be good enough.  He said at para [30] of his judgment that he would not order disclosure of the royalty reports because it would be disproportionate.

His lordship refused the claimants' request for a schedule for much the same reason.  He said at para [31]:

"I am not satisfied that any disclosure, in this sense, of licences from Lenovo to which Lenovo is a party, is proportionate in the context of this case, bearing in mind that it would inevitably engage third party confidentiality."

His reasoning is amplified between paras [32] and [43].

Technical Trial "A"
I explained above that technical trials determine whether a patent is valid, essential to the standard and infringed. The reason why they are ordered is that implementors (users of what are said to be standard-essential patents) are offered a licence to use a portfolio of patents on FRAND (fair, reasonable and non-discriminatory) terms as an alternative to an injunction. Unless there is at least one UK patent that is valid, essential and infringed there is no need for a licence, FRAND or otherwise.

Technical trial "A" came on before His Honour Judge Hacon sitting as a judge of the Patents Court between 3 and 12 March 2021.  The learned judge delivered judgment on 29 July 2021 (see InterDigital Technology Corporation and others v Lenovo Group Ld Ltd and others [2021] EWHC 2152 (Pat) (29 July 2021)). 

The patent in suit was European patent (UK) 2 485 558 Method and apparatus for providing and utilizing a non-contention based channel in a wireless communication system. Judge Hacon summarized the patent between paras [72] and [74].  He discussed the claims between paras [75] and [79].  After setting out the law on construing patent claims between para [80] and para [94], the judge construed the relevant claims between [95] and [106].

The claimants alleged that the defendants had infringed the patent by importing and marketing 4G devices in the UK. The defendants admitted the importation but denied infringement and counterclaimed for a declaration of invalidity on the ground that the invention was not new, that it was obvious and that it had not been disclosed in a manner which was clear enough and complete enough for it to be performed by a person skilled. in the art.   The claimants sought to amend their patent should the claims as granted be found to be invalid.  The defendants opposed the proposed amendments on the grounds of lack of clarity, added matter and lack of support.

Addressing first the question of novelty, the judge said at [107]:

"It is well established that in order to anticipate an invention, an item of prior art must disclose the invention unambiguously: 'the prior publication must contain clear and unmistakeable directions to do what the patentee claims to have invented', see General Tire and Rubber Co Firestone Tyre and Rubber Co Ltd [1972] RPC 457, at 485-486."

He also quoted para [22] of Lord Hoffmann's speech in Synthon BV v Smithkline Beecham plc [2005] UKHL 59:

 "It follows that, whether or not it would be apparent to anyone at the time, whenever subject-matter described in the prior disclosure is capable of being performed and is such that, if performed, it must result in the patent being infringed, the disclosure condition is satisfied. The flag has been planted, even though the author or maker of the prior art was not aware that he was doing so.”

The defendants contended that PCT Application No. PCT/US2003/024889, publication number WO 2004/016007 for a Method and apparatus for operating mobile nodes in multiple states (“Laroia”) anticipated the patent in suit.   Judge Hacon described Laroia between para [184] and [190].  The claimants had argued that several features of the contested claims of the patent in suit were missing from Laroia. The judge considered whether that was so between [191] and [226] and concluded that the patented invention did not lack novelty over Laroia.

Turning to obviousness, the judge noted that there was no dispute about the law but there was a difference in emphasis. He referred to para [23] of Lord Justice Jacob's judgment in Pozzoli SpA v BDMO SA [2007] EWCA Civ 588, at [23]:

“(1) (a) Identify the notional ‘person skilled in the art’;
(b) Identify the relevant common general knowledge of that person;
(2) Identify the inventive concept of the claim in question or, if that cannot readily be done, construe it;
(3) Identify what, if any, differences exist between the matter cited as forming part of the ‘state of the art’ and the inventive concept of the claim or the claim as construed;
(4) Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?”

At para [14] of his judgment, Judge Hacon said that the parties had agreed that the "person skilled in the art" would be

"an engineer in the field of mobile telecommunications with 2-3 years’ experience. The engineer would have worked with 3G mobiles and by the priority date in January 2006 would have been aware that 4G, LTE, was in the process of being developed and standardised. LTE is the system implementing the fourth generation of mobile telecommunications technology, discussed more fully below. He or she would have been aware that the relevant standardisation was being carried out by 3GPP. They would have known that one of the key standards to be agreed was that governing the signalling between a base station and mobiles. The experts agreed that the skilled person would have attended at least some of the 3GPP meetings on LTE standardisation and would have known about the four technical reports published by January 2006 and that their contents offered the best guide to the development of LTE up to that time."

Between paras [16] and [71] he considered the skilled addressee's common general knowledge which had been agreed by the parties. I have already mentioned the construction of the relevant claims between [95] and [106]. The prior art relied upon by the defendants was Lariosa and T-doc no. R2-052409, submitted by one of the Samsung companies at a meeting of the 3GPP TSG RAN Working Group 2 held at Cannes on 10-14 October 2005 and published before the meeting (“Samsung”). A T-doc is a technical document submitted for discussion at 3GPP working group meetings during the development of LTE.   He considered the differences that existed between Samsung and the claims between [129] and [164] and those that existed between Lariosa and the claims between [184] and [190].  He remarked at para [109] that, as is usual, discussion would focus on step 4 of Lord Justice Jacob's methodology in Pozzoli.  He discussed whether those differences constitutes steps which would have been obvious to the person skilled in the art or whether they required some degree of invention between [165] and [175] in relation to Samsung and between [237] and [247] in relation to Lariosa. He concluded that the relevant claims of the patent in suit were not obvious over the prior art.

As to insufficiency, Judge Hacon reminded himself that s.72 (1) (c) of the Patents Act 1977 enables a court to revoke a patent on the ground that the specification does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the art. He referred to Mr Justice Aldous's observation in Mentor Corp v Hollister Inc [1990] FSR 577, at 562, approved on appeal [1993] RPC 7, at 14:

“[Section 72 (1) (c)] requires the skilled man to be able to perform the invention, but does not lay down the limits as to the time and energy that the skilled man must spend seeking to perform the invention before it is insufficient. Clearly there must be a limit. The sub-section, by using the words, clearly enough and completely enough, contemplates that patent specifications need not set out every detail necessary for performance, but can leave the skilled man to use his skill to perform the invention. In so doing he must seek success. He should not be required to carry out any prolonged research, enquiry or experiment. He may need to carry out the ordinary methods of trial and error, which involve no inventive step and generally are necessary in applying the particular discovery to produce a practical result. In each case, it is a question of fact, depending on the nature of the invention, as to whether the steps needed to perform the invention are ordinary steps of trial and error which a skilled man would realise would be necessary and normal to produce a practical result.”

Judge Hacon also referred to para [2] of  Lord Brigg's judgment in Regeneron Pharmaceuticals Inc v Kymab Ltd [2020] UKSC 27:

"It is a general requirement of patent law both in this country and under the European Patent Convention (“EPC”) that, in order to patent an inventive product, the patentee must be able to demonstrate (if challenged) that a skilled person can make the product by the use of the teaching disclosed in the patent coupled with the common general knowledge which is already available at the time of the priority date, without having to undertake an undue experimental burden or apply any inventiveness of their own. This requirement is labelled sufficiency. It is said that the invention must be enabled by the teaching in the patent.”

The defendants argued that it was not possible to build an eNB at the priority date and that the specification did not at the filing date enable the skilled person to use a transmission burst, the presence of which is indicative of a scheduling request, for the concurrent purpose of signalling an ACK/NACK.  As to the first contention, the learned judge had already found that an eNB of claim 1 was properly construed as a Demonstrator eNB and that it was possible for the skilled person to make such a thing at the priority date.  As to the second. the Supreme  Court had said that it was enough if the skilled person can perform the invention by using the teaching disclosed in the patent coupled with the common general knowledge available at the time of the priority.  He noted that the experts had agreed that that could be done.  It followed that the defendants' argument on insufficiency failed.

As the judge had upheld the validity of the disputed claims it was unnecessary for him to consider the application for amendment.  As the issues had been argued, he found that the objection of lack of clarity would have failed and that the proposed amendments would not have satisfied s.76 (3) (a) of the Act.  

The defendants had argued that the invention was not essential to the standard.  After considering how the standard worked, the judge concluded at [296] that it fell within claim 1 of the patent and that accordingly the patent was essential to the standard.

The finding on essentiality disposed of the argument on infringement.

The learned judge found at [298] that the patent was valid, essential and infringed.

Restrictions on Disclosure
in InterDigital Technology Corporation and others v Lenovo Group Ltd and others [2021] EWHC 3192 (Pat) (26 Nov 2021) Mr Justice Mellor was asked to amend a confidentiality regime that Mr Justice Birss had ordered in July 2020.  

The order established a three-tier confidentiality regime comprising (1) a general confidentiality tier to protect 'General Confidential Information' or 'GCI' (2) an Approved Persons only tier ('AP') and (3) what was called Lawyers Eyes Only ('LEO') but included external non-legal experts. The claimants had disclosed some 70 patent licences of which 26 were relied on by the parties as comparables in the FRAND trial.  All of those licences were designated LEO and the experts' reports that referred to those licences were heavily redacted.   

The judge noted in para [8] of his judgment:

"Under the current LEO regime, not only can no one at Lenovo see an unredacted copy of any of the PLAs relied on as comparables, substantial redaction of the expert reports has been required to provide copies for Lenovo personnel to read. The redactions are such that Lenovo personnel do not currently have access to the evidence on comparables which will form an important, if not critical part of the case at trial. Furthermore, Lenovo has recently served a statement of case in draft as to the lump sum which it wishes to say should be paid under a FRAND licence. The document remains in draft because Lenovo is not at present able to give instructions as to what the figure for the lump sum should be, because certain inputs which will be used to calculate that lump sum figure cannot presently be disclosed to any Lenovo personnel."

The parties agreed to a new protocol in which there would be:
  • a limited number of discloses ("Specified Persons") who should be named with the counterparties having the right to object to them; and 
  • a licensing bar in place, that is to say, the disclosees should not be involved in any licensing negotiations for a specified period.
Following Mr Justice Mellor's judgment in Godo Kaisha IP Bridge 1 v Huawei Technologies Co., Ltd and others [2021] EWHC 2826 (Pat) (22 Oct 2021) which I discussed in Disclosure and Security for Costs - Godo Kaisha IP Bridge 1 v Huawei Technologies Co., Ltd on 13 April 2022, a number of issues arose on the terms of the protocol.  Also, many of the counterparties to the licence agreements objected to any changes in Mr Justice Birss's order.

The judge considered the authorities which had been summarized by Lord Justice Floyd at paras [39] and [40] of his judgment in Oneplus v Mitsubishi [2020] EWCA 1562, [2021] FSR 13:

"[39] Drawing all this together, I would identify the following non-exhaustive list of points of importance from the authorities:
(i) In managing the disclosure of highly confidential information in intellectual property litigation, the court must balance the interests of the receiving party in having the fullest possible access to relevant documents against the interests of the disclosing party, or third parties, in the preservation of their confidential commercial and technical information: Warner-Lambert [1975] R.P.C. 354 at p.356; Roussel [1990] R.P.C. 45 at p.49.
(ii) An arrangement under which an officer or employee of the receiving party gains no access at all to documents of importance at trial will be exceptionally rare if indeed it can happen at all: Warner-Lambert [1975] R.P.C. 354 at p.360; Al-Rawi [2011] UKSC 34 at [64].
(iii) There is no universal form of order suitable for use in every case, or even at every stage of the same case: Warner-Lambert [1975] R.P.C. 354 at p.358; Al-Rawi [2011] UKSC 34 at [64]; IPCom 1 at [31(ii)].
(iv) The court must be alert to the fact that restricting disclosure to external eyes only at any stage is exceptional: Roussel [1990] R.P.C. 45, p.49; Infederation at [42].
(v) If an external eyes only tier is created for initial disclosure, the court should remember that the onus remains on the disclosing party throughout to justify that designation for the documents so designated: TQ Delta [2018] EWHC 1515 (Ch) at [21] and [23];
(vi) Different types of information may require different degrees of protection, according to their value and potential for misuse. The protection to be afforded to a secret process may be greater than the protection to be afforded to commercial licences where the potential for misuse is less obvious: compare Warner-Lambert [1975] R.P.C. 354 and IPCom 1; see IPCom 2 at [47].
(vii) Difficulties of policing misuse are also relevant: Warner-Lambert [1975] R.P.C. 354 at p.360; Roussel [1990] R.P.C. 45 at pp.51–52.
(viii) The extent to which a party may be expected to contribute to the case based on a document is relevant: Warner-Lambert [1975] R.P.C. 354 at p.360.
(ix) The role which the documents will play in the action is also a material consideration: Roussel [1990] R.P.C. 45 at p.49; IPCom 1 at [31(ii)];
(x) The structure and organisation of the receiving party is a factor which feeds into the way the confidential information has to be handled: IPCom 1 at [33].
40 To this I would add that the court must be alert to the misuse of the opportunity to designate documents as confidential. It remains the case that parties should not designate such material as AEO, even initially, unless they have satisfied themselves that there are solid grounds for establishing that restricting them in that way is necessary to protect their confidential content."

One unresolved issue concerned the number of Specified Persons to be appointed. The defendants wanted two. The claimants offered one. The judge allowed two: one was a General Counsel in the Intelligent Devices Division of Lenovo and the other was in a finance role.

Another issue was the duration of the licensing bar. The claimants and some of the counterparties asked for 5 years. The defendants offered two. Neither of the Specified Persons was involved in licensing and there was no likelihood that they would be for at least 2 years. His lordship considered there was good reason for the licensing bar to be 5 years in view of the range of the detailed and commercially valuable information which would be available to them. 

A third issue was whether the Specified Persons should have read only access as in IP Bridge.  The judge could see no reasons for such a restriction and commented that it would be extremely burdensome in the run-up to the FRAND trial.

The fourth issue was whether the licences not relied upon by either party should continue to be restricted to LEO.  The defendants asked for any licence that was to be included in the agreed bundle to be available to the Specified Persons. The judge agreed that was a practical solution.

His lordship gave the counterparties a deadline to object to his directions. If no objections were received by the deadline the order would take effect the very next morning,   He also modified the designations of the experts' reports that referred to the licences.

Appropriate Remedy
Following their success in Technical Trial "A", the claimants sought the following declaration and order:

"By refusing and/or failing to undertake to take the licence the subject of the Court's FRAND determination, the Defendants and each of them are not entitled to rely on the Claimants' undertaking to ETSI under clause 6.1 of the ETSI IPR Policy."

"With effect from 14 days from the order, the Defendants (and each of the), either by themselves or through their agents, affiliates, through third parties or howsoever otherwise, are prohibited from infringing EP 558. The aforesaid injunction shall cease to have effect if the Defendants enter into a licence on FRAND terms which covers EP 558, and is subject to a liberty to apply in the event that any FRAND licence that is entered into ceases to have effect for any reason."

They relied on Mr Justice Meade's judgment in Optis Cellular Technology LLC and others v Apple Retail UK Ltd and others [2021] EWHC 2564 (Pat) (27 Sept 2021).

The claimants' application came on before Judge Hacon in InterDigital Technology Corporation and others v Lenovo Group Ltd and otherss[2021] EWHC 3401 (Pat) (16 Dec 2021). Although the facts in InterDigital were close to Optis they were not identical,  The defendants expressed willingness to tale a licence on FRAND terms but one that took account of US, French and Chinese law and they had actually started proceedings in China to determine the licence terms from 2024.  Judge Hacon described the defendants' commitment at para [69] as "qualified" and the qualifications as "vague" but he took the view that it was not possible to say that under French law unarguably the defendant's qualified and vague commitment disqualifies them from the benefit of the stipulation de contrat pour autrui created by InterDigital's undertaking to ETSI and clause 6.1 of ETSI's IPR Policy.  The learned judge declined to make the requested declaration and order at this stage.

Technical Trial "B"
In InterDigital Technology Corporation and others v Lenovo Group Ltd and others (Trial "B") [2022] EWHC 10 (Pat) (6 Jan 2022) the claimants alleged that European patent (UK) 3,355,537 for a ‘MAC multiplexing and TFC selection procedure for enhanced uplink’ was valid, essential to the UMTS (3G) standard, release 6 onwards (‘the Standard’) and infringed by compliance with the Standard. The defendants denied that the Standard required use of the patented method.  They contended that the invention had been anticipated by, or was obvious over a marked-up version of 3GPP TS 25.309 v6.2.0 entitled ‘FDD Enhanced Uplink; Overall Description; Stage 2 (Release 6)’ which had been circulated by one Charles Filiatrault, on 27 April 2005 to members of the RAN WG2 (Radio Access Network Working Group 2). 

The proceedings came on for trial before Mr Justice Mellor between 22 and 30 June 2021.  He delivered his draft judgment on 20 Dec 2021 and his approved judgment on 6 Jan 2022.

His lordship described the patent between para [120] and para [146].  The disputed claims were claims 1, 2 and 3.  He construed those between [147] and [184].  The claimants’ case on essentiality and infringement was that the patent was infringed by certain of the defendants’ devices that implement sections of standards, TS 25.321 v6.18.0, TS 25.309 v6.6.0 and TS 25.319 v7.0.0.   It was common ground that the defendants' points on essentiality and infringement depended on (and only on) the construction of the claims of the patent. Since the judge decided all three points against the defendants, it followed that there was no remaining dispute. If the Patent was valid, then the defendants' devices infringed and the patent was essential. 

The judge considered whether the patent had been anticipated by Mr Filiatrault's paper.  He noted at para [188] that the case turned on the difference(s) if any between what was disclosed by Mr Filiatrault and claim 1 of the patent.  He discussed those issues between para [254] and para [301].  

Turning to obviousness, the judge said at para [302]:

"It is not necessary to set out any of the well-known propositions of law which apply to an obviousness attack. Suffice to say I have them fully in mind. I will deal with the two ways in which the attack was presented."

I have already mentioned the Pozzoli analysis in my discussion of Technical Trial "B".  The judge noted at para [12] that "the skilled person/team would be a systems engineer working on HSUPA technologies and focused on the MAC layer. Such a person would have a degree in electrical engineering or computer science and around 3-5 years of experience in the mobile communications industry."  His lordship identified that person's common general knowledge between para [14] and para [119],  I have also mentioned the judge's construction of claims 1, 2 and 3, the prior art and the differences between the prior art and the patented invention.  

The judge concluded at para [325] that the patent in suit was invalid and therefore not capable of being infringed by the defendants' devices or capable of being essential to the Standard.

Conclusion
Each side has won a technical trial in England.  That should entitle the claimants to a FRAND injunction in relation to EP 2,485,558.  It should be remembered that the UK is a relatively small market and that there is litigation between the parties in China and elsewhere.    Anyone wishing to discuss this article or any of the issues mentioned in it is welcome to call me on +44 (0)20 7404 5252 during normal office hours or send me a message through my contact form.

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