International Conference on Judicial Protection of IPR Chengdu, China September 9-11 2009

Patents and Standards: The rôle of the Courts Christopher Floyd Judge of the Patents Court Royal Courts of Justice, London, UK

Standards International standards regulate a large range of interoperable products particularly in the computing and telecommunications fields. Examples are JPEG (Joint Photographic Experts Group), MPEG (Moving Pictures Expert Group), GSM (Groupe Speciale Mobile/Global System for Mobile Communications) and 3G. Mandatory nature makes patents which embody features of the standard extremely valuable.

Standards Anything from:

Standards To

Essential Patents A patent which must be infringed if the technical requirements of the standard are to be complied with. Technical, not commercial test

F.R.A.N.D. Commonly, members who participate in the standards setting process required to license essential patents on terms which are FAIR REASONABLE NON-DISCRIMINATORY

Issues which may arise for the Courts Is a patent truly “essential” to the Standard? What are the principles embodied in FRAND? Has a patentee abused a dominant position by refusing to license on FRAND terms?

Essentiality The number of “essential” patents which the patent owner possesses is a factor in licence negotiations Third parties may have a contractual right to a licence under essential patents on FRAND terms “Essentiality” also gives rise to an alternative method of proving infringement

ETSI definition “Essential” as applied to IPR means that it is not possible on technical (but not commercial) grounds, taking into account normal technical practice, to make …equipment or methods which comply with a standard without infringing the IPR. For the avoidance of doubt in exceptional cases where a standard can only be implemented by technical solutions, all of which are infringements of IPR, all such IPRs shall be considered essential

Determining “essentiality” English court has on several occasions been asked to determine whether patents are “essential” to a given standard Purpose – to counteract the effect of alleged “overdeclaration”

Example 1: essential patent A standard requires a mobile device to be capable of using both “open loop” and “closed loop” power control. A patent claims a particular circuit for combining the use of both types of power control. Other non-infringing circuits for using both types of power control are technically possible.

Example 2: inessential patent A standard requires a mobile device to be capable of using both “open loop” and “closed loop” power control. A patent claims the idea of combining the use of both types of power control.

Squeezes Patentee argues for wide construction to preserve essentiality, so that patent exposed to invalidity attack. Amendment of claims may change an essential patent into an inessential one

Use of declaratory judgments Those wishing to use the standard may wish to challenge whether any (and if so how many) of a competitor’s declared essential patents are in fact essential Can do so by seeking a declaratory judgment of “inessentiality”

CPR 40.20 “The Court may make binding declarations whether or not any other remedy is claimed”

Discretionary “It is obvious that the principal factor affecting the exercise of the court’s discretion, apart from such matters as the adequacy of the description of the device or system to which the invention is said to be inessential is the utility of the negative declaration sought. Would the declaration be the legal equivalent of shouting in an empty room, or is there some point in it?” Pumfrey J in Nokia v Interdigital

Ingredients of an inessentiality action One or more patents have been declared to be essential to the standard The applicant for the declaration has a genuine intention to market products which comply with the standard There is a real dispute between the parties as to whether the patent is in fact essential to the standard Whether the patent is essential has real commercial consequences for the parties.

Nokia v InterDigital action An action for declarations of inessentiality in relation to 29 of InterDigital’s patents. How many were essential? By exchange of written evidence, the 29 patents had reduced to 7. Of those 7, InterDigital chose not to advance a case in relation to 3. That left 4, two of which were a parent and divisional, meaning that only three different specifications had to be considered at trial. Held essential: 1/29

Alternative method of proving infringement Normal method: evidence directed to features of product or process Alternative method in case of standards: Patent is essential D’s device declared to operate in accordance with standard Infringement proved without looking at detail of D’s device

Other standards related cases Declarations about disputed principles on which FRAND royalty to be calculated Declarations that patentee obliged to grant licence under specific essential patent Declarations as to what FRAND royalty is on the facts? Abuse of dominant position.

Example A owns a portfolio of patents, 30 of which are declared essential to a standard B wishes to market a device which operates in accordance with the standard Licence negotiations between A and B break down over the amount of royalty A sues B who denies infringement and essentiality, and attacks validity B says that if its device infringes any valid patent which is essential, then A is obliged to grant B a licence on FRAND terms B says that if any of the patents are valid and infringed and essential, then A has abused a dominant position by refusing to grant B a licence on FRAND or other reasonable terms B seeks a declaration that if any patent is valid, infringed and essential, A is obliged to grant it a licence on FRAND terms

No licensing obligation Where a patentee encourages standard to be set embodying a patent which he owns and is essential Can he obtain an injunction/damages against those who use the standard? Common law principles of acquiescence and estoppel may apply

Case management problems Size Technical subject matter Discretion Amendment

Size A trial on 1 patent can last 3-4 days: so 30 patents… Single trial or smaller chunks? One judgment, or judgments on each chunk?

Technical subject matter Grouping Teach-ins

Discretion Try at the end, when all the technical decisions taken? Try at the beginning, so as to have potential to avoid waste of resources?

Validity Can try at same time where manageable Where tens of patents involved may be desirable to hold over In Nokia v Interdigital only 1/29 for which validity mattered

Thank you