After a three-week trial between Finland’s Nokia and US company InterDigital, in which the Court was asked to decide whether four of InterDigital’s European patents were essential to the 3G telecoms standard in Europe, Lord Justice Pumfrey ruled that three of the patents, and one claim of the ‘610 patent, were not essential.
But the Court agreed with InterDigital that a second claim of the ‘610 patent, which relates to loop power control – a key aspect of 3G technology – was essential to the 3G UMTS WCDMA European standard published by the European Telecommunications Standards Institute (ETSI).
According to ETSI rules, patents that are essential to the standard should be licensed on fair, reasonable and non-discriminatory (FRAND) terms. If users of the technology do not take a licence, they are technically infringing.
In a statement, InterDigital said it believed that the High Court’s ruling is the first in which a court of law has found any patent to be essential to the 3G standard.
As this is the first English judgment on essentiality of patents to a technical standard, it is likely that InterDigital will appeal the decision. In an emailed statement, a spokesman for InterDigital said that the company would not comment on litigation matters.
The case began when Nokia asked the High Court to declare that 29 of InterDigital’s telecoms patents are not essential to the frequency division duplexing (FDD) mode of operation in the 3G standard in Europe set by ETSI.
During the litigation, Nokia withdrew its challenge to one InterDigital patent and InterDigital conceded the non-essentiality of several more. As a result, by the time the trial began, only four remained in dispute.
The case is unusual in that involves the Court being asked to make a so-called negative declaration.
In his judgment, Pumfrey explained that the Court of Appeal had agreed that the courts have the power to do so: “From the Court of Appeal's judgment I think it is established that there is jurisdiction to entertain an action like the present where negative declarations as to the essentiality of a patented invention to a standard are sought is established if the Court has personal jurisdiction over the defendant and if sufficient facts are alleged that it is possible that the Court might grant declaratory relief. Whether declaratory relief will be granted is a matter of a discretion to be exercised on all the relevant available material in every case.”
Pumfrey, a distinguished judge specializing in IP cases who had recently been appointed to the Court of Appeal, died suddenly on December 24, three days after the ruling was published.
It is uncertain how the High Court’s decision will affect licensing disputes between the two parties over patents relating to 3G technology.
In a complaint filed at the International Trade Commission in Washington DC in August, InterDigital sought to bar imports of Nokia phones which, it claims, infringe two of its US patents. The two companies are also involved in an infringement lawsuit in a federal court in Delaware.
“In the meantime, the case is certain to generate further interest in the Court’s ability to determine issues of essentiality, as well as related issues concerning FRAND licensing obligations,” said one UK-based IP lawyer. At the same time, businesses with an interest in seeking such relief must be prepared for involvement in substantial and possibly costly litigation, including a trial that may last several months.”
In a statement, Nokia said that it was very pleased with the Court’s decision.
It went on: “The result is an extremely favourable outcome for Nokia and other industry participants ... Nokia supports open standards-setting processes for developing new technologies. It creates more open and more predictable market conditions that stimulate innovation, foster competition and ensure widespread adoption of new technology. However, for the proper functioning of the standard-setting process all parties must live up to their commitments to international standards-setting bodies, including declaring patents as essential in good faith, based on a reasoned analysis at the time the declaration is made.”
But InterDigital said that the Court’s decision to declare a claim of the ‘610 patent essential to the UMTS WCDMA standard would boost its licensing programme.
“While we believe our patent portfolio includes a number of patents and patent applications that are or may become essential to the UMTS WCDMA standard, having a court confirm our position on the '610 patent after a long and thorough litigation, and coupled with Nokia's withdrawal of its challenge against another of our patents, provides added strength to our licensing programme,” said Lawrence Shay, InterDigital’s chief legal officer, in a statement.
The High Court’s decision is subject to appeal by either party if permission to appeal is granted. There will be a further hearing in 2008 to determine the form of order to be made as well as any orders relating to attorneys' fees.
Nokia was advised by Bird & Bird and represented in court by a team of barristers led by Simon Thorley QC. InterDigital was advised by Wragge & Co and represented in court by a team of barristers led by Antony Watson QC.
The November issue of Managing IP included a detailed analysis of disputes between telecoms companies, including Nokia and InterDigital, over 3G technology. Subscribers and those with free trial access can read it here.
