Patents: cancellation of RAND trial

Summary

The Court of Appeal has cancelled a RAND trial because it would serve no useful purpose where an undertaking was given not to enforce the right to a FRAND licence in respect of a UK patent which had been held valid and enforceable.

Background

The European Telecommunications Standards Institute (ETSI) sets standards for mobile telephones. Members are obliged to inform ETSI about any essential intellectual property rights (IPRs) which they own, known as standard essential patents (SEPs). They must agree to license these rights to users of the standard on fair, reasonable and non-discriminatory (FRAND) terms. 

The Court of Appeal has confirmed the High Court's jurisdiction to award a licence rate for a global patent portfolio, and also to order an injunction in respect of unlicensed infringements for SEPs (Unwired Planet International Ltd v Huawei Technologies Co Ltd, see Briefing "Patent licensing and FRAND: a new approach", www.practicallaw.com/w-011-0614). Leave to appeal Unwired Planet to the Supreme Court has been granted. 

Facts

T owns a portfolio of SEPs, which it declared essential to telecommunications DSL standards. Z implements technology in the DSL area and takes advantage of the standards. 

A technical trial dealt with the validity, essentiality and infringement of particular patents, and a non-technical trial was to deal with the RAND dispute. Z admitted that there was a real issue regarding the scope and effect of a RAND licence, and undertook to take a licence on agreed or court-determined RAND terms if any patent were found to be valid and infringed. 

In the technical trial, one of the patents was found to be valid and infringed, but that patent would expire before the non-technical trial was due to take place. The court ordered an inquiry as to damages for infringement of the valid patent. The court rejected Z's argument that there was no longer any need for the non-technical trial. 

T then issued fresh proceedings on two further SEPs relating to the same overall group of standards. Z applied to strike these out as an abuse of process. Z also applied to cancel the non-technical trial on the ground that they had waived their rights to enforce T's RAND obligations to license them in respect of the UK generally. The court held that the second action was not an abuse of process and refused to stay the non-technical trial. Z appealed against the refusal to stay. 

Z informed T that, if the RAND trial did not go ahead, they would pay the liquidated sum claimed by T as damages in the action together with any additional interest.

Decision

The court allowed the appeal. 

The court has a broad, flexible jurisdiction to grant declaratory relief, but must scrutinise claims and reject declaratory relief  where it would serve no useful purpose. The court should consider whether granting relief would serve the aims of justice. Finally, the court must ask whether there were special reasons why the court should or should not grant the declaration. 

Before Z waived their right to a RAND licence, the court's declaratory jurisdiction was properly invoked as part of resolving Z’s defence to the grant of the usual relief for patent infringement. Following the waiver, insofar as the declaration sought simply to determine the scope and terms of the licence which T was bound to offer to Z, it would no longer serve a useful purpose. For the same reason, Z had no interest in a determination by the court as to whether T was obliged to grant them a licence for the purposes of resisting that relief. As…