June 1, 2021
The case involves the potential infringement of three Standard Essential Patents (SEPs) relating to 3G and 4G telecommunications standards, which were owned and administered by the claimants (Mitsubishi Electric Corporation and Sisvel International SA respectively) and which were part of a pool of SEPs licensed to numerous licensees on FRAND terms (the Pool).
The claimants were ordered to disclose those licences where the rights licensed included any of the patents in the Pool so that the defendants could plead positive cases as to what they considered FRAND terms would be, since they denied that the licence offered by the claimants was FRAND.
Disputes ensued as to confidentiality in relation to the licences disclosed, which were resolved by the court.
The defendants then served statements of case on the FRAND issue. The claimants served a Reply in relation to FRAND, followed by Requests for Further Information, including requests on essentiality rates pleaded by the defendants, to which the defendants were subsequently ordered to reply. In that Reply, the defendants said that their case on essentiality depended on how the claimants sought to justify their case on essentiality. The claimants’ case was an alleged 100% essentiality ratio for the Pool, although they subsequently sought to downplay the significance of that plea, referring back to their original statement of case on FRAND, in which they pleaded that at least one member of each patent family was subject to an independent review process for determination of essentiality to the UMTS and/or LTE standards. The 100% essentiality ratio was not really part of their primary case, they said.
However, Mr Justice Mellor said that unless it was withdrawn, the plea was there and the defendants were obliged to take it seriously and respond. The significance or not of the plea would emerge at trial and the question was how the claimants proposed to prove that part of their case.
In order to respond, the defendants pursued requests for further information and for disclosure, all relating to the 100% essentiality rate. They sought to understand how the various review processes relied on by the claimants enabled them to generate a portfolio with an essentiality ratio of 100%, which was around 7 times the average in the 3G/4G field.
The claimants resisted the requests, saying that they were all irrelevant and accusing the defendants of want to conduct a review of 50-100 patents within the Pool as part of their case on essentiality.
To resolve the impasse, Mellor J said that much appeared to depend on how the claimants relied on the alleged independent review process referred to in their original FRAND statement of case. The response from the defendants was likely to be different if the claimants relied only on the fact that reviews had been carried out, to if they relied on the reviews as establishing essentiality.
In terms of the defendants’ requests for further information, what they were really getting at was whether and, if so, by what process(es) patents were selected for inclusion into the Pool in order to understand how the Pool went beyond the normal essentiality rate.
In Mellor J’s view, the independent review for essentiality must have necessarily resulted in some form of selection process as to which patents were to be included in the Pool and which were not.
In any event, the way the processes by which the independent review was undertaken was highly relevant to the court’s determination of whether it could rely on the claimants’ asserted 100% essentiality ratio or whatever lower percentage it turned out to be. The discard rate (i.e. which patents were de-selected) was relevant as to whether the asserted 100% rate could be sustained or not. Therefore, Mellor J said, the claimants should produce documents evidencing the methodology for choosing the patents for inclusion into the Pool.
As for the statements of case on essentiality, Mellor J said that, as yet, neither side had set out their case at a sufficient level of detail to enable the court to case manage the case or to make findings of fact at trial. Therefore, he ordered an exchange of statements of case on the allegations relating to essentiality ratios. The claimants should start the process by serving a statement of case that:
- Sets out what their case is as to the essentiality rate of the Pool; this must include any alternative case the claimants wish to run at trial;
- specifies what any such case is based on in terms of the sources of analysis and the nature of the materials relied upon;
- explains how their essentiality ratios compare with the general essentiality ratios amongst 3G and 4G technologies generally;
- explains how any such case interrelates to the essentiality rate of any other patent holder; and
- set out details of the processes by which patents were selected for inclusion in the Pool; this should also provide which patents within the Pool have been approved as essential.
Mellor J emphasised that this statement of case must set out precisely the findings of fact which the claimants will be asking the court to make at the trial. It had to be apparent to the informed reader how the case was going to be proved at trial.
Mellor J said that the defendants should then respond in a statement of case setting out what their approach to any essentiality analysis was going to be, at an equivalent level of detail.
Mellor J emphasised that both statements of case must set out sufficient information so that the court can actively case manage this aspect of the case. He also emphasised that the defendants’ ability to respond adequately in their statement of case depended very much on the quality and the precision of the statement of case that the claimants provided. (Mitsubishi Electric Corporation v Oneplus Technology (Shenzhen) Co Ltd  EWHC 889 (Pat) (13 April 2021) — to read the judgment in full, click here).