Irides: Weekly patent litigation update

The Irides Weekly Update is our round-up of patent litigation news highlights from around the world. Taking its name from the plural of “iris” - a nod to the ability of Irides to see what’s happening around the world.

Our latest edition - 18 October 2024 - is below:

UK

Split poly(A) tail mRNA patents invalid for insufficiency and obviousness.

On 8 October 2024, Mr Justice Meade handed down judgment in BioNTech SE and Pfizer Inc. (together, BioNTech/Pfizer) v CureVac SE. Meade J found CureVac's patents, relating to split poly(A) tails in mRNA, invalid for obviousness and also for insufficiency due to (i) lack of plausibility and (ii) because the purported technical effect does not in fact exist over substantially the whole scope of the claims. BioNTech/Pfizer's added matter attack failed and is not discussed further below.

BioNTech/Pfizer, the developer and supplier of the Comirnaty COVID-19 mRNA vaccines, issued proceedings seeking to revoke three patents owned by CureVac: (1) EP (UK) 1 865 122 (EP 122); (2) EP 3 (UK) 708 668 (EP 668); and (3) EP (UK) 4 023 755 (EP 755). Infringement was not disputed if the patents were held to be valid. Issues pertaining to the validity of EP 122 were adjourned as CureVac accepted that the patent was invalid according to the current state of the law (although it wanted to argue on appeal to the Supreme Court should the law change), so the present trial was limited to the validity of EP 668 and EP 755.  Both EP 668 and EP 755 (collectively, the Patents) concern mRNA molecules comprising split poly(A) tails, which was said to improve protein expression, use of said mRNAs as vaccines and intramuscular administration of said mRNAs. The priority date was 12 December 2014.  

Technical background 

At the priority date, mRNA was being explored for vaccine applications. The basic idea was to administer mRNA that encode a viral protein, which would be translated in the patient’s cells to produce the viral protein. This protein would then stimulate an immune response, which would be induced if the patient were exposed to the virus in future.

mRNA is made up of nucleic acid bases: adenine, cytosine, guanine and uracil (and minor variations thereon). mRNAs have a typical structure, which is depicted in Fig. 6 of the judgment (copied below).

The "poly(A) tail" refers to multiple adenine residues at the 3’ end of the mRNA. The poly(A) tail was understood to prevent RNA degradation, which increases the half-life of the mRNA and therefore protein expression. However, the precise mRNA degradation pathways were not well understood at the priority date. Generally speaking, the longer a poly(A) tail, the greater the expression from the mRNA construct, although this was known to be subject to certain plateauing and masking effects.  

The Patents

The Patents claimed an mRNA comprising a split poly(A) tail, defined as “comprising at least two separate poly(A) sequences, wherein a poly(A) sequence is a sequence of 20 to 400 adenine nucleotides, wherein at least one poly(A) sequence comprises at least 70 adenine nucleotides and wherein a first and/or a second poly(A) sequence comprises at least 60 adenine nucleotides…”. The linker, which splits the poly(A) sequences, was defined in the specification as being from 1 to 200 nucleotides in length. Taken together, the claims were to an extremely broad class of mRNA molecules.

Plausibility / Sufficiency

Meade J addressed this validity attack in three stages: (1) is the technical effect disclosed in the patent?; (2) is it plausible across the scope of the claims?; and (3) is the technical effect possessed by substantially all mRNAs covered the claims? (i.e. sufficiency in fact).

1. Is the technical effect disclosed in the patent?
   Based on existing case law, the patentee is afforded some flexibility in framing its technical contribution, but the patent in suit must disclose such a contribution to the skilled person. In this instance, CureVac alleged that its technical contribution was the introduction of a linker to produce an mRNA with a split poly(A) tail, which improves protein expression. Meade J did not consider that the contribution was disclosed in the Patents. Examining the data in the Patents, Meade J held that the skilled person would consider that plateauing and masking effects accounted for protein expression levels, rather than a split poly(A) tail.
    
2. Is the technical effect plausible across the scope of the claims?
   In the event that his finding above was incorrect, Meade J continued to the second question, namely whether the alleged technical effect was plausible across the scope of the claims. CureVac argued that the skilled person would understand that the addition of a linker (splitting the poly(A) tail) would act as a roadblock and disrupt the mRNA degradation pathway based on their CGK. However, Meade J held that whilst potential mRNA degradation models were known, there was uncertainty about which system was correct. The topic was highly complex and incompletely understood. Further, it was possible that the linker could have a functional effect which alters expression. Accordingly, it was not plausible that insertion of a linker in the poly(A) tail would result in improved protein expression.
    
3. Sufficiency in fact
   Meade J completed his analysis by considering whether, in the event the technical effect was plausible, was the technical contribution in fact achieved across the scope of the claim, i.e. did substantially all of the mRNAs within the claims benefit from improved protein expression? Significant amounts of experimental data were submitted from in vivo and in vitro litigation experiments and CEA notices. Meade J concluded that the technical effect was not enjoyed across substantially the whole claim; the technical effect was demonstrated in some mRNAs, but often it was not present. Ultimately, the data was not able to support such a broad claim such that they were insufficient.

Obviousness

The cited prior art, Thess, was a PCT application which disclosed that combinations of a poly(A) sequence and a histone stem loop sequence (another type of mRNA sequence) synergistically improve protein expression. Thess included ambiguous language as to the proposed combinations and repetition of the sequences. Meade J agreed with BioNTech/Pfizer that, in light of Thess, the skilled person would be motivated to test different combinations of the sequences to explore their synergistic effects. As part of this testing, the skilled person would test a poly(A)-histone stem loop-poly(A) sequence, in which the histone stem loop effectively acts as a linker and splits the poly(A) tail, thereby arriving at the claimed invention. Accordingly, the Patents were obvious over Thess.
 

UPC

Düsseldorf Local Division rules in main action. 

On 10 October 2024, the Düsseldorf Local Division of the UPC issued a permanent injunction in Seoul Semiconductor v expert e-commerce and expert klein (UPC_CFI_363/2023). The dispute related to patent EP 2926698 “Light Emitting Diode” and alleged infringement by LED lights on smartphones that were marketed by the defendants.

The reasoning in this decision starts with the Local Division confirming the admissibility of both the infringement action and the counterclaim for invalidity. The fact that the counterclaim was brought only by the second defendant did not preclude its admissibility. However, as a result, the first defendant could not raise invalidity arguments. The Local Division explained that defendants must each be dealt with independently, conducting their own proceedings formally and substantively independently of the others, without the respective actions of one defendant causing advantages or disadvantages for the other defendant. However, as an aside, this does not preclude the joint filing of a revocation counterclaim by more than one defendant. As the Court did not separate the proceedings in this case, this had little impact on the outcome, but defendants should be aware of these possible implications of waiving their right to file a counterclaim for invalidity.

In relation to the counterclaim for revocation, the court considered the issues of added matter and inventive step after setting out claim interpretation following the approach outlined in 10x Genomics v. NanoString and confirmed in later cases. The description was used extensively to interpret a number of specific claim features such as “mesa-etched areas”, with the court stating for each of these features that “the skilled person will search in vain in claim 1 for further specifications”.

On the issues of added matter and inventive step, the Court rejected the defendant’s arguments, finding the patent to be valid. In relation to inventive step, the Court referred to a decision from the Munich Local Division (Sanofi v Amgen, UPC_CFI_1/2023) and stated that the assessment of inventive step requires an objective, case-by-case assessment that considers realistic starting points and whether the claimed solution would be an obvious next step for a skilled person.

On the topic of determining realistic starting points, the Court stated that reasons must be given as to why the skilled person would regard a particular part of the prior art as a realistic starting point.

They further stated, again with reference to 10x Genomics v. NanoString, that a starting point is realistic if its teaching would have been of interest to a person skilled in the art who, at the priority date of the patent in suit, was seeking to develop a similar product or process to that disclosed in the prior art, i.e. which has a similar basic problem to the claimed invention. The Court reiterated that there could be several realistic starting points and that it was not limited to the most promising one.

On the topic of obvious next steps, the Local Division referred to considerations outlined by the Court of Appeal in 10x Genomics v Nanostring, re-iterating the following factors:

a) In general, something is obvious if, the skilled person would be motivated (i.e. would have an incentive) to consider and implement the claimed solution as the next step.

b) It may be relevant whether the skilled person would have anticipated particular difficulties in carrying out the next step.

c) A technical effect or advantage achieved by the claimed subject-matter compared to the prior art may be an indication of inventive step but a feature arbitrarily selected from several possibilities cannot generally contribute to inventive step.

Factor a) above, relating to motivations, was particularly relevant on the facts, with the Court finding that in relation to a first prior art document that “the skilled person has no reason to look for a solution to reduce possible tension between the two layers and possibly to provide a further (stress-relieving) layer for this purpose. For the design of the metal barrier layer with palladium, he already has a material at his disposal in which such tensions do not occur in the first place” (emphasis added) and in relation to a second, that “… the person skilled in the art has no reason to replace the transparent diode arranged under the reflective cathode contact (150) with a reflective diode” (emphasis added).

On infringement, the Local Division concluded that the marketed products directly infringe the patent in suit. Regarding acts of infringement, with reference to a previous decision from the same division (UPC_CFI_7/2024), the offering and marketing of the LEDs creates a rebuttable presumption that the defendants are using, importing or possessing the products for directly infringing acts. In addition to granting a permanent injunction to prevent these acts, the court also ordered the defendants to provide information and to recall, permanently remove and destroy the infringing products from their distribution channels.

A final point of note relates to costs, the value of the case was €500,000 and the €56,000 ceiling on recoverable costs calculated based on this was applied separately to the infringement action and the counterclaim for revocation. Whilst the upper limit of recoverable costs would therefore have been €112,000, the parties had agreed to a value of €100,000 for recoverable costs at the hearing. Absent any suggestion otherwise from the parties, the Local Division divided this equally at €50,000 between the two actions. Each defendant therefore had to pay half (€25,000) of the infringement action costs, with the second defendant being liable for the €50,000 costs of the rejected counterclaim for invalidity.

The Court also discussed whether it was appropriate to the provision of security. Whether this is necessary if there is a justified and real concern that a claim for damages might not be realised should the decision be reversed.  This must be assessed on a case by case basis, considering factors such as the financial situation of the plaintiff.  The defendant must justify the need for security and, if it is raised, the plaintiff must justify its financial situation and explain why enforcing its right without security outweighs the defendant’s interests.  Here no security was not justified and it was noted it would have been necessary to specifically demonstrate the potential damages if a party is seeking a security payment equal to 10 times the amount in dispute. 

UK

High Court Upholds Enzalutamide Patent.

On 8 October 2024 the High Court handed down its judgment in Accord Healthcare Ltd v (1) Regents of the University of California and (2) Astellas Pharm Europe Ltd (together Astellas) [2024] EWHC 2524 (Pat), finding that EP (UK) 1 893 196 B2 (the Patent) was not obvious, with the sufficiency squeeze also failing. The decision can be accessed here.

The Patent claimed the compound enzalutamide for the treatment of hormone refractory prostate cancer, marketed under the brand name Xtandi, with a priority date of 29 March 2006. Enzalutamide is an anti-androgen hormone therapy that blocks androgen receptors (AR).

The Claimants relied on two pieces of prior art independently, both of which originated from the inventors discussing their work: the first was a series of slides presented as part of a lecture (the Slides); and the second was a poster depicting a step-wise development of compounds based on structure-activity relationship (SAR) studies (the Poster). The prior art was made available to the public at a conference in September/October 2005. The Slides and Poster both disclosed what was agreed to be the closet prior art compound, RD162, which differed from the claimed compound, RD162’ (enzalutamide), by virtue of an alternative substituent at the bottom right of the central thiahydantoin ring (Position X); RD162 has a cyclobutyl group, whereas RD162’ has a dimethyl substituent (see structures below taken from the judgment).

Obviousness over the Poster

Mellor J held that claim 1 of the Patent was not obvious over the Poster. He therefore dismissed the Claimants’ arguments that it would have been ‘immediately obvious’ from the Poster to develop RD162’ or, in the alternative, that it would have been ‘obvious to do a SAR’ which would have led the Skilled Team to RD162’ (The Skilled Team comprising a cancer biologist and a medicinal chemist).

1. ‘Immediately obvious’
   Mellor J outlined a number of issues with the Claimants’ expert evidence on whether it would have been immediately obvious to the Skilled Team to develop RD162’ from the Poster. This included that the Claimants did not explain why the Skilled Team would start by considering making a change from the cyclobutyl group at Position X. Instead, the evidence was submitted on the assumption that the Skilled Team would begin the development on the above assumption that there ought to be a change at Position X. In this regard, the Judge observed that a case run on obvious immateriality does not absolve the claimants from having to consider the actual teaching of the prior art or allow them to generalise it into oblivion. There is also no separate body of law that is applicable if the change from the prior art to the claim is said to be ‘immaterial’ or ‘trivial’. There is only the statutory question, “is it obvious?” Furthermore, in general terms, issues of ‘immateriality’ or ‘triviality’ are not well suited to the field of medicinal chemistry, although this will depend on the context. Mellor J therefore found the ‘immediately obvious’ case to be driven by hindsight. Whilst not determinative, it was also not helpful for the Claimants that their medicinal chemistry expert had seen the Poster after the Slides and the Patent.  Furthermore, despite this sequence of events, the Claimants’ medicinal chemistry expert report was structured so that he presented his views on obviousness of the Poster first (including the immediately obvious wording), before assessing obviousness over the Slides (without referring to the immediately obvious wording).
    
2. ‘Obvious to do a SAR'
   The Claimants’ supplementary case was one that was said to have been developed through the cross examination of Astellas’ medicinal chemistry expert. They sought to establish that it would have been obvious to the Skilled Team to do a SAR, starting from RD162, to develop their own compound. Although this was agreed, it was in dispute what would occur following the SAR. The Claimants attempted to put forward a number of arguments as to why, having done a SAR, the Skilled Team would have arrived at RD162’, including being instructed to do so by a department responsible for patent applications, and in order to make a ‘back-up’ compound.  Mellor J dismissed these arguments as also being driven by hindsight. Although the Skilled Team would carry out a SAR, and would use RD162 as their starting point having read the Poster, they would have been motivated to develop a novel compound further away from close analogues to RD162.
   
   It is interesting to note that Mellor J expressed the view that it would be possible to envisage a finding of obviousness had it been established in the evidence in chief (the written expert evidence) that RD162’ would have been a by-product of a SAR and subsequent testing of RD162. Instead, the ‘obvious to do a SAR’ case was developed in cross examination, with knowledge of RD162’ as the target compound, thus driven by hindsight.

Obviousness over the Slides

Mellor J also held that claim 1 was not obvious over the Slides, although he noted that the arguments in relation to the Slides were more finely balanced – he even went as far as to say that he had changed his mind on obviousness over the Slides more than once. However, as with the obviousness arguments for the Poster, the Claimants’ medicinal chemist had failed to explain the context in which the Skilled Team would make the considerations set out in his technical reasoning, i.e. why the Skilled Team would make the changes necessary to arrive at RD162’. This finding of inventive step was made notwithstanding the reservations the Judge also had over certain aspects of the evidence of Astellas’ medicinal chemistry expert.

The Slides contained a pharmacophore, which was said to be an overview of the author’s views of different interactions of a compound within the AR binding site, with three targets being marked for investigation. One of these targets contemplated a dimethyl at Position X. The Claimants argued that had the authors intended to communicate that this was not to be investigated further they would have presented the pharmacophore in a different way. Astellas said that the Slides were considering ways to improve the agonist, and the Reader could see a deliberate decision to change the dimethyl. It would therefore not be obvious to revert back to dimethyl without reason to do so. Mellor J ultimately agreed that the Skilled Team would have considered it a backwards step to change from cyclobutyl to dimethyl in the context of RD162.

In reaching his conclusion on obviousness over the Slides, Mellor J outlined three overarching principles that are useful to bear in mind. First, if steps are obvious, it should be possible to explain this clearly and in the evidence in chief. Second, in litigation there is intense focus and much analysis of the route(s) to obviousness and obstacles. Thirdly, it is unsurprising that, with skilful cross-examination driven by an intense focus on the target, obviousness arguments may appear to have force. As a matter of principle, this did not mean that an obviousness case could not be proved through cross examination of a patentee’s experts. It was simply that, in the specific circumstances of this case, the judge did not consider he had sufficient primary evidence to establish a finding of obviousness.  

This case therefore raises important points for practitioners about the preparation of expert evidence when trying to invalidate a patent for obviousness, particularly in circumstances where the differences between the prior art and the patent may appear trivial or immaterial at first sight.  

Validity – Sufficiency/Plausibility

The Court also rejected the sufficiency attack run as a validity squeeze with obviousness. The Patent disclosed a novel compound, RD162’. It was plausible that RD162’ would work (and does in fact work) and the Patent plainly made a technical contribution.

UPC

Lisbon Local Division dismisses application for provisional measures and rules on issue of territorial competence.

On 15 October 2024, the Lisbon Local Division (LD) handed down its decision in proceedings concerning Telefonaktiebolaget LM Ericsson’s (Ericsson) EP 2 819 131 B1 (EP 131), which relates to voltage controlled oscillators used in laptops and notebook computers. Ericsson applied for provisional measures, including a preliminary injunction, against AsusTek Computer Inc (AsusTek), Digital River Ireland Ltd (Digital River) and Arvato Netherlands B.V. (Arvarto) (together, the Defendants), alleging infringement of EP 131 by sales of laptops and notebooks containing either the Intel Wi-Fi 6E AX211 Module or the Intel Wi-Fi 6 AX011 Module.

The Defendants objected to the application, arguing that the LD lacked competence to hear the claim, non-infringement of EP 131, invalidity of EP 131, and unreasonable delay and lack of urgency on behalf of Ericsson in bringing the proceedings.

Jurisdiction and Competence

The Defendants alleged that the LD had no competence to hear the case on 2 grounds.  First, regarding AsusTek and Digital River, it was argued that there was no competence because the claim to infringement of EP 131 was not made out, The Defendants did not challenge the territorial connection element. The LD disagreed with this approach, noting that the allegation that no acts of infringement were committed is a question for the defence based on the merits and is irrelevant to the question of territorial competence.

Secondly, regarding Arvarto, it was postulated that Art. 33(1)(a) UPCA does not relate to intermediaries. The LD also rejected this argument and stated that  Art. 33(1)(a) UPCA applies regardless of whether the defendant is an infringer or an intermediary. The provision requires an objective link to the place of actual or threatened infringement and the quality of the accused entity is irrelevant.  Further, a solution whereby an action against an intermediary is required to be lodged in a different Local Division would be contrary to the UPC’s principles of efficiency, economy of means, legal certainty, avoidance of the risk of irreconcilable decisions and dispersal of proceedings.

Preliminary Measures

Regarding the application for preliminary measures, the LD noted that the applicant is required to provide reasonable evidence to satisfy the Court with a sufficient degree of certainty (i.e. that it is at least more likely than not) that the applicant is entitled to initiate proceedings, that the patent is valid, and that its rights are being infringed (or will be imminently infringed). The application must also show that the urgency requirement is met. If the preliminary injunction proceedings are inter partes, the burden of proving that the patent is invalid lies with the defendant.

The requirement for urgency is derived from the specific and exceptional nature of provisional measures. The Court must be convinced of the urgency, balancing it against the impact on the rights of the defence. The requirement for urgency is related to the need for early and prompt protection to avoid further damage resulting from delays. In order to fulfil the urgency requirement, the applicant is expected to be diligent in seeking a remedy against the alleged infringer, having gathered all necessary evidence, from the moment the infringement began or from the time the applicant became aware of said infringement. Where an applicant is negligent in seeking timely protection, the Court can take this lack of diligence into account and conclude that there was no genuine interest in promptly enforcing its right. In such cases, provision legal protection would be inappropriate. 

In this case, Ericsson failed to provide evidence to refute the Defendants’ claim that it would have been aware of the allegedly infringing components much earlier than the date of its test purchase in May 2024. In particular, the Defendants relied on: (i) the fact that the alleged infringement began in 2019 in respect of AX201 and 2021 in respect of AX211; (ii) that Ericsson initiated ITC proceedings against Lenovo in the US in respect of the same components in October 2023; and (iii) Ericsson and AsusTek had been actively engaged in SEP licensing negotiations since 2018 so it was reasonable to expect it to be paying special attention to the Defendants’ products on the European market. As Ericsson proffered no evidence on the exact date it had become aware of the alleged infringement, the burden of proving urgency and due diligence in initiating proceedings was not satisfied and the request for provisional measures must be dismissed.

Although the criteria for assessing a request for preliminary measures are cumulative (meaning the finding on urgency was sufficient to dismiss the request), the LD decided to further address the issues of validity and infringement. The LD concluded that EP 131 was prima facie more likely to be valid than not in the face of arguments of added subject matter, lack of novelty and lack of inventive step. The Court did note that had it concluded that the patent was invalid, the exemplary auxiliary request would have been inadmissible at this stage in the proceedings where it is incompatible with the nature of provisional measures. Further, EP 131 was more likely than not to be infringed on the basis of the cited evidence put forward by the parties. The Court noted that the inclusion of images from the product of a competitor of the Defendant without explanation was misleading and could potentially be considered a misrepresentation under Art. 48(6) UPCA and r. 284 RoP. However, it did not do so in this case as there were no material differences.

UK

Biogen’s patent for a method of assessing a patient’s risk of developing progressive multifocal leukoencephalopathy (PML) held invalid and not infringed.

On 11 October 2024, Mr Justice Mellor handed down a lengthy decision finding EP (UK) 3 575 792 (EP 792) invalid for insufficiency and added matter, and not infringed. Mellor J also declined a request from Sandoz, made in view of a pending divisional, for a declaration in respect of the PCT application from which EP 792 derived (PCT). The decision can be accessed here.

Claim 1 of EP 792 claims a method of assessing a patient’s risk of developing PML, a potentially fatal neurological condition, comprising the use of a test to determine a patient to be at a high risk if a patient sample has an index value of greater than 1.5. The index value is a measure of a patient’s antibody titer to a virus called JCV. Pre-priority, prior infection with JCV was a known risk factor for the development of PML in certain immunosuppressed individuals, including in individuals undergoing treatment with Biogen’s multiple sclerosis therapeutic, Tysabri (natalizumab). Biogen has its own anti-JCV antibody test, STRATIFY JCV DxSelect, that is said to implement the teaching of EP 792 and had brought an infringement claim following Sandoz’s development of its own test (Sandoz Test) for use with its biosimilar natalizumab product, Tyruko.

Some of the most interesting points to emerge from the decision are outlined below. The decision also addresses obviousness, added matter, excluded subject matter and technical infringement (both on a normal basis and applying the doctrine of equivalents).

Insufficiency

For EP 792 to be sufficient, the skilled team would need to be able to produce a test that identifies an individual as being at high risk of developing PML at an index value of 1.5 that is the same anti-JCV antibody titer as in the test disclosed in EP 792. Mellor J held that the skilled team would be unable to do so, and that even if by chance they had, they would not have known this. A key point was that the index value was calculated by reference to a claimed but undisclosed cut-off calibrator. Mellor J held that although it may be difficult for a patentee to describe a calibrator in words, that does not excuse them from the requirement to make an enabling disclosure. Although Biogen described them as burdensome, there were options available to meet the disclosure requirement such as depositing a calibrator and making it available on request.

Sandoz also supported its case with secondary evidence of insufficiency. It explained that it was only able to develop the Sandoz Test because it had access to post-priority samples and results that had been tested using STRATIFY JCV DxSelect and, even then, it took them 18 months to develop the test. The Judge therefore held EP 792 insufficient for classical insufficiency and uncertainty insufficiency. EP 792 was also bad for breadth of claim insufficiency as the method did not work for individuals that had received prior immunosuppressant treatment.

Declaratory relief

Sandoz sought a declaration that the PCT did not disclose a JCV test clearly and completely enough for the skilled person to be able to determine a patient to be at high risk of developing PML at an index value of 1.5 or any other index value disclosed in the PCT. The justification was that Biogen intended to assert a pending divisional if or when it granted. However, having considered the authorities on Arrow declarations, Mellor J held that such a declaration would usurp the function of the EPO regarding the grant of the pending divisional or any future divisional that might derive from the PCT.

Infringement

Amongst other non-infringement arguments, Sandoz advanced a territorial defence, with which Mellor J agreed, holding that no steps of the method were carried out in the UK. Even though patient samples were taken in the UK, they were prepared for testing, tested and assigned an index value that determined whether the patient was at high risk outside the UK. The index value would be sent to the clinician in the UK and they may go on to make their own assessment, but this assessment was not part of the claimed method. This follows earlier decisions of English courts on territoriality, including Menasche v William Hill, RIM v Motorola and Illumina v Premaitha.

UK

Court of Appeal considers declaration that a willing licensor would offer and enter into an “interim licence”  prior to FRAND trial.

On 3 October 2024 the Court of Appeal (CA) handed down its decision concerning an application by Xiaomi for a declaration that a willing licensor would offer and enter into an “interim licence” for its standard-essential patents (SEPs). The first instance court (HC) dismissed the application, but the Court of Appeal overturned that first instance decision (Phillips LJ dissenting).  

The English proceedings are part of the ongoing global litigation between Panasonic and Xiaomi, including infringement claims before the Germany national courts and the UPC, where Panasonic is seeking injunctions. Panasonic and Xiaomi have both undertaken to the English Patents Court that they will enter into the global FRAND licence on terms set by the English Court (the Court-Determined Licence).  

At first instance it was held that performance of its FRAND commitment in good faith did not require Panasonic to enter into an interim licence, nor did clause 6.1 of the ETSI IPR Policy create an implied obligation to do so. Further, Leech J found no useful purpose in granting the declaration, rather he considered it would be an exercise of jurisdictional imperialism given the real purpose was to influence the German and UPC proceedings.   

Writing the leading judgment, Arnold LJ overturned this, accepting three out of five of Xiaomi’s grounds of appeal as set out below:

1. The “high degree of assurance” test 

The first ground related to the standard applied by Leech J, arguing that the balance of probabilities should have been applied rather than a “high degree of assurance”.

The CA dismissed this ground and found that the references the HC made to a “high degree of assurance” was not concerned with the standard of proof. Instead, the Court was assessing the merits of the parties' substantive cases, where a high degree of assurance was required for the interim relief sought.

2. The obligation of good faith under clause 6.1 of the ETSI IPR Policy

The CA found that Leech J had reached the wrong conclusion when he found that Panasonic was not acting in bad faith by continuing to pursue injunctive relief in the German and UPC proceedings.

Arnold LJ held that there was an inconsistency between the parties having committed to accept and enter into the global FRAND licence on terms set by the English Court and the continued request by Panasonic for injunctions in the parallel UPC and German actions. It was not consistent with the obligation to negotiate a licence in good faith to try to use the exclusionary powers of injunctions to attempt to achieve licence terms that were more favourable than those that would be determined to be FRAND by the English Court.

3. The utility of the declaration

The CA found that the declarations would serve a useful purpose in forcing Panasonic to reconsider its position to offer and enter into the interim licence. It would also safeguard the integrity of the English proceedings.

4. The principle of comity

The CA held that if the declarations induced Panasonic to reconsider its position, it would promote comity by relieving these courts of burdensome and wasteful litigation. If the parallel proceedings continued, it would be entirely for the German and UPC courts to make their own assessments of the parties’ conduct, including in the English proceedings, and decide what, if any, relief to grant.

5. Panasonic’s revised proposal

Xiaomi’s fifth ground of appeal was that to the extent that the judge found that Panasonic’s revised proposal was arguably sufficient to discharge its obligation, he was wrong to do so.  This ground was dismissed on the basis that the HC had not made such finding.

The Terms of the Interim Licence 

The CA noted that as the Court was equally capable of determining the FRAND terms of an interim licence as it was of determining the final FRAND licence terms, it wasn’t necessary to stick rigidly to one of the parties’ proposals. The CA adopted the terms proposed by Panasonic but with a term from 2011 until the licence determined by the Patents Court takes effect and a lump sum royalty midway between the parties’ offers. This sum and all other licence terms would then be subject to adjustment when the final terms are decided.  

Dissenting Judgment  

Phillips LJ gave a dissenting judgment.  In his view, it was not appropriate to grant a final declaration that Panasonic is obliged to enter an interim licence on terms “which have not been determined on evidence to be FRAND”. He considered that the good faith obligation only related to the negotiation and/or determination of a FRAND licence terms, not an obligation to enter into an interim licence.  In considering the purpose of the declarations sought, he concluded that “the real purpose and effect can only be used to influence the approach of the foreign courts”. Further, the “exceptional power” to grant a final declaration at an interlocutory stage, was not warranted in this case, especially when a more “conventional remedy”, an anti-suit injunction, may have been available to Xiaomi. 

UPC

Paris Central Division clarifies whether in-house lawyers can be independent representatives.

On 16 September 2024, the Paris Central Division accepted an application made by Microsoft in the Suinno Mobile & AI Technologies Licensing Oy v Microsoft Corporation proceedings (UPC_CFI_164/2022) to set aside an earlier issued order to keep certain Suinno Mobile information confidential.

This had been granted by the Judge-Rapporteur, restricting access to Suinno Mobile’s confidential information to a select confidentially club. This was later challenged by Microsoft who contended that: (i) the requirements for issuing a confidentiality order was not met; and (ii) that the legal representative for Suinno Mobile, who was a managing director and main shareholder, could not act as a UPC representative of Suinno Mobile, in light of the requirement of independence of representatives as set out in Art. 48(5) UPCA and Art. 2.4.1 of the Code of Conduct of Representatives for the UPC.

The Paris Central Division disagreed with Microsoft's argument in (i) above, holding that the Judge-Rapporteur was correct in classifying the information as confidential.

With regard to point (ii) above – namely, Microsoft's questioning of the independence of Suinno Mobile's representative - the Paris Central Division agreed with Microsoft. The Paris Central Division held that Art. 48(5) UPCA is modelled after Art. 19(5) of the Statute of the Court of Justice of the European Union, which requires a party to use the services of a third party authorised representative and prevents a party from acting itself. Given the requirement for a lawyer to be fully independent and act in the overriding interests of the administration of justice, a party cannot be represented before the Courts of the European Union by a lawyer that is employed or financially dependent on the client.

However, the Paris Central Division did clarify that such in-house lawyers can represent the client in court, where permitted by national legal systems.  Therefore, Suinno Mobile's representative was not considered as independent for the purpose of a valid representation of their client in the proceedings. As a result of this finding, Suinno Mobile's original application for confidentiality was declared inadmissible and the order of the judge-rapporteur was set aside.

Importantly, the Paris Central Division held that the inadmissibility of Suinno Mobile's application on procedural grounds did not affect the confidential nature of the information and as such the restrictions on the members of the confidentiality club were still maintained.

Permission to appeal to the Court of Appeal was granted by the Paris Central Division due to the need for consistent interpretation of the notion of independence before the UPC.