Philips v. ASUS/Wiko FRAND litigation in the Hague: new decisions

As readers may know, Philips is currently engaged in pan-European litigation against ASUS and Wiko for infringement of its FRAND-patents relating to Universal Mobile Telecommunications System (UMTS) technology. In the spring of 2019, the Court of Appeal of the Hague issued an injunction against both parties on the basis of one patent [see Katpost here for the decision against ASUS; an English translation of the decision against Wiko is forthcoming in GRUR-Int]. In October, the Oberlandesgericht Karlsruhe decided against Philips in a case concerning a parallel patent [Katpost here]. The Philips UMTS case highlights differences in the European approaches to FRAND and both in the Netherlands and in Germany, the cases are now pending before the supreme courts. It is therefore worth keeping an eye on.
Just before Christmas, the Court of Appeal in the Hague handed down decisions in cases that Philips had initiated on the basis of two others patents, also against Wiko and Asus.

European Patent (EP) 1 440 525

This patent was upheld and found infringed by the Court of Appeal [see here for decision against Asus and here for decision against Wiko]. It then further discussed both parties' FRAND defences.

In the case against ASUS, the Court of Appeal referred to its earlier decision and then addressed ASUS additional arguments. It reiterated that [under the CJEU's decision in C-170/13 Huawei/ZTE] after notification by the SEP-holder, a SEP-implementer must show willingness to take a licence before an obligation to make a FRAND-offer on the part of the SEP-holder arises. According to the Court of Appeal, this is consistent with the UK approach, as set out in the decisions in Unwired Planet [see [2017] EWHC 711 (Pat) and [2018] EWCA Civ 2344, Katpost here].

The Court of Appeal also reaffirmed that it will not always be necessary to submit claim charts as part of the notification to the implementer, but that it depends on all circumstances of the case whether sufficient notification is given. What is decisive is whether the SEP-implementer knows which rights are invoked against is, which products are alleged to infringe them and in what manner.

As for willingness, the Court of Appeal clarified that mere attendance of licensing negotiations is not sufficient: to be considered willing, a licensee must actively engage in them. It may also oblige licensees to inquire after the relevant licensing terms if it considers these unclear. In the absence of such willingness, it will not be inappropriate for SEP-holders to request an injunction, even if they did not make a FRAND-offer – since under the Huawei/ZTE framework, they are under no obligation to do so until a licensee has proved to be willing.

In the decision in proceedings against Wiko, the Court of Appeal did not explicitly differentiate between Wiko's FRAND-arguments in the present proceedings and those that led to the earlier decision. Its discussion of the FRAND-issues in the case was entirely along the lines of its July 2019 decision and the Court of Appeal did not add significant new points to its earlier reasoning.

European Patent (EP) 1 685 659

In the cases concerning this patent, the Court of Appeal rejected Philips' appeal and upheld the nullity of the patent as per the District Court's findings [see here for decision against Asus and here for decision against Wiko]. According to the Court of Appeal, this patent lacked inventive step.

The closest prior art was considered a proposal by Nortel Networks for a working group in October 2003, which comprised a solution to a problem in the High Speed Downlink Packet Access (HSDPA) protocol. Philips had argued that its patented invention differed from the Nortel proposal in three non-obvious ways. However, the Court of Appeal disregarded one of these differences because it did not contribute to the solution of the objective technical problem. As regards the other two, it held that the skilled person would not require any inventive effort to derive these technical measures when combining the Nortel proposal with one of Nortel's earlier proposals to improve the HSPDA protocol.

"Introduction

Christmas came early this year! Because on 18 December 2019 the UK Group of AIPPI held its annual patent round-up event. The highlights of 2019's patent cases were presented by barrister, Andrew Lykiardopoulos QC, at the offices of Hogan Lovells LLP in London. Andrew's presentation was in the form of a lovely Christmas dinner, beginning with some tasty starters and finishing with a few delightful mince pies. Flying over from the other side of the Canal, this Kat lover was here to report for those who were too actively committed in other Christmas festivities.

Andrew kicked off with some statistics of 2019:

- The UK High Court rendered ten judgments regarding the contested validity of a patent. Of those ten, one patent was upheld by the court.

- The UK Court of Appeal rendered five judgments regarding the contested validity of a patent. Of those five, three patents were upheld by the court.

- The UK Supreme court rendered one judgment regarding the contested validity of a patent. In this judgment, the patent was held invalid.

Andrew concludes that 2019 was not the easiest year for patentees.

(1) Added matter and summary judgment

In Novartis v Dr Reddy's [2019] EWHC 92, the UK judge (Birss J) ruled on added matter. The case was initiated by Novartis' application for an interim injunction on the basis of its patent. Dr. Reddy’s responded with an application for summary judgment on its counterclaim for revocation. It argued that the patent was invalid for the reasons given by the opposition division of the EPO, which had revoked the patent solely on the basis of added matter.

Birss J, however, ruled that the decision of the OD "appears to take an unduly technical approach which has lost sight of the disclosure of the document as a whole and has also lost sight of the prominence of Compound A in it."

An interim injunction was thus granted.

(2) Equivalence

In Regen Lab v Estar [2019] EWHC 63, the UK judge (Hacon HHJ) ruled on the doctrine of equivalents. This case relates to Regen's patent, claiming a method for the preparation of platelet rich plasma. Two key features of claim 1 relate to a polyester based thixotropic gel and a buffered sodium citrate solution at 0.1M.

The Defendants' case on non-infringing was i) that the gel of their variant process was not polyester-based and ii) that their solution was at 0.136M and not 0.1M as required in claim 1.

Hacon HHJ took the reformulated Improver questions in sequence. After a 'yes' to the first two questions, Hacon HHJ answered 'no' to the third. He ruled: "The evidence indicated that the molarity of the sodium citrate is not essential to the inventive concept and would not have been so regarded by the skilled person at the priority date". This would be different if there had been a sufficiently clear indication to the skilled person that strict compliance with the figure of 0.10M was intended. This was not the case.

Had the patent been valid, it would have been infringed.

(3) Plausibility and SPC's

The Eli Lilly v Genentech proceedings do not only relate to a (typical) patent revocation/infringement action, but also involved an issue on third-party SPC applications. The UK judge (Arnold J) started by saying that this case is "one of the most complex patent cases I have ever tried". Thankfully, he reassured us, he has "considerable experience of trying complex patent cases".

Genentech's patent relates to the IL-17A/F peptides and therapeutic uses thereof. While Genentech did not have a marketed product covered by its Patent, Lilly marketed an ixekizumab product: Taltz. Taltz is an antibody to interleukin-17 indicated for the treatment of psoriasis and psoriatic arthritis.

Starting with plausibility, [2019] EWHC 387, in relation to the medical use claims directed to psoriasis, Arnold J (as he then was) summarised the law as set out in Warner-Lambert [2018] UKSC 56. He noted that the application of plausibility depends on the context of the case. Taking this context into account (including the lack of relevant data in the patent), Arnold J (as he then was) held that the claim of therapeutic efficacy against psoriasis was speculative and that plausibility was not established.

As for the SPC, [2019] EWHC 388, Lilly sought a declaration that Genentech’s SPC was invalid. Arnold J considered the relevant provisions of the SPC Regulation to be unclear (whether or not the basic patent was considered to be valid). The question Arnold J referred to the CJEU, was: “Does the SPC Regulation preclude the grant of an SPC to the proprietor of a basic patent in respect of a product which is the subject of a marketing authorisation held by a third party without that party’s consent?”

By order of 5 September 2019, C-239/19, the CJEU ruled that the request was inadmissible as it was not necessary to answer it as the basic patent had held to be invalid. Back to Arnold LJ (as he now is!), [2019] EWHC 3260, he did not entertain further argument on the issue leaving it if necessary for appeal.

(4) Translations

In Illumina v TDL Generics [2019] EWHC 1497, the UK judge (Arnold J) ruled on the question whether the prior art was considered to be the abstract in Japanese or the English translation of the abstract. Arnold J considered: "It was common ground between counsel that what mattered was how the original Japanese would be understood. I am doubtful this is correct, since the skilled person is located in the UK" (referring to Generics v Warner Lambert [2015] EWHC 2548). Arnold J ruled that the skilled person was deemed to read Ikeda in the English translation. However, Arnold J said, even if it was the meaning of the Japanese that was determinative, an English court had to rely on a translation in order to appreciate that meaning in any event.

In the end, this point was not influential to case in question. The patent has been held valid.

A palate cleanser 

(5) Arrow declarations

In Pfizer v F-Hoffmann La Roche [2019] EWHC 1520, the UK judge (Birss J) ruled on arrow declarations. In this case, Pfizer claimed that its proposed use (involving bevacizumab) lacked novelty and/or was obvious at the earliest relevant date and requested a so called Arrow-declaration (see: [2007] EWHC 1900). Roche had patents covering Roche's proposed use. After Pfizer initiated legal proceedings, Roche de-designated the UK from all relevant patent families. However, now that Roche done so, it this absence of protection in the UK sufficient to prevent the granting of such declaration?

Birss J ruled that although Roche had no patent protection in the UK, such declaration might help Pfizer to defend itself against suits brought by Roche in other European countries. Thus, "the true purpose of an Arrow declaration in this case would be for it to be used in foreign courts". This is not sufficient to Birss J.

No Arrow declaration was granted.

(6) Enablement

In Takeda v Hoffmann-La Roche [2019] EWHC 1911 , the UK judge (Birss J) ruled about enablement. The issue of law concerned what exactly needs to be enabled by the prior art. Must it be the very thing disclosed (as Roche (the patentee) argued) or is it sufficient if a skilled person would produce something different from the prior art which still fell within the claims (as Takeda argued)? 

In this case, the issue was that the skilled person could not make the same antibody as referred to as 'Anti-D1' in the prior art. There was insufficient information to do so. Roche contended that means the patent (claim 1) is novel. Birss J disagreed. He held that the relevant prior art is an enabling disclosure because a skilled person given that disclosure is able to make a version of Anti-D1 without an undue burden. He continued: "It would be a great deal of work and it would not be identical to the antibody which the authors of [the relevant prior art] but from all the evidence in this case it is clear that a skilled team seeking to make their own version of Anti-D1 would succeed.

Birss J ruled that there was an anticipated disclosure.

The main course – Supreme Court cases 

(7) Obvious to try

In the case Actavis v ICOS [2019] UKSC 15, the UK Supreme Court reviewed the approach to obvious to try. Earlier, the Court of Appeal ([2017] EWCA Civ 1671) ruled that based on the trial judge's factual findings ([2016] EWHC 1955), claim 7 should be held obvious. Claim 7 was directed to the treatment of sexual disfunction by administration of a dose no more than 5mg tadalafil per day. ICOS' invention is finding that that dose is effective with minimal side effects.

ICOS argued that the correct question to be asked was whether at the priority date, before the skilled team embarked on any testing, it was obvious in the light of the prior art that a 5mg daily dose of Tadalafil would be safe and effective with minimal side effects. However, the Supreme Court held that it is not necessary for the skilled team to identify the specific dose in advance of the clinical testing. The skilled team would very likely test a 5mg dose given that the aim of a dose ranging study is to identify a dose as low as possible consistent with effectiveness.

In addition to the often cited passage of Kitchin J in Generics v H Lundbeck ([2007] EWHC 1040) on the factors for obviousness, Lord Hodge added “the routineness of the research”.

ICOS' patent for a Tadalafil dosing regime was held to be invalid.

(8) Inventor compensation

In the case Shanks v Unilever [2019] UKSC 45, the UK Supreme Court ruled on inventor compensation. This case was initiated by the employee (Prof. Shanks) who applied for compensation on the basis that the inventions Shank made had been of outstanding benefit to Unilever and that Prof. Shanks was entitled to a fair share of that benefit.

Where the judge starts by considering that the employee, Prof. Shanks, "initially received a salary of £18,000 per annum and a Volvo car", one might guess what the outcome of this case will be. Especially when the Supreme Court continues to consider that Prof. Shanks "built the first prototype of his invention at home using Mylar film and slides from his daughter’s toy microscope kit, and bulldog clips to hold the assembly together".

The Supreme Court held that an employee who makes an invention which belongs to his or her employer from the outset and for which a patent has been granted is entitled to compensation if he or she establishes:

i) that the patent is, having regard among other things to the size and nature of the employer’s undertaking, of outstanding benefit to the employer; and
ii) that, by reason of these matters, it is just that he or she be awarded compensation.

The employee, prof. Shanks, received an overall award of £2 million.

Dessert 

(9) FRAND cases

Andrew also provided some 'snapshots' of what has happened since the FRAND ruling in Unwired Planet v Huawei [2018] EWCA Civ 2344. The snapshots relate to the following cases:

1. Conversant v Huawei (Floyd LJ)

2. TQ Delta v ZyXEL (Floyd LJ)

3. IPCom v Xiaomi (Hacon HHJ)

4. IPCom v Vodafone (Birss J)

5. IPCom v Lenovo (Hacon HHJ)

6. Vestel v Advance and Philips (Hacon HHJ)

Andrew concluded by mentioning that two important FRAND judgments are awaited:

Unwired Planet v Huawei and Philips v Asus and HTC.

(10) A few mince pies

Andrew finished with commenting on some decisions of lesser importance but worthy of note:

1. L'Oreal v Liqwd [2019] EWCA CIV 1943 (Arnold LJ & David LJ)

 - about late advanced construction and new evidence;

2. Anan Kasei v Neo Chemicals [2019] EWCA Civ 1646 (Floyd & Lewison LLJ)

 - about ambiguity, insufficiency and uncertainty;

3. Conversant v Apple [2019] EWHC 3266 (Birss J)

 - about the identity of the skilled person post amendment;

4. Conversant v Huawei [2019] EWHC 3130 (Arnold LJ)

-  about costs in case of a win on only one point; "