Wednesday, October 23, 2019

President-designate of UK Supreme Court recognized diplomatic dimension of Unwired Planet v. Huawei FRAND case

This my fourth post this week on the UK Supreme Court hearing in Unwired Planet v. Huawei (consolidated with Conversant v. ZTE). After a preview, I had reported on Apple's and Qualcomm's interventions, and on Unwired Planet's $8 billion royalty demand from Apple. Also, I'd like to recommend reading the views of the Fair Standards Alliance on the key issues in the case.

The implications of this case are huge not only for the technology industry but also from a comity-of-nations point of view. The most senior justice on the panel of five, current Deputy President of the UK Supreme Court Lord Reed (who has already been appointed to become the court's president next spring), made this clear yesterday:

"Just before you do that, just for a point of information, it has struck me in the last few minutes sitting here that the issues in this case are of such international commercial significance, and also have a certain diplomatic significance, that it is a kind of case where one might have had an intervention either from our own government, let us say the Department of Trade, or from other governments, such as the Chinese government. I do not know if the parties have notified these proceedings to any interested governments?

"It might have been useful to know what, for example, our own government thought of the idea that we should be exercising the sort of jurisdiction that you are describing."

Huawei's counsel didn't have an immediate answer, but promised to check.

In the United States, the court would have requested the views of the Solicitor General of the United States ("CVSG"). In the UK it's apparently up to the parties to notify.

In the UK, not only the Department of Trade but also HM Treasury might have been able to offer some perspective. Why should judges that are on the payroll of UK taxpayers adjudicate issues involving foreign patents (such as valuation) only because a patent holder asks for it? It doesn't make sense.

The two trolls are presented by the same lead counsel, 8 New Square's Adrian Speck. He started yesterday afternoon and had all the speaking time today. I found the things he said unimpressive and boring. The justices had some questions here and there, but it didn't appear to me that anything Mr. Speck said was too likely to be outcome-determinative.

Mr. Speck did, however, misinform the UK Supreme Court by falsely suggesting that German SEP injunction are (apart from a successful appeal) irreversible by offering to take a license on terms the court would deem FRAND. That's plain wrong. Specifically, Mr. Speck--when addressing Huawei's reference to how foreign jurisdictions handle comparable situations--made the following misrepresentation today:

"It is quite plain. If Unwired Planet and Huawei were before the German court adopting the positions that they had 16 done in this case, it is quite plain what the outcome would have been. We would have had an injunction, not limited in the way that Birss J's injunction reserves the right for Huawei to change their mind. There would be no protection for it. It would simply be enjoined. That would be the end of it. So why does my friend rely upon Germany? As I understand it, it is the recent decision in the German litigation between the parties."

What is "quite plain" is that Mr. Speck either didn't do his research or he's a liar; the former is far more likely than the latter, though there are indications that he likes to say things that are in a gray area between tactically-motivated selectivity and untruthful distortions.

German SEP injunctions simply don't have to come with the open door to accepting terms deemed by the court to be FRAND-compliant because the law provides for this anyway. It's not like Justice Birss in the UK had been more generous than his German counterparts would be; it's that it works differently in Germany, and I don't just mean the question of whether a SEP holder would get an injunction in the first place but, specifically, whether a defendant can "change mind" to avoid (further) enforcement.

In Motorola v. Apple, the Mannheim Regional Court handed down a SEP injunctions, and Apple asked the Karlsruhe Higher Regional Court for a stay. This didn't work out initially, but Apple kept modifying its offer to take a license until the appeals court determined that Apple had now (though not at the time of the trial) created a situation in which further enforcement of the injunction was no longer acceptable.

While that case may have been special in some ways, German law always provides for the possibility of a "Vollstreckungsabwehrklage" ("action opposing enforcement"). When new facts render the (further) enforcement of an injunction unacceptable, such an action enables the court to evaluate the new situation and, if warranted, lift the injunction. In a SEP case, that's what would happen if the implementer made the patentee an offer to take a license on terms that the German court deems FRAND. Such terms could simply be the ones that the SEP holder offered: in order for a German court to enter a SEP injunction, the patentee's offer must be deemed FRAND-compliant.

Tomorrow will be the fourth and final day of the hearing. I was cautiously optimistic after day one, far more optimistic on and after day two, and Mr. Speck's arguments haven't changed a thing about my belief that reversal looms large, though there are psychological factors here, particularly with Lord Kitchin having authored the Unwired Planet v. Huawei opinion just before moving up to the Supreme Court, so the five justices here have to overrule a new colleague but I can't see how any other outcome would make sense. Mr. Speck referred to Lord Kitchin by name all the time (instead of just "the Court of Appeal") for that reason. But there's no reason to believe that deference to the courts below would be unlimited when so much is at the stake that the man who will soon be the UK equivalent of the U.S. Chief Justice views this as a case of international relevance and diplomatic significance.

Share with other professionals via LinkedIn: