Best FRAND forever

One common trait of all standard essential patent (SEP) disputes is their procedural complexity. A lawyer’s dream come true.

A few weeks ago, I reported on the IPCom v. Lenovo litigation. The apparent conclusion was that, in the context of a multidimensional and multinational lawsuit, French courts were not ready to forgo their say. This seems to be confirmed in another high profile case, brought to my attention by Denis Schertenleib.

The case pitches the Dutch giant Philips against Hong Kong-based TCL.

Philips owns a portfolio of patents declared as essential for the 3G and 4G standards with the standard-setting organization ETSI (European Telecommunications Standards Institute). According to a classical plot, Philips and TCL negotiated a patent license for this portfolio and the negotiations failed. It seems that one of the bones of contention was the scope of the license, both in terms of patents and countries.

Philips sued TCL in the UK for infringement of two patents, in October 2018.

TCL started a legal backfire by suing Philips in front of the Paris Tribunal de grande instance (TGI). By the way, have I already mentioned on this blog that the TGI has been renamed TJ (tribunal judiciaire) since January 1, 2020?

What is much less conventional in this plot is that TCL sued not only Philips, but also the ETSI itself.

As a main request TCL asked the court:

  • to declare that Philips’ essentiality declaration to the ETSI amounts to a promise to grant a FRAND license to TCL on all patents declared as essential for the 3G and 4G standards;
  • to determine FRAND conditions for the license and to enjoin Philips to grant it;
  • to enjoin the ETSI to participate in the license granting process;
  • to declare that the conditions offered by Philips are not FRAND-compliant.

At the risk of disappointing readers, we do not have the court’s ruling yet. What we do have is an interim order by the judge in charge of case management dealing with a number of preliminary objections raised by Philips.

A blogger working on his next SEP post during the lockdown.

First, Philips argued that the Paris court lacked jurisdiction.

The discussion here revolves around article 8.1 of Regulation (EU) No. 1215/2012 (known as the Brussels I bis regulation) per which “a person domiciled in a Member State may also be sued where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings“.

Again, Philips is a Dutch company. The ETSI, on the other hand, is located in Sophia Antipolis, on the French riviera. Philips argued that the claim against the ETSI was artificial so that the institute was not a “real defendant“. Philips further challenged that the claims against it and against the ETSI were closely related.

The judge in charge of case management disagreed:

It must be noted in this case that the claims against the ETSI on the one hand and Philips on the other hand relate to a same factual situation resulting from the fact that, according to the plaintiffs, Philips does not comply with the IP rules established by the ETSI. 

Although the legal grounds for the requests against the ETSI and Philips are different […], this is not an obstacle to the acknowledgment of an identity of legal situation, […] especially since in this case all requests are expressly subjected to French law, as provided in the rules of procedure established by the ETSI. 

The identity of legal situation supporting these requests is thus characterized. 

It must also be noted that the ETSI is endowed with legal means to ensure that IP obligations are complied with by its members, so that the claims against this institute cannot be held as artificial.

In addition, it must be noted that a decision enjoining the ETSI to participate in the grant of a license if needed by implementing the measures provided in its internal regulations, and one holding that Philips complied with its obligation to offer a license to TCL under FRAND conditions would be incompatible and not only diverging.  

Second, Philips relied on a lis pendens objection (due to the preexisting British lawsuit).

The basis for this objection is article 29 of the Brussels I bis regulation, per which “where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established“.

Again, the judge disagreed:

[…] The claim in front of the High court of justice of England and Wales is based on infringement of the British part of European patents No. […]. It only concerns Philips and TCL. 

The present lawsuit concerns Philips, TCL, and also the ETSI. It consists in determining whether Philips […] offered a worldwide license on a [patent portfolio] under fair, reasonable and non-discriminatory conditions. 

As a result, the condition of triple identity of cause of action, subject-matter and parties is not met, and there is no reason to decline jurisdiction in favor of the English court.

Third, Philips relied on a related actions objection (still due to the preexisting British lawsuit).

This time, it is article 30 of the Brussels I bis regulation that comes into play:

1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.

2. Where the action in the court first seised is pending at first instance, any other court may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.

3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

This objection was no more successful than the previous ones:

As mentioned by TCL, the trial on the FRAND license issue will only proceed in the UK if TCL does not renounce requesting such a license […]. No risk of irreconcilable judgments under article 30 of the Regulation is established, so that the objection based on related actions cannot be sustained and the present court does not have to decline jurisdiction. 

I must say that this part of the judgment is somewhat less clear to me than the rest. I assume that what the judge meant is that the objection is premature as there is no indication at this time that the same question will be asked to the British court and the French court.

As a result, the judge rejected all objections raised by Philips, so that the litigation can proceed further.

The ETSI also requested that the claims against it should be declared inadmissible. However, this other objection needs to be examined by the full court, so that the judge in charge of case management has not ruled on it.

This interim judgment is of particular interest because the jurisdiction of the Paris TJ was acknowledged with respect to TCL’s FRAND determination requests, independently of any infringement, non-infringement or validity claims regarding any French patent or French part of a European patent.

Suing France-based ETSI as a co-defendant was what made it possible to achieve this outcome.

If this strategy continues to prove successful (which remains to see), it will mean that it can be replicated in any other 3G or 4G standard-related dispute, in other words that any IP right owner can be sued in France with respect to FRAND determination claim. So this is kind of a big deal.

On the other hand, I have read comments on this judgment according to which the decision was the first one to qualify the promise by a patent owner to grant a FRAND license under the ETSI IPR Policy as a “stipulation pour autrui”, namely a third-party beneficiary clause that creates a direct contractual relationship between the ETSI member (patent owner) and a third party (would-be licensee).

It has indeed long been proposed that an essentiality declaration with the ETSI amounted to this contractual mechanism of “stipulation pour autrui“. But I personally fail to find in the judgment any clear confirmation that the judge agreed with this qualification.

What I do find in the judgment is a mention that the ETSI agrees with this qualification; and a discussion on the legal grounds of the claims against Philips and the ETSI, the latter one being the “stipulation pour autrui“. But I do not understand this discussion as an acknowledgment that the proposed legal qualification is correct. However, it is likely that future judgments in this litigation will provide more clarity.


CASE REFERENCE: Tribunal judiciaire de Paris, 3ème chambre 1ère section, ordonnance du juge de la mise en état, February 6, 2020, SAS TCT Mobile Europe et al. v. Koninklijke Philips NV et al., RG No. 19/02085.

IPCom-tinuation

Traditionally, patent litigation has a tendency to endlessly drag on.

Think about the pravastatin case in France for example (which I am not brave enough to keep reporting on).

But some cases are really fast movers. Such is IPCom v. Lenovo. In my previous post, published a couple of weeks ago, I reported on the anti-anti-suit injunction issued by the judge in charge of emergency interim proceedings (juge des référés) on November 8, 2019.

The ink on the post was barely dry, or its pixels were barely on, or whatever the right metaphor is, that the Paris Cour d’appel issued its ruling further to Lenovo’s appeal against the November 8 judgment (first brought to my attention by Jérôme Tassi on LinkedIn).

For a detailed summary of the facts of the case, please refer to the previous post.

For the most part, the appeal judges agreed with the juge des référés.

They confirmed that she had jurisdiction over the petition filed by the would-be licensee / infringement defendant Lenovo under article 46 Code de procédure civile, as IPCom would suffer a potential harm in France if the anti-suit injunction were issued in the U.S., affecting IPCom’s right to sue in France.

They also held that the anti-suit injunction, if issued by the Californian judge, would be a manifestly unlawful disturbance, in view of the French courts’ exclusive jurisdiction on matters of infringement of patent rights on the French territory, and in view of the property rights and the right to a fair trial enshrined in the European Convention on Human Rights and in the Charter of Fundamental Rights of the European Union. This was true even if the potential anti-suit injunction was only temporary. Therefore, the juge des référés was right when she ordered Lenovo to withdraw the motion for anti-suit injunction in the U.S.

However, the court canceled the second part of the référé order, which prohibited Lenovo from filing any other similar motion in front of any foreign court. This is because there is no longer any such motion currently pending, and no indication that a similar motion would be filed again. Therefore, the above manifestly unlawful disturbance has ceased and there is no imminent threat of the same.

In summary, there is formally no more anti-anti-suit injunction in place in France. But since the court agreed with the juge des référés‘ assessment, it would probably be unwise for Lenovo to give it another try.

But this is not the only development of the case that I would like to report on.

An even more interesting twist is that, in parallel to the ongoing FRAND determination lawsuit in the U.S., IPCom sued Lenovo (et al.) for patent infringement in France based on EP 1841628 (hence, of course, the anti-suit discussion in the first place). In addition to the action on the merits, IPCom also filed a motion for preliminary injunction (PI) in front of the juge des référés (not the same one as the one who issued the anti-anti-suit injunction, mind you).

On January 20, 2020, the judge issued his judgment, rejecting IPCom’s motion for PI.

I will skip the first part of the judgment, which deals with an alleged invalidity of the complaint – the argument did not work but is worth looking at if only to have the pleasure of reading a reference to the ordinance of Villers-Cotterêts of 1539, the oldest piece of legislation still in force in France, enacted more than 250 years before the monarchy started losing its head.

I will also skip the second part of the judgment, in which Lenovo disputed IPCom’s standing to sue, challenging the chain of transfer of the patent and the recordal of this chain of transfer with the French patent register. This objection was also rejected by the judge.

No, the real interesting part is the discussion on the merits of IPCom’s motion.

Remarkably, the judge heavily relied on the Enforcement Directive (2004/48/EC) and more specifically on the 22nd recital:

It is also essential to provide for provisional measures for the immediate termination of infringements, without awaiting a decision on the substance of the case, while observing the rights of the defence, ensuring the proportionality of the provisional measures as appropriate to the characteristics of the case in question and providing the guarantees needed to cover the costs and the injury caused to the defendant by an unjustified request. Such measures are particularly justified where any delay would cause irreparable harm to the holder of an intellectual property right.

Although the Code de la propriété intellectuelle does not explicitly mention this principle of proportionality of provisional measures, the judge considered that it does apply.

And in the present case, he considered that this proportionality principle would be breached if the preliminary injunction was ordered as requested by the patent proprietor.

Is there a proportionality issue here?

Here are a couple of important facts to bear in mind in this case.

First, the EP’628 patent was declared as essential for the UMTS (3G) standard. Therefore, it is supposed to be implemented by all laptops, mobile phones and tablets of the defendants (marketed under the brands Lenovo, ThinkPad and Yoga). The motion for PI accordingly targeted all of these devices.

Second, the EP’628 patent was set to expire on February 15, 2020. Therefore, the PI, if issued, would just last for a few weeks.

The judge stated that the PI would be justified if IPCom could demonstrate that the infringement of the patent was likely, but also that the absence of a PI would cause harm which could not be repaired by damages. The judge further stated that the negative economic consequences for the defendants should also be taken into account, and more specifically whether they could be adequately repaired if the patent were ultimately found invalid or not infringed.

IPCom argued that it would suffer irreparable harm in the absence of a PI due to the annihilation of the value of its patent portfolio.

The judge was unpersuaded, as IPCom cannot lose any market share, because it does not market any devices. The sole harm suffered by IPCom is the lack of license revenues, which can be repaired by damages to be set by the court at a later stage.

The judge further noted that a PI would have long-lasting effects on the market even after the upcoming expiry of the patent on February 15, 2020, since the public would turn away from the Motorola, Lenovo, ThinkPad and Yoga devices. The loss of income would thus be very large. In addition, a recall of products from the market would tarnish the corporate image of the defendants in the long run and significantly disrupt distribution networks. In short, the PI and recall of products from the market would result in negative economic consequences which could not be adequately repaired by damages, if IPCom were to ultimately not prevail on the merits.

The judge’s conclusion was the following:

[…] The requested measures, set to last for a few weeks in view of the expiry date of the patent of February 15, 2020, are manifestly disproportionate and may result in an imbalance in the situation of the parties conferring an undue advantage to the patentee which may then be able to impose a license not meeting with FRAND requirements. 

Frankly, I don’t really see how the judge could possibly have decided otherwise. The message is clear: SEP owners need to be more reasonable when they go to court.

In the meantime, the parties seem to be back to square one.


CASE REFERENCES:

Cour d’appel de Paris, pôle 5 chambre 16, March 3, 2020, Lenovo Inc. et al. v. IPCom GmbH & Co. KG, RG No. 19/21426.

Tribunal judiciaire de Paris, ordonnance de référé, January 20, 2020, IPCom GmbH & Co. KG v. Lenovo SAS et al., RG No. 19/60318.

A core issue

I have already reported twice on the Core Wireless v. LG litigation in France: the first time to report on the first instance judgment, and the second time to report on a procedural ruling issued during the appeal proceedings.

Today’s post will be about Conversant v. LG… which is exactly the same litigation, since Core Wireless Licensing SARL has now become Conversant Wireless Licensing SARL.

So, the appeal ruling is out – and it basically confirms the first instance judgment.

As a reminder, Conversant (Core) holds a portfolio of Nokia-originating telecom patents. More than a thousand of these patents were declared essential for the 2G, 3G and 4G standards before the European Telecommunications Standards Institute (ETSI).

Core negotiated for several years with South-Korean giant LG Electronics in an attempt to reach a license agreement over this portfolio – but the negotiations failed. In September 2014, Core filed a complaint with the Paris Tribunal de grande instance (TGI), claimed damages and requested that the court should set a royalty rate for LG’s telecommunication devices. The complaint was based on a set of five European patents.

The TGI held that there was no evidence of infringement of the five patents by LG, and thus dismissed Core’s claims in April 2015.

The many traps of standard essential patent litigation.

Core appealed. When I commented on an interim case management ruling, I assumed that the only remaining issue on appeal was the determination of the royalty rate. This understanding was based on a somewhat misleading comment in the interim ruling – and it was thus incorrect.

In fact, similar issues were raised on appeal as in first instance. The main difference is that Conversant no longer asserted three of the patents initially discussed and preferred to focus on the remaining two.

Conversant still claimed that these two patents were infringed by LG and requested that the court should set a worldwide FRAND royalty rate for its portfolio. LG raised a number of defenses: invalidity of the two patents, absence of FRAND offer by Conversant, exhaustion of rights (based on a Nokia – Qualcomm license), absence of essentiality of the two patents, etc.

The first interesting part of the appeal ruling is a procedural one. The parties and the court made extensive use of the new provisions offered by the law of July 30, 2018 on the protection of trade secrets.

As already explained in the report on the interim ruling, the access to some of the exhibits (especially license agreements) was restricted to the parties’ lawyers and to some designated persons having signed confidentiality agreements (especially interpreters and economist experts).

Also, two versions of the written submissions, were filed, namely a complete one and a redacted one deprived of any reference to confidential information relating to the various license agreements at stake.

Finally, the hearing was scheduled over three days.

On the first day, Nokia’s FRAND commitment, an alleged abuse of dominant position and the exhaustion defense were debated. During part of the day, access to the courtroom was restricted to the lawyers of the parties as well as a couple of representatives from said parties. This closed session revolved around the most sensitive exhibit (the Nokia-Qualcomm agreement) and the exhaustion defense.

On the second day, the determination of the FRAND rate was discussed. Again, access to the courtroom was restricted to the above persons, plus a number of designated experts, during part of the day – when comparable license agreements were disclosed.

On the third day, validity, essentiality and infringement of the patents were discussed (without any access restriction).

The recent modernization of French procedural rules which has made this type of customized arrangement possible is most commendable – and was long overdue. It has probably put France on an equal footing with other major patent jurisdictions that have long been accustomed to such notions.

As readers may already have noted, a three-day appeal hearing for a patent case, especially at the appeal stage, is truly exceptional in France. This duration was certainly justified by the complexity of the case.

Hence, it could legitimately be assumed that a significant decision would come out of this whole process, namely a worldwide FRAND rate-setting determination. It did not.

First, the court reviewed the two sample patents asserted by Conversant, and addressed the invalidity challenges brought by LG. The court concluded that both patents were valid.

Second, the court addressed whether these two patents, declared as essential, were indeed essential for the standards at stake. Walking in the footsteps of the first instance judges, they concluded that they are not.

Since the demonstration of infringement was solely based on the essentiality of these patents (and on the compliance of LG’s devices with the standards), and since no other patent from the portfolio was asserted in the lawsuit, the court was finally not aware of any actual Standard-Essential Patent (SEP) held by Conversant.

As a result, the court did not rule on exhaustion of rights, on the FRAND royalty rate and on all other exciting questions raised by the case.

Again, I guess that a number of stakeholders may be disappointed by this underwhelming decision, not so much because the plaintiff lost, but because legal certainty is currently relatively low when it comes to SEPs, FRAND royalty rates and exhaustion of rights.

Additional guidance from a French court would thus have been welcome.

That being said, looking at the non-essentiality finding in the ruling in more detail is rather interesting.

Claim 1 of the first patent, EP 0978210, is directed to a “method for selecting a base station in a mobile communication system“. One of the steps of the method consists in, “in response to recognizing the poor radio signal, measuring“, well, a certain something.

According to the relevant technical specifications of the UMTS (3G) and LTE (4G) standards, as explained by the parties and their experts, if a radio connection having a quality lower than a threshold is identified, a measuring step as claimed must be performed. But if the quality of the radio connection is higher than the threshold, the terminal may decide not to perform any measurement, which means that it may conversely decide to perform a measurement anyway.

The court concluded that a terminal which also performs the measurement when there is a good connection would be compliant with the standards but would not infringe the patent. Therefore, the patent is not an SEP.

Claim 1 of the second patent, EP 0950330, can be quoted in its entirety: “A user terminal comprising a wireless interface and a formatting device for formatting a signal for transmission over said wireless interface in accordance with a low level signal format protocol, characterised in that it comprises means for receiving a type signal, wherein said type signal is indicative of a high level signalling protocol to be used in transmitting said signal, and for formatting said signal in accordance with said high level signalling protocol“.

According to Conversant’s expert, LTE terminals can access both of the so-called IPv4 and IPv6 networks. If a network can work with only one of IPv4 or IPv6, the terminal will use it. If a network can work with both IPv4 and IPv6, the terminal will select one of those. Thus, the claimant argued, the subject-matter of claim 1 is implemented.

However, LG replied that IPv4 and IPv6 are just two versions of the same protocol, and not two different protocols. The court was quite sensitive to this argument, as the patent itself, although it was filed after IPv4 and IPv6 were established, does not distinguish between these versions and only broadly refers to the internet protocol (IP). Besides, the standard does not explicitly state that the terminal should select between IPv4 and IPv6 when both are available. It is thus not possible to consider that such a selection step would be demanded by the standard.

Again, the conclusion is that the patent is not an SEP.

Essentiality was thus the core issue throughout this litigation.

This appeal ruling should come as a warning that claim mapping of a standard is far from being straightforward.

Among the 1,000+ patents of the portfolio, it can be safely assumed that the five (later narrowed down to two) patents asserted in this case were rated as being among the “strongest” or “best” ones by their holder. And yet, even with these two particularly “strong” or “good” patents, the essentiality case was not clear-cut, as delicate issues of claim interpretation arose.

This is not completely surprising, as standards are elaborated quite independently from the patents which may be owned by members of the standard-setting body. Also, a standard contains a number of minimal rules but does not provide all implementation details. Even if, in practice, all implementations use a certain feature, it does not necessarily mean that this feature is required by the standard itself.

This makes me wonder about the proportion of patents declared as potentially essential which would be viewed as actually essential by a court? I assume that proportion could in fact be rather low. Definitely some food for thought for all those involved in license negotiations.


CASE REFERENCE: Cour d’appel de Paris, pôle 5 chambre 1, April 16, 2019, Conversant Wireless Licensing SARL v. LG Electronics France SAS & LG Electronics Inc., RG No. 15/17037.

For your eyes only

No, this post has nothing to do with the famous 007 spy.

It rather deals with the restriction of the accessibility of evidence filed during patent litigation to protect trade secrets. With such an exciting topic, who needs car chases, double agents and half-naked bodies?

A while ago, I reported on the first instance judgment in the Core Wireless Licensing v. LG  litigation. As a reminder, this is an SEP (standard essential patents) infringement action brought by Core Wireless (Core) against the Korean giant LG, which was handled super fast by the Paris Tribunal de grande instance, upon the claimant’s request for accelerated proceedings. Not that it worked out for them though, as there was no finding of infringement by the court for any of the five asserted patents.

As swift as the first instance case was, I have not heard about any appeal proceedings since the judgment of April 17, 2015 – until very recently, that is. Now, owing to LG’s lawyers and via the AIPPI French group (thank you), here are tidings of Core’s appeal.

It turns out that the appeal case has been moving at a much slower pace, with already three orders on procedural motions issued by the appeal judge in charge of case management. The third order, dated October 9, 2018, is of particular interest.

First of all, the order of the judge mentions that “what is at stake in the litigation is now the determination of a FRAND royalty rate applicable to the patents in suit“.

This is somewhat surprising, since the first instance judgment dismissed all infringement claims brought by Core. I can only assume that a partial agreement between the parties must have been reached, that LG must have agreed to take a license from Core and that the only remaining contentious issue must be the royalty rate.

Now, a major difficulty in a FRAND royalty rate-setting lawsuit such as this one is how evidence relevant to the royalty rate determination should be handled.

For instance, similar license agreements granted by the right holder, or even third party license agreements may be of relevance to the determination, but these are also highly sensitive documents.

Eyeing towards the right royalty rate.

The first point addressed in the October 9 order is a dispute regarding one exhibit filed by LG, namely a license agreement between Nokia and Qualcomm.

Core’s patent portfolio was originally owned by Nokia. Nokia licensed the patents to the chip manufacturer Qualcomm. The LG devices comprise Qualcomm chipsets. As a result, LG contends that they benefit from pass-through rights under the Nokia / Qualcomm agreement (by exhaustion of the Nokia patent rights). A recurring debate in many SEP lawsuits.

LG had made repeated official requests for being granted access to the Nokia / Qualcomm agreement, to no avail. But on October 31, 2017, LG finally filed a redacted version of this agreement in front of the Paris Cour d’appel, which they apparently originally obtained from parallel proceedings in the U.S.

Core protested and stated that this filing was illegal. They argued in particular that, under article 21 of the agreement, Nokia’s consent is a prerequisite for filing the agreement in the French proceedings, and that Nokia did not consent. Core thus requested that the exhibit should be dismissed.

An interesting problem, but also one that the appeal judge did not solve. Indeed, the judge noted that it is not within her prerogatives to dismiss an exhibit. This is a matter for the three-judge court to decide. So, Core’s request was rejected – for the time being at least. It will be decided in the judgment on the merits.

As a second point addressed in the order, various requests for additional evidence were filed by both LG and Core.

LG requested that Core be ordered to file a number of contracts: 1) a purchase and sale agreement between Intellectual Property Asset Trust and Core dated 2011, 2) a royalty participant agreement between Intellectual Property Asset Trust, Core, Nokia and Microsoft dated 2011, and 3) all further agreements between Core and any third party regarding the patents at stake, and in particular an agreement of 2015 between Core and Microsoft.

The judge deemed that these agreements were indeed relevant to the determination of the FRAND royalty rate. Besides, Core did not frontally object to the submissions of these documents but requested that confidential information be protected (more on that below).

On the other hand, Core requested that LG be ordered to file license agreements between LG and Nokia, Interdigital, Ericsson and Blu Products.

LG objected, and the judge held that the LG agreements are in fact not relevant to the lawsuit because they do not relate to the patents in suit. Also, the judge did not like that this request by Core was submitted only a few days before the scheduled hearing on the parties’ motions.

As a summary, Core was ordered to file a number of agreements in relation with the patent portfolio at stake, but LG was not ordered to filed its own license agreements regarding other patents.

But the most interesting part of the order is probably that the judge made use of a brand new provision, introduced by law No. 2018-670 of July 30, 2018 into the French statute.

This is the transposition of the so-called “trade secret directive” (aka Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure).

Among others, this law created a new article L. 153-1 in the Code de commerce, which reads as follows (my own translation):

When, in civil or commercial proceedings relating to a motion for taking of evidence before a trial on the merits or during litigation on the merits, the communication or supply of an exhibit is relied upon or requested, and a party or a third party contends, or it has been held, that it may breach a trade secret, the judge can, on his/her own motion or upon the request of a party or a third party, if the protection of this secret cannot be otherwise safeguarded and without prejudice of the rights of the defendants: 

1. Read the exhibit alone and, if deemed necessary, order an expertise and ask for the opinion, for each party, of a person authorized to assist or represent them, in order to decide whether the protection measures provided in the present article should be applied; 

2. Decide to limit the communication and supply of this exhibit to some elements only, order the communication or supply in the form of a summary, or restrict access, for each party, to at most one person and another person authorized to assist or represent them; 

3. Decide that the debates will take place and the decision will be handed out in private; 

4. Adapt the reasons of the decision and modalities of publication thereof to the necessities of protecting trade secrets. 

The judge thus decided that the documents at stake should be first communicated for LG’s attorneys’ eyes only. The attorneys of both parties should then tell the judge which parts of the documents may or may not infringe a trade secret, in their view. The judge will then, if necessary, issue another order to implement some of the measures under 2, 3 and 4 above.

I think it is very positive that the range of options to preserve trade secrets during litigation has been broadened by the transposition of the trade secret directive. This will hopefully make it easier for judges to order relevant evidence to be communicated – knowing that guarantees can be put in place in order to prevent the misuse of such evidence, if it is highly confidential and sensitive. This is essential in the French system which does not provide for a broad discovery / disclosure procedure.

Turning back to this Core v. LG case, I personally hope that the judge will not issue an order under paragraph 3 of article L. 153-1, and will make moderate use of paragraph 4. This is because the judiciary determination of the FRAND royalty rate in a case such as this one will be of major interest to all stakeholders in the industry, as it could provide some eagerly awaited general guidance.


Cour d’appel de Paris, pôle 5 chambre 1, October 9, 2018, Core Wireless Licensing SARL v. LG Electronics France SAS & LG Electronics Inc., RG No. 15/17037.

Standard or not standard?

Traditionally, non-practicing entity patent infringement suits have been  relatively few and far between in France.

Without the huge financial stakes of U.S. litigation, and without the lure of German bifurcation, the French legal system has, to some extent, resisted the trend so far. There are a few counter-examples, though.

Like the case discussed today, between famous Intellectual Ventures (IV) and SFR, one of the major French telecommunications companies.

Among the many patents owned by IV is EP 1304002, entitled “Arranging Data Ciphering In a Wireless Telecommuncation System” and originally filed as a PCT application by Nokia Mobile Phones Ltd, in Finland.

As you have probably already guessed, IV initiated legal proceedings in front of the Paris Tribunal de grande instance (TGI), alleging infringement of the EP’002 patent. The alleged infringement mainly relates to the WiFi technology.

You will not know who won at the end of the post, because no one did – the lawsuit is not over yet. In fact, the pleadings hearing is presently scheduled to take place on November 23, 2018. So there is still plenty of time left for you to take your morning off at the new courthouse.

The decision discussed today is only an interim order issued by the judge in charge of case management (JME in the local jargon).

Can you believe there are actually patent applications on methods for identifying patent troll activity? Do some of them get acquired by NPEs, just for the irony of it?

Among the various defenses raised by SFR, there is a rather interesting one, which is that the EP’002 patent is a standard essential patent (SEP).

Two standards were mentioned by SFR: 3GPP TS 33.234 (a 3G standard issued by ETSI – short for European Telecommunications Standards Institute), and 802.11.2012 (a WiFi standard issued by IEEE – short for Institute of Electrical and Electronics Engineers). According to SFR, the EP’002 patent was not declared as essential by its then owner Nokia – a member of both ETSI and IEEE – although it should have been. Due to this omission, they argued, the infringement action should be deemed inadmissible.

Now, apparently SFR did not have all the necessary evidence at hand.

They thus wrote both to ETSI and IEEE and requested the “travaux préparatoires” (one of the most well-known French expressions among lawyers, ranking third after “bonjour” and “merci”) for the relevant standards, as well as relevant correspondence between Nokia and both organizations.

France-based ETSI replied that they would provide the requested documentation, but IEEE turned down SFR’s request.

Thus, SFR filed a motion with the JME, requesting a stay and further requesting that IEEE be ordered to hand down the relevant documents. 

IV fought this motion.

First, IV claimed that SFR’s motion was inadmissible.

Indeed, IEEE is based in the U.S., and the French judge has no jurisdiction to directly order a third party to the litigation to hand down evidence, they argued. The only possible procedure would be the letter rogatory, i.e. the French judge should ask U.S. authorities to issue the order.

The judge closely looked at the written response made by IEEE further to SFR’s request. The first part of this response was the following:

Please be advised that it is IEEE’s policy not to provide information that may be used in litigation without a subpoena. This is to protect IEEE’s neutrality in any dispute. If that is necessary, please feel free to let me know and we can arrange the details of service. 

The JME deduced from this response that IEEE was willing to hand down the evidence at stake, and that they just required a formal judicial order for doing so. The judge was happy to oblige, and the formal and cumbersome process of the letter rogatory could thus be avoided.

I note that IEEE’s response does not specify whether the requested subpoena should be specifically issued by a U.S. court, or whether any subpoena would do. It was probably the judge’s understanding that, in the absence of any specific mention, they were open to any form of subpoenaing.

As a second defense against the motion, IV argued that SFR’s request was useless and unjustified.

SFR raised the SEP argument late in the case management procedure, IV said, and only they should have the burden of providing their own evidence. Besides, the second part of IEEE’s written response to SFR reads as follows:

However, a subpoena may not be necessary in this instance as IEEE 802.11 does host a public website that contains a wide variety of working group materials. The IEEE 802.11 website is located http://www.ieee802.org/11/.

But the judge held that SFR was free to raise a new defense at any point within the case schedule (which, in case you are wondering, is nothing like the extremely tight schedule envisioned for the future UPC). Besides, SFR stated that they could not find the relevant documents on the IEEE website, and that in particular the correspondence with Nokia is not supposed to be available on this site. Finally, the supply of evidence by the standard organizations should not take long.

As a result, the judge granted SFR’s request and issued an order for IEEE to send SFR all documents and reports of the working group relating to the relevant part of IEEE 802.11, as well as the relevant correspondence with Nokia, within one month.

On the other hand, the request for stay of proceedings was dismissed – probably because this timeline is supposed to be still compatible with the planned date for the main hearing.

Access to evidence can be challenging in this country especially in the absence of discovery / disclosure. French judges are often reluctant to order a taking of evidence, such as the provision of documents. But in a case such as this one, it does seem rather fair that a defendant should be allowed to explore a particular line of defense by requesting third party-held documents.

We will thus stay tuned, and I am sure the decision on the merits will be most interesting to read – if the lawsuit goes all the way of course.


CASE REFERENCE: Tribunal de grande instance de Paris, 3ème chambre 4ème section, ordonnance du juge de la mise en état, June 7, 2018, Intellectual Ventures LLC v. Société française du radiotéléphone, RG No. 16/16346.