News Flash – Philips v ASUS & HTC

Update: 19 July 2018

Summary of the findings

This judgment concerned EP 1 623 511, with the judgment on the other patent from trial B being handed down last week (see below).This patent relates to a scheme for transmitter power control.

HTC and Asus again advanced a common case, arguing EP 511 was not essential to the UMTS standards and that, in any event, was invalid for obviousness over a single piece of prior art (with two other items of prior art abandoned shortly before trial). Philips meanwhile sought an unconditional amendment to EP 511, which would amend the wording of claim 1, delete claims 2-8 and make further changes to claims 9 and 10 (becoming claims 2 and 3 as amended). The parties agreed that for the purposes of validity and essentiality, it was only necessary to consider claim 3 as amended.

HTC and Asus's argument of non-essentiality rested on the interpretation of the words "data transmit power". The Defendants contended that this referred to the total transmission power which would lead to a finding of non-essentiality, whereas Philips argued that it related to the power of a single physical channel. Arnold J agreed with Philip's assessment and therefore found EP 511 to be essential.

The Defendant's case on validity was based on a portion of the Physical Layer Standard for CDMA2000 called C.S0002. The dispute between the parties focused on what the skilled person would understand one paragraph of C.S0002 to disclose as to how and when transmission power would be reduced. Arnold J considered in detail the evidence given by the experts on this point and concluded that Philip's interpretation was correct, meaning EP 511 was inventive over C.S0002.

Further Commentary

Given the results stood at one all after the last judgment, this result was an important one as the parties move onto the FRAND stage of these proceedings. Had HTC and Asus been successful, it would have put them in a strong position to downplay the value of Philip's portfolio. However, a positive result for Philips puts it in a much stronger position in this respect. This result for Philips also means the FRAND trial, listed for 2020 is more likely to go ahead – HTC and Asus will inevitably appeal both findings of validity and essentiality and this decision means that they now need to succeed on two appeals to prevent the FRAND trial from going ahead.

Original Story: 11 July 2018

Today the High Court handed down its second decision in the standard essential patents (SEP) dispute brought by Philips against ASUS and HTC. The first decision, in May this year, found in favour of Philips while this second decision held Philips' patent to be invalid for obviousness. The results therefore currently stand at one all. We are expecting a second judgement from the most recent trial imminently.

The story so far

These proceedings relate to three of Philips patents, EP (UK) 1 440 525, EP (UK) 1 685 659 and EP (UK) 1 623 511. Philips has declared that these patents are essential to the ETSI UMTS standard and, in particular, they relate to a system known as High Speed Packet Access (HSPA).

The parties agreed that the technical issues of validity and infringement would be heard in two trials, with trial A for EP (UK) 1 440 525 and trial B for the other two patents. Further technical issues that emerged in the course of these proceedings are scheduled to be heard in trial C, while FRAND issues will be considered in trial D.

The judgment in trial A was handed down in May. In it, Mr Justice Arnold held that EP 525 was valid and essential, and had therefore been infringed by HTC and Asus.

Summary of trial B

This judgment deals with the validity of EP 1 685 659, while a further judgment relating to EP 1 623 511 is expected imminently.

HTC and Asus advanced a common case that EP 659 was invalid for obviousness, initially pleading three pieces of prior art but abandoning two of these during the course of the trial. The focus of the trial was on a single piece of prior art – a submission by Nortel to one of the 3GPP RAN working groups. Philips also sought unconditional amendments to the claims 1 and 3 of EP 659.

In relation to the amendments, it was common ground between the parties that the Court did not need to consider them as:

1. HTC and Asus did not object to the proposed amendments to claim 3 and, if valid, accepted that they would infringe it; and
2. notwithstanding that HTC and Asus considered the amendment to claim 1 to be impermissible, Philips did not contend that claim 3 would be independently valid if claim 1 as amended was held to be obvious.

On this basis Mr Justice Arnold held that the amendment to claim 1 would be allowable if the amended claim was not obvious over the Nortel prior art.

Turning to obviousness, Arnold J summarised the HTC's and Asus's position as being that the skilled man would be able to use his CGK, and in particular his knowledge of CDMA2000, to make further improvements to the proposal in the Nortel submission. Philips, meanwhile, argued that the Nortel submission was a carefully worked out proposal intended to ensure maximum backwards compatibility, which would be lost in making the step to claim 1 of EP 659. Mr Justice Arnold finding was that he considered EP 659 to be obvious in light of the Nortel submission for the reasons given by the HTC and Asus.

HTC and Asus also sought to rely on a finding by the District Court of The Hague that the Dutch designation of EP 659 was invalid for obviousness in light of the Nortel submission. Although Arnold J noted that the Dutch courts did not consider validity in light of the amended claims and that the evidence and arguments before the respective courts were somewhat different, he nevertheless considered his judgment to be consistent with the Dutch decision. 

Commentary

2018 has seen a flurry of FRAND based judgments from the High Court, with Apple v Qualcomm and Conversant v Huawei in addition to the two Philips v Asus judgments. Although this judgment contains no ground breaking legal points, it further cements the High Court's position as one of the foremost forums for settling SEP disputes.