Jurisdictional tussling: the UK is open for business on FRAND

The recent Supreme Court decision in Unwired Planet v Huawei (see our reporting here and PLC Magazine article here) answered many important questions about the UK court’s approach to FRAND disputes. However, it also left areas of uncertainty, particularly on the issue of jurisdiction. The High Court decision in Philips v TCL ([2020] EWHC 2553 (Ch)), handed down around a month after the Supreme Court’s judgment, confirms that the UK will take an expansive approach to its jurisdiction to determine FRAND licence terms. Indeed, it is unclear under what circumstances (if any) the UK courts will cede jurisdiction to another national court.

Background

Philips commenced proceedings in the UK against TCL on 30 October 2018 for patents it claimed were (and are now accepted to be) essential to the 3G and 4G standards. Its particulars of claim confirmed that it was willing to license those patents on fair, reasonable and non-discriminatory (FRAND) terms.

On 19 February 2019 TCL commenced proceedings in France for the determination of FRAND licence terms under Philips’ undertaking to the European Telecommunications Standards Institute (ETSI). The ETSI undertaking is governed by French law.

On 5 July 2019 Philips served a FRAND statement of case in the UK, setting out what it considered to be FRAND terms. On 19 July 2019 it submitted a written challenge to the jurisdiction of the French court under, inter alia, Articles 29 and 30 of the Brussels I Regulation (EU) 1215/2012 (the “Brussels Regulation”) essentially on the basis that the French and English proceedings had the same cause of action between the same parties and the English court was first seised.

The French court delivered its judgment on 6 February 2020. It rejected Philips’ jurisdictional challenge, confirming that the French courts had jurisdiction to hear the dispute. Philips filed an appeal to that judgment which is due to be heard on 15 February 2021. Judgment in the main French proceedings (assuming the appeal fails) is expected in late 2022 or early 2023, which is after one of the patents in suit in the English proceedings expires.

The decision

On 9 April 2020 TCL issued an application for a stay of “all aspects of [the UK proceedings] concerning [Philips’] FRAND licensing obligations”. The judgment of Mr Justice Mann was issued in relation to that application. In its application TCL asked that the UK proceedings be stayed under Articles 29 and 30 of the Brussels Regulation.

Article 29

Article 29 states that “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”.

TCL argued that although the English proceedings had been commenced first, the issue of appropriate FRAND licence terms had not arisen until Philips served its FRAND pleadings, which it did after the French proceedings had been commenced. Accordingly, TCL argued that the French courts were first seised with the FRAND licensing issues. A key basis for TCL’s argument was that the French courts had already ruled in favour of French jurisdiction on the basis that the French courts were first seised and so the English court must give effect to that judgment.

Philips, on the other hand, argued that the French court had not decided that it was first seised but rather that the issues in dispute in the two proceedings were different and therefore Article 29 was not engaged. The basis for this interpretation being that the English proceedings concerned infringement of UK patent rights (and the FRAND determination merely arose as a consequence of TCL raising a FRAND defence), while the French proceedings were contractual in nature.

Mr Justice Mann preferred Philips’ interpretation of the French judgment. In particular, he noted that this was consistent with the UK Supreme Court’s characterisation of FRAND proceedings that the key issue in dispute is one of UK patent rights (the FRAND aspects of the proceedings apparently being ignored for the purposes of considering jurisdiction). Accordingly the Article 29 challenge failed at that stage.

Mann J nevertheless went on to consider when the issue of a FRAND licence determination first arose in the English proceedings. His view was that Philips’ original statements of case clearly brought the issue of a FRAND licence determination into play in the UK proceedings. The fact that it later served a specific FRAND statement of case was to further particularise its position on appropriate FRAND licence terms, but it did not raise a new issue in the proceedings. He therefore held that the English court would have been first seised with the FRAND issues if those issues had been the same as those in France.

Article 30

Article 30 states that “Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings” where there is a “risk of irreconcilable judgments”.

Given that Mann J had already found that the English court was first seised the Article 30 challenge failed immediately as there was therefore no jurisdiction for it to stay proceedings under Article 30 (because article 30 only applies to courts “other than the court first seised”). Mann J nevertheless went on to consider the position if he were wrong about the English court being first seised.

Following UK Court of Appeal authority, he found that even if the proceedings only became “related” within the meaning of Article 30 at the point when Philips served its FRAND statement of case, the fact that the UK proceedings were commenced first still meant that the English court was first seised and so there was still no discretion to order a stay.

Although not determinative given Mann J’s previous findings, he also considered evidence from Philips’ French law expert that there was serious doubt about whether the French court would in fact determine FRAND terms. Along with that point, he also considered relevant the fact that the English court would be in a position to decide on the issue imminently, while any French judgment would take another two years and, importantly, would be given after expiry of one of the patents in dispute.

Mann J therefore decided that, even if he did have discretion to order a stay under Article 30, he would exercise that discretion against ordering a stay. The only point he considered weighed in favour of the French court determining FRAND terms was the fact that the ETSI undertaking was governed by French law. However, Mann J noted that “English courts are well used to construing foreign contracts, with the aid of evidence from foreign lawyers, and this contract is no exception”.

Analysis

Given this judgment, it is hard to envisage a situation where the English courts would cede jurisdiction to another national court to determine FRAND licence terms where English infringement proceedings are afoot.

Although in this case Mann J found that the UK courts were first seised, he made clear that even if that were not the case then (1) the Article 29 challenge would fail because the issues in dispute in the English and French proceedings were different and (2) he would have exercised his discretion under Article 30 against a stay. Therefore, even where English proceedings are commenced after those in another national courts, it seems possible that the courts will still refuse to stay the English proceedings.

This decision is another example of the English court’s expansive approach to jurisdiction in FRAND cases. It remains to be seen whether there will be any circumstances in which the court will cede jurisdiction. Ultimately, it may then become a question of which national court can give judgment on appropriate FRAND licence terms first and the risk of conflicting judgments is clear.

 

Andrew Moir
Andrew Moir
Partner, Intellectual Property and Global Head of Cyber & Data Security
+44 20 7466 2773
David Webb
David Webb
Associate, London
+44 20 7466 2629

Human Says No: AI Can’t Be Patent Inventor, Rules High Court Judge

In the latest instalment of the DABUS saga, the UK High Court has dismissed an appeal against the decision of the UK Intellectual Property Office (‘UKIPO’) rejecting the naming of an AI system as inventor on two patent applications.

Monday’s judgment was made on the basis that DABUS “is not, and cannot be, an inventor within the meaning of the [Patents Act 1977], simply because DABUS is not a person”.

The applicant is also appealing the parallel decision of the European Patent Office (‘EPO’) reported here , and has issued proceedings against the United States Patent and Trademark Office (‘USPTO’) over its decision to reject two corresponding US patent applications.

Interestingly, the World Intellectual Property Organisation (‘WIPO’) published a PCT in April of this year which names DABUS as the inventor of both inventions and notes that “the invention was autonomously generated by an artificial intelligence”. This may be the first published patent application to name an AI as the inventor – and with AI inventorship a key focus of the UKIPO’s call for views on AI and IP, it seems the DABUS story is far from over.

Background to the appeal

In late 2018 Dr. Stephen Thaler filed two GB patent applications, GB1816909.4 and GB1818161.0, for a food container and a search and rescue beacon, in his own name, but stated that he was not an inventor of either invention.

The UKIPO requested Dr Thaler to file a statement of inventorship and of right to grant a patent for both applications. Dr Thaler duly filed these statements, asserting that the inventor was an AI machine known as DABUS, and that Dr Thaler had acquired the right to grant of the patents by “ownership of the creativity machine DABUS”.

His arguments, which formed the substance of the current appeal, were as follows:

  1. Inventorship was not confined to natural persons: a non-natural person, or non-person, could be the “inventor” of an invention.
  2. He did not contend that DABUS had any legal personality – although he was seeking an extremely wide definition of “inventor”, he was not seeking to change the conventional limits of legal personhood.
  3. If it were possible for a non-person to be an inventor, but not the applicant nor owner of a patent, then that non-person would not be able to transfer such rights to another. Dr Thaler’s proposed solution to this problem was that the rights to an invention of a non-person inventor should vest in the owner of the inventor.

At a subsequent oral hearing, the UKIPO decided that because DABUS was a machine, it could not be regarded as an inventor for the purposes of the Patents Act 1977: a natural person must be identified as the inventor. Further, as DABUS was not an inventor, it could own nothing capable of being transferred, and so Dr Thaler had not acquired the rights in the patent, whether by virtue of ownership of DABUS or otherwise.

As such, the UKIPO decided that the patent applications should be taken to be withdrawn.

The current appeal

Dr Thaler sought to appeal the UKIPO’s decision on the grounds that the Comptroller’s representative had prejudged the outcome, had misdirected himself in his approach to construing the relevant legislation, and had used section 13 of the Patents Act 1977 (“Mention of Inventor”) as an illegitimate means of denying Dr Thaler his rights.

In his decision, Marcus Smith J dismissed the first two grounds as unfounded, and re-considered Dr Thaler’s substantive submissions in relation to the third ground in light of the more appropriate section 7 of the Patents Act 1977 (“Right to apply for and obtain a patent”).

Marcus Smith J considered the three classes of persons to whom, under section 7(2)(a), (b), and (c), a patent may be granted:

(2) A patent for an invention may be granted –

(a) primarily to the inventor or joint inventors;

(b) in preference to the foregoing, to any person or persons who, by virtue of any enactment or rule of law, or any foreign law or treaty or international convention, or by virtue of an enforceable term of any agreement entered into with the inventor before the making of the invention, was or were at the time of the making of the invention entitled to the whole of the property in it (other than equitable interests) in the United Kingdom;

(c) in any event, to the successor or successors in title of any person or persons mentioned in paragraph (a) or (b) above or any person so mentioned and the successor or successors in title of another person so mentioned;

In summary, the judge found that:

  • The concluding words of section 7(2) indicated that there were only three classes to whom a patent may be granted, and classes (b) and (c) were derivative and arose only by transfer from the inventors in class (a).
  • It was possible to construe section 7 in such a way that the term “inventor” extended to both persons and non-persons, but only persons fell within the classes in section 7(2). In other words, regardless of the meaning of “inventor”, a patent could only be granted to a person, in view of the established principle that only a person can hold property rights.
  • Neither Dr Thaler nor DABUS fell within class (a) because Dr Thaler was a person but not the inventor, and DABUS was the (assumed) inventor but not a person.
  • In any event, reading “inventor” as extending to non-persons was an “unlikely” construction of the relevant provision, in view of section 7(3) of the Patents Act 1977 which defines “inventor” as “the actual deviser of the invention”, and Lord Hoffman’s reference in Yeda [2007] UKHL 43 to the inventor as the natural person who came up with the inventive concept. Further, the requirement that any “invention” feature an inventive step (being something “not obvious to a person skilled in the art”) led inevitably to restricting the term “inventor” to a natural person.
  • Therefore, DABUS “is not, and cannot be, an inventor within the meaning of the 1977 Act, simply because DABUS is not a person”. That was not to say that it had not “invented” the inventions subject to the application – but it could not be the inventor as meant by the 1977 Act.
  • Similarly, because DABUS is not a person, it “cannot even hold property, let alone transfer it”, so there could be no transfer of rights to bring Dr Thaler inside classes (b) or (c).

On the question of ownership, Dr Thaler had argued that “if you own the machine, you own the output of that machine”, relying on parallels with copyright law. The judge noted, however, that no such rules have been framed in the context of patents, and it was “impossible to say that simply because (i) DABUS has invented something and (ii) Dr Thaler owns DABUS, Dr Thaler is entitled to the grant of a patent. There must either be an application by the inventor within section 7(2)(a) (which cannot be made because DABUS is not an inventor nor a person) or the inventor must have transferred the right to apply enabling Dr Thaler to apply under one of section 7(2)(b) or (c) (which again cannot be in this case).”

The argument that Dr Thaler was the inventor under class (a) by virtue of his ownership of DABUS, was positively not advanced by him, “not merely because he considered it bad in law, but more importantly because (in moral terms) he considered that he would illegitimately be taking credit for an invention that was not his”. It was therefore not considered in the case, although the judge did make clear that he “in no way” regarded “the argument that the owner/controller of an artificially intelligent machine is the “actual deviser of the invention” as an improper one”.

It therefore remains to be seen whether such an approach would be accepted by patent offices, but both parties to the appeal agreed that work is needed to address the way in which patent systems will handle inventions created by AI. This case suggests that this needs to be done at the legislative level, however: the IPO’s submissions were that changes should not be shoehorned into existing legislation through judicial interpretation, and while the Judge did not go as far as to endorse these comments, he did decline to find in favour of Thaler’s appeal, leaving the invention unprotected by patent law.

Case: Thaler v The Comptroller-General of Patents, Designs and Trade Marks [2020] EWHC 2412 (Pat)

 

Laura Adde
Laura Adde
Associate - London
Peter Dalton
Peter Dalton
Senior Associate - London
+44 20 7466 2907
Joel Smith
Joel Smith
Head of IP - London
+44 20 7466 2331

FRAND patent licensing: Supreme Court stays the course

Andrew Moir and David Webb have today published an article about the recent Supreme Court FRAND decision in Unwired Planet in PLC Magazine.

This article first appeared in the October 2020 issue of PLC Magazine.

The article analyses the Supreme Court’s judgment, which provides welcome guidance on the UK’s approach to FRAND licensing, much of which will be welcomed by standard essential patent owners. You can also find an in depth summary of the case in our separate blog post.

Please do not hesitate to contact the authors if you would like to discuss this decision and its implications in more detail.

Andrew Moir
Andrew Moir
Partner, Intellectual Property and Global Head of Cyber & Data Security
+44 20 7466 2773
David Webb
David Webb
Associate, London
+44 20 7466 2629

UKIPO launches ‘AI and IP Call for Views’

The UK Intellectual Property Office has published its call for views on artificial intelligence (‘AI’) and intellectual property (‘IP’). The IPO is interested in understanding the implications that AI might have for IP policy, and vice versa, in the near to medium future.

To respond, email AIcallforviews@ipo.gov.uk before 11:45 pm on 30 November 2020.

Overview

In this call for views, the IPO recognises that “AI and machine learning are enabling. They are transforming the global economy and already an integral part of our lives. They impact our workplace, our homes, our transportation, and our healthcare”, and wants to understand “the commercial, economic, legal and social implications of AI and how the IP framework can incentivise the development and adoption of AI technologies”.

The call for views asks a number of questions in relation to how the IP framework currently relates to AI and the future of AI and IP policy.

It contains five sections covering the below IP rights and themes:

  • Patents (including in relation to AI inventorship, patentability of AI inventions, and infringement of patents by AI systems);
  • Copyright and related rights (including in relation to use of copyright works by AI systems and copyright protection of AI-generated works);
  • Designs (including in relation to AI ownership and authorship, and infringement by AI systems);
  • Trade marks (including how current trade mark law would apply to AI technology and infringement by AI systems); and
  • Trade secrets (including the advantages and disadvantages of using trade secrets in the AI sector).

A full list of the questions asked across all of the IP rights above can be accessed here.

 

Priyanka Madan
Priyanka Madan
Associate - London
+44 20 7466 2986
Laura Adde
Laura Adde
Associate - London
+44 20 7466 7491

The Unified Patent Court – on the move again?

Yesterday (10 September 2020) the UPC Preparatory Committee met (albeit virtually) for the first time since March 2017.  On the agenda were the issues triggered by the formal withdrawal of the UK from the UPC system and the events in Germany in relation to challenges to Germany’s participation.

The note of the meeting on the Committee’s website (here) states that the Committee took note of the “good progress” being made in Germany with regard to the legislation needed for the German ratification of the Unified Patent Court Agreement and the Protocol on Provisional Application.

The Committee also took note of the call from European Industry for a swift entry into operation of the Unitary Patent System.

“Against this backdrop issues concerning the effects of the UK withdrawal were discussed as well as appropriate ways forward. Good progress was made and the Committee is confident that pragmatic and legally sound solutions will be found that will enable the unitary patent system to be functional in a near future“.

The Italian Ministry of Foreign Affairs reported that the replacement of London as the life sciences seat of the central division was considered at yesterday’s meeting and a recommendation adopted that Munich and Paris divide the workload that would have gone to London as a temporary arrangement, so that the determination of this seat’s final location would not delay the start of the UPC system. The report also states that the procedure to amend the agreement to change the location of the London seat can now be commenced.

Once Germany has ratified the UPC Agreement, the hope is that the UPC could be formally established (and the unitary patent system also come into effect) in 2021. The start of the UPC would allow the EPO to start to grant unitary patents (European patents with unitary effect) which can only be enforced via the UPC.

Italy has formally submitted its proposal for Milan to host the life sciences seat of the central division court of the UPC on a permanent basis.  The Italian Minister of Foreign Affairs (Di Maio) was satisfied with the outcome of the meeting and Italy’s proposal was well received.

See also this post by Sebastian Moore, one of our European patent specialists, with more information and comment about the benefits of Milan hosting the life sciences seat of the UPC central division.

Authors

Sebastian Moore
Sebastian Moore
Partner, Milan & London
+39 02 3602 1398; +44 20 7466 2331
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, IP, London
+44 20 7466 2217

UK Supreme Court stays the course in Unwired Planet and Conversant – confirming the approach to FRAND adopted by the lower courts

On 26 August 2020 the UK Supreme Court handed down judgment in Unwired Planet v Huawei [2018] EWCA Civ 2344 (the “Unwired Planet Appeal”) and Conversant v Huawei and ZTE [2019] EWCA Civ 38 (the “Conversant Appeal”). The Unwired Planet Appeal concerned the courts’ jurisdiction to determine global FRAND (Fair, Reasonable And Non-Discriminatory) licence terms, the meaning of the ‘non-discrimination’ element of FRAND and an SEP (Standard Essential Patent) owner’s right to an injunction. The issue in the Conversant Appeal was whether England was the appropriate forum to hear such a FRAND case in the circumstances of that case (further explained below). Continue reading

Patent and Pharma Update, August 2020

Key recent developments in the United Kingdom and Europe relating to patents and the pharmaceutical sector

In this edition we cover landmark judgments from the UK and German Supreme Courts, on sufficiency in the UK and FRAND obligations in Germany. We also cover a significant decision of the CJEU in relation to SPCs in the Santen case, as well as a decision concerning the provision of sample medicine to pharmacists and the Advocate General’s Opinion regarding an appeal from a fine imposed for anticompetitive agreements and we report on an important decision of the European Patent Office regarding the patentability of plant and animal products. This edition also includes our analysis of a number of noteworthy UK High Court and Court of Appeal decisions on issues including injunctions, attempted strike-out of an infringement claim and the law on obviousness. Finally, we report on UK’s formal withdrawal from the Unified Patent Court Agreement.

Continue reading

UK’s exit from the UPC now final

On 20 July 2020, the UK officially withdrew its ratification of the Unified Patent Court Agreement. This was expected, following the announcement from the UK Prime Minister’s Office on 28 February 2020 – see our previous post here.  Details can be viewed here on the UPC website.

In a written statement in the House of Commons, Amanda Solloway (Parliamentary Under Secretary of State, Minister for Science, Research and Innovation), explained the decision as follows:

“…in order to ensure clarity regarding the United Kingdom’s status in respect of the Agreements and to facilitate their orderly entry into force for other States without the participation of the United Kingdom, the United Kingdom has chosen to withdraw its ratification of the Agreements at this time. The United Kingdom considers that its withdrawals shall take effect immediately and that it will be for the remaining participating states to decide the future of the Unified Patent Court system.”

It is now up to the Preparatory Committee to convene and find a way forward. We will report on any further announcements from the Committee as and when they become available.  Meanwhile, HSF’s EU-wide patent litigation practice stands ready to represent clients in the UPC despite the UK’s exit from the project, and to manage multi-jurisdictional patent litigation as it always has.

Andrew Wells
Andrew Wells
Senior Associate, London
+44 20 7466 2929
Priyanka Madan
Priyanka Madan
Associate, Milan
+39 02 3602 1389

UK Supreme Court in Regeneron v Kymab: technical contribution critical to determining sufficiency

The Supreme Court has handed down today its judgment in Regeneron Pharmaceuticals Inc v Kymab Ltd [2020] UKSC 27, allowing Kymab’s appeal and holding Regeneron’s patents invalid for insufficiency by a majority of 4:1.

The judgment emphasises the fundamental principle of the patent bargain, which envisages that the patentee makes full disclosure of the invention in return for a time-limited monopoly. Sufficiency is, amongst other tools like novelty, inventive step and industrial application, one of the ways to ensure such patent bargain is struck in the right place, such that the protection afforded by the claim is commensurate with the technical contribution to the art made by the disclosure of the invention in the patent. Whilst the Lords and Lady of the Supreme Court were of the view that their judgment does not change the existing, fundamental legal principles of sufficiency contained in the well-established authorities in the UK and of the Technical Board of Appeal of the European Patent Office, this case illustrates the importance of, and difficulty in, identifying a patent’s technical contribution and the significant consequences which follow. Continue reading