Case Law post CJEU ruling Huawei v ZTE

Apple v Qualcomm, [2018] EWHC 1188 (Pat)

22 May 2018 - Case No. HP-2017-000015

http://caselaw.4ipcouncil.com/english-court-decisions/apple-v-qualcomm-2018-ewhc-1188-pat

A. Facts

The Claimants are the US-based parent company of the Apple group, Apple Inc., and five European subsidiaries. The Apple group manufactures and sells, among other products, mobile telecommunication and media devices [78] .

The two Defendants are the US-based parent company of the Qualcomm group, Qualcomm Incorporated (Qualcomm USA), and its subsidiary, Qualcomm (UK) Limited (Qualcomm UK) [79] . Qualcomm USA supplies manufacturers of Claimants’ devices with chipsets for mobile phones [80] . The company holds a great number of patents declared essential (Standard Essential Patents, or SEPs) to mobile telecommuni¬cation standards developed by the European Telecommunications Standards Institute (ETSI) [79] . Qualcomm USA made undertakings towards ETSI pursuant to Article 6.1 of the ETSI Intellectual Property Rights Policy (IPR Policy) that it “and its Affiliates” would make its SEPs accessible to users on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions (FRAND undertakings). Qualcomm UK, on the other hand, neither holds SEPs relating to ETSI standards, nor made a FRAND undertaking vis-à-vis ETSI pursuant to Article 6.1. ETSI [81] . The company is, nevertheless, a member of ETSI.

The Claimants brought an action against both Defendants before the High Court of Justice (Court). Against Qualcomm USA the Claimants asserted claims for declaration of invalidity, for revocation and for declaration of non-essentiality with respect to certain SEPs [82] , a claim for declaration that rights derived from SEPs held by Qualcomm USA are exhausted [83] , a claim for damages allegedly suffered by an abuse of dominant position by Qualcomm USA in the relevant markets [84] , as well as claims arising from an alleged breach of the ETSI IPR Policy and the FRAND undertakings [85] .

Against Qualcomm UK the Claimants raised one single claim: They argued that Qualcomm UK as a member of ETSI was in breach of an obligation to license or procure licences on FRAND terms for SEPs held by the Qualcomm group [86] .

In its present decision, the Court did not rule on the merits of the claims asserted against Qualcomm USA. The Court focused on procedural questions regarding to the service of these claims, expressing doubts that some of the claims raised (particularly the claim for damages resulting from an alleged abuse of market power) could be validly served on Qualcomm USA outside the UK jurisdiction [87] .

Regarding to the claim asserted against Qualcomm UK, the Court found that no real prospect of success on the merits exist [88] . Accordingly, the Court signaled that it will grant Qualcomm UK a summary judg-ment against that claim, as the latter requested [89] .


B. Court’s reasoning

The Claimants based the claim against Qualcomm UK on the notion that the ETSI IPR policy obliges all ETSI members to license or procure a licence for SEPs on FRAND terms [86] . In addition, the Claimants argued that the ETSI IPR Policy imposes on Qualcomm UK as a member of ETSI an obligation to see to it that Qualcomm USA, or other companies belonging to the Qualcomm group, performed their FRAND undertakings [90] . Further, the Claimants pleaded that the FRAND undertakings made by Qualcomm USA towards ETSI on behalf of itself and its “Affiliates” also covered Qualcomm UK; thus, a breach of these undertakings was enforceable and actionable against the latter as well [91] .

Ruling on the obligations of ETSI members, the Court made clear that the ETSI IPR Policy does not require ETSI members which do not own SEPs to make a FRAND undertaking, not least because such an undertaking could not be fulfilled [92] . Moreover, in the eyes of the Court, the ETSI IPR Policy does not establish such an obligation even for entities which hold SEPs [92] . This can be derived from the provisions contained in the ETSI IPR Policy regulating the steps to be taken, in case that the patent holder chooses to refrain from making a FRAND undertaking (Article 8 ETSI IPR Policy) [92] .

Furthermore, the Court rejected the notion that the ETSI IPR Policy imposes on Qualcomm UK as a member of ETSI an obligation to make sure that Qualcomm USA performed its FRAND undertakings [90] . According to the Court, there is nothing in the wording of the ETSI IPR Policy or in the nature of the ETSI scheme which could establish such an obligation of ETSI members [90] . The Court did not see any need to impose an unexpressed obligation of that kind on ETSI members, either [90] .

Finally, the Court ruled that the FRAND undertakings of Qualcomm USA did not affect Qualcomm UK [93] . In the Court’s view, the reference to “Affiliates” in connection with undertakings pursuant to Article 6.1 ETSI IPR Policy covers only subsidiaries which themselves own SEPs subject to the respective undertaking [94] . Again, a company which does not own SEPs cannot be required to grant licences for patents that it does not hold [95] .

  • [78] Applev Qualcomm, UK High Court of Justice, judgement dated 22ndMay 2018, Case-No. HP-2017-000015, [2018] EWHC 1188 (Pat), para. 1 et seq.
  • [79] Ibid, para. 3.
  • [80] Ibid, para. 63.
  • [81] Ibid, para. 35 et seq.
  • [82] Ibid, para. 13 et seq.
  • [83] Ibid, para. 15.
  • [84] Ibid, para. 16.
  • [85] Ibid, paras. 13 et seq.
  • [86] Ibid, paras. 11 and 38.
  • [87] Ibid, paras. 92 and 115 et. seq.
  • [88] Ibid, para. 57.
  • [89] Ibid, paras. 8 and 57.
  • [90] Ibid, para. 53.
  • [91] Ibid, para. 38.
  • [92] Ibid, para. 47.
  • [93] Ibid, para. 49 et seq.
  • [94] Ibid, para. 50 et seq.
  • [95] Ibid, para. 50.