Out-Law News 3 min. read

Nokia to seek HTC sales ban in Britain following High Court patent ruling


Nokia has said it will seek an injunction banning rival mobile device manufacturer HTC from selling products in the UK that breach its patent rights following a High Court ruling over a dispute involving the two companies.

Mr Justice Arnold ruled that a European patent owned by Nokia was valid and that it had been infringed by HTC. The patent covers the structure of a modulator, technology that allows data to be transmitted over radio waves. HTC has said it will appeal the ruling, according to media reports.

Nokia successfully argued that the Taiwanese company infringed its patents when it included chips within some of their devices that implemented the patented technology. Some of the chips were made by Qualcomm.

Nokia and Qualcomm had entered into an agreement relating to the use of Nokia's patent in its chips which included a clause that confirmed that Nokia would not sue Qualcomm for patent infringement providing certain conditions were met. The agreement was governed by law in Delaware in the US.

HTC argued that, under the terms of that agreement, Nokia effectively consented to its use of its patent when it had itself bought chips featuring the patented technology from Qualcomm. This arrangement therefore meant that it did not need to buy a separate licence from Nokia to use its patented technology, the company claimed.

However, Mr Justice Arnold said that Nokia had not consented to Qualcomm selling its chips in Europe. He said that, in accordance with English law, HTC could not be said to have "acquired greater rights on purchasing the chips from Qualcomm than Qualcomm was granted by Nokia under the agreement [formed between Nokia and Qualcomm]".

In the case HTC also sought to rely on a 'first sale doctrine' under US law as showing that Nokia's patent rights were exhausted after it sold products containing the patent.

However, Mr Justice Arnold said that US patent law could not be relied on in order to interpret an agreement formed under Delaware contract law where that agreement concerned "non-US patents".

"The ruling confirms a long line of authority that the purchaser of a patented product from an authorised licensee of a foreign patent does not automatically obtain any rights under the corresponding UK patent," patent law specialist Indradeep Bhattacharya of Pinsent Masons, the law firm behind Out-Law.com, said. "The patentee in this situation is entitled to rely on his or her rights under the UK patent to prevent the sale of the product in the UK.”

"Patents are territorial and therefore licences granted under a foreign patent are necessarily limited to that foreign jurisdiction. It follows therefore that a subsequent purchaser of product from the licensee cannot acquire rights broader than the licensee itself," he added.   

The expert also said that the ruling had highlighted the importance in ensuring expert witnesses are treated carefully by the companies seeking to rely on their evidence in a patent dispute.

"Justice Arnold criticised HTC for instructing its expert in a manner which was 'calculated to induce hindsight'," Bhattacharya said.

"Disputes relating to the validity of patents necessarily involve looking back at how a skilled person at the time of an invention would have assessed the obviousness of that solution to a problem that existed at the time of the invention. For this reason, it is usually inappropriate for a party that is challenging validity of a patent to provide its expert with a copy of the patent, detailing the solution to the problem, before they are given a chance to first review the prior art that existed and form their own conclusions about the state of knowledge available at the relevant time. Mr Justice Arnold deemed the witness' evidence in this case to have been coloured as a result of benefiting from hindsight," he said.

The finding of infringement affects HTC's flagship HTC One devices as well as a number of other "representative" devices made by the Taiwanese company. However, Bhattacharya said that the ruling could help Nokia exert patent rights over other device manufacturers too.

"The patented technology in this case was contained in the form of chips made by two of the world's largest chip manufacturers, Qualcomm and Broadcom," he said. "Other devices incorporating the same or similar chips are therefore also at risk."

Mark Durrant, spokesman for Nokia, said that the company was pleased with the High Court's judgment. He said that the judgement was a "significant development" in Nokia's dispute with HTC across the world.

"Nokia will now seek an injunction against the import and sale of infringing HTC products in the UK as well as financial compensation," Durrant said. "Local counterparts of this patent are already in suit against HTC in Germany, Italy, Japan and the US."

"This is the third court this year to find that HTC infringes Nokia patents, bringing the number of patents found infringed to four. In September, the US International Trade Commission gave an initial determination of infringement of two Nokia patents and, in March, the Mannheim court ordered HTC to cease infringing a Nokia power saving patent. Nokia began its actions against HTC in 2012, with the aim of ending HTC’s unauthorised use of Nokia’s proprietary innovations. Nokia has now asserted more than 50 patents against HTC in France, Germany, Italy, Japan, the Netherlands, UK and US," he added.

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