SanDisk vs. Philips, mp3 litigation in the UK, J Pumfrey denies injunction

In a high profile legal battle on mp3 patents, UK Judge Pumfrey rendered its judgment in a request for interim injunction by SanDisk against Philips et al. The first four defendants (the patentees, registered in the Netherlands, France, France and Germany respectively) own a number of European patents relevant to mp3 technology. The patents have been the subject of an intensive licensing campaign carried out on behalf of the patentees by the fifth defendant, Sisvel, an Italian licensing company. Sisvel claims that five of the patents in dispute are essential for the making and/or selling of an mp3 player in the EU and that if an mp3 player complies with a particular standard, it will necessarily infringe these four “essential” patents. It seems that most of the principal manufacturers and/or sellers of mp3 players (with the exception of the claimant, SanDisk) have entered into licenses, though the terms of those licenses have not been made public. SanDisk, a US corporation, which inter alia imports and sells in the EU (unlicensed) mp3 players was offered a license, upon filing the action, relating only to the four “essential” patents but nevertheless on the standard royalty rate by Sisvel. In February 2006, SanDisk began invalidity proceedings in the Patents Court in relation to the five patents. In March 2006, SanDisk also started proceedings for declarations relating to essentiality and non-infringement. The Patentees counterclaimed for infringement. These proceedings are ultimately due to come together for trial in February 2008. Subsequent to the start of proceedings in the UK, Sisvel sought to enforce the patents elsewhere in the EU by summary means. It obtained several Border Detention Orders and consequent infringement proceedings are pending in Germany and the Netherlands. Sisvel also sought domestic remedies in Germany and Italy, including the seizure by the Berlin Public Prosecutor of mp3 players exhibited in the SanDisk booth at a major exhibition, an action which resulted in significant publicity (among which this blog posts).SanDisk alleged several breaches of arts. 81 and 82 EC Treaty. These were considered by Pumfrey J in relation to the jurisdiction issue but they also raised interesting substantive issues, for example whether the offer of an objectionable license could be characterized as an abuse of a dominant position (the patentees refused to grant licenses on an individual basis having agreed that all licenses would be granted by Sisvel).Relief soughtSanDisk claims that Sisvel and the patentees enjoy a dominant position in two relevant defined markets and that their conduct constitutes harassment amounting to an abuse of that dominant position. It argued that this is actionable in the UK and also justified at least limited interlocutory relief requiring Sisvel to notify SanDisk of any further proposed complaint to the relevant administrative or prosecuting authorities. This would enable SanDisk to approach those authorities and explain to them why it believes the essentiality argument is a bad one before the authorities decided whether to act. SanDisk also complained about certain aspects of the licensing activities of Sisvel, claiming that these also amount to abuse of a dominant position. In respect of both the “harassment” allegation and the licensing allegation, Sisvel argued that there was no jurisdiction either to entertain the substantive complaint or to grant any form of interim relief in England and Wales.Jurisdiction in the Substantive ClaimPumfrey J held that the court had no jurisdiction to determine the substantive claim.He started by noting that Sisvel (an Italian company), against whom the greatest complaint was made, could be sued in Italy and that the Patentees could be joined to such proceedings under Article 6(1), Brussels Regulation. However, because none of the defendants were domiciled in England and Wales, SanDisk needed to establish that a special jurisdiction was available under Art 5(3).In order for the English court to possess the exceptional jurisdiction pursuant to Art 5(3) which would allow it to adjudicate upon the alleged abuses of a dominant position in the present case, either the event setting the tort in motion must have been in England and Wales or, alternatively, the claimant needed to show that it was the immediate victim of that abuse suffering direct harm in England and Wales. In addition, the scope of the two jurisdictions was different. The jurisdiction based upon the place of the harmful event was international, while the jurisdiction based upon the relevant harm was restricted to England and Wales. Pumfrey J concluded that SanDisk had not established that any of the first steps of the abuses complained of took place in the UK, nor that immediate damage was caused to SanDisk in the UK by reason of the alleged abuses. SanDisk also needed to demonstrate a good arguable case before jurisdiction would be assumed under Art 5(3). Since there were courts (for example in the Netherlands, Germany, France and Italy) which indisputably had jurisdiction over the individual defendants pursuant to Art 2, something better than a case which was merely arguable was required in order to preserve the necessarily exceptional nature of Article 5(3) jurisdiction and for the purpose of ensuring the uniform application of the Brussels Regulation. In relation to the enforcement steps taken by Sisvel in Germany and Italy (by use of criminal complaints) and in the Netherlands (and possible Germany) by the employment of Border Detention Orders, Pumfrey J noted that – assuming it was possible to invoke these administrative actions in an abusive manner, for example by relying upon a patent positively known to be invalid – the damage resulting from the abuse was plainly suffered in the Member State in which the Border Detention Order has been effected. There was no Border Detention Order in the UK. Similarly, in relation to the seizure by the Public Prosecutor in Berlin, both the act itself and the harm immediately flowing from it arose in Germany. Pumfrey J observed it could be thought that all these legal proceedings were duplicative and so potentially oppressive. However, this could not be the case. Although all the patents in question derived from the same European patent applications, the patent system meant that these matured into domestic patents in the designated contracting states and that enforcement had to be undertaken state by state. Infringement could not be litigated for all designated states in only one of them: if validity is or will come into issue, enforcement must be on a country-by-country basis (GAT vs. LuK and Roche vs. Primus).Enforcement of patent rights as abusive conductPumfrey J also considered a separate issue relating to jurisdiction under both Article 5(3) (see above) and Article 31 (see below) under the heading “Enforcement of patent rights as abusive conduct”. SanDisk claimed that there was a sustained campaign of abusive and anti-competitive activity throughout Europe, including the UK. This resulted in loss by SanDisk throughout the EU and immediate damage in every country, thus giving the English court jurisdiction. The core of this argument related to the enforcement steps invoked by Sisvel in various Member States and the interim relief sought by SanDisk was targeted at enforcement measures. Assuming that the Patentees and/or Sisvel have a dominant position within a relevant market, and assuming that the effect of enforcing their intellectual property rights will consolidate that position of dominance, Pumfrey J asked in what circumstances would the law recognize that enforcement through the legal channels provided for either by Community law or by domestic law of the Member States amounted to abuse? He said that a comprehensive answer was provided by ITT Promedia NV vs. Commission (Case T-111/96), a judgment of the EU Court of First Instance. Pumfrey J concluded from this case that where there is no dispute that the patents have been granted to the patentee, the enforcement action can be considered to be merely harassing if the patent is obviously not infringed or if the patent is invalid and in either case the patentee either knows or believes that to be the case. He acknowledged that it might be argued that duplication of patent proceedings takes on a harassing aspect, but, as he had already explained, enforcement must proceed, if it proceeds at all, on a country-by-country basis. As a result, he ruled that that not only was there no arguable case for saying that immediate loss was suffered by SanDisk in England and Wales as a result of the acts complained of, but the basis upon which it can be supposed that the conduct was abusive at all was very thin indeed. In any event, the appraisal of the abusive nature of litigation or other administrative action was surely for the relevant jurisdiction to decide. Article 31, Brussels Regulation and the interim relief sought. Art 31 states that “Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.”ConclusionPumfrey J concluded from the case law that jurisdiction under Article 31 is to be exercised by the court best placed to be acquainted with and to understand the effects of the provisional and protective measures which are sought. Jurisdiction was conditional, inter alia, on the existence of a real connecting link between the subject-matter of the provisional or protective measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought. The nature of this connection could be purely physical – there were assets within the jurisdiction – or one of control – the person who was the subject of the order was within the jurisdiction and immediately susceptible to such coercive measures to secure compliance as might be necessary. In any event, Pumfrey J ruled that there was no such connection in the present case. He also noted that none of the defendants were UK companies, that there were no Border Detention Orders in the UK and that no proceedings other than the present set of patent infringement proceedings were on foot in the UK. The courts in the Members States where Border Detention Orders had been obtained were beyond doubt in the best position to decide what, if any, measures of warning it was appropriate for Sisvel to give SanDisk, and it was plain that these courts were live to the possibility of abuse of the various measures available to Sisvel for the purpose of enforcing the patents.Art. 31 jurisdictionPumfrey J noted that the scope of the relief sought was not very wide and should not cause Sisvel any difficulties. However, since the existence of the jurisdiction itself depended upon the factors outlined above, he held that there was no Art 31 jurisdiction to grant the order sought. Pumfrey J also noted that the only part of this dispute which could conceivably support the grant of interlocutory relief was, for various reasons, unarguably bad. For this reason, and also because of the extraordinary delay which had already taken place both before the issue of this application and this hearing, he would in any event have refused any form of interim relief.see on mp3 software, for alternative padding detection algorithm, dr. Otto Witte @

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