Guest Post by Peter Arrowsmith. Arrowsmith is a patent attorney and partner at the London based firm Cleveland IP
In a recent judgment from the High Court in England & Wales, a Vringo patent was found valid and infringed by ZTE, the Chinese telecommunications giant. This case involved an interesting combination of parties: Vringo, an alleged patent troll, against ZTE, a leading Chinese innovator. The case is also of interest because the relevant patent was deemed essential to the 3GPPP telecommunications standard, which means that hardware produced according to the standard would inevitably infringe the patent.
Vringo is a US company headquartered in New York City. Its website says the following about its activities:
Vringo, Inc. is engaged in the innovation, development and monetization of intellectual property and mobile technologies. Vringo’s intellectual property portfolio consists of over 500 patents and patent applications covering telecom infrastructure, internet search, and mobile technologies. The patents and patent applications have been developed internally, and acquired from third parties.
In this case the relevant patent was filed by Nokia, and acquired by Vringo after grant.
Vringo’s website has details of various patent enforcement activities around the world against companies such as ZTE, ASUS, Google and AOL. Despite their global activities and sizeable patent portfolio, Vringo employ only 27 people, and do not produce any physical products. As such, Vringo could reasonably be called a non-practicing entity (NPE), or even a patent troll, if one wanted to be pejorative.
The judgment dealt with Vringo’s business model directly, as follows:
Although they never say so bluntly, ZTE contend that Vringo are ‘patent trolls’. They contend that Vringo have conducted themselves in various inappropriate ways around the world against ZTE. However ZTE have not alleged or pleaded that any of this conduct amounts to a defence relevant to the issues I have to decide at this trial. For example, no defence in competition law is relied on. Vringo do not accept that ZTE’s allegations are correct. Whether ZTE are right or wrong about this is irrelevant and I will ignore these allegations.
Thus, the case was correctly decided without reference to Vringo’s business model. This seems just, especially given the difficulty in agreeing upon a definition of a NPE or patent troll.
ZTE is a Chinese telecommunications company with around 70,000 employees. They have grown into one of the largest telecommunications companies in the world, and are also very active users of intellectual property. In fact, ZTE filed more PCT applications than any other company in the world in 2011 and 2012.
It is not straightforward to identify the bad guys and good guys in patent litigation. In general, this is simply a matter of perspective. However, Chinese companies are often cast in the role of bad guys, due to a reputation of disregard for IP rights. Meanwhile, US companies are often cast as the good guys, as they pioneer new technologies for the benefit of humanity. In this case it is clear that the stereotypic labels do not apply. Indeed, it is an indication of evolution in the IP landscape to see a Chinese innovator being sued by a Manhattan company, which did not contribute to the patented technology but acquired it from overseas.
The technology in this case relates to the handover of mobile phone calls from one cell to another. In particular, it relates to a ‘soft’ handover between cells.
The invention was developed by Nokia during a rapid period of development in 1999. At this time Nokia were involved in the process for establishing the 3GPP standard and met regularly with contributors from the other leading telecommunications companies of the day. The patent is relevant to one specific working group, which was involved in issues relating to the handover of calls. The working group, WG3, produced various memoranda and papers regarding the progress of their work. These papers formed part of the prior art, against which the validity of the patent was assessed.
Nokia developed the invention while discussions regarding the standard were ongoing, and they filed a patent application. The invention was subsequently disclosed to the working group, and was eventually adopted as part of the finalised standard. As a consequence, equipment produced in accordance with the standard would inevitably infringe the patent. The key question in this case was therefore whether the patent is valid over the papers produced by the working group before the date of filing.
In this case the judge was not persuaded by ZTE’s case that the invention was obvious. Therefore, the patent was found to be valid and infringed by ZTE.
This decision is also the first of a series of patent trials scheduled to be heard in the UK between these parties in the next year or so. It will be fascinating to follow this intriguing battle in the coming months.