Nokia's rights not exhausted - and neither is the IPKat

This Kat was travelling last week when Mr Justice Arnold handed down the decision in HTC Corporation v Nokia ([2013] EWHC 3247 (Pat)), and has only now had a chance to read it.  It is not really his technology, but there are some features of the decision that are of general interest.

First the headline, if all you want to know is “Who won?” Nokia (confusingly the defendant) accused HTC of infringement of EP0998024.  The patent was found valid and infringed by certain HTC phones incorporating chips manufactured by Qualcomm and Broadcom.  So Nokia won.

So what interested this Kat about the case?

Well, firstly the decision is really rather short, weighing in at 44 pages, 189 paragraphs for a judgement dealing with infringement, validity, and some complex licence defences.  [Does this mean that we now need to redefine the meaning of Arnoldian? asks Merpel]

Merpel was tired of her
phone anyway

This leads to the second interesting point – the public judgment lacks two confidential annexes.  Confidential Annex 2 contained information about the Broadcom and Qualcomm chips that was obtained pursuant to a US Court order with stringent terms as to confidentiality.  As Arnold J noted “This has the regrettable consequence that some of what follows [in the judgment] will be obscure to those who do not have access to that annex.”  But at any rate we know that they were considered to infringe.  Confidential Annex 3 contained details of a licence agreement between Nokia and Qualcomm that were also considered confidential.  The significance of this will be discussed later in this post.

The patent concerns modulators, and in particular a modulator structure which is suitable for dual-band or triple-band mobile stations.  Claim 1 requires “A modulator using a Gilbert cell”. 

[For the next bit we need just a little technical background.  A Gilbert cell is a circuit which can be used as, for example, an analog multiplier, a modulator or a phase detector.  The mode of operation depends on the magnitude of the input voltage(s) compared to the transistor voltages used within the Gilbert cell.  An analog multiplier is a device which takes two analog signals and produces an output which is their product.  A modulator can be used in radio transmitters to modulate a carrier frequency with the information signal.  (Katpat goes to Adam Flint for this!)]

The patent was considered novel over US 5469092 (Itakura).  Itakura discloses a multiplier, not a modulator, which were held to be different things based on how the skilled person would read the claim.  Therefore, novelty was acknowledged.

Inventive step was also acknowledged over both Itakura and another piece of prior art Tan (WO 97/42554).  Tan concerned an anti-aliasing filter.  This Kat was interested by this statement at paragraph 123 of the judgment:

In his written closing submissions, counsel for HTC expressly advanced precisely the same argument of obviousness over both Itakura and Tan. Furthermore, when I asked about this during his oral submissions, he said that, if forced to choose between them, he would choose Tan. In my view, this approach betrays the weakness of HTC's case, because Itakura and Tan are different pieces of prior art directed to different problems and teaching the skilled person different things. Furthermore, of the two, Tan is on its face less close prior art than Itakura.

The IPKat is currently considering whether it is in general problematic to argue the same inventive step attack from two different starting points, or only in this case.  This finding (at paragraph 5) concerning HTC’s technical expert also drew the Kat’s attention:

He was forced to retract certain points he had made in earlier reports in his seventh report, and to make further significant qualifications to his reports in cross-examination. Even where he did not retract or qualify his evidence, he was less able convincingly to support what he had written. Furthermore, it became apparent that he had been instructed in a manner which was calculated to induce hindsight.

The final interesting point is the licence defence to infringement.  This was alleged to arise because HTC purchased the chips from Qualcomm (in Taiwan) and there is an agreement between Nokia and Qualcomm which contains a covenant by Nokia not to sue Qualcomm for infringement of various patents, including the Patent, in certain circumstances (which are not enumerated in the public judgment).  Arnold J rejected this under both English law and US law.

Under English law, Arnold J considered himself bound by Tilghman (Société Anonyme des Manufactures de Glaces v Tilghman's Patent Sand Blast Company (1883) 25 Ch D 1), from which he extracted the following principles at paragraph 163 of the judgment:

Rather, the court considered that there was a fundamental distinction between a sale of a product and a licence under a patent. Where a product was sold, the purchaser acquired all rights that were not expressly reserved. Where a patent was licensed, the licensee acquired only those rights which were expressly or necessarily granted.

Applying the principle of nemo dat quod non habet, Arnold J considered that Qualcomm could not give HTC the right to import the products from Taiwan into the UK.  

US law was invoked because the agreement between Nokia and Qualcomm was under Delaware law.  This was said to bring into play the US Federal doctrine known as the first sale or exhaustion doctrine.  But this did not assist HTC either, not least because it was held not to apply where the sale was outside the USA, and in this case the sale had taken place in Taiwan.

In this judgment we see the denial of any doctrine of international exhaustion under US, EU and UK law, and indeed of any implied licence concept which would lead to a similar outcome.  Which leaves the IPKat wondering - should we recognise international exhaustion in the UK?