English Court of Appeals cancels RAND trial in TQ Delta patent dispute
The English Court of Appeals has ruled that a trial over reasonable and non-discriminatory (RAND) licensing in an ongoing dispute between technology licensing company TQ Delta and Taiwanese company ZyXEL will not go ahead later this year.
Handed down on Thursday July 18, the decision comes after earlier this year, the English High Court ruled that the trial would go ahead and that ZyXEL could not waive its obligation to engage in RAND negotiations with TQ Delta over the licensing of a patent.
The dispute concerned two of TQ Delta’s standard-essential patents (UK numbers 1,453,268 and 1,792,430), which relate to digital subscriber line (DSL) technology. DSL technology is used to provide broadband internet to homes over standard telephone lines.
As previously reported by WIPR, in March the High Court delivered a partial win for TQ Delta ruling that the ‘268 patent, which was due to expire in three months, was valid and had been infringed by ZyXEL. It found that the ‘430 patent was obvious in light of prior art.
The English High Court said that unless ZyXEL agreed to license the ‘268 patent from TQ Delta, a three-month injunction would follow, in addition to damages for past infringement.
Following the ruling, ZyXEL submitted a waiver, declaring that it no longer wished to license the technology from TQ Delta and would instead be subject to the injunction and pay the damages for past infringement of the ‘268 patent.
In response, TQ Delta submitted a new claim for infringement on two other DSL-related patents, the case for which was set to go to trial in October.
TQ Delta also sought to amend its original complaint and requested declarations that ZyXEL was not willing to license the TQ Delta’s patent portfolio and TQ Delta was not obliged to offer a licence to ZyXEL.
In its decision, the Court of Appeals had to decide whether, given that ZyXEL would not be taking a RAND licence, a RAND trial should still go ahead in October.
In its March decision, the High Court said the trial should go ahead because TQ Delta’s claim for declaratory relief was not dealt with by ZyXEL’s waiver.
The court said there was “a real and lively dispute as to RAND terms. That dispute has not gone away”.
But ZyXEL appealed, arguing that its waiver meant the RAND trial fell away entirely.
But, the Court of Appeal’s decision means there will no longer be a trial to decide the terms and costs of a RAND licence for other patents in TQ Delta’s portfolio.
In its decision, the Court of Appeals said the terms of ZyXEL’s waiver were sufficient to stop the RAND trial.
The court relied on earlier case law from the England and Wales High Court’s Unwired Planet v Huawei (2018), and said that a national licence could be RAND if a patent is valid and infringed, and that an injunction is appropriate if a defendant refuses to take a national licence.
The judge at first instance, Justice Birss, said attempting to limit the waiver to the UK was wrong because RAND operated on a global basis.
However, Lord Justice Floyd disagreed, given that the terms of the waiver meant RAND could be dispensed with entirely.
“TQ Delta submitted that you cannot do what ZyXEL is purporting to do. That is because a RAND licence and a RAND obligation operates worldwide, they contend,” said Floyd J.
“It does not follow from the above that ZyXEL are somehow prevented from saying to TQD and the court that they no longer rely on any licence to which it is entitled to resist the grant of relief for infringement of the UK patents.”
He added, “I can see no basis whatsoever for saying that such a waiver should be treated as ineffective or invalid. To say that the waiver is ineffective is equivalent to saying that the proceedings must go on as if ZyXEL were still relying on the RAND undertaking to resist the grant of the injunction in the UK, when ZyXEL are prepared to give an irrevocable undertaking not to do so.”
The Court of Appeal ruled if a trial was to go ahead, it would be costly as it “would take some ten days” and costs to be incurred would reach £4 million ($5 million).
Alex Woolgar, writing for IPKat, said the decision makes clear the Court of Appeal’s view that RAND does not only operate on a global scale, but that a national licence can be RAND in the appropriate circumstances.
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