LG Electronics Inc v Sony Europe Ltd & Ors

This is an application for summary judgment in a patent case. The claim is one for infringement of three patents in the name of the claimant (“LG”) relating to Blu-Ray technology. The earliest priority date of the patents in suit is in March 2003. The defendants (“Sony”) are defending the claim inter alia on the grounds that all three patents are invalid, and counterclaim for revocation.

In the Grounds of Invalidity one of the items of prior art relied upon, in two cases as depriving the patents in suit of novelty and in the third case as an obviousness citation, is a document referred to as DVD Specification for Read-Only Disc - Part 3: Video Specifications (version 1.1, December 1997). I will refer to this as “the DVD Specification”. As is common ground, in order for Sony to be able to rely upon that document in support of their allegations of lack of novelty and obviousness, the document must have been made available to the public prior to the priority date. LG contends that the document was not made available to the public prior to the priority date or indeed subsequently. On the contrary, LG contends that at all times the document has only been available under terms as to confidentiality.

On this application LG seeks a summary determination of that issue in its favour. This being an application for summary judgment, I should remind myself of the applicable principles. There is no dispute as to these. They were conveniently summarised by Lewison J in Easy Air Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]:

“As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:

i)

The court must consider whether the claimant has a ‘realistic’ as opposed to a ‘fanciful’ prospect of success: Swain v Hillman[2001] 1 All ER 91;

ii)

A ‘realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel[2003] EWCA Civ 472 at [8];

iii)

In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman;

iv)

This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];

v)

However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)[2001] EWCA Civ 550;

vi)

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

That summary was cited with approval by Etherton LJ, with whom Wilson and Sullivan LLJ agreed, in A C Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098, [2010] Lloyd’s Rep (IR) 301 at [24].

In support of its case that the document in question was not made available to the public, LG relies upon three main points. The first is what appears on the face of the DVD Specification itself. The cover of the document bears a serial number which on its face is to be a unique serial number. Inside the cover there is an extended colophon page which bears the heading “Conditions for Publication”. The first paragraph reads as follows:

“Confidentiality. This document should be treated as confidential under the non-disclosure agreement which has been signed by the obtainer. Reproduction in whole or in part is prohibited without prior written permission of Toshiba Corporation.”

At the foot of the page there appears the following wording:

“Do not copy. Copyright 1996/1997. All rights reserved. Confidential.”

That wording appears to be reproduced (with insignificant variations) on every single page of the document. On its face, therefore, the document is one that is confidential.

Secondly, it is, as I understand the evidence, common ground that the DVD Specification is only available by paying a fee of some $5,000 and signing a Non-Disclosure Agreement. The Non-Disclosure Agreement is subject to New York law, but neither side has put in evidence of New York law before me. The Non-Disclosure Agreement contains express obligations of confidentiality in respect of the information disclosed thereunder.

Counsel for LG relied in particular upon clause 3(1) of the Non-Disclosure Agreement, which is in the following terms:

“After the execution of this Agreement, and upon the Receiving Party’s payment to DVD FLLC of a fee in the amount of five hundred and fifty thousand Japanese YEN (JPY550,000), DVD FLLC shall disclose Proprietary Information to the Receiving party FOR THE SOLE PURPOSE OF THE RECEIVING PARTY’S EVALUATION OF THE POSSIBILITY OF THE COMMERCIAL DEVELOPMENT of Products.”

Accordingly, counsel for LG submitted that, by virtue of signing the Non-Disclosure Agreement, the recipient is not merely bound by express obligations of confidence, but also is only permitted to use the information disclosed thereunder for that limited purpose.

I should say that, in addition to signature of the restrictions in the Non-Disclosure Agreement, there is also in evidence a licence agreement that someone must sign if they want to develop DVD products in accordance with the DVD Specification, and that too contains express terms as to confidentiality and restrictions upon the use that can be made of the Specification.

The third main plank of LG’s case consists of some correspondence between DVD FLLC and the European Patent Office. DVD FLLC is a company that was set up by the DVD consortium that developed the DVD format in order to administer the DVD format, as I understand it in about the year 2000. There are two pieces of correspondence that are relied on. The first is an email sent by Miho Yonemura, a Deputy Manager at DVD FLLC, to Piet Mourik at the European Patent Office dated 27 September 2005. The second is a letter from the same person at DVD FLLC to Paul Schwander at the European Patent Office dated December 21 2005.

It is sufficient, I think, for present purposes to refer to paragraph 1 in the letter, which is headed “DVD Books: Trade Secret” and reads as follows:

“The very nature of the DVD Books alone may run counter to the purpose for your purchase. DVD Books are being referred to as ‘Proprietary Information’ in the Non-Disclosure Agreement (NDA) and its confidentiality is being protected by NDA. It mandates the companies to afford the highest level of confidentiality to the information we provide. Therefore, as you may imagine, the information in the DVD Books will never be qualified as prior art. Also, the ‘prior art exclusion practice’ is most basic and means little.”

Counsel for LG submitted that that provides yet further confirmation as to the confidential nature of the documents referred to in the letter as the DVD Books, which I do not understand it to be disputed include the DVD Specification.

So far as the law is concerned, counsel for LG relied in particular upon following passage in the judgment of Floyd J in Qualcomm Inc v Nokia Corp [2008] EWHC 329 (Pat):

“111.

The matter relied upon must have been made available to the public. There is no room for dispute as to the law to be applied to this issue. It is sufficient to make a document available to the public if it is communicated to a single person who is free in law and equity to make use of it for himself. If the communication is encumbered with an obligation of confidence, expressed or implied, the communication has no invalidating effect.

112.

Nokia submitted that, where a document is effectively circulated to every person having an interest in it, it should be treated as made available to the public, even if individual recipients were supplied the document in confidence. I cannot accept that submission. The effect of the submission is to put a gloss on the words of the Convention: to read it as if it said ‘made available to the interested public’ The submission is contrary to the decision of the Technical Board of Appeal of the EPO in Decision T 482/89 (OJ EPO 1992 646 at paragraphs 2.1-2.8) relying on German law to the same effect.”

As counsel for LG accepted, however, the case T 482/89 referred to in that passage is not directly on point.

Against that, counsel for Sony cited a trio of decisions of Technical Boards of Appeal in the EPO which do not appear to have been cited to Floyd J in Qualcomm. It is sufficient for present purposes to refer to one of these, namely, case T 50/02 Daikin Industries. The facts in that case, as I understand it, were somewhat similar to the present case. The alleged prior art was provided under confidentiality obligations preventing dissemination of the information to third parties. A fee of $6,000 had to be paid before the document would be provided under those restrictions. The appellant in the case argued that, in order to be made available to the public, there were two requirements that had to be satisfied: first, all interested parties must be able to access the content; and secondly, such access must be unrestricted.

The Board of Appeal in that case rejected the second requirement. It said, at paragraph 2.5.2 of the reasons:

“However, this Board considers that only the first is acceptable, but that the second requirement is too broadly formulated, and not justified by the phrase ‘made available to the public’ in Article 54(2) EPC. This Board holds that it is enough for all interested parties to have an opportunity of gaining knowledge of the content of the document for their own purposes, even if they do not have a right to disseminate it to third parties, provided these third parties would be able to obtain knowledge of the content of the document by purchasing it for themselves, as the Board finds is the case here. On this Board’s view of the law, the outcome in case T 300/86 would still be the same, as in that case it was found that not all interested parties had an opportunity of gaining knowledge of the information.”

The Board went on in paragraph 2.5.3 to say:

“The Board sees the essence of the requirement in Article 54 EPC ‘being made available to the public’ as the information being available to any interested person, who having once obtained the information should then be free to exploit the information for his own purposes in an industrial application. It is not necessary that this information be supplied free of charge, or that the recipient should be entitled to disseminate it to all and sundry, provided others can obtain the information for themselves from the original source.”

It is Sony’s case that the DVD Specification was, prior to March 2003, disseminated on a basis which meant that all interested parties had the opportunity of gaining knowledge of the content of the document for their own purposes. Indeed, Sony say that, in a variety of ways, the contents of the document were extremely widely disseminated. In particular, Sony points to evidence that hundreds of companies in the DVD industry obtained copies of the DVD Specifications of which the one in issue forms part and that, even within single entities such as Sony, there were hundreds of copies available. (I should explain that, where corporations like Sony obtained a first copy for $5,000, subsequent copies were available at a cost of $500.)

It is not necessary for the purpose of this judgment for me to review all of the evidence that Sony has adduced in support of that case. It is sufficient for me to say that, having considered that evidence, I am satisfied that Sony has a real prospect in the sense that is described in the authorities of establishing that all interested parties had an opportunity of gaining knowledge of the contents of the DVD Specification for their own purposes.

Counsel for LG submitted that the present case was distinguishable from the three EPO cases relied upon by Sony. He also submitted, if necessary, that those decisions were actually wrong. I consider that there is room for debate as to the correct legal test to be applied. In the light of the three EPO decisions, it seems to me that the position in law may not be quite so clear as it appeared to be to Floyd J in Qualcomm. It is not desirable to try to decide what the correct legal test is, however, without having a clear and concrete factual foundation for the decision. I consider that this is one of those situations where it is necessary to determine what the facts are first before reaching a view as to the law. As I have said, it seems to me that there is a real prospect of Sony establishing the factual basis upon which they rely. In those circumstances, it seems to me that this is a matter which is not fit for summary judgment.

In conclusion, I accept that the three points relied upon by LG in support of this application provide a prima facie case that the DVD Specification is confidential and, moreover, that the use of it was restricted. For the reasons I have given, however, I do not think it is possible for the court at this stage, and upon the incomplete evidence available, to rule out the possibility that at trial Sony will be able to establish that all interested parties had the opportunity to gain knowledge of the contents of the document and that that is sufficient as a matter of law for the document to be held to have been made available to the public.

Furthermore, I would, in any event, hold that there are other compelling reasons for this issue to be disposed of at trial. The first is that it is Sony’s case that in substance all skilled persons in the art in question had access to the document in question and were aware of its contents to the extent that they would carry a lot of it around in their heads and they would know where in the document to find any information which they needed to be reminded. In short, it is Sony’s case that the contents of the document were not merely made available to the public, but were also common general knowledge.

Counsel for LG submitted that, if the document was not made available to the public for the purposes of novelty or obviousness, then it necessarily followed that the information could not be common general knowledge either. While I would agree prima facie that would appear to be correct, I do not consider the point to be clear beyond argument. Counsel for LG was unable to cite any authority on the point. Moreover, to be fair to him, he was not ready to argue that issue, since LG has not applied for summary judgment on that issue.

Counsel for LG made it plain that, if LG was successful in the present application, then it would bring a further application for a summary determination of the issue as to whether the contents of the document could be relied upon by Sony as common general knowledge. That seems to me to be an unattractive prospect. Moreover, as at present advised, it seems to me that again that is a matter that would be better to be dealt with on the basis of concrete findings of fact and a full argument as to the applicable law.

The second reason is that, rather unusually, in this case part of Sony’s defence is a claim of lack of entitlement on the part of LG. It is Sony’s case that, to the extent that there are patentable inventions here, it was Sony in two cases and Panasonic in the third case that were entitled to obtain any patents in respect of them. It is clear from Sony’s statement of case in support of that contention that the DVD Specification will form an important part of the evidential background to that case. To put matters in a nutshell, Sony say that the DVD Specification formed the starting point for the development of the Blu-Ray technology. That underpins not only its case on common general knowledge, but also its case on entitlement.

In those circumstances, it seems to me that, even if I acceded to the present application and even if I proceeded on the hypothesis that LG would be entitled to summary judgment on the common general knowledge issue as well, the fact of the matter is that the DVD Specification will still be a document in evidence at trial as part of the entitlement dispute, and its contents, dissemination and technical relevance will be matters to be explored at trial come what may.

In those circumstances, it seems to me that it would be unsatisfactory for the court summarily to determine the issue as to whether the document had been made available to the public at this stage.

For all of those reasons, the present application is dismissed.