Vringo Infrastructure Inc. v ZTE (UK) Ltd

This is a patent action which began in December 2012. It is one of two actions. This one relates to three patents: EP (UK) 1 330 933, EP (UK) 1 221 212 and EP (UK) 1 186 119. All are declared essential to various telecommunications standards. Particulars of Infringement were served pleading the case by reference to standards generally.

At a case management conference in June 2013 it was decided to deal with the issues in this action by scheduling two technical trials and a trial of issues referred to as FRAND issues. Thankfully on this application I do not need to get into FRAND. The technical trials were to come first. The technical trial relating to these three patents as scheduled to come second, no less than six months after the first technical trial. Full directions were given for the first technical trial. For this second trial the directions addressed Notices to Admit Facts but then a review hearing was directed to take place on the first mutually convenient date after judgment in the first technical trial. It would be before a judge who could deal with the second trial. Directions for disclosure and evidence (factual and expert) would be addressed at that review stage.

The first technical trial was scheduled for autumn 2014 and the second trial for June 2015. Notices to Admit were dealt with in October 2014. Vringo’s notice sought admissions that the patents would be infringed by operating in accordance with various standards. For the ‘933 case the standard referred to by Vringo was GSM TS 43.059. ZTE replied making no admissions of infringement at all.

The first technical trial took place in the autumn of 2014. By then there was only one patent in issue at that first trial. Of the three which had been in issue for that trial, one had fallen away some time before and in relation to the other (EP (UK) 1 808 029), Vringo had dropped the main part of its case but raised a new point in the summer of 2014 which meant it was not possible to address the ‘029 patent at the first trial. Dealing with the ‘029 patent was put off to a later stage.

Judgment in the first trial was given on 28th November 2014. No review hearing was scheduled by the parties. Vringo applied to stay the second technical trial. The parties decided that directions for that second trial would be given at the stay hearing if the stay was refused. The hearing took place on 22nd January 2015. I refused the stay, noting as follows:

"It is notable that in the case I already tried there were originally to be three patents. One was dropped altogether in that Vringo accepted that the patent (I believe the number was '589) was not infringed. That is an important result and it clearly only happened because of pressure on the patentee to come to court and justify its position. For the other patent (029) Vringo dropped a major part of its infringement case but raised another infringement issue to be decided along with validity and consideration of that patent had to be adjourned.

"Also, this is not a situation in which I am scheduling matters from scratch. The application is to seek to alter existing arrangements in a radical way. Although preparation for the June trial in terms of exchanging things between the parties has not been advanced much past the stage of exchanging Statements of Case, nevertheless the evidence from Mr. Burdon of ZTE explains that some work, significant work, has been done in the preparation of the case up till now."

So with the stay refused, the second trial was on track for June 2015. It was to deal with all three of the patents in issue (‘933, ‘212 and ‘119) and possibly ‘029 as well. The latter (‘029) was subject to an outstanding application by ZTE for summary judgment to dispose of Vringo's new point. The parties discussed and agreed some directions to bring the case to trial in June. Experts’ reports were agreed to be exchanged at the end of March. Today is 23rd March.

In February 2015, Vringo abandoned reliance on the '212 and '119 patents and ZTE withdrew their counterclaims for revocation. This hearing was actually fixed for the resolution of ZTE's summary judgment application to dispose of the '029 patent, but on 17th February 2015 Vringo withdrew its claim for infringement and so that patent has fallen away as well. As I understand it, it is now accepted by Vringo, at least in this jurisdiction, that Vringo cannot show that those three patents, '212, '119 and '029 are infringed by ZTE and therefore those patents are not essential to the relevant standards. That leaves the case in relation to the '933 patent.

An important step in this case was the service of a Product and Process Description in lieu of disclosure (“PPD”). On 6th March 2015 ZTE’s solicitors had written a letter which indicated that they would focus in the PPD on the relevant paragraphs in the standard to which the '933 patent had been declared essential. That standard is TS 43.059. That was a sensible course, subject to anything raised by the patentee. Vringo did not object.

On I think 5th or 6th March, ZTE served a PPD for the '933 patent. Vringo objected to its adequacy and applied for an order requiring full particulars of the products in issue. An application was issued on 13^th March, supported by evidence.

The evidence in support is a witness statement of Mr. Laakkonen, a solicitor for Vringo. In reply I have two witness statements, one from Mr. Burdon, a solicitor for ZTE and the other for Ms. Peng Jiangpeng, the GSM BSS product planning manager at ZTE Corporation, the parent of the defendant in this case, ZTE (UK) Limited.

The thrust of the problem is easy to see. The entire PPD consists of just seven paragraphs confirmed by a statement of truth by Ms. Peng and an exhibit which includes some parts of the standard. The PPD refers to the products in question, mentions the standards and in particular the relevant paragraphs to which the patent in suit was declared essential. It contains an important sentence at paragraph 4 which confirms that the description is generic in the sense that no products are being offered which are different from the ones identified in this PPD.

Then at paragraph 5, it mentions a clause in the TS 43.059 (clause 7.4.1) and summarises in extremely general terms what that clause relates to. Paragraph 6 mentions two other clauses in the standard and simply states that they describe message sequences utilising the connections in clause 7.4.1.

The only substantive information is in paragraph 7, which states as follows:

"The ZTE Equipment does not comply with clauses 7.4.1, 8.1a, and 9.1.3 of TS 43.059 relating to Location Services for an MS in the PS domain."

That is it.

So the PPD does three things, as I have said, it identifies the products, it deals with the fact that it is generic, stating that no products behave in a different way, and then it asserts that the equipment does not comply with the clauses of the standard. No explanation of any kind is given at all.

Mr. Laakkonen described his product description in paragraph 14 of his witness statement as follows:

"This is clearly totally unsatisfactory. With this PPD, it is impossible for Vringo's expert (or indeed ZTE's expert) to produce a report on whether the functionality present in ZTE Products falls within the scope of the patent. It is impossible for Vringo to determine whether there are any construction issues relevant to infringement. The PPD does not say when this type of arrangement supposedly was adopted in ZTE Products, nor does the PPD explain whether this apparent non-compliance with a certain section of the standard is made clear when products are offered for sale."

I agree with that description. There is in fact an explanation which comes in Ms. Peng's witness statement, but that was served on 20th March, that is to say Friday, this being Monday, in response to this application.

Before I get there, I note that Mr. Burdon criticizes Vringo's approach to the problems raised by the PPD for not raising them in correspondence. He says as follows at paragraph 12:

"In the time between service of the PPD and this application Vringo did not raise any of the alleged deficiencies in correspondence, or even explain in outline terms what the alleged deficiencies were."

Mr. Burdon's characterisation of the position is not correct. The deficiencies in this PPD are manifest and obvious. ZTE has the benefit of advice from an experienced legal team well versed in patent litigation. They did not need to be told what was wrong with this product description. The principles are well known and they are summarised in two decisions of Pumfrey J (as he then was), that is to say, Consafe v Emtunga [1999] RPC 154 and Taylor v Ishida [2000] FSR 225.

In paragraph 23 of Consafe, Pumfrey J (as he then was) said as follows:

"A product description is normally prepared by the defendant to the allegation of infringement so as to take advantage of the provisions of RSC Ord. 104 rule 11 and avoid giving discovery. The purpose of this provision is to avoid, if possible, obliging the defendant to give extensive discovery much of which, experience has shown, is rarely if ever referred to. If this object is to be achieved, it is essential that parties and their advisers appreciate that the rule requires 'full particulars of the product or process alleged to infringe' to be given. In this context, 'full particulars' means particulars sufficient to enable all issues of infringement to be resolved. The description must be complete in all relevant areas. A description of the product either in general terms or including tendentious assertions is not acceptable."

Pumfrey J was expressing himself by reference to the Rules of the Supreme Court (RSC), which were then in force. I entirely agree with what is said there and it is as applicable today under the CPR as it was then.

In Taylor v Ishida, Pumfrey J said as follows:

"The purpose of the product description - as I have already indicated in the judgment which I have delivered - is to enable the issues relating to infringement to be resolved. In the present case, it was remarkable that the cross-examination of Mr Taylor, who gave the relevant evidence on behalf of the plaintiffs, was interrupted not once but twice in order to accommodate fresh information relating to the defendant's product, which had not been clearly - or indeed at all - set out in the product description.

"It is clear that in principle, even on a taxation on the standard basis, that the additional costs incurred by the service of the product description, in a defective form, can be recovered. However, Mr Speck in this case seeks an order for indemnity costs, both of the issue of infringement and of the issue of validity, by way, in effect, of an indication of the Court's disapproval of what happened in the present action, in relation to the product description.

"He submits that the history of the product description shows, in effect, that the defendants were unwilling, properly, to describe their machine and that that unwillingness was wilful. To a certain extent, I believe that submission to be entirely justified. My reason for saying that is that it is clear from the fact that the defendants were unwilling to reveal, even to their own expert, the computer software, which controlled and determined the operation of the machine, makes it quite plain that the defendants wished to control what information was made available to the plaintiff and to the Court in relation to their product.

"The criticism to which I subjected the product description, in my judgment, is severe. I wish to repeat that the function of a product description is in all respects equivalent to that of disclosure. The duties of all parties, both the professionals and of the parties themselves, in relation to a product description, are the same as they would be in relation to disclosure."

I entirely agree with those statements by Pumfrey J as well

It is manifest that ZTE's PPD was not in accordance with those principles.  It is conclusory in nature. It makes no effort to allow the patentee or the court to understand what it is about the product or process in question which leads to the conclusion that it does not infringe. It is nothing more than a bare assertion that the equipment does not do something. Whenever someone in a PPD asserts that something relevant is absent, it is incumbent on that party preparing a product description to explain why. The explanation may be entirely obvious and require very little text or it may not, but whether it is obvious or not, the product description itself, and not evidence served afterwards, has to explain why it is not there.

I turn to the detailed explanation given by Ms. Peng. It turns out that one reason why ZTE say their equipment does not infringe '933 is as follows. Some of the accused products are UMTS infrastructure. However, the relevant standard, TS 43.059, is a GSM standard. While the fact that some products are UMTS products may well mean they cannot infringe on any view and need not be described further, that statement itself should have been in the PPD.

Mr. Abrahams on behalf of Vringo pointed out that the pleaded case is not specific to the TS 43.059 standard. Mr. Abrahams submits that there may be other standards, apart from TS 43.059, which the UMTS equipment or multimode equipment complies with and which, as a result, leads to infringement of the patent. In the broadest of terms he may be right about this or he may not. However whether this is correct or not depends first on knowing which other standards may be relevant.

It was suggested by Vringo that the first step should be that ZTE should produce what Vringo describes as a full product description in order for that matter to be addressed. That is unrealistic. In a case about standard essential patents, it is clear that normally the starting point has to be that the patentee who claims his patent is essential to a standard should identify what standards it is relying on. That is so particularly when the patentee has pleaded an infringement case based and based only on references to standards.

Until the hearing today, some two years after this action began and in the absence of any other information or statement of case from the patentee, it was perfectly reasonable for ZTE to understand that the only relevant infringement case which it had to meet was one focussed on the paragraphs of the standard to which the patent had been declared essential. That was what ZTE has done up till now. The right way of dealing with the problem is for Vringo to explain what other standards it asserts are relevant. Once that has been done, ZTE can deal with the matter.

I turn to the next issue arising from the PPD. This relates to the GSM equipment and requires some technical explanation. GSM is a circuit switched system. GPRS is a scheme added to the GSM network which involves sending data by packet switching. GERAN (GSM EDGE Radio Access Network) is in effect a name for a GPRS + GSM network. The invention in the ‘933 patent is concerned with providing information about location of a mobile phone to other entities, i.e. not to the phone itself. The location information may be for an entity in the core network or elsewhere.

The claim refers to packet switching and circuit switching. An important feature, based on what Mr. Laakkonen has explained in his evidence, is a feature in the claim which relates to an association between messages for transferring data between packet switched and circuit switched functionality.

Mr. Laakkonen says that this association can be found in the relevant standard TS 43.059 and he refers to one of the particular clauses to which the patent has been declared essential (that is paragraph 9.1.3 of TS43.059). That paragraph refers to sending a message called the BSSGP Perform Location Request message and states that various parameters shall be stored in something called the SCCP signalling context. Mr. Laakkonen explains that Vringo’s case is that this storage is the relevant association as required by the claim. Mr Laakkonen also mentions a relay element which is shown in figure 5a of the relevant part of the standard. Hence, says Mr. Laakkonen, a phone which complies with standard TS 43.059 will infringe the patent. Thus ZTE's equipment must infringe.

Ms. Peng explains that the ZTE equipment does not support location services (LCS) in the packet switched (PS) domain. I refer to paragraph 15 of her witness statement as follows:

“The GSM ZTE Equipment does not support LCS services in relation to requests originating in the PS domain. The PPD therefore explained that the ZTE Equipment does not comply with the Declared Clauses.”

Ms. Peng also states there is no relay in the ZTE equipment. In paragraph 17, she says as follows:

“The GSM ZTE Equipment does not implement any aspect of the 'LSCF Relay' of Figure 5a TS 43.059 (described in paragraph 22 of Mr. Laakkonen's witness statement). The GSM ZTE Equipment does not support LCS systems initiated from the PS domain over the Gb interface (described in paragraph 23 of Mr. Laakkonen's witness statement). If the GSM ZTE Equipment receives a “BSSGP Perform Location Request” message, the message is ignored and no action is taken. Since the GSM ZTE Equipment does not support LCS services initiated from the PS domain there is no need to maintain the 'signalling context' referred to in paragraph 24 of Mr. Laakkonen's statement.”

Ms. Peng also explains that in the circuit switched domain the GSM ZTE equipment does comply with the relevant parts of the standard TS 43.059, As I understand it ZTE’s case is that this compliance does not lead to infringement because no location services initiated from the packet switched domain are provided.

It was suggested by ZTE in the skeleton argument for this hearing that Ms Peng’s evidence was that the invention claimed by the 933 patent is optional as far as the standard is concerned. Ms. Peng explained the matter this way:

“The implementation of a standard is optional. A standard describes a recommended means to achieve inter-operability between equipment. Manufacturers and operators are therefore free to offer products that do not implement certain features of the standards. Indeed, there are often features of the standards which are expressly described as optional; features where the standard mandates different means of achieving the same result; features that are very seldom used commercially; features which related to outmoded technology; and features that do not have a significant impact on the utility or functionality of a product as a whole. A product may, therefore, be completely compatible with a standard without using every detail in the process recommended in the standard, and without implementing all the suggested functionalities.”

As I understand ZTE's position before me, when ZTE describes LCS provided in response to a request from the packet switched domain as optional, the term is used in the sense described in the quotation from Ms. Peng’s statement.

So ZTE's position on this application is that via Ms. Peng's witness statement ZTE have now provided all that was required by way of a PPD relating to the only infringement case with which they thought they were concerned. That was a case based on TS 43.059.

In my judgment, it is not possible to say on this hearing that that submission is wrong. Ms. Peng's witness statement must now be regarded as part of ZTE's product description for the purpose of this case. If Vringo wish to assert that the information now provided is not adequate to allow the court to adjudicate on whether or not the ZTE equipment infringes, it is incumbent on Vringo to provide a detailed explanation why not. That is what I will direct should happen.

Of course, if it turns out that ZTE's PPD as explained in Ms. Peng's witness statement is inadequate in relation to a case based on TS43.059, then it will be something which will be laid at ZTE's rather than Vringo's door. Vringo are entitled to rest on Ms. Peng's witness statement. There is nothing before me which demonstrates that what Ms. Peng has explained is somehow inadequate to allow the court to decide the question of infringement. For all I know it could be, as ZTE now asserts, that because their equipment does not support LCS services relating to requests originating in the PS domain, it simply cannot ever infringe the '933 patent.

The next step to be taken, if there is to be a dispute about this, is for Vringo to articulate its reasons why this detailed explanation is inadequate.

The next problem is that Vringo say that although ZTE assert that their equipment does not support LCS services originating for the packet switched domain, it can be shown by evidence that ZTE have at least offered products which do offer precisely this feature.

Mr. Laakkonen exhibits an optional feature list extract in his witness statement. It is headed "ZXG10 BSS Optional Feature List up to Release 8", with a copyright date of 2008 from ZTE Corporation. At point 2.98 it refers to "ZGF06-25-001 LCS launched via PS domain".

At least at first sight, this could be said to indicate that at least one time ZTE Corporation as a whole were offering GERAN equipment which did do the very thing that Ms. Peng's witness statement states that ZTE’s equipment does not do. I should say that does not mean that what Ms. Peng said is untrue. The important point, according to counsel for ZTE, is that Ms. Peng is describing the equipment which is relevant to the United Kingdom.

This raises a factual issue of a kind about which disclosure ought to be given.

Mr. Nicholson suggested that it was somehow Vringo's fault that this issue of disclosure had not been dealt with at an earlier stage. I do not accept that. The only reason this issue arises at all is because of the nature of the position explained in ZTE's product description. There is no reason to criticise either party. The matter has now arisen and it needs to be dealt with.

ZTE should give disclosure focused specifically on the question of whether they have made any offers to dispose of equipment described of a kind in that exhibit to Mr. Laakkonen's witness statement. I will make an order in these terms.

The final matter I need to deal with relates to other acts of infringement which Mr. Abrahams referred and which he says disclosure may be necessary.

That is a point on which Mr. Nicholson is right that if it was to be raised it could and should have been raised a long time ago. That does not mean the disclosure should not be given, but I am not prepared to do it on this application, which was after all related to the PPD, and not to wider questions. If the parties cannot agree terms then I will have to resolve that later. That is my judgment.