Optis Cellular Technology LLC & Ors v Apple Retail UK & Ors

This is an application for a reference to be made to the Court of Justice of the European Union on issues in these proceedings. The proceedings are a patent and FRAND dispute between a group called Optis (which includes UnwiredPlanet), and the Apple group. Optis contends that it holds a portfolio of standard-essential patents relating to various telecommunication standards and that Apple is using that technology without an appropriate licence. Apple does not accept the patents are valid and/or essential and denies a licence is needed. There are also FRAND issues to be determined, assuming Optis has some valid essential patents. Currently the dispute is arranged as a series of technical trials, A to D, and two other trials, E and F.

I will start with trials A to E. Trial A starts in about four weeks' time (October 2020). Trials B, C and D are spaced out over the next year and a half, and Trial E, which is to determine the terms of a FRAND licence, and rule on various allegations made by Apple of anti-competitive behaviour by Optis, is due to be heard in June 2022. That is how the proceedings had been set up.

A further dimension to the dispute began to crystallise in spring/early summer 2020, and in July 2020 I directed that a new trial, Trial F, be fixed. This trial is to deal with the question of whether Apple is an unwilling licensee. It arises, says Optis, because Apple is not currently prepared to commit to take a licence on FRAND terms settled by the court. Optis's point is that Apple is in effect seeking now to take the benefit of Optis's FRAND undertaking because Apple is arguing that even if, for the sake of argument, Trial A finds the relevant patent valid, essential and still in force, nevertheless no injunction should be granted at that time until Trial F is resolved, 18 months to two years later. Optis argues that this amounts to Apple taking the benefit of the FRAND undertaking given by Optis right now (or at least as soon as any technical trial goes in Optis's favour) and so, says Optis, Apple ought also to accept the burden of FRAND and be prepared to take whatever licence is found to be FRAND (since the parties cannot agree about those terms). Therefore, says Optis, since Apple will not do this, Apple is an unwilling licensee.

Apple does not agree with this analysis, contending it is entitled to take the stance it is taking. Apple also argues that various alleged breaches of competition law by Optis are relevant, and I will come back to that. Apple resisted the idea of having a separate Trial F, arguing that the issues overlapped with Trial E, and that the unwilling licensee question should be dealt with at Trial E.

In my judgment, which the neutral citation is [2020] EWHC 2033 (Pat), I rejected Apple's submissions about when the unwilling licensee issue should be decided, and rejected Apple's submission that the issues were not separable. I directed that Trial F should take place in July 2021. The hearings today (4th September) were originally fixed to be the PTR in Trial A; and also a first CMC in Trial F, to resolve any outstanding arguments about what issues were to be decided at Trial F and what were not. It is not without significance that by the time the CMC commenced, the parties had been able to agree a list of what was and was not in issue at Trial F.

At paragraph 11 of the July judgment, I dealt with whether scheduling Trial F was useful in terms of the need for further proceedings after that:

In fixing Trial F I also had well in mind that Apple contended that certain alleged breaches by Optis of competition law meant that no injunction should be granted in favour of Optis even if Apple has not undertaken to accept a FRAND licence settled by the court. Those points would not be in issue in Trial F, but, as I held in paragraph 13:

The alleged breaches of competition law which will not be in issue at Trial F are pleaded in paragraphs 70(1)-(7) and the second sentence of 70(8) of Apple's FRAND defence. Rather than set out the whole of that section of the pleading, the tenor of those points can be seen from sub-paragraphs (i) to (v) to question 3 of the draft questions to be referred. I will introduce the questions themselves below, but at this stage it is useful to see these sub-paragraphs:

Sub-paragraphs (i) to (v) of this are what I referred to as alleged "bad behaviour" by Optis in the July judgment, at paragraphs 7 and 8 of the judgment, holding as follows:

In other words, I was satisfied that despite those allegations summarised in (i) to (v), which mostly relate to an early stage in the dispute, it was nevertheless properly arguable that Apple's refusal to abide by a finding of what is FRAND may have adverse consequences for Apple (e.g. by putting them at risk of an injunction) even if those points were well-founded.

Now Apple has applied for an order that the court should refer questions to the CJEU. Apple contends that the reference should be made now, not least because even though the UK is not a member of the EU, we are currently in the transitional period, and while in that situation a UK court can make a reference to the CJEU. That ability to refer will end at the end of transitional period, which today is the end of this year, 2020. So there will be no possibility of referring a question as part of the outcome of Trial F, nor for a court hearing an appeal from Trial F in making a reference.

The questions are:

It is notable that questions 1 and 2 do not really arise at Trial F. Question 2 in particular is really asking whether the Supreme Court's recent judgment in UnwiredPlanet v Huawei [2020] UKSC 37 is right or wrong. The Trial F questions are questions 3-5. Ms. Demetriou QC for Apple explained that questions 1 and 2 had been added in on the basis that if questions 3-5 were being asked then it made sense to ask questions 1 and 2 as well. I will decide this application by focusing on questions 3-5 first. In my judgment, the only possible basis for even contemplating asking questions 1 and 2 would be if questions 3-5 were being asked. In fact Ms. Demetriou accepted that I should consider questions 3-5 first, but I should make clear that I am doing that not because Ms. Demetriou accepted it, but because, in my judgment, it is the right thing to do in the circumstances. An application to refer questions 1 and/or 2 on their own is hopeless. The Supreme Court in UnwiredPlanet was asked to refer questions and declined to do so.

In fact, the key issue I need to consider, in terms of the reference, is the issue raised by question 3. That is the key point. Question 4 is a new argument about the Enforcement Directive, and I will say now that I am not satisfied that I should refer that if I am not referring question 3. Indeed, I think in some ways question 4 is more

Apple contends that the issue is an important one, not previously determined, and is not acte clair; arguing that the court will be assisted by a definitive ruling from the CJEU on the questions, and that given the international nature of FRAND, this will assist industry in general. Apple describes it as a crisp point of law, eminently suitable for the CJEU. Apple also contends that there will be no delay to the trial, pointing out that Apple is not suggesting that the case be stayed in the meantime. Apple does contend that judgment following Trial F should await the result of the reference, but argues that given the average time which the CJEU takes to deal with references from start to finish is 15½ months (based on the court's 2019 annual report), on that basis it will not seriously delay the proceedings.

Optis argues to the contrary. It argues that this is a transparent delaying tactic by Apple and part of a long series of Apple delaying tactics. The timing of Trial F is important and it would be derailed by such a reference. Separately, says Optis, a reference is not necessary in its own terms because the UK courts have shown in the UnwiredPlanet case that they can interpret Article 102 and the CJEU's judgment in Huawei v ZTE without the need for a reference.

Also, Optis contends that a reference would be inappropriate because the issues under consideration are highly fact-sensitive, and therefore are matters for the national court. Optis contends that the Supreme Court's judgment in UnwiredPlanet (and the CJEU's judgment in Huawei v ZTE) both made clear the fact-sensitive nature of the examination. In answer to this point, Apple argues that while that may be true in a general sense, the way Trial F is set up means that this is not a difficulty. That is because Apple's point on question 3 is that there is an issue of principle which arises irrespective of what the actual facts turn out to be (these being the allegations of breaches of Article 102 by Optis which are summarised in the sub-paragraphs to question 3 I have set out above).

Optis maintains that the issues are fact-sensitive, and therefore not suitable, and also points to the fact that the issues to be decided in Trial F include the true construction of the ETSI FRAND obligations as a matter of French law. This is something which will inform the answer to the unwilling licensee issue. Apple contends that that is the wrong way round, in that it is Article 102 which will inform the true construction of the ETSI obligation.

It is common ground that whether I should refer questions at this stage of this case is a matter of discretion. Nevertheless Apple contend that an important factor is that in practice this is the last opportunity to refer questions because of the impending end of the transition period. Apple argues that this is akin to, but not the same as, the principle that a court of final appeal is obliged to refer questions in certain circumstances, because that is the last chance.

The question in question 3 is an issue at Trial F. It is conceivable that the circumstances might play out in such a way that the issue never has to be decided, e.g. because Optis loses on the interpretation of the ETSI obligation itself or for some other reason, but subject to that the point is in issue. Leaving to one side the Article 102 points and the subparagraphs, I am nevertheless sceptical that it is right to say that the question ought sensibly to be divorced from a detailed assessment of the rest of the circumstances which will be considered at Trial F, and I refer to the list of issues for Trial F which I will not set out in this judgment. In other words, were it not for the point about leaving the EU, then I would be quite sure that whether questions should be referred in this case would be best decided after the trial, when the rest of the circumstances had been gone into properly. However, I recognise that that option is not available in the current circumstances.

Another point is that Optis argues that the Supreme Court's judgment in UnwiredPlanet already decides these issues against Apple. That is a matter for Trial F, and for present purposes I will assume that that is not the case.

I turn to consider the impact a reference would have on the timing of these proceedings. Fifteen and a half months for the CJEU is an average. If I assume that the reference is resolved in fifteen and a half months, that means that while the trial would still take place in July 2021, the answers would not come back until about December 2021. There will then be a need for a further hearing to deal with the consequences. Ms. Demetriou contended that the ruling will be definitive and will resolve any further argument. That might happen, but in any case the judgment arising from Trial F would still then have to be written. Moreover, in my experience of these issues, and of the way this litigation has gone so far, things are unlikely to be so simple. Overall, in my judgment, there is a very real likelihood that dealing with the consequences of a ruling will push the conclusion of Trial F well into 2022. Trial E is scheduled for June 2022. The advantages of scheduling Trial F in the manner I have done, well before Trial E, will be lost.

For this reason of timing alone, I have decided that I should not refer these questions.

I appreciate that if I do not refer questions now, then the opportunity to do so will be lost. However, on that I return to the point that the Supreme Court felt able to decide questions relating to Article 102 and the interpretation of Huawei v ZTE without a reference, despite being asked for one. Even if I assume question 3 is not answered by UnwiredPlanet and/or the application of Huawei v ZTE, it arises in the very same territory. UnwiredPlanet shows that issues of this kind can be dealt with fully and properly without a reference, and in my judgment the national courts will be able to deal with this case without a reference.

I therefore dismiss this application. That is my judgment.