Nokia Technologies OY & Anor v One Plus Technology (Shenzhen) Co., Ltd & Ors

I have to rule on issues concerning the confidentiality club in this SEP FRAND litigation. The broad shape of the litigation has been described in others of my judgments, and I will not repeat it now, but, in the briefest possible terms, Nokia, the claimants, allege infringement of various SEPs (standard essential patents) by the defendants, who have generally been referred to as Oppo in this litigation. The litigation is proceeding towards a determination of the FRAND issues in October, subject to the resolution of various other logically prior issues in April at another trial, which I will be hearing, and about which I need not say any more at the moment. However, for present purposes I am dealing with confidentiality arrangements for the FRAND trial, and, as is often the case, the dispute between the parties over confidentiality concerns the position of comparable licences, and the effect on the counterparties to comparable licences of the confidentiality regime.

The legal principles that I have to apply have been set out in a number of cases over the years, but in particular in IPCom v HTC [2013] EWHC 52 (Pat), a decision of Floyd J as he then was, in OnePlus v Mitsubishi [2020] EWCA Civ 1562, a decision of the Court of Appeal in which Floyd LJ gave the leading judgment and where a non-exhaustive list of points of importance were given and, finally, more recently, the decision of the Court of Appeal, the leading judgment given by Birss LJ in InterDigital v OnePlus [2023] EWCA Civ 166, which draws together strands from previous cases in a convenient form, and in a convenient place, and reiterates the points that Floyd LJ had set out. Those are set out in the judgment of Birss LJ at paragraph 20:

And my attention was also drawn, in particular, to paragraphs 23-25 of Birss LJ's decision, which are as follows:

I have been referred to a number of other decisions at the hearing today, and in the parties' written skeletons, but I think it is important to say that the legal principles are those set out by the Court of Appeal, in particular in the two judgments to which I have referred, and individual decisions made in individual cases, even if they bear some similarity on the facts, and even if some commonality to the decisions that have been made emerge over time, do not, without more, state any different legal principles. I say that because there is a tendency in the skeletons of the parties before me today, particularly the parties resisting broader disclosure, to treat what has been done in those other cases as the default, and that is not so. Each case must turn on its own facts, and the principles are the principles.

Next, what I will attempt to do is to identify the stage at which the current proceedings towards the FRAND trial in October stand, because important parts of the principles that I have set out -- and this is illustrated again and again in the individual decisions -- turn on whether the proceedings are at what might broadly be called an early or a late stage. In a recent decision of my own, called R2 v Intel [2023] EWHC 703 (Pat) I said that the stage of the proceedings has to be approached in a flexible and fact-sensitive way, and it is not just a matter of time to trial but also a matter of what has been achieved already and what remains to be achieved.

The dispute before me today revolves around the degree to licences where Nokia is the licensor which should be disclosed to the individual instructing clients at Oppo. I will not go into the precise numbers of licences or names of the licensees for fear of compromising confidentiality, but the number of licences potentially in issue, in the sense of potential licences to be considered at trial, has in the usual way shrunk through a number of stages in this litigation, having gone from quite a number of dozens down to around one dozen. They have been discarded for a variety of reasons, including, in particular, a focus in the pleadings on a certain structure of royalty payments within the licences, which again I will not go into for fear of giving away somebody's confidentiality.

Experience tells us that come the FRAND trial there will not be a dozen licences seriously in issue as comparables; there will probably be a significantly smaller number, where it is to be expected that each side will have a different contention as to what the most relevant comparables are. However, my understanding from the other hearings I have done and the evidence before me today is that Oppo is in the process of analysing the remaining candidate comparables towards the preparation of its expert evidence which is due in June. The practical difficulty faced is that because of the nature of the confidentiality dispute, which I will describe in a moment, that exercise is having to be done by Oppo's external advisers and experts without input from its internal people.

Shortly, Oppo will have to make the decision for the purposes of its evidence about what the real thrust of its case is. Therefore, to describe the stage at which this litigation stands, what one can say is that we are more than six months from trial, but only a couple of months from a crucial stage at which Oppo will have to refine its case, and that will be a very significant strategic decision. Still closer to trial, and it may shrink its case even more, which will also be an important stage.

This matter first came before me - this specific matter about the confidentiality club - in March, when I adjourned the hearing. The reason for that was that it had been raised as a possibility that Nokia ought to contact the counterparties to its licences to see whether and to what extent they had concerns about confidentiality. That, in itself, followed a related but rather different exercise, which had taken place in litigation between Philips and Oppo, where, by consent, an order was made allowing counterparties to object to the disclosure of their confidential agreements to Oppo, and where the evidence before me showed that the level of objection was very low.

Since March, Nokia has undertaken that exercise, and the upshot has been that one party, referred to as Counterparty Blue, to whom I will return in a moment, has made an objection, and another party referred to as Turquoise has made a more limited objection. Its objection is to the extent that it does not oppose disclosure of the agreements, provided that there is what is referred to as the narrow form licensing bar. The identities of Counterparty Blue and Turquoise have been treated as confidential by the parties before me. I have gone along with that approach provisionally but make clear that its appropriateness has not been argued or tested.

I digress briefly to say that a substantial dispute, part of the dispute before me today, is whether Oppo's in-house personnel should be subject to either a wide form or a narrow form of licensing bar. The concept of a licensing bar and the risks it seeks to meet was explained in the judgment of the Court of Appeal in InterDigital v OnePlus, to which I have referred already, and in the present case the wide form is as follows:

And the narrow form is as follows:

Counterparty Blue has taken an active role in this application, as it was entitled to do, and, indeed, as was the intention of my March order, and has instructed counsel, Ms. Love, to whom I am grateful for her submissions, to appear before me today. That party is also involved in other litigation, again as a counterparty to a comparable, where a regime has been put in place by which rather than the in-house advisers of the defendant seeing the agreement as such, Mellor J has made a direction that the implied unpacked licence rate can be communicated to the defendants' representatives, and they can then take matters further if it appears likely that the Counterparty Blue licence will be material to the case they want to make. That arrangement, which I have deliberately described in rather general terms to preserve confidentiality, is commended to me today by Ms. Love on behalf of Counterparty Blue.

The real bone of contention before me is whether there should be any licensing bar at all - Oppo say none – and if there should, whether it should be in the narrow form or the wide form. Oppo's position is that the wide form is unworkable and intolerable, and to a lesser extent that the narrow form is objectionable as well.

Against that background, I just return briefly to InterDigital v OnePlus to focus on some particular paragraphs, and the way the decision unfolded in that case. I have referred to three paragraphs in the decision of Birss LJ (paragraphs 23-25), and it is necessary also to understand that what the Court of Appeal was dealing. It was whether the decision of the judge, again Mellor J, who had opted for the wide bar, was within the scope of reasonable approaches available to him. What the Court of Appeal ultimately had to do was to decide whether Mellor J had weighed the risks identified in paragraphs 23-25 against the imposition on Oppo of the wide-form licensing bar in a reasonable way. What to my mind Birss LJ made very clear was that the judge's balance was an appropriate one, given that OnePlus had put in minimal, and in a sense no, evidence about the difficulty for it of complying with the licensing bar.

That, in my view, was a case-specific assessment by the Court of Appeal, and it was not a decision that the risks to the confidential information of the parties concerned, set out in paragraphs 23-25, was of any particular magnitude, or to be regarded as ubiquitous. It must depend on the evidence.

Compared with the situation in InterDigital v OnePlus, and compared with the situation as it was in March when this issue first came before me, matters are different in, in my view, two important ways. One is that not once but twice an exercise has been done, asking counterparties to this kind of licence whether they have an objection to disclosure to a party in Oppo's position, and implicitly whether they have an objection without a licensing bar, and the level of objection has been low. It amounts to Counterparty Blue in the Philips litigation and in this one, and to counterparty Turquoise in this case.

I believe I am entitled to take the practical and robust view that that is truly revealing of a low level of concern among counterparties. Mr. Campbell KC, who appears for Nokia today, says that I should not draw that inference because there may be counterparties who would have liked to object but found the cost of doing so disproportionate. I reject that for two related reasons: one is the counterparties, who I will not name for reasons of confidentiality, are all extremely well-funded and, in the most part, active litigants, and could afford the effort if they thought it was proportionate, but also, second, because it would not have taken very much resource for them to object. They could have done so by letter, as has happened in a number of other SEP FRAND cases in which I have been involved. While I respect Counterparty Blue's decision to instruct solicitors and counsel, that was not an essential reaction. I therefore conclude that although the risks identified by Birss LJ in paragraphs 23-25 exist, and are supported by the Lord Justice's logic and experience of FRAND, they are not in fact strong concerns for most counterparties. That does not mean they are non-existent

The second thing that has changed the decision of the Court of Appeal in InterDigital v OnePlus is that I have had significant evidence about the organisation of Oppo’s personnel and the likely burden of licensing bars.

Oppo's evidence is still not overly burdened with detail, but it is adequate, I think, for me to form a view of its resources and the impact of either a wide or narrow licensing bar on it. Essentially there are two gentlemen concerned, Mr. Peng and Mr. Huang. It is described to me in Mr. Brown's tenth witness statement, Mr. Brown being the partner at Hogan Lovells with overall charge of these matters, that Oppo has, as it were, a joint litigation and licensing function at the moment. Its exact staffing number is described as being confidential, but I will say that it is in the low double digits. Given the very large amount of litigation that Oppo is engaged in at the moment it is all hands to the pumps, and everybody in the department has to work on litigation whether they like it or not and whether or not they would do so in a less pressured situation.

It is pointed out on behalf of Nokia that this paints a different picture from that which was before the court in earlier litigation (where the situation at Oppo in 2020 was described), but nothing turns on that because in my view it is perfectly plausible, and indeed it seems likely, that Oppo's arrangements have changed since then in reaction to the great increase in the amount of litigation facing it.

My understanding from the evidence, which was supplemented to a modest extent by what Mr. West KC for Oppo said on instructions, which I accept and which makes sense, is that Mr. Peng is very much litigation focused, he is the day-to-day contact between Oppo and its advisers in the UK, and he has had very little exposure in the recent past to what might be called “pure” licensing, by which I mean licensing outside the context of settlement of SEP litigation. Mr. Huang is the head of litigation, and he clearly has a higher and more supervisory role, although details are not given, and he has been more broadly involved in pure licensing recently.

There are a number of different ways in which organisations can quite legitimately organise their internal affairs, and it may well be, I think it probably is the case, that Oppo organises itself differently from Nokia, and the evidence suggests that companies in China organise themselves differently from companies in Europe or the US. Quite a lot of Nokia's submissions suggest that Oppo has been wrong from the outset in organising its internal affairs the way that it does, and a number of adjectives are used by Nokia, at one point I think even going so far as to say that Oppo's internal organisation is not “legitimate”.

I reject this. It would be an unfortunate thing if the existence of FRAND litigation meant that parties have no option but to organise their business in a way which they find unworkable, unsuitable for their employees or burdensome. I therefore reject any attempt to get me to deprecate the way Oppo has organised itself. I will take Oppo as I find it and look at what is appropriate in the circumstances.

For reasons I will come on to, I will park the position of Counterparty Blue and deal with all of the other counterparties to the Nokia licences.

On the basis of the evidence before me, I am of the view that the general kind of risk identified by Birss LJ in paragraph 23 of InterDigital v OnePlus, which goes to what the narrow version of the licensing bar is aimed to prevent (in other words an undertaking not to take part in licensing against the selfsame counterparty) is a risk which is real, and could arise from inadvertent use of confidential information. I think it is simple to understand why that is so. It simply is that if Oppo knows how much some party has agreed to pay Nokia and then goes into negotiation with that party itself, there will be a strong reluctance to settle for any less than what would be implied by the Nokia licence. I think that is a direct material risk. I have to come on to balance that against the effect on Oppo, of course, and in the light of the limited objection from counterparties that I describe above.

I find the risk identified at paragraph 25 of InterDigital v OnePlus, and recalling all the time that these are factual determinations and not determinations of principle, much more limited and weaker, and indeed Birss LJ said. Both Nokia and counterparty Blue, have had the opportunity to put in evidence, but there was no concrete evidence and in the end there was nothing more than argument. I find that risk to be much, much lower. Both Mr. Campbell and Ms. Love were in a position where they were unable to say anything more really than that in the situation of negotiation with a different party, the party receiving disclosure, i.e. Oppo, would have a slightly better overall idea of what might be called the SEP licensing jigsaw than they otherwise would. I find it unconvincing that there could be meaningful inadvertent use of this, compared with the situation with negotiations against the same specific counterparty, and it is not alleged that there would be any deliberate misuse by Oppo.

Drawing these facts together, in my view a fair balance to be drawn in this case is by requiring the narrow form of licensing bar. In my view that will have absolutely minimal effect on Mr. Peng, but it will give important protection to the counterparties, Counterparty Turquoise for example. The reason I say it will have minimal impact on Mr. Peng is that he has very little to do with what I called earlier in this judgment pure licensing, and is able to carry on supporting litigation in which a settlement licence is made, because the narrow form of undertaking permits that.

In my view, it is adequate for that bar to last for two years beyond the termination of these proceedings, but I think it would be an unfair imposition on Mr. Peng for him to have to carry that forward if he changes employment. It seems to me extremely unlikely that he will change employer and end up in a company where he is in such a position as to be able to influence licensing decisions. While it might be said that Mr. Peng could make an application to the court to be discharged from any undertaking that he gives, that, in my view, is not a practical or fair burden to impose on an individual.

I have hesitated about what to do in relation to Mr. Huang, because I am concerned that I do not fully understand his role separately from that of Mr. Peng. However, I think in the circumstances and the timing of this case decisions will have to be made in the next couple of months which will in all likelihood requiring Mr. Huang's approval and understanding as the senior client involved. There are only so many times one can kick the can down the road. I think having another hearing to discuss the status of Mr. Huang between now and May/June time, when decisions have to be made and evidence served, is not a practical one. So Oppo should have the option to involve him. His giving the narrow licensing bar may mean that there are a number of negotiations in the future that he has to step aside from. That is a matter for him, and it is possible that he will come to the conclusion that he would rather not give the undertaking, in which case Oppo will have to press ahead with Mr. Peng alone. I am not persuaded on the evidence that Oppo lacks sufficient personnel that it will be unable adequately to man its licensing operation if Mr Huang agrees to the narrow bar. If he does agree to it then I think the risk to the counterparties is minimal to nil.

So I impose the narrow licensing bar in relation to both of those gentlemen in the terms that I have indicated, which will require a change to the terms set out above, and which I invite the parties to agree.

I turn to consider the position of Counterparty Blue. This is a complicated situation and further complicated by the fact that it is really difficult for me to know at the moment whether the Counterparty Blue agreement with Nokia is any more or any less likely to be a key comparable at trial than any of the others.

In the Philips litigation, to which I have referred, Counterparty Blue persuaded Mellor J to provide that the provision of an implied and unpacked rate was good enough. As far as I can tell, that was at a significantly earlier stage of litigation than this, and that would count against taking the same approach here. None the less, it might move matters forward. The difficulty is that there are aspects of the pleadings in the present case which give me concern that providing just a single unpacked rate will not enable an adequate or meaningful decision to be made by Oppo. Further progress of discussion was blocked by an unfortunate impasse between Nokia and Oppo about what can be communicated to Counterparty Blue about the issues in this action, which means a single unpacked rate is not good enough.

I have a strong suspicion that it is not going to be good enough for these proceedings for the Counterparty Blue licence to be unpacked to a single implied rate, but I am persuaded by Ms. Love that it would be wrong to just forge ahead and order disclosure of the whole licence, subject to the narrow licensing bar now, when Counterparty Blue is in the dark about why its Philips-type proposal would not be good enough in this case, and, importantly also, how it could be improved.

Having said just a moment ago that there are only so many times one can kick the can down the road, having made the broad decision that I am satisfied will allow the litigation to move forward constructively, I am going to adjourn this matter as it relates to Counterparty Blue so that it can be given the information it needs to make a meaningful choice and (if it wants) a meaningful further proposal. I would hope to deal with that on paper, but more likely, given the way this litigation tends to go, it will require another hearing, which will take place in the near future. It is a frustrating instance of one licence being treated differently from all the others, but Counterparty Blue having gone to all the effort it has, I think it would be unfair to cut off its argument in a situation where it is understandably in some bafflement about what is actually going on.

I will say that I was also addressed about events in the courts of the Netherlands where it is said by Oppo that the Dutch court has made an order with no licensing bar, which will result in the comparable agreements going to Mr Peng and Mr Huang in any event. If that had already happened or if it was inevitable that that was going to happen, then that would have been a material factor in my consideration, but it is common ground that that has not happened yet. Mr. West, on behalf of Oppo, accepts that it is not inevitable that it will. So that forms no part of my reasoning. If the Dutch court comes to the conclusion, as a general matter of policy, or in the circumstances of this case, that even a narrow bar is not appropriate, then I will stand ready to consider their views and act appropriately if action is required. It goes without saying, I make no criticism of the course they have taken. These are close calls and are very fact-specific. That is my conclusion.