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UK – TQ Delta, LLC v. ZyXEL Communications

11 Apr 2019

TQ Delta, LLC v ZyXEL Communications Limited & Anor [2019] EWHC 745 (Pat), 18 March 2019

In this judgment Mr Justice Carr granted an injunction against ZyXEL, following on from his earlier decision that TQ Delta’s EP (UK) 1,453,268 (“the 268 Patent”) was valid, essential and infringed. See our previous headnote here.

ZyXEL submitted that an injunction would be disproportionate given that the 268 Patent will expire in a just a few months (on 25 June 2019), and before any RAND licence is settled by the Court, they did not seek such a licence. Mr Justice Carr accepted TQ Delta’s arguments that this was a case of “hold out”, whereby ZyXEL had sought to postpone any possible payment for as long as possible whilst infringing standards essential patents with a view to exhausting the resources and will of the patentee.

The judge summarised his reasoning as follows:
“They have not paid any royalties to TQ Delta (or any other patent holder) in respect of any standards essential patent. Of the two patents from TQ Delta’s portfolio which have now been litigated in this jurisdiction, infringement of the ‘268 Patent has been established, and has been continuing for many years. ZyXEL have blown hot and cold as to whether they will accept whatever licence is considered by the Court to be RAND. They have refused to ‘agree to submit to the outcome of an appropriate [RAND] determination’ and yet have claimed the benefit of the RAND undertaking.”

As such it would be unjust to deprive the patentee of injunctive relief in these particular circumstances. In the judge’s view it would be wrong in principle to effectively provide a compulsory licence from the court where ZyXEL had elected not to enforce the RAND undertaking in respect of the 286 Patent.

Refusing to grant a stay or carve-out from the injunction that would enable ZyXEL to fulfil pending orders, the judge stated that “[w]ithout sight of the contracts, and the full terms on which ZyXEL have agreed to supply the relevant goods, it is not possible to assess the extent of any prejudice to ZyXEL if these orders are not fulfilled.”

Mr Justice Carr also refused permission to appeal, both in respect of the technical trial and the grant of the injunction. For the technical trial, he rejected a ground of appeal that the term “frame”, the interpretation of which was central to the finding that the 268 Patent was valid, was a term of the art. He also held that as the decision on the 268 Patent was “a standard case of obviousness which required a multifactorial value judgment” an appeal would not have any realistic prospects of success.

Regarding his refusal of permission to appeal from the grant of the injunction, he stated:
“I consider that it would be wrong to grant permission, the Court of Appeal already having indicated at [53] – [54] of Unwired Planet v Huawei the correct general principles. I also bear in mind that were I to refuse injunctive relief it would amount to a compulsory licence of the patentee’s exclusive rights and deprive it of meaningful protection in circumstances where the Defendants have elected not to enforce the RAND undertaking. Whether to grant an injunction in these circumstances is an exercise of discretion, from which it is difficult to appeal. For those reasons I do not consider that an appeal would have any real prospect of success and I refuse permission to appeal.”

A copy of the judgment can be found here.

Laurence Lai and Amy Crouch, Simmons & Simmons LLP