Patent enforcement actions against SanDisk by the owners of patents relating to the MP3 standard (including a member of the Philips Electronics group) are unlikely to amount to an abuse of a dominant position. Mr Justice Pumfrey in the UK High Court said that SanDisk’s complaint, that customs seizure proceedings and infringement actions against it in Germany, Italy and the Netherlands amounted to such an abuse, was “very thin indeed”.
As access to the courts was a “fundamental right”, patent proceedings could only amount to an abuse if the patentee knew already that the patent was invalid or obviously not infringed. SanDisk’s application for an interim protective order that it should be notified before the commencement of any further actions was therefore refused. There was also an insufficient connection between the order sought by SanDisk and the UK territory for the court to have jurisdiction to grant it.
David Barron, head of the High Tech Team at Wragge & Co LLP, said: “We’ve seen the interplay between competition law and patents essential to technical standards examined repeatedly in the US courts. This is one of the first European cases to examine this relationship and it raises important questions which at some point are bound to be considered by an appellate court. The owners of patents relating to the MP3 standard will be relieved but this isn’t the end of the story.”
This decision centred on jurisdictional issues and included some surprising conclusions. The judge determined that SanDisk’s main action should not be heard in the UK. The company responsible for the collective licensing of the various patents (Societa Italiana Per Lo Sviluppo Dell’ Elettronica S.P.A.) was domiciled in Italy and none of the other EU patent owners was domiciled in the UK.
The judge held that the harm that SanDisk alleged it had suffered as a result of the licensing practices used by the relevant patent owners could only be felt by it in Delaware – its HQ. Although SanDisk’s MP3 players were on the UK market, none of its UK subsidiaries were trading companies and it appeared that the retailers/distributors of these players made their payments to Delaware. Undoubtedly some will question whether these conclusions actually accord with the wider economic policy, purpose and perspective of competition law.
In respect of its allegations of improper patenting and enforcement practices, the judge concluded that neither the events, which were said to be abusive (e.g. the seizures of players under the EU Border Control Regulation), nor the harm allegedly suffered took place in the UK.
But the battle does not end there. SanDisk has also commenced a separate action to revoke 4 patents claimed to be essential to the MP3 standard, and the owners have counterclaimed for infringement. In a third action, SanDisk is seeking declarations that the patents are not infringed by its MP3 players and that several of the patents are not in fact essential to the standard. These actions are due to be tried in February 2008.