High Court Grants Injunction Against Standard Essential Patent Implementer

28 March 2019

The English High Court has granted an injunction (decision here) against an implementer of a Standard Essential Patent which had been ‘holding out’ and refusing to engage constructively in the RAND (reasonable and non-discriminatory) process. Mr Justice Carr had held, in a judgment dated 11 March available here, EP 1 453 268 (the ‘268 patent) to be valid, essential and infringed by the defendants’ products. There was then a hearing, again before Mr Justice Carr, on 18 March to determine what order should be made by the Court against the defendants. The ‘268 patent expires on 25th June 2019 and Zyxel (the first defendant) argued that an injunction prohibiting sale of infringing products would be disproportionate and that it should not be granted, or alternatively that it should be stayed or include a carve-out relating to three pending orders.

TQ Delta (the claimant) argued that Zyxel had purported to be a willing licensee (therefore taking the protection of TQ Delta’s RAND undertaking) but had gamed the system and constantly changed its position on whether it was prepared to take a licence on whatever terms the Court determines to be RAND. By the time of the hearing Zyxel’s position was that it did not seek a licence, given that the ‘268 patent is due to expire in June this year. The question was whether Zyxel should also be able to avoid an injunction, having made that election.

The judge held that Zyxel’s actions were a clear case of “hold-out”. Zyxel had refused to pay any royalties since 2013, when TQ Delta first approached them, nor paid royalties to any other patent holder in respect of any Standard Essential Patents. If the injunction were not granted then it would enable Zyxel to benefit from its strategy of hold-out and would amount to a compulsory licence by the Court in circumstances where Zyxel had elected not to enforce the RAND undertaking in respect of the ‘268 patent. The judge held that this was wrong in principle and therefore granted the injunction with no stay.

Zyxel then argued that three pending product orders should be carved out from the scope of the injunction. The judge refused to grant the carve-outs on the basis that Zyxel had provided no evidence that the customers for whom those orders were destined would be inconvenienced, and the judge was unable to assess the extent of any prejudice to Zyxel if these orders were not fulfilled.

In English proceedings the judge has discretion whether to grant an injunction or not. There have been some recent decisions (here, for example) in which an injunction has not been granted for public policy reasons, but this decision returns to the usual practice which is to grant injunctive relief for patent infringement. For further information, please contact Tom Carver or your usual contact at J A Kemp.

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