Unwired Planet International Ltd v Huawei Technologies Co. Ltd & Anor

1. Judgment in the FRAND trial in these proceedings was given on 5th April 2017. On that day two judgments were handed down. The two judgments were [2017] EWHC 705 (Pat) and [2017] EWHC 711 (Pat). I will refer to them as the 705 judgment and the 711 judgment. The 705 judgment sets out my reasoning in full. However it includes numerous references to material which at least one party claimed was confidential and should not be made public. So the 705 judgment remains confidential. In accordance with the court’s usual practice the draft form of what became the 705 judgment was sent to the parties on a confidential basis some days before judgment was due to be given. The position on confidentiality was so complicated that I convened a hearing with the parties’ solicitors to give directions about it. One serious practical difficulty was that different aspects were confidential to different groups of parties. The legal representatives were privy to details which they were not able to share with their clients. This is obviously not a desirable state of affairs but it had allowed the case to proceed in a practical manner.

2. One course would have been to give the parties more time to deal with confidentiality but that would have required a great deal more time. It is not desirable for parties to be put into a position in which they have the text of a judgment with potentially significant consequences on a confidential basis for an extended period. Moreover it was not clear that this would have worked at all because in order for representatives to take proper instructions it was necessary to have a version of the judgment which could be discussed freely with their various clients.

3. I took the view that provided the resulting public judgment fairly set out the reasoning in a manner which the public could comprehend, I would initially take a generous view of the claims to confidentiality in order to produce a public judgment at the same time as the full judgment was given formally. That exercise was successful, thanks in part to the parties taking a constructive approach. The result was the 711 judgment, handed down at the same time as the 705 judgment. The exercise did not mean simply accepting every claim to confidentiality and there are points in the 711 judgment which I was asked to keep confidential but refused. However the important thing is that the 711 judgment does fairly reflect the vast bulk of the court’s reasoning.

4. Inevitably there would be a further hearing at which the confidentiality issues would be finally resolved. That would be likely to produce a third version of the same judgment. Of course having multiple versions of the same judgment is highly undesirable but in this case all the alternatives were even less welcome. I doubt any other course was practical. This judgment represents the final resolution of the confidentiality claims relating to the judgment.

5. The redactions now sought are less extensive than those in the 711 judgment but there remain substantial aspects which at least one party, and often more than one, wishes to redact.

6. I have witness statements from Timothy Elliss of Enyo Law on behalf of Unwired Planet; Peter Damerell of Powell Gilbert on behalf of Huawei, Sophie Lawrance of Bristows on behalf of Samsung and Christina Petersson, Vice-President, Head of IPR Legal Services at Ericsson. Each witness has included a table in the form of a confidential annex which works through the various paragraphs of the 705 judgment for which redaction is sought and explains the reasons why. Principles

7. That justice should be done in public is a vital aspect of the rule of law. In R (Willford) v Financial Services Authority [2013] EWCA Civ 674 the Court of Appeal held at paragraph 9 (Moore-Bick LJ) that the principles of open justice require that a judgment should be published in full unless there are overriding grounds for not doing so. Also in R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2011] QB 218 at paragraph 41 (Lord Judge CJ) and 176 (Lord Neuberger MR), the Court of Appeal emphasised that redactions from judgments should be “rare indeed” and that all parts should be public unless there are “powerful reasons to the contrary”.

8. In the Patents Court it is not unusual for the court to have to deal with technical trade secrets. The confidentiality of this information is often protected by a combination of CPR r31.22, not reading the documents out in public and, on occasion sitting in private. The public form of the judgment may have such material redacted from it. The fact this happens relatively often in patent cases is not because the principles of open justice are different in those cases, far from it; it is because the particular circumstances in which it is appropriate to redact come up relatively frequently. The justification for redacting technical trade secrets is straightforward. It is because the trade secret would be destroyed if it was revealed. Even then however the redactions from judgments (or confidential annexes which amount to the same thing) will be kept to the absolute minimum and claims to confidentiality have to be justified with cogent evidence focussed on the specifics rather than on generalities.

9. The preservation of the confidentiality of material which was disclosed during the trial process but is not set out in the judgment raises the same basic principles, but their application in that situation is not the same. Self evidently the information is not part of the reasons the judge has given. Lilly ICOS No 2 [2002] EWCA Civ 2 is concerned with that situation. The role the information played at trial is an important factor.

10. None of the information which I am asked to redact is a technical trade secret. It is all information relating to licensing. The information relates mostly to the terms of existing licences although a very small amount is concerned with negotiations about those terms. Most of the information relates to the financial information, such as running royalty rates, lump sums etc., but a small amount relates to other terms in licences. A fair description of it all is commercial licensing information. All of the information relates to licences to which at least one of Unwired Planet, Huawei, Ericsson or Samsung are a party, but third parties are involved too. For example some of the information relates to other well known telecommunications and IT companies named in the 711 judgment such as Apple, Qualcomm, and ZTE while other information relates to third parties who are not named (e.g. parties M, N, O and P – see paragraph 433-445 of the 711 judgment).

11. Most of the commercial licensing information derives from Ericsson but it is notable that all the parties who made submissions before me orally or in writing – i.e. Unwired Planet, Huawei, Ericsson and Samsung (in writing) — ask me to redact at least some details from the 705 judgment. So I have not heard truly adversarial argument about the matter. I did wonder about appointing an amicus in this matter but it would have been disproportionate.

12. The commercial licensing information in issue is just the sort of information which would be taken into account in an intellectual property damages enquiry, which after all might set a reasonable royalty. So a rights holder claiming damages would have to disclose relevant IP licences. The terms of those licences, such as the royalty rates, would be critical evidence in assessing what an appropriate damages award would be. As far as I am aware that sort of information is not routinely redacted from judgments on intellectual property damages. The parties were asked about this. They did not cite any example of such a case in which that information has been redacted.

13. On the other hand, as Ericsson submitted, this sort of information is often redacted from judgments relating to competition law. Decisions about competition law are often redacted to remove commercial information such as pricing. Paragraph 1 of Schedule 4 of the Enterprise Act 2002 expressly provides that in preparing a decision the Competition Appeal Tribunal must have regard to the need to exclude as far as practicable (at para 1(2)(a)) information “whose disclosure would be against the public interest” and similarly to exclude (at para 1(2)(b)) “commercial information the disclosure of which would or might, in its opinion, significantly harm the legitimate business interests of the undertaking to which it relates”. Counsel referred to examples of such redactions in the CAT decision Sainsbury v Mastercard [2016] CAT 11 (Barling J, Prof Beath OBE and Marcus Smith QC). In paragraphs 441, 453 and 533 financial details are redacted. Another example of the same essential principles in the competition sphere (albeit the Competition and Markets Authority rather than the CAT) was case CE/9742-13 relating to unfair pricing of the anticonvulsant drug phenytoin. Many of the actual selling prices of drugs have been redacted from the public decision.

14. Counsel for Ericsson submitted strikingly that another way of looking at this problem was to consider what the competition authorities would consider if Huawei, Samsung and Ericsson got together and exchanged these confidential royalty rates. Commercial rivals exchanging pricing information looks like a cartel. That would be a serious breach of competition law. Therefore Ericsson submitted there is a public interest in not doing so by another route. Nevertheless it strikes me that it might be said that the lack of public information about FRAND licence terms is a cause of difficulty in this sphere and perhaps more transparency about royalty rates would be a good thing, but this is not the occasion to get into that.

15. Counsel for Ericsson also submitted that this information is material which the companies concerned do certainly regard as confidential and which would harm their interests if it was made public – because for example it would enhance the bargaining position of putative licensees. He also submitted that if the court was too liberal in requiring that information of this kind become public as a result of the trial process, it would act as a “dampener to companies being willing to give disclosure to assist justice being done between the parties”.

16. It is clear that in the area of competition law, the need to keep certain information out of the public domain is well recognised. This is for two different reasons. One reason is that publication may discourage frankness and discourage companies from coming forward and applying for leniency. That is a good reason but it is not relevant in this case. The other reason is because publication of certain information such as pricing may itself be anti-competitive. That may be because publication could work a bit like a cartel. Another way in which publication could be anti-competitive is because it could weaken the competitive position of a party relative to others in the market. This latter point plays a major part in the reasoning of the parties before me. I accept that the point is capable of being relevant but there is a risk. In such a case it is easy to make generalised assertions that publication would harm a company’s interests. Just because a company regards the information as confidential and would prefer that it not be disclosed is not enough.

17. A further submission on Ericsson’s behalf was a suggestion that Ericsson should be regarded as a third party. However as Ericsson’s counsel accepted, its position relative to this case is not the same as the position of true third parties named in the judgment such as Apple, Qualcomm and ZTE. For one thing under the terms of its relationship with Unwired Planet, Ericsson at least potentially benefits from royalties earned by Unwired Planet for its patents. I will return to Ericsson’s position in this litigation below.

18. A number of FRAND disputes have been settled by arbitration and of course that form of dispute resolution allows all the material to remain confidential. It might be said that parties who choose not to resolve their differences by arbitration but by public litigation cannot therefore complain if material comes into the public domain. There is force in that but only up to a point. A key aspect of this kind of dispute is about the validity and essentiality of certain patents. Parties to a patent dispute will not generally have a pre-existing contract which contains an arbitration clause, and so both sides would have to agree to arbitrate after the dispute had started. That may not be easy. Also a party who refuses an offer to arbitrate may not be the one whose interests would be harmed by publicity.

19. As discussed in the main FRAND judgment, these issues are international in nature and have been considered in other courts. Samsung pointed out that in the USA in the seminal Microsoft v Motorola case, Judge Robart allowed various confidential licence terms to be protected. While not determinative, I accept that the fact that US courts considering the same FRAND issues recognise that common law principles of open justice should yield in such circumstances is relevant.

20. Finally in terms of principles I was referred to two patent cases in which financial and licensing information had been redacted or not released. One is HTC v Nokia [2013] EWHC 3247 (Pat). In that case Arnold J put the terms of a Qualcomm chip licence in an annex to the judgment which was kept confidential once the judgment was published (paragraph 148). The confidential annex also contained some of the judge’s reasons (see e.g. paragraphs 150, 170, and 173) which ultimately led to the failure of a licence defence. No doubt because it was not disputed, Arnold J did not expand on the reasons why the Annex should be redacted beyond stating it was confidential but it is not difficult to see why in that case the redaction took place. Both Nokia and Qualcomm regarded the terms of the licence as highly confidential but Qualcomm were not a party to the dispute before the court.

21. The other is Lilly Icos No2 in which one of the documents accepted as being subject to a permanent CPR r31.22 order was one containing financial information about advertising.

22. I derive the following principles applicable to a case like this:

23. Unless the public can see and understand a judge’s reasons they cannot hold the courts to account. There is therefore a strong principle that all parts of a judgment should normally be publicly available. Nevertheless there are occasions on which judgments may be redacted. Redactions will require powerful reasons, supported by cogent evidence which addresses the details. Generalities will not do. Although redactions will be rare indeed when looking across the legal system in general, certain kinds of proceedings may regularly involve redactions due to the nature of the proceedings and the material involved. In any event however redactions must be kept to the bare minimum.

24. Factors which will be relevant include: i) the nature of the information itself: for example cases in which some redaction may more readily be accepted could include technical trade secrets and private information about family life. ii) the effect of the publication of the information. This will be a critical factor. If publication would be truly against the public interest then no doubt the information should be redacted. If publication would destroy the subject matter of the proceedings – such as a technical trade secret – then redaction may be justified. The effect on competition and competitiveness could be a factor but will need to examined critically. iii) the nature of the proceedings: for example privacy injunctions and competition law claims may require some redaction while an intellectual property damages claim may not. The point is not that different kinds of case demand a different approach, it is that the balance of factors will change in different cases (e.g. the need to encourage leniency applications in competition law). iv) the relationship between the information in issue and the judgment (as well as the proceedings as a whole). Obviously judges do not deliberately insert irrelevant information into judgments but not every word of a judgment is as important as every other word. It may be that some sensitive information can be redacted without seriously undermining the public’s understanding of the reasons. v) the relationship between the person seeking to restrain publication of the information and the proceedings themselves (including the judgment). For example, a patentee seeking damages for patent infringement on a lost profit basis knows that they will have to disclose their profit margin in the proceedings and that those proceedings are public. A third party whose only relationship with the case is that they are a party to a contract disclosed by one of the parties to the litigation is in a different position.

25. I turn to the facts of this case. Assessment

26. All the information sought to be redacted is commercial licensing information relating to a 2G, 3G and/or 4G telecommunications standards patent licence for which at least one of the four companies Unwired Planet, Huawei, Samsung or Ericsson is a party. The judgment deals with a number of competition law claims but is also concerned with declaring what terms of a patent licence for Unwired Planet’s SEP portfolio would be FRAND. The competition law aspects are mostly not concerned with the specifics of the commercial licensing information such as actual royalty rates. Some of the material sought to be redacted is information which third parties regard as confidential. By third parties I mean the likes of Apple, Qualcomm, ZTE and other unnamed licensees of Ericsson. Ericsson’s relationship to these proceedings is different. It was playing a full part in the case until the summer of 2016 when it decided to drop out after Huawei withdrew its counterclaim against Ericsson which in turn occurred after the Samsung settlement. That full part included serving evidence. There were statements from Ericsson witnesses at the trial (see judgment paragraph 38). It was obvious before Ericsson dropped out that Ericsson’s licences were going to be discussed in detail at the trial. Ericsson did not have to drop out completely if it had wished to make full submissions to the court about the licences, for example to put into context an inference that might otherwise be drawn. Moreover Ericsson’s ongoing contractual relationship with Unwired Planet means that Ericsson retains a financial interest in the outcome.

27. As far as the relationship between the information and the judgment is concerned, without the figures which are asked to be redacted one cannot see how the court has reached the conclusions it has on one of the critical questions, the FRAND royalty rates. The public can see what the conclusions actually are – i.e. the final FRAND royalty rates themselves. The public can also see that a critical step in that reasoning was to derive a benchmark royalty rate for Ericsson’s portfolio (the value E). And the public can see what the value E was determined to be (see conclusion paragraph 807 (7)). However if I accept the redactions then the public cannot see what the underlying data was which led to that conclusion. That is a significant limitation on the public’s ability to understand and to scrutinise the reasons why the court has come to the conclusion it has.

28. I turn to consider the effect of the publication of the information sought to be redacted. The reason relied on by all parties in their evidence is the same for everything. Publication would reveal information about existing licences. Save for one very minor exception, the licensor for all the licences is one of the parties (and I include Ericsson for this purpose). That information would be of help to future putative licensees seeking a licence from the same licensor and weaken the licensor’s negotiating strength. For example as a putative licensee if you know what rates a licensor charged another licensee for a similar licence, you may be less inclined to accept a higher rate and the licensor will have a harder job persuading you to accept it. A similar problem would arise if you know that a licensor has accepted a lump sum from a different licensee but is trying to persuade you to take a running royalty, or vice versa. In the context of FRAND and particularly the non-discrimination aspect, there might be more to say about this question but I accept the point as a matter of principle.

29. For some licences another of the parties is a licensee. In that capacity that party often supports some redaction too although not always as extensive as the redactions sought by the licensor. That difference reflects the different balance of interests of licensee and licensor. The licensee’s motives were not examined in detail. One will no doubt be because it perceives it has a contractual duty to do so under the confidentiality clause in the licence. Another may be because its negotiating position as a licensee itself may be harmed if putative licensors know it was prepared to accept a given term. This is a lesser point than the licensor point but tangible nevertheless.

30. A further reason relied on by Ericsson in support of redaction is that third parties could get a wrong impression from the judgment about what Ericsson’s terms actually are. Of course it is true that the full terms of Ericsson’s licences are not disclosed but I reject that point. It fails for two distinct reasons. First it is made in an unspecific way. There are said to be several instances but only two examples are given and neither is convincing.

31. The first is about a factor referred to in the judgment as a “UK uplift”. This was calculated in Mr Lasinski’s evidence based on his analysis of the terms of one of the agreements in the case. The identity of the agreement is one of the facts sought to be redacted. The wrong impression argument is that the reader of the judgment might think that the particular agreement actually contains an uplift factor for the UK whereas what in fact it contains is a set of regional royalty rates which were negotiated and “carefully calibrated” to work together. So Ericsson submits a “prospective Ericsson licensee, however, could potentially cite the judgment to insist on a licence with country by country royalty rates for a global licence” whereas that is something Ericsson has never and could never agree to. I do not believe a fair minded reader of the 705 judgment would think that the licence in question is like that at all. Apart from anything else the judgment makes clear that that the uplift factor is something which had to be calculated by one of the experts from the licence. If there really was a risk of a wrong impression being created then the remedy is to explain it to the court and if necessary a suitable change can be made. It is not a reason to redact.

32. The second example is about a licence which has a payment structure which is not typical of Ericsson’s licences. As an instance of the problem of harming the licensor’s competitive position vis a vis licensees, I can see the point. But as an example that a wrong impression might be created by the judgment, I do not agree. Apart from anything else, simply taking the descriptions of the various Ericsson licenses in the 705 judgment one can see that this feature is not typical.

33. The second reason this point fails is that it is founded on the suggestion throughout that Ericsson’s stance is that of an uninvolved third party, with no means to influence matters or how they are portrayed. I have rejected that already. In addition to the points already mentioned above, I note that after Ericsson dropped out steps were taken to keep its representatives involved in order to protect Ericsson’s position. For example Ericsson was monitoring the conduct of the trial and complained at one stage during trial when it perceived confidential information was or might be revealed. Ericsson was also given a copy of the confidential draft 705 judgment precisely in order for its interests to be protected.

34. As mentioned already, the redactions sought are less extensive than those in the 711 judgment. However they are still substantial. The 705 judgment has about 800 paragraphs and redactions are still sought to about 130 of them. So well over 10% of the paragraphs in the judgment would contain redactions.

35. The evidence is clear that all the commercial licensing information in issue is kept confidential by undertakings in this industry. Initially I was doubtful whether the redactions were justified but on reflection I am satisfied that the evidence demonstrates that publication of the commercial licensing information in issue (subject to a few exceptions below) would materially weaken the competitive position of the relevant party in each case, particularly the relevant licensor. That is true not only in a general sense but in specific terms. The evidence properly condescends to detail. Given the number of instances and their disparity I will not try to set out every point in this judgment. Subject to a few exceptions below, all the redactions stand or fall together on the single question of whether that harm is a sufficiently powerful reason to justify redaction here. I have decided it is. The public can understand how the judge reached the conclusions in the main decision without seeing those details. Although, for example, they cannot decide for themselves whether they would agree that the specific figures arrived at are justified by the data, to provide that information would substantially weaken the position of various companies mentioned in the judgment, particularly as licensors but also as licensees. That interference with the competitive position of the telecommunications market is unwarranted.

36. The exceptions are as follows.

37. In paragraph 238 I have not accepted every redaction sought and have inserted some Xs and Ys to maintain the sense of it. None of this harms the parties’ legitimate interests and the differences between what was sought and what I have accepted are self-explanatory.

38. In paragraphs 384, 385, 394, 395, 396, 397, 405, 406, 411, 413, 433, 447, 448, 449, 452, 462(iv), 467, 483, 517, 604, 606, 607, 611 and 614 I have not accepted every redaction sought. The differences are minor and self-explanatory to the parties.

39. On paragraph 392, Unwired Planet seeks redactions. I accept them even though Samsung, while not opposing those redactions, does not support them. This is the same kind of information as all the rest.

40. On paragraph 419 Ericsson seeks more extensive redactions that I am prepared to accept. The point explained in the paragraph in the form I am prepared to accept is a significant aspect of the reasoning overall and I am not persuaded the risk Ericsson perceives is substantial enough to justify further redactions.

41. Paragraphs 421, 424, 425, 427, 428, 429 and 462(ii) relate to details of the 2009 Ericsson -Huawei licence. I have accepted proposed redactions which were sought by both Ericsson and Huawei. Those redactions remove the specific figures. However Ericsson sought wider redactions. They were not opposed by Huawei nor were they supported. The reason I reject them is that this licence is historic. It was signed in April 2009 and therefore negotiated before that. It expired in 2012. That is five years ago and longer ago than other expired licences in evidence. It has been replaced by another, different licence. No third party is involved. Ericsson’s evidence did not persuade me why revealing these aspects of the terms of such a historic licence was really damaging. The only specific point was an allegation that the particular point which did not corroborate Huawei’s case referred to paragraph 425 made an insinuation which was confidential information. It is another historic point and I am not persuaded there is a tangible risk of real harm.

42. Paragraphs 443 and 445 relate to three licences. The identities of the licensees are not public. There is no reason to make the identities public. However Ericsson seek blanket redactions. The most significant is in

445. The suggestion is that the judgment contains an insinuation which Ericsson does not accept but that Ericsson was not able to testify as to those licenses. I do not accept that the situation is as portrayed by the submission. First, the point was not a surprising one. Second, Ericsson’s evidence now does not face up to the true nature of Ericsson’s position in these proceedings. Third I am not satisfied that a legitimate interest of Ericsson’s is damaged by the paragraphs in the form I have accepted.

43. I have not accepted all the redactions sought to paragraph

457. Ericsson’s evidence justified the redactions to paragraph 456, which I have accepted, and the redaction to 457 I have provided for but not a wider redaction.

44. In paragraphs 464 and 468 the redactions sought to remove some text which was already public in the 711 judgment. I decline to do that.

45. In paragraph 473 I have accepted the redaction. Apparently the figure in the 705 judgment which has been redacted in the public judgments is actually a typographical error. I will provide the parties with a copy of the confidential 705 judgment in which the figure has been corrected.

46. More extensive redactions to paragraph 597 and 600 are sought than I am prepared to accept on the evidence. The points are self-explanatory to the parties.

47. For all other paragraphs I have accepted the redactions sought by whoever proposed them in the form discussed at the hearing.

48. The public form of this judgment will be [2017] EWHC 3083 (Pat). The draft form of this judgment and the draft final form of the redacted public main judgment will be given to the parties on the usual confidential terms in advance. I would be grateful if they could check that the draft final form of redacted public main judgment corresponds to what they expect from the reasons given in this judgment. Any application for permission to appeal this judgment which would lead to a different set of redactions needs to be raised with me before handing down. UK only licence terms

49. At the hearing of this matter I was asked to annex to the judgment a copy of the licence terms which the parties had agreed between themselves as a set of terms which would accord with the main judgment save for the fact that its scope is as a UK only licence. Since I have been asked to do so, I will. In annexing this licence I am not endorsing it as FRAND. I have already found such a licence would not be FRAND. Nor have I been asked to consider if I agree it might otherwise accord with the main judgment and I have not done so.