Intellectual property - patents - title - licensee of licence granted by patent owner estopped from disputing licensor’s title and validity of patent - whether licence agreements in respect of “essential patents” giving rise to estoppel
P, the purported owner of patent rights said to be essential to certain mobile communication technology standards, entered into a patent licence agreement (the “Agreement”) whereby D was licensed to make products incorporating those standards in return for payment of royalties. Under the Agreement inter alia, “essential patents” were patents of which infringement or use could not reasonably be avoided in remaining compliant with a standard; “Licensed Standards” was the GSM (including GPRS specifications) and UMTS Standards; CDMA 2000 was an example of Non-Licensed Standards; and royalties were payable for the sale of “Licensee Licensed Products” in accordance with the rates and standards set out in Annex A.
P brought proceedings against D for underpaying royalties due and owing in breach of the Agreement. Specifically, P alleged that: (a) D had failed to accurately calculate, report and pay royalties due to P in respect of sales of Licensee Licensed Products; and (b) in breach the Agreement, D had manufactured or sold CDMA/UMTS and/or CDMA/CDMA 2000 Subscriber Terminals which used P’s “essential patents” other than those for which licence fees and royalty terms had been agreed. D disputed P’s ownership or control of any patents; whether such patents were “essential patents”; and whether any products sold by D used any of P’s “essential patents”.
Held, granting the applications in part, that:
• A licensee who had used and enjoyed a licence granted by the owner of a patent was deemed to acknowledge the title of his licensor and the validity of the patent, by the mere act of accepting the licence and was estopped from afterwards disputing such title or validity. Here, the GSM, GPRS and UMTS standards were expressly defined in the Agreement as Licensed Standards, and D was estopped from disputing P’s ownership, control, validity or the essentiality of P’s patents rights in respect of those standards.