Out-Law / Your Daily Need-To-Know

Judge orders UK ban of one HTC device but stays decision on ban of another

Out-Law News | 05 Dec 2013 | 10:30 am | 3 min. read

An HTC mobile device will be banned from sale in the UK after Friday afternoon unless the company wins the right to appeal against the imposition of that ban on that timescale.

The High Court rejected HTC's bid to delay a sales ban on the Taiwanese company's HTC One Mini device after previously finding that it contained technology which infringes a patent owned by Finnish telecoms giant Nokia. HTC has appealed against the ruling of infringement, which was made on 30 October.

Mr Justice Arnold, however, refused to issue an injunction requiring HTC's best selling smartphone, the HTC One device, to be removed from sale in the UK. He ruled that the interests in granting a 'stay' on a decision on that matter outweighed those in granting the injunction.

"In my judgment, in the case of the One, the balance comes down in favour of granting a stay," Mr Justice Arnold said in his ruling. "The potential harm to HTC outweighs that to Nokia, the One has been on the market for some time and the impact of HTC's apparent lack of contingency planning is less significant."

"In the case of the One Mini, the balance comes down in favour of refusing a stay. In this case the potential harm is more evenly weighted, but importantly the phone was launched much more recently and HTC designed and launched it at a time when HTC knew it was facing a claim for infringement of the patent and apparently without making any contingency plans," he said.

HTC had claimed that an immediate ban on the HTC One device would be "catastrophic for its UK business". The judge said HTC is due to release a new "flagship" device to supersede the HTC One as early as February next year, but said it would be wrong to ban the HTC One in the interim period because the harm the company would suffer would be disproportionate.

"I am bound to say that I am somewhat sceptical about this evidence given that HTC will shortly be launching its new flagship phone which cannot be assumed to infringe and therefore to be caught by the injunction," Mr Justice Arnold said. "Nevertheless, I accept that there is a period between now and February or March 2014 when HTC is vulnerable. Furthermore, I accept that the damage which HTC will suffer if prevented from selling the One during this period will be both considerable and very difficult to quantify."

"As to the One Mini, I do not accept that the damage which HTC will suffer if it is wrongly prevented from selling the One Mini pending appeal is as serious as in the case of the One. I do accept that it would be difficult to quantify," he said.

Patent law expert Indradeep Bhattacharya of Pinsent Masons, the law firm behind Out-Law.com, said that the High Court's reasoning behind its decision to impose an immediate sales ban on the HTC One Mini bore similarities to reasons cited by the Court of Appeal when issuing an injunction in a separate patent dispute between rival drugs companies earlier this year.

In that case the Court of Appeal granted Novartis AG an interim injunction preventing Hospira UK Limited from launching a rival product on the market. The injunction was granted despite a previous finding by the High Court that two patents Novartis was seeking to rely on in the dispute, to prevent Hospira launching a rival to its product, were invalid. The judges said Novartis had a reasonable prospect of having that invalidity ruling overturned on appeal. They granted the injunction after finding that Novartis' interests in waiting for that appeal judgment to be made outweighed Hospira's interests in being able to launch to market sooner.

Bhattacharya said that both Mr Justice Arnold in the HTC v Nokia dispute and Lord Justice Floyd who led the Court of Appeal ruling in the Novartis v Hospira case had factored in the extent to which HTC and Hospira had considered ongoing and potential court proceedings in their product launch strategies.

"In circumstances where the losing party has had a long period of notice of a likely claim against them, UK courts are likely to be less sympathetic to stay the execution of a judgment pending appeal," Bhattacharya said. "A court has broad discretion on such matters and they take into account the respective interests of the parties."

On 30 October the High Court ruled that a European patent owned by Nokia was valid and that it had been infringed by HTC. The patent covers the structure of a modulator, technology that allows data to be transmitted over radio waves.

Nokia successfully argued that the Taiwanese company infringed its patents when it included chips within some of their devices that implemented the patented technology. Some of the chips were made by Qualcomm. At the time, Mr Justice Arnold rejected HTC's claims that Nokia had effectively consented to its use of its patent as a result of a clause contained in an agreement Nokia had formed with Qualcomm which generally prevented Nokia from suing Qualcomm for patent infringement.

HTC argued that, under the terms of that agreement, Nokia effectively consented to its use of its patent when it had itself bought chips featuring the patented technology from Qualcomm. This arrangement therefore meant that it did not need to buy a separate licence from Nokia to use its patented technology, the company claimed. Its assertions were rejected by the High Court judge.

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