HTC Corporation v Nokia Corporation

In intellectual property infringement cases, the court must assess a proposed injunction by reference to efficacy, proportionality and dissuasiveness, while avoiding barriers to legitimate trade and safeguards against abuse. Where the right is a patent, refusal of an injunction in favour of a running royalty may be tantamount to imposing a compulsory licence. The burden of showing disproportionate harm is therefore heavy where no countervailing right is engaged. The availability and cost of non-infringing alternatives are especially important. A stay pending appeal requires a fact-sensitive assessment of the balance of hardships, designed to preserve the Court of Appeal’s ability to do justice after the appeal.

Nokia succeeded at trial in establishing that HTC had infringed its European Patent (UK) No. 0 998 024. Following the infringement judgment, Nokia sought a final injunction. HTC accepted that it intended to continue the infringing acts unless restrained, but sought damages in lieu of an injunction and, alternatively, a stay pending appeal.

The court had to decide whether the injunction would be disproportionate, including in light of the Enforcement Directive and the limited statutory availability of compulsory patent licences, and whether the injunction should be stayed pending appeal. The court also had to determine whether different treatment was justified for HTC’s principal infringing phones.

1. Final injunction. The court granted a final injunction restraining further infringement. An injunction remains a discretionary equitable remedy, and damages may be awarded in substitution under section 50 of the Senior Courts Act 1981.
2. The traditional guidance in Shelfer v City of London Lighting Co Ltd [1895] 1 WLR 287 and Jaggard v Sawyer [1995] 1 WLR 269 requires particular attention to whether an injunction would be oppressive. The court must not apply an undifferentiated balance of convenience test.
3. For intellectual property rights, the governing criteria are those in article 3(2) of the Enforcement Directive: efficacy, proportionality, dissuasiveness, avoidance of barriers to legitimate trade and safeguards against abuse. The court may refuse an injunction where it would be disproportionate, even having regard to efficacy and dissuasiveness.
4. Where the right is a patent, the court must be very cautious before making an order equivalent to a compulsory licence when no compulsory licence would be available under sections 48 to 48B of the Patents Act 1977. Where no countervailing right is engaged, the party seeking to avoid the injunction bears a heavy burden.
5. The availability and cost of non-infringing alternatives are a particularly important consideration. The fact that the patented feature is only a small component, or that the likely royalty is small relative to the product price, does not by itself make an injunction disproportionate. HTC could obtain or develop non-infringing alternatives within a period materially shorter than the patent term, and had already had substantial time to do so.
6. A stay pending appeal is governed by the objective of arranging matters so that the appellate court can do justice whichever way the appeal is decided. The court must assess the balance of hardships and consider safeguards, the likely harm to each party, the status quo and the parties’ contingency planning, following Minnesota Mining & Manufacturing Co v Johnson & Johnson Ltd (No 3) [1976] RPC 671 and Novartis AG v Hospira UK Ltd [2013] EWCA Civ 583.
7. The injunction was stayed for the HTC One, because the potential harm to HTC was considerable and difficult to quantify. A stay was refused for the One Mini, launched later when HTC knew of the infringement claim and had apparently made no contingency plans.

First-instance decision. The judgment records that HTC was granted permission to appeal against the earlier infringement judgment, with the injunction stayed in part pending appeal. It does not state a subsequent appellate decision.