Koninklijke Philips NV v Asustek Computer Incorporation & Ors

Whether to order a preliminary issue is a case-management decision. The court should consider whether the issue may dispose of the whole case or a substantial aspect, reduce costs and preparation time, is sufficiently discrete and suitable for early determination, and may promote settlement. It should also consider factual complexity, the risk of delay or duplicated judgments, procedural unfairness, subsequent amendments, and the overriding objective. An issue may be ordered even though pleadings are incomplete, provided they are sufficiently advanced to reveal its significance. Where a licence issue may substantially affect a complex patent action, early determination can be appropriate even if it will not resolve every infringement issue.

The claimant brought a complex patent infringement action concerning three patents said to be essential to 3G mobile technology. The fourth and fifth defendants sought a two-day trial of a preliminary licence issue arising from an agreement between the claimant and a third party. The defendants had not challenged patent validity because doing so might affect their ability to rely on the licence defence.

The claimant contended that the agreement did not have the alleged effect and that the relevant clause was void under competition law. The court was asked whether the licence issue should be determined before the technical infringement and validity issues.

1. Application allowed. The licence issue was ordered to be tried as a preliminary issue in July 2016.
2. The court adopted the guidance in Wagner International AG v Earlex [2011] EWHC 3897 (Pat), itself adopting the approach in Steele v Steele [2001] unreported. Relevant considerations included whether determination would dispose of the whole case or an aspect of it, reduce costs and time, be suitable for determination on the available facts, avoid unfairly fettering the parties or court, create settlement prospects, and avoid delay, duplication or loss of effect through later amendments.
3. The licence issue was sufficiently discrete. The pleadings were sufficiently advanced even though they were not closed. The possibility that the third party might seek to intervene was speculative and carried little weight.
4. The court was not persuaded that the licence issue was necessarily inseparable from the threatened competition case. The evidence did not permit a concluded view of the competition arguments, but the possible expense and delay reinforced the value of deciding the licence issue first.
5. There was sufficient urgency because the issue could affect related foreign proceedings and concerned the licensing position for phones that had been sold for many years. The court also considered that either outcome could produce substantial savings in costs and resources. The licence issue might substantially reduce or bring to an end the practical significance of the remaining litigation.
6. The order was justified by the considerations identified in Wagner International AG v Earlex [2011] EWHC 3897 (Pat) and the overriding objective in the CPR.