Koninklijke Philips NV v Asustek Computer Incorporation & Ors

Where defendants seek to withdraw from substantial patent proceedings, the application should ordinarily be determined as swiftly as fairness and proper preparation permit. The court must balance prejudice to the claimant against the costs, court time and uncertainty caused by leaving the defendants in the proceedings unnecessarily. An early hearing is appropriate where the application can be fairly determined on focused legal issues and agreed assumptions which materially reduce factual and expert complexity. Assumptions may define the issues for the interlocutory hearing, but should not remove central and genuinely disputed matters from the argument.

Philips brought substantial patent proceedings against the ASUS and HTC defendants, with a five-week trial planned for the following year. The ASUS defendants applied to end their participation in the trial. The immediate issue was procedural: whether the application should be heard promptly before the end of term or deferred until the first day of the trial.

The proposed application raised issues concerning global licensing, territorial requirements and the meaning of a proper FRAND licence. ASUS was willing to proceed on specified assumptions so that those matters would not require determination at the interlocutory hearing. Philips opposed an early hearing, principally on grounds of prejudice and the timing of the application.

1. Application for early determination granted. The ASUS defendants were permitted to have their application heard before the trial, at a one-day hearing on 13 December 2019.
2. The court attached substantial weight to the benefits of early determination. If the defendants could properly extricate themselves from a major trial, early resolution would save their preparation costs, reduce the likely length and cost of the trial, preserve court time and clarify the position of the HTC defendants.
3. Philips’ prejudice was recognised but did not outweigh those considerations. The prejudice consisted principally of the need to expand its solicitor team and possibly use different leading counsel. It was not a sufficient reason to defer the application until the trial where a fair earlier hearing could be arranged.
4. The application was sufficiently manageable because ASUS accepted two assumptions for the interlocutory hearing: that Philips’ policy of seeking a global licence was a proper commercial policy, and that a global FRAND licence was, at least for the purposes of the application, the appropriate licence. Those assumptions materially reduced the factual and expert complexity and reduced the evidence Philips would need to adduce.
5. The court refused to impose a further assumption concerning alleged undermining of the ETSI and FRAND system or the possibility of territorial hold-out. That issue went to the heart of the parties’ competing territorial arguments and was to remain open for determination at the application hearing.
6. The order was required to state expressly the two assumptions governing the hearing, so that the scope of the interlocutory determination was clear. The judge did not decide whether ASUS was entitled to leave the proceedings or prejudge the substantive FRAND issues.