IPCOM GmbH & Co Kg v HTC Europe Co Ltd & Ors

Damages for infringement of a UK patent cannot include sums attributable solely to sales or dealings outside the patent’s territory unless those acts were caused by infringement of the UK patent. A damages claim cannot recover compensation for foreign patent infringement indirectly by presenting the loss as royalties under a hypothetical global licence.

The fact that parties might have agreed a global licence, including a lump-sum royalty, does not alter that principle. Such a sum may be apportioned or unpacked to identify the amount attributable to UK infringement. Losses from non-infringing acts remain recoverable where they are causally connected with a UK infringement, as in a convoyed-goods case. A claim concerning non-infringing UK phones was allowed to proceed because a possible UK portfolio approach required determination at trial.

The claimant, proprietor of a standards-essential UK patent relating to mobile telephones, pursued an inquiry as to damages after the patent had been held valid, essential and infringed. The defendants applied to strike out the part of the damages claim calculated by reference to all phones sold worldwide, including workaround phones, 2G-only phones and phones never imported into the UK.

The claimant relied on a notional global licence and a royalty said to reflect the parties’ position as willing licensor and willing licensee. The central issue was whether damages for infringement of the UK patent could include sums attributable to foreign sales or non-infringing products.

1. Disposition. The claim was struck out insofar as it sought royalties attributable to sales of, or other dealings in, phones outside the UK. The claim relating to UK phones was allowed to proceed to trial.
2. The relevant damages were damages for infringement of the UK patent. Foreign sales were not caused by acts of infringement committed in the UK. The claim therefore either amounted to an impermissible claim for infringement of foreign patents or failed because no other legal basis supported recovery. A foreign patent claim could not be made by the back door: Unwired Planet v Huawei [2020] UKSC 37, paras 58, 79, 80 and 87.
3. The principle in Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443 was not inconsistent with the result. Losses arising from non-infringing acts may be recoverable where they are caused by a UK infringement, such as sales of convoyed goods. That principle did not assist where foreign sales were independent of any UK infringement.
4. A global running royalty or a single lump sum did not change the analysis. A lump sum could be treated as a capitalised future income stream and, if necessary, apportioned to the UK sales. It could not create an entitlement to recover sums which would not be recoverable if calculated by reference to individual foreign sales.
5. The court declined to strike out the claim for non-infringing UK phones. The circumstances of Unwired Planet v Huawei suggested that damages might have been assessed by reference to a UK portfolio, although the judge considered that, absent concession or agreement, damages ordinarily concerned the individual UK patents found valid and infringed. The issue was sufficiently arguable to go to trial.
6. The observations concerning the likely effect of Force India v 1 Malaysia Racing [2012] RPC 29 and 32Red v William Hill [2013] EWHC 815 (Ch) were not finally determined.

The judgment describes earlier liability proceedings and subsequent steps:

• Court of Appeal: remitted the matter to the Patents Court for a damages inquiry and determination of the FRAND licence terms.
• High Court, Patents Court: following further infringement, the Chancellor ordered an inquiry as to damages and granted an injunction on 17 December 2019. At the case management conference on 21 October 2020, Mr Justice Birss struck out the foreign-sales aspect of the damages claim and stayed the inquiry in its existing form.