Koninklijke Philips NV v Asustek Computer Inorporation & Ors

Damages for infringement of a UK patent must compensate the proprietor for the loss caused by the infringement. Where the proprietor licenses its rights, the court may use the reasonable price of a licence as a measure of loss. However, the terms of a court-declared FRAND licence do not automatically determine the terms of the counterfactual licence used to assess damages for past infringement. The relevance and weight of the declared licence are fact-sensitive. An automatic linkage may be struck out as legally unarguable, while the underlying damages issue must be determined at trial.

The claimant brought patent infringement and FRAND proceedings against ASUS and HTC concerning standard-essential patents forming part of the Philips patent portfolio. ASUS waived its right to seek a FRAND licence, accepted that an injunction could be granted in respect of UK infringements, and offered to pay damages calculated at a fixed rate per infringing device.

ASUS applied to be removed from the forthcoming FRAND trial. Philips contended that the damages for past UK infringements might include royalties referable to a worldwide portfolio licence, so that the amount of damages remained unresolved. The central issue was whether the terms of the court-declared FRAND licence automatically governed the counterfactual licence used to calculate damages.

1. The ASUS application was dismissed. The unresolved dispute about damages meant that ASUS remained a necessary party to Trial D.
2. Damages for infringement of a UK patent are compensatory. They are assessed by seeking to place the proprietor in the position it would have occupied had the infringement not occurred. Where the proprietor exploits its monopoly by licensing, the reasonable price of permission to use the invention may provide a useful measure of loss.
3. The court distinguished between the Declared Licence, whose terms are determined in a FRAND dispute and which an implementer may accept or refuse, and the Counterfactual Licence, which is a construct used only to assess damages for past infringement. The latter does not represent an actual licence that the implementer must enter.
4. There could be no automatic read-across from the Declared Licence to the Counterfactual Licence. Applying the declared worldwide portfolio rate only to UK infringing devices risked under-compensation. Treating the entire worldwide portfolio licence as the measure of loss risked over-compensation and improper interference with the jurisdiction of foreign courts. Either approach might nevertheless prove appropriate on the evidence.
5. The extent to which the Declared Licence informed the assessment of damages was a question of fact. The issue could not be determined summarily and had to be resolved at trial as part of Trial D. The parties were directed to draw up an appropriate order, including provision for amendments to the pleadings.