Optis Cellular Technology LLC & Ors v Apple Retail UK Limited & Ors

Where information constitutes a statutory trade secret, the open justice principle yields to the protection of that information to the extent necessary. The court must apply the cumulative statutory criteria of secrecy, commercial value because of secrecy, and reasonable steps to preserve secrecy. A general balancing exercise between confidentiality and open justice is unavailable once the statutory definition is satisfied.

In FRAND proceedings, the court determines the licence issues framed by the pleadings and evidence. More than one set of terms may be FRAND, but the court must impose clear terms where the parties disagree. A worldwide portfolio valuation cannot ordinarily be recalculated to create an intermediate rate for selected patents. Where both parties’ proposed methodologies are rejected, costs need not follow a conventional winner-and-loser analysis.

The judgment concerned consequential matters arising from the court’s earlier FRAND judgment in proceedings between Optis and Apple, reported as [2023] EWHC 1095 (Ch). The court determined the final scope of redactions, the treatment of the Ericsson Patent Families, interest on sums payable for past infringement, costs, the geographical and patent scope of the FRAND licence, the inclusion of 5G standards, permission to appeal, and the consequential order.

The principal questions were whether confidential licence information qualified as a statutory trade secret, whether the court-determined licence could exclude patents litigated in parallel United States proceedings, and how the licence and associated financial consequences should be framed.

1. Confidentiality and redaction. The Trade Secrets (Enforcement, etc) Regulations 2018 adopted a cumulative three-limb definition of trade secret. The lump-sum royalty figures were secret, commercially valuable because secret, and subject to substantial protective measures. Following JC Bamford Excavators Ltd v Manitou UK Ltd, [2023] EWCA Civ 840, open justice therefore yielded to the necessary protection of the information. The court rejected a balancing approach under which open justice could outweigh protection of a statutory trade secret.

2. Other information in the comparable licences, including counterparties, dates, duration, stack share and general terms, was not itself a trade secret. It could be published unless disclosure would enable the protected lump-sum figures to be inferred. Some workings using lump-sum rates therefore remained redacted, but unreliable reverse engineering did not justify further redaction.

3. FRAND licence. A Court-Determined Licence is a remedy consequent upon infringement of a valid standard-essential patent and may have extraterritorial effect. More than one set of FRAND terms may exist. The court must determine disputed issues within the pleaded case and should be slow to impose alternative terms where the parties agree a term which is consistent with the judgment.

4. Apple had to choose between a licence including the Ericsson Patent Families at the 0.61% stack share or a licence excluding them at the 0.38% share. The court could not rationally devise an intermediate rate for partial rights because the valuation concerned access to the Standard through the portfolio as a whole. The worldwide licence therefore included the patents asserted in the EDTX Proceedings.

5. Interest on the past-release payment was appropriate to discourage hold-out. Denial of interest because of an SEP owner’s negotiating conduct should be rare and would require conduct verging on the outrageous. The appropriate rate was 6%, rather than a commercial borrowing rate. The court determined that the licence should also extend to 5G standards.

6. There was no order as to the costs of Trial E. Both parties’ methodologies were rejected, and the court’s methodology and result lay between their positions. General permission to appeal was refused, as were the specified grounds, subject to renewal before the Court of Appeal.

The judgment followed the court’s earlier FRAND judgment in the same proceedings, [2023] EWHC 1095 (Ch). It determined consequential matters and the terms of the Court-Determined Licence.