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VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS

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1 IN THE HIGH COURT OF JUSTICE Claim Nos. HC 12 D03895 1 Mannheim and Munich, dealing with infringement first in
CHANCERY DIVISION HC 12 B04711
2 PATENTS COURT 2 October -- the towels are already on the seats in relation to
3 The Rolls Building
7 Rolls Buildings 3 that -- and Munich in relation to the reverse nullity, almost
4 Fetter Lane 4 certainly will get there first.
London EC4A 1NL
5 5 Also relevant is the fact that the US courts have now
Wednesday, 5th June 2013
6 6 conducted a FRAND trial in Microsoft and Motorola, and they
Before:
7 7 have done so quickly and efficiently in Microsoft's backyard,
MR. JUSTICE BIRSS
8 ---------------
8 Seattle, Judge Robart delivering judgment in April. I will
BETWEEN: 9 take your Lordship to that in due course because it
9
VRINGO INFRASTRUCTURE, INC. 10 demonstrates how a FRAND trial can be conducted and how
10 (a company incorporated under the laws
of the state of Delaware) 11 efficient it could be.
11 Claimant
- and -
12 It also relevant that in the United States, the
12 13 defendants, ZTE Corporation and their US subsidiary, are
(1) ZTE (UK) Limited
13 First Defendant 14 arguing strongly that FRAND should be tried first, that there
(2) ZTE CORPORATION
14 (a company incorporated under the laws 15 is no point in trying validity or essentiality or infringement
of the People's Republic of China)
15 Proposed Second Defendant
16 of the InterDigital portfolio launched against them in the US
16 --------------- 17 proceedings. In particular, they say that it really does not
17 (Computer-aided transcript of the Stenograph Notes of
Marten Walsh Cherer Ltd., 1st Floor, Quality House, 18 matter whether or not the patents in suit are invalid,
18 6-9 Quality Court, Chancery Lane, London WC2A 1HP.
Telephone No: 020 7067 2900. Fax No: 020 7831 6864 19 non-infringed or non-essential, because there are all the
19 e-mail: info@martenwalshcherer.com)
20 ---------------
20 other patents in the portfolio which will need to be assessed.
21 MR. NICHOLAS GREEN QC, MR. THOMAS HINCHLIFFE and 21 We say that standing back from this there is great sense in
MR. TIM POWELL (instructed by Powell Gilbert LLP) appeared
22 for the Claimant. 22 getting to the heart of the issue between the parties, namely,
23 MR. DANIEL ALEXANDER QC and MS. ISABEL JAMAL (instructed by
Olswang LLP) appeared for the Defendant. 23 deciding FRAND, and courts across the world are beginning to
24
---------------
24 do this. In the United States there is Microsoft and
25 PROCEEDINGS 25 Motorola. There is Samsung and Apple in Holland. There are
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1 MR. GREEN: My Lord, I appear today with Mr. Tom Hinchliffe and 1 indicia from certain judges in this jurisdiction that dealing
2 Mr. Tim Powell for the claimant, Vringo. My learned friend, 2 with FRAND first makes good sense. Indeed, it is, even on the
3 Mr. Daniel Alexander QC and Ms. Isabel Jamal appear for ZTE, 3 defendants' own case as set out in their witness statements, a
4 the defendant. 4 recognition that the core issues between the parties are the
5 As your Lordship knows, there are effectively three 5 terms of a global FRAND licence with Corp. So we would invite
6 applications. The first is for an early determination of a 6 your Lordship to cut to the chase. This, as ZTE itself argues
7 FRAND. The second is for permission to amend the Particulars 7 in the US, will cut through viral worldwide litigation.
8 of Claim and the third is to add ZTE Corporation as a second 8 MR. JUSTICE BIRSS: Why is it viral?
9 defendant. What I propose to do is to deal with my 9 MR. GREEN: Proliferation.
10 submissions in the following way: first of all, the core 10 MR. JUSTICE BIRSS: I see; "it has gone viral".
11 facts; secondly, why FRAND should be tried first and then 11 MR. GREEN: Which, as your Lordship knows infinitely better than
12 permission to amend and joinder. 12 I, usually starts with intense sabre rattling and then fizzles
13 By way of introduction can I provide your Lordship with 13 out into something of a lethargic game of conkers before there
14 a 30 second standing back nutshell. In relation to FRAND, ZTE 14 is a settlement, and that is what happens.
15 (UK) says that there should be two ten day trials of the six 15 Now to the core facts. My client, Vringo, owns 500
16 patents in suit, three days reading of each, then a trial on 16 patents and applications covering telecoms infrastructure,
17 competition law issues and then probably a reference to the 17 internet search and mobile technologies. Your Lordship will
18 Court of Justice. The issue between the parties appears to be 18 be familiar with its ring tones, or your children will be.
19 common ground. It is that there will be in due course a 19 MR. JUSTICE BIRSS: Not if I let them!
20 global portfolio licence between ZTE Corporation and Vringo. 20 MR. GREEN: Crazy Frog is probably the one better known. Vringo
21 The defendants say that there should be a trial of the patents 21 possesses 138 SEPs and 248 outstanding applications. The
22 in suit first because this will provide guidance and will 22 portfolio includes patents both developed internally and
23 facilitate a settlement of that licence with their parent 23 acquired from third parties. The details for your Lordship's
24 company corporation. They say this even though the chances of 24 note are Mr. Laakkonen's witness statement, bundle C1, tab 4,
25 the High Court providing that facilitative guidance before 25 paragraph 22. Vringo's business includes operating a global

[1] (Pages 0 to 3)
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VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS

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1 platform for the distribution of mobile apps, social apps in 1 proposed by ZTE. Vringo is prepared to license all patents
2 particular. Indeed, Vringo has already licensed some of these 2 which are Essential (as that term is defined in the ETSI IPR
3 to ZTE. As your Lordship may have seen from the witness 3 Policy) to a standard provided that the consideration is
4 statements, Vringo is in partnership with Virginia State 4 .... FRAND. If and for as long as ZTE does not make a
5 University to develop and commercialise new products. 5 concrete, binding offer to take a licence capable of
6 ZTE (UK), a subsidiary of ZTE Corp, according to its 6 acceptance by Vringo, which would include a FRAND payment for
7 annual accounts, had a turnover of 39 million in 2011 but an 7 all past infringement, and which would result in a licence to
8 operating loss of 2 million. Its parent company in China has 8 Essential patents on FRAND terms, Vringo will pursue all legal
9 an operating revenue of 84 billion Yuan, approximately 8 9 remedies available.
10 billion sterling, 12 billion US$. It is the fourth largest 10 "A list of acquired patents as can be found" -- there is
11 manufacturer of Smart Tone handsets according to its report, 11 a reference to where it can be found -- "We look forward to
12 measured by global shipments for the last quarter of 2012, so 12 your response. Please address all correspondence to the
13 it is a major world player. Those are the two protagonists, 13 undersigned", which is Mr. Berger in New York, the COO. There
14 and potential second protagonist. 14 was no response, total radio silence. Vringo commenced
15 The relationship between Nokia and Vringo, as your 15 proceedings on 5th October 2012 which included Particulars of
16 Lordship will have seen, is that Vringo acquired patents which 16 Infringement. Your Lordship will have seen that in bundle B,
17 include those in suit for 22 million plus a right to a share 17 tabs 1 and 3. They were against the UK subsidiary and further
18 of future licensing revenues from Nokia. The assignment is in 18 proceedings were issued on 3rd December, bundle 3, tab 7.
19 the papers. It was concluded in August 2012 and completed on 19 Again, this did not engender the response, "How dare you! We
20 10th September 2012. Nokia does not own any shares in Vringo. 20 want a licence which will cover these patents in suit".
21 It does not exercise control over Vringo's litigation 21 The position of ZTE Corporation and ZTE (UK) can be seen
22 strategy. Again, for your Lordship's note, the public version 22 from a relatively small number of other letters which deal
23 of the assignment is referred to in Mr. Laakkonen's statement, 23 with the offer. Let me start with ZTE Corporation. Powell
24 paragraph 27. 24 Gilbert wrote to Olswang on 28th March 2013 vis-a-vis the
25 MR. JUSTICE BIRSS: So the only relationship now is that Nokia is 25 September 2012 offer. That is at page 16. This pointed out

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1 entitled to a share of any royalties. 1 that ZTE (UK)'s response did not address the actual offer, and
2 MR. GREEN: Yes. Again, standing back from it, the structure of 2 that response is at page 14. If you turn back two pages you
3 the deal is fairly obvious. We have paid a fairly significant 3 will see that Olswang were referring to previous
4 up-front sum. We get a percentage of the licensing revenues. 4 correspondence in relation to the UK proceedings. On the next
5 In so far as there is litigation risk, we bear it. 5 page, Olswang, on behalf of (UK), say that if the patents are
6 I would like to turn to the position of both ZTE 6 found to be valid and infringed, they will then take what they
7 Corporation and ZTE (UK) Limited in these proceedings. I can 7 say is a FRAND licence, but that is only in relation to the UK
8 do this fairly briefly but the issues arising in 8 patents. So Vringo goes back and says, "Yes, but what about
9 correspondence between the parties at least in some respects 9 the global licence?" This is therefore the letter of the 28th
10 are important in establishing where the parties stand and why 10 March. So it pointed out that ZTE (UK)'s response did not
11 there is a real issue between them. Can I first start in 11 address the actual offer which was to Corporation and plainly
12 bundle C2 with the offer of a FRAND licence to ZTE Corporation 12 covered the UK. The letter enclosed a detailed term sheet
13 on 25th September of last year, C2, tab 1, pages 1 and 2. 13 which your Lordship will find at tab 15, and I will come to
14 This letter pointed out that ZTE had, in effect, been selling 14 that shortly. It was confidential but it was available to be
15 standard compliant equipment since 2002 and, as it stated in 15 shown to Corporation.
16 the second paragraph, ZTE has had a very long period of time 16 Just so that your Lordship is aware of why it was
17 to evaluate and consider patents in the portfolio -- this is 17 confidential, my client in fact has no objection to it being
18 the Nokia portfolio -- and has evidently decided not to take a 18 public. The fear was that if it was not simply limited to
19 licence to them. It points out that ZTE is familiar with the 19 these proceedings, Corp would rush off to the Chinese courts
20 ETSI IPR regime and ZTE is listed as having declarations. 20 and get a pre-emptive FRAND determination in its favour.
21 Then, on the second page, Vringo invites ZTE to consider 21 There is no objection to those terms being made public so far
22 whether any licence to the patents is required. "If ZTE 22 as my client is concerned otherwise provided there is a
23 determines that a license is required, we invite ZTE to make a 23 preliminary issue on the terms.
24 concrete request for such license, identifying the patents to 24 The letter asked whether ZTE Corporation was prepared
25 which ZTE would wish to take a license, and the consideration 25 to ----

[2] (Pages 4 to 7)
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VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS

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1 MR. JUSTICE BIRSS: Sorry, Mr. Green, just to make sure I have 1 companies (save that the term sheet may be shown to the Judge
2 understood that, in my simple minded way, if I write a 2 in these UK proceedings or to the European Commission if
3 judgment in your favour, I can include the terms and if I 3 either party wishes to do so). As ZTE UK is no doubt in
4 write a judgment against you, I cannot? 4 communication with its parent about this dispute, our client
5 MR. GREEN: Yes. That is the confidentiality issue. 5 has no objection to the term sheet being transmitted to ZTE
6 MR. JUSTICE BIRSS: That is all right. It was not a criticism at 6 Corp on ZTE Corp first confirming that it will treat the term
7 all. 7 sheet on the above confidential basis. This is subject to
8 MR. GREEN: I understand. I am just confirming from behind. 8 further agreement between the parties or court order.
9 Vringo asked whether or not ZTE Corporation was prepared to 9 "Our client considers that all of the patents in suit in
10 take a licence, and the letter cross-referred to ZTE's request 10 the UK and German proceedings as currently constituted, and
11 that Vringo issue no further proceedings which is in the final 11 all the patents in issue in the French saisie proceedings,
12 paragraph of that letter. 12 would be licensed under the term sheet.
13 MR. JUSTICE BIRSS: I am sorry, Mr. Green. I am afraid that as a 13 "In order to clarify the issues in dispute, we consider
14 result of me asking you questions I have now not picked up 14 that it is now incumbent on your client to confirm whether ZTE
15 what you were referring to. 15 Corp is willing to take a licence on these terms and, if not,
16 MR. GREEN: I am sorry. Let me take you slightly more 16 what its objections to these terms are. Therefore, please
17 systematically through this letter starting at page 16. The 17 inform us by 11 April whether: (a) the terms proposed are
18 letter in the second paragraph states: "Our client wrote to 18 satisfactory, in which case a licence agreement can be
19 your client's parent company - ZTE Corporation - on 25th 19 negotiated immediately between the parties on the basis of the
20 September 2012 stating that our client was prepared to license 20 term sheet; (b) the terms proposed are rejected; or (c) the
21 all of its standards-essential patents .... This remains the 21 terms proposed are satisfactory in principle, save that your
22 case. At no point until your letter of 14 March 2013 has your 22 client or its parent company would wish to negotiate certain
23 client, ZTE UK, or its parent company indicated that it would 23 aspects of the terms (in which case, please indicate which
24 be willing to take any licence under pour client's patents, or 24 terms would be negotiated).
25 sought to negotiate a licence. Neither has your client stated 25 "If your client or its parent company is prepared to

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1 in its Defences that it is entitled to a licence on FRAND 1 negotiate now on the basis of the term sheet, our client is
2 terms and that it undertakes to take such a licence, or put 2 prepared to allow a reasonable period for such negotiations to
3 forward any FRAND-related defence to liability or relief. 3 take place on appropriate terms as to confidentiality and will
4 However, your client made a number of requests in your letter 4 work with your client and its parent company to establish a
5 of 17 January 2013 that are predicated on some or all of these 5 procedure for the timely and efficient settling of licence
6 points being in issue in these proceedings. Also, from your 6 terms."
7 letter of 14 March 2013 and your second letter of 22 March it 7 Then the next paragraph sets out the patents which have
8 is apparent that your client considers that it may refuse to 8 been declared ETSI standards. This is in response to various
9 negotiate the offered FRAND licence to our client's portfolio, 9 questions. "Our client is prepared to license its essential
10 compel our client to litigate its rights patent per patent and 10 patents on FRAND terms .... and is prepared to negotiate
11 (if your client is unsuccessful in its defence of the patent 11 ..." Then we have 3. It is not an unimportant point but one
12 actions) claim an entitlement to a licence to any patents 12 which does not arise now. "Should your client refuse to
13 found valid and infringed. No basis for such an alleged 13 confirm that it is willing to license our client's
14 entitlement is explained or pleaded. 14 standards-essential patents on FRAND terms, our client will be
15 "Given the importance of this issue to the management of 15 seeking an injunction, delivery up or destruction in relation
16 these proceedings, we do not consider that it is appro pirate 16 to any products which are found to infringe a valid claim of
17 or acceptable to run the case to the CMC without your client 17 any of the 6 patents in suit." The reason it is important
18 clarifying its position. 18 that that marker was put down is because it is at least
19 "In order to make our client's position clear, we now 19 theoretically possibly that, at the end of the patent's suit
20 enclose our client's proposed terms for a licence under its 20 in which the claimant had been successful, it would say, when
21 portfolio of standards-essential patents. As this is a global 21 it came to relief, "You were not a willing licensee. You
22 licence it is between Vringo Infrastructure Inc. And ZTE Corp 22 forced me to go through the mill on litigation. You have
23 but will be for the benefit of all ZTE Corp's subsidiary 23 therefore lost your ETSI rights and I am entitled to an
24 companies include ZTE UK. This term sheet is confidential to 24 injunction, not just damages." But that is for the future.
25 the parties to these proceedings and their respective parent 25 Then there is the last paragraph: "Finally, you asked

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VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS

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1 for confirmation in your letter of 1 March that our client 1 only after we have litigated the hell out of you and
2 will not issue further proceedings on any other patents in its 2 established that some of the patents are not valid and are not
3 portfolio. Our client wishes to resolve the real issue 3 infringed". "Use" really goes to whether a standard-essential
4 between Vringo Infrastructure Inc. and ZTE Corp and its 4 patent is really essential. As we all know, there are
5 subsidiaries (together, 'ZTE') (whether ZTE will take a 5 probably quite a large number of patents which are said to be
6 licence under our client's portfolio) without unnecessary 6 part of the standard but which can be worked around just in
7 litigation. The prompt negotiation of a licence on the basis 7 very general terms.
8 of the enclosed term sheet will remove any desire by our 8 At this stage can I just ask your Lordship, to put this
9 client to bring further patent actions in the UK and 9 letter into context, to go to Mr. Burdon's witness statement
10 elsewhere, based on its standards-essential patents." That 10 at C1. I will come back to the letter in a moment. This is
11 was the offer. 11 just so that your Lordship has the defendants' position well
12 The response to that is on the next pages. On page 19 12 in mind. It is C1, tab 7, paragraph 12, page 5 of the
13 you have the response in relation to the UK, and on page 22 13 internal numbering.
14 from Corporation. I will start with Corporation because this 14 "ZTE UK's position on the CMC is that the two cases
15 does respond to the letter. You will see the inconsistent 15 should continue to proceed in the usual way of patent
16 positions adopted by ZTE Corp and UK. Corp starts by saying 16 infringement proceedings, as they have done to date. The
17 -- this is Olswang -- "We have been instructed by ZTE 17 issues on remedies will only arise if any of the patents is
18 Corporation to respond to your letter of 28 March 2013, in 18 held to be valid and infringed. For the reasons I will
19 which you proposed a global licence between Vringo and ZTE 19 explain, I consider that the Court's judgment on the validity
20 Corp under Vringo's worldwide portfolio of SEPs. 20 and infringement of the two sets of three patents in these
21 "As has been explained in correspondence in relation to 21 proceedings will assist Vringo and ZTE Corp separately to
22 the existing UK patent infringement proceedings between Vringo 22 negotiate a worldwide licence." That is consistent with the
23 Infrastructure Inc and ZTE (UK) Limited, the licence you have 23 letter from Corp which is that they are interested in a global
24 proposed extends considerably beyond the six UK patents in 24 portfolio.
25 issue in those proceedings. It is therefore appropriate to 25 Perhaps I should just read the rest of that paragraph to

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1 respond to your proposal separately from those proceedings. 1 save coming back to it. "I also consider that it is an
2 We note that your proposal is on behalf of Vringo 2 efficient and effective way to proceed. Further, Vringo's
3 Infrastructure Inc and the licence would be subject to and 3 position regarding ZTE UK's lack of entitlement to damages in
4 interpreted in accordance with the laws of the United Kingdom, 4 lieu of an injunction raises possible competition law issues
5 by which we presume you mean the laws of England and Wales". 5 which might need to be referred to the CJEU. It seems to me
6 Then there is this: "ZTE Corp appreciates Vringo 6 that this Court could not make such a reference unless and
7 finally providing a detailed licence proposal. ZTE Corp is 7 until it had decided that one of Vringo's patents was valid
8 interested in seeking to agree with Vringo a licence under 8 and infringed and was considering whether to grant an
9 Vringo's SEPs on FRAND terms. However, ZTE Corp would 9 injunction or damages in lieu of an injunction."
10 appreciate further information and clarification ..." That is 10 So the position of Corp is quite clearly that it wants a
11 a pretty unequivocal statement that they are interested. 11 licence and that, at best, the UK suits will assist it in
12 Your Lordship might just wish to put by that "confirmed in 12 bringing forth a commercial resolution between Corp and Vringo
13 witness statement Burdon, paragraph 12" which I will come to 13 Infrastructure.
14 shortly. That is Mr. Burdon on from Olswang for the 14 Going back to the letter, the remaining responses are
15 defendant. 15 essentially questions about a licence. There is no objection,
16 They are interested in negotiating a global licence but 16 of course, to a potential licensee asking questions. It is
17 they seek further information. It says at 1, "Please provide 17 what one would expect and one would expect it as a precursor
18 a list of the patents". Paragraph 2 is not unimportant for 18 to the parties sitting down and having a serious negotiation
19 what it does not say. "The proposal appears to be structured 19 about the portfolio. Unless my learned friend wishes me to
20 on the assumption that if a patent has been declared essential 20 read any paragraph I was not going to go through the remainder
21 to a standard it must be used/infringed in equipment which is 21 of those.
22 said to be standards-compliant. That assumption is not 22 The offer itself is worth bringing to your Lordship's
23 necessarily correct. Please confirm that the royalty will 23 attention. It is at tab 15. This is the term sheet. It is
24 only be payable if the patent is actually used." There is no 24 explained that it is, as it were, the guts of the agreement.
25 reference to, "Please confirm that the royalty will be payable 25 There would need to be a lot of ordinary template language

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VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS

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1 around it which would be subject to negotiation but it 1 ZTE UK to take a licence under each, or all, of the three UK
2 essentially, at base, offers licences of essential patents 2 patents which Vringo has asserted in each of the two sets of
3 related to GSM, UMTS or LTE. It is offered that they are the 3 proceedings which it has commenced in the UK. Neither is it
4 essential patents which are to be the subject of a portfolio. 4 possible to sub-divide, apportion or otherwise discern a
5 It is said to be a global licence, but the licence does offer 5 royalty rate for each of the 6 UK patents in issue. Indeed,
6 a negotiation as to some parts of the portfolio by genus or 6 the global royalty rate you propose would remain the same if
7 type. There is a past release in the event that the licence 7 any, or all, of these six patents in issue were held invalid
8 is entered into so that what might have, ex hypothesi, been 8 and/or not infringed." I will come back to that later because
9 ten years' worth of infringement is swept aside. That is 9 it is not strictly true.
10 clause 2(b). Royalty rates are set out in 2(c) and (d), but 10 "Your proposal does not, therefore, provide particulars
11 it is said they are for negotiation. As I have said, my 11 of the relief sought in these proceedings as requested on page
12 client has absolutely no objection to its position being put 12 3 of our letter .... It is important that the defendant is in
13 in the public domain. This is its opening offer to anybody 13 a position to consider and assess the claims which are made
14 who wants a licence. 14 against it. In light of your client's acceptance that the
15 There is then, as it were, no nullity proceedings in 15 patents in suit have been declared essential, and in light of
16 clause 3(c). It is a form of no challenge but that almost 16 the fact that our client has agreed to take a FRAND licence on
17 suggests it is pejorative. It makes perfect sense that if 17 any of those patents declared essential and held to be valid
18 there is a licence, the parties then dismiss nullity 18 and infringed ...", in other words, a UK patent only if valid
19 proceedings for claims of invalidity around the world. 19 and infringed and essential, what I would describe as a
20 This is Vringo's offer. It is an invitation to 20 contingent acceptance, highly contingent.
21 negotiate. It is an attempt to settle the real dispute 21 Then the next sentence states: "We, therefore,
22 between the parties. It is cards face up on the table. We 22 reiterate our request that you provide full particulars of the
23 suggest that it is not suggested by the defendants that it is 23 relief sought including the terms of a draft licence
24 not a FRAND-compliant offer put forward in good faith. If 24 identifying FRAND terms, the royalty rate which Vringo
25 they have objections they simply come and tell us when they 25 proposes ZTE UK should agree in relation to each of the

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1 sit down and negotiate. 1 patents in suit in these proceedings and the damage alleged to
2 I dealt with ZTE Corporation. ZTE (UK), the defendant, 2 have been suffered. We wish to avoid a position where costly
3 responded on exactly the same day, 18th April. This is back 3 proceedings are pursued in the UK which could easily have been
4 in tab 1 at page 19. ZTE (UK) comes back with an inconsistent 4 resolved. Your client's stance of refusing to say what it was
5 offer, an offer inconsistent with its parent's offer. Two 5 is unhelpful." That is, if I may say so, a bit rich given
6 letters come out from Olswang on behalf of D1 and putative D2. 6 that the letter of the same date, sent by Corporation, was
7 I will just take you through the salient parts. This refers 7 agreeing that they would be quite happy with a global licence
8 to the letter of 28th March and the enclosed confidential 8 which would cover the UK, and Mr. Burdon's acceptance that in
9 proposal for a licence. It describes the offer as a proposal 9 fact this piece of litigation is merely one small step on the
10 for a licence under the entire portfolio of SEPs and extends 10 way to a global licence.
11 to all countries. It is a global licence between Vringo 11 "You appear to be of the view that the point we have
12 Infrastructure Inc and Corp, but for the benefit of UK, and 12 been discussing in correspondence about the defendant's
13 would include, as they recognise, all the patents in suit in 13 entitlement to, and the determination of the terms of, a FRAND
14 the UK as well as Germany and France and, indeed, the other 14 licence under the patents in suit in these proceedings needs
15 litigation which is ongoing or about to commence around the 15 to be specifically pleaded. We do not agree. It is
16 world. They then say they do not consider it necessary or 16 self-evident that this case is only about money since your
17 appropriate to address Vringo's more general proposal, and it 17 client is a licensing undertaking asserting patents which have
18 is more appropriate to discuss that separately. Your Lordship 18 been declared to be standards essential and has no legitimate
19 has seen that. 19 claim to an injunction."
20 Then they say: "The proposal provides for a single, 20 In one sense, that is absolutely correct. We are a
21 indivisible royalty rate for all Vringo's SEPs (save that 21 licensor. We are prepared to grant a licence on FRAND terms
22 there is an option to take separate licences under the GSM, 22 and it is a money dispute. The parties both agree that it
23 UMTS and LTE SEPs) including patents that are not in issue in 23 needs, in all commonsense, be a global licence, but it would
24 these proceedings which may neither be claimed to be valid nor 24 be wrong to say that if they prove themselves to be an
25 said to be infringed. The proposal does not appear to enable 25 unwilling licensee that my client would not reserve the right

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1 to argue at a later stage that it is entitled to an 1 issue now stands between the parties.
2 injunction. 2 Can I now make my submissions on why we say FRAND should
3 "However, to avoid unnecessary correspondence and to 3 be determined first. I will lump my submissions under five
4 ensure that our client's position is clearly stated and in 4 headings. The five headings are basically as follows. One is
5 issue, we propose to amend our client's Defence in each of the 5 that there is a strong and, if I can use the word, "ripe", lis
6 two actions by addition to paragraph 10 of the following 6 between the parties which cries out for resolution. Secondly,
7 text." Then they summarise the gist of their amendment. Your 7 a FRAND determination will enable ZTE to make all the
8 Lordship will have seen that. They are effectively saying 8 arguments that it would wish to make about the strength of the
9 that if everything goes against them, then they will have a 9 portfolio. This can be seen very clearly from the approach of
10 FRAND licence, please. "Please let us know [if you] consent 10 the US courts in Microsoft and Motorola. Thirdly, and in some
11 to this amendment". 11 respects related to the second point, FRAND trials can be seen
12 That position set out on 18th April was more or less 12 to be quick and effective in terms of both case management and
13 confirmed in a letter of 3rd May, a few pages on, in which 13 speed of resolution. Fourthly, in comparative and relative
14 they effectively confirm that they are only prepared to take a 14 terms, a FRAND trial will save considerable time and cost and
15 licence in relation to UK patents held valid and infringed and 15 will avoid the risk of wasted court proceedings. Fifthly,
16 essential. They will only take a licence with UK as 16 determining FRAND licence rates is not only consistent with
17 effectively licensee. But it is interesting, and I can do it 17 the philosophy behind SSO, the Standard Setting Organisations,
18 at this stage to avoid me coming back to it later, to look at 18 but it is beginning to become a much more widely acceptable
19 the 3rd May letter which is at 27. They attach their proposed 19 course for courts to take.
20 amendments to the defence. I will make some submissions now 20 Turning to the first of those, that a strong and ripe
21 about the lis between the parties, what is the essential 21 lis exists, as I have said, it is essentially common ground
22 dispute between the parties, because there is really no 22 that the case will ultimately be resolved in a global licence
23 disagreement between the parties on this aspect of the case. 23 with Corporation and not (UK), and that we have made an offer
24 They are proposing amendments to the defence in which they say 24 which is face up on the table and subject to negotiation. The
25 that they are entitled to a FRAND licence, and the basis upon 25 key terms are therein set out. There is, in those

[Page 21] [Page 23]
1 which they do that -- this is what their proposal is and it is 1 circumstances, a very clear and indisputable lis between the
2 translated into the amended defence -- I will summarise as 2 parties. ZTE's own pleading, its amended defence, raises the
3 follows. First of all, they say that declarations were made 3 same legal issues as do Vringo, namely, our commitment to act
4 by Nokia to the Standard Setting Organisation, the SSO. They 4 in accordance with FRAND terms. It does not matter whether
5 say that we have committed in the patent purchase agreement 5 one puts that in the context of declarations by our successor
6 with Nokia that we will be bound by their prior declarations, 6 in title, our own willingness to act in accordance with FRAND
7 and they rely upon what they say are our obligations under UK 7 or competition law. There is a clear, legal issue between the
8 and EU competition law, in particular, the law relating to 8 parties as to whether those terms are or are not FRAND and,
9 dominance and abusive dominance. They say you have a duty to 9 indeed, would go so far as to include the question whether our
10 grant licences on FRAND terms. 10 offer is not FRAND because it is per patent and does not break
11 We agree that those are the disputes in law between the 11 it down into state by state. So there is a clear lis.
12 parties. The first two might be described loosely as 12 ZTE itself has pleaded an undertaking to accept a FRAND
13 contractual. That is certainly how the US courts look at it. 13 licence under the relevant patent in the UK proceedings. For
14 Those would be relevant when I come back to explaining why the 14 your Lordship's note, it is the amended defence and
15 court has jurisdiction to grant a declaration. 15 counterclaim, paragraph 14. That is bundle B, tab 10. That
16 The position, therefore, as between the parties now may 16 is only in relation to (UK) of course but, none the less, they
17 be summarised as follows. ZTE Corporation has, since coming 17 were prepared to give a FRAND undertaking. Although it might
18 off the fence on 18th April, more or less gone to ground but 18 not be true to say that this is purely contractual, none the
19 it is the lynchpin. ZTE's case is that it wants a UK patent 19 less for declaration purposes there is a contractual lis
20 suit to be resolved because that will facilitate a global 20 between the parties and there is a clear competition law lis
21 settlement with Corp. Elsewhere in the world, ZTE is busy 21 between the parties.
22 entering into global portfolio licences. We have put in 22 Why do I say the lis is ripe? The question might be
23 evidence of the very recent licence with Microsoft, and 23 asked, is it premature? Let me take you to ZTE's own
24 arguing rigorously against the position it takes in these 24 submissions in the US litigation with InterDigital which
25 proceedings. That is the correspondence. That is how the 25 addresses when litigation is ripe for a FRAND determination.

[6] (Pages 20 to 23)
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1 This is bundle C4 at tab 12. The context of this case can be 1 reason, or the philosophical reason or legal reason why they
2 summarised very briefly. It is set out on page 1 of the 2 say contingency should not arise is at the bottom of page 17
3 pleadings, page 7 of the file number. InterDigital, IDC, had 3 under the heading, about seven lines down. "Moreover,
4 filed a second raft of patents in suit against the two 4 Defendants seek a FRAND rate determination as to IDC's entire
5 defendants, ZTE and Huawei. Both defendants then filed a 5 US 3G and 4G declared essential portfolio. Even if there were
6 counterclaim which they described as compulsory for a request 6 a finding of non-essentiality, non-infringement or invalidity
7 that the court set a FRAND royalty for all of IDC's portfolio. 7 as to one or more of the individual patents-in-suit, it would
8 This was the US portfolio, the important point being that it 8 not negate Defendants' commitment to license IDC's 3G and 4G
9 was much wider than the patents in suit. These were 9 portfolio ..." In other words, an argument about individual
10 described, your Lordship will see at the bottom of page 7, as 10 patents in suit, even the crown jewels of InterDigital's
11 counts IV, V and VI. Those were the counterclaims for 11 portfolio, is irrelevant, so they say.
12 declarations of the FRAND royalty. 12 Coming back to page 14 ----
13 One can pick up ZTE's own submissions on page 13 of this 13 MR. JUSTICE BIRSS: I litigated some of InterDigital's crown
14 bundle. What I will do, if I may, is that I will deal with 14 jewels once, you know.
15 this document comprehensively now and then I will make 15 MR. GREEN: I understand so. Your Lordship may have a view as to
16 submissions about it. Page 13: "Jurisdiction Exists over the 16 what was a crown jewel or not.
17 Declaratory Judgment Counterclaims (Counts IV, V and VI), and 17 MR. JUSTICE BIRSS: Quite!
18 the Court Can and Should Exercise Jurisdiction over Them. A. 18 MR. GREEN: Turning back to page 14, dealing with IDC's assertion
19 The Declaratory Judgment Counterclaims Are Ripe for 19 that it is all highly contingent, they go on to strongly
20 Adjudication. Counts IV, V and VI are ripe for adjudication. 20 refute that. They say that it rests on a misreading of the
21 If the parties had not disagreed over what a FRAND rate is, 21 counterclaims. This is about line 5. "In fact, the
22 they would have entered into licenses and the present lawsuits 22 counterclaims state that each of the Defendants 'has been and
23 would not have been filed." So ZTE's position is, "We want to 23 is willing to license each of the Combined Asserted Patents on
24 enter into a licence. There is a disagreement, on this 24 FRAND terms and conditions' ... Defendants repeatedly have
25 occasion, over rate, but we would have entered a licence 25 made clear their unqualified commitment to pay the FRAND rate

[Page 25] [Page 27]
1 otherwise, and that makes it ripe". 1 set by the Court. There are no qualifications or reservations
2 "A declaratory judgment that IDC has waived the right to 2 in this commitment then or now.
3 obtain injunctions for its declared essential patents and that 3 "IDC argues that Defendants could 'change their
4 it failed to comply with its obligation to offer FRAND 4 positions' and that they might 'at the end of the process deny
5 licenses would dispose of IDC's claims for injunctive relief 5 the applicability of any judgment unless and until each patent
6 in both this court and in the ITC." So would the 6 is found valid and infringed' .... Both cases are inapposite.
7 determination assist in disposing of outstanding claims. 7 "In Apple v. Motorola, Apple expressly made acceptance
8 "The Court's setting of a FRAND rate, which Defendants 8 of the judicially determined FRAND rate contingent upon the
9 have unequivocally undertaken to pay" -- that is ZTE and 9 rate falling below a specific value ... Apple's failure to
10 Huawei -- "together with the companion orders of specific 10 commit to paying the court-determined rate was the sole basis
11 performance that Defendants have requested as remedies, would 11 for the decision of the Apple v. Motorola court to refuse to
12 resolve these lawsuits entirely" -- that, of course, is the 12 declare a FRAND rate. There is no such failure here.
13 US patents in suit -- "These declaratory relief claims are 13 Defendants have not hedged their commitment to pay the
14 ripe, and jurisdiction exists, under all three prongs of the 14 judicially determined FRAND rate.
15 inquiry of Armstrong World Indus ..." 15 "Rembrandt was also very different from the situation
16 Then they go on to say: "IDC's assertions that (1) 16 here. Like Apple, the defendant in that case equivocated on
17 Defendants' 'willingness to agree to FRAND licence terms 17 its commitment to pay the rate set by the court, reserving the
18 applies only to patents that are valid, infringed and 18 right to argue that 'no payments are due under the license',
19 essential' ..." So IDC were saying, "But you have only agreed 19 if the single asserted patent was found not infringed or
20 to contingency and therefore there is no point in having a 20 invalid. Defendants, in stark contrast, have unequivocally
21 FRAND determination", which is the opposite here. Here, in 21 committed to license IDC's entire US declared-essential 3G and
22 the US case, ZTE was unashamedly, unequivocally and vigorously 22 4G portfolio on the FRAND terms set by the Court regardless of
23 asserting that it was not going to make a contingent claim. 23 whether any asserted patent is found to be infringed or
24 It goes on to explain the reason for that on page 17, which is 24 valid."
25 that there is really no point. Just flipping to page 17, the 25 Then they go on to set out some case law about

[7] (Pages 24 to 27)
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1 contingency. I think it is worth just reciting because it 1 'hypothetical'."
2 gives you a flavour. Of course, I accept this is ZTE's. It 2 Then they make the point, which I have already
3 is a one-sided submission but, none the less, it is a flavour 3 highlighted, that even if you get three findings absolutely in
4 of the US court's position. 4 their favour as they plead in this country, it still does not
5 "IDC is also wrong as a purely legal matter in arguing 5 undermine the utility of a FRAND determination.
6 that its FRAND commitment is contingent on a finding of 6 Finally, I have just a couple of other points to pick up
7 essentiality. Every court that has considered the issue 7 on the next two pages under, first of all, the heading, "The
8 agrees that 'claims based on fair, reasonable and 8 Third Prong", at page 18, which is about utility. They make
9 non-discriminatory licensing obligations are not contingent 9 the point that the court is the only forum in which FRAND
10 upon the results of patent infringement suits regarding the 10 rates can sensibly be set, and they then cite Microsoft v.
11 same patents' and that such claims are therefore ripe when 11 Motorola at the bottom. "As the court found in Microsoft v.
12 declared essential patents have been sued on: The policies of 12 Motorola, it is an 'inescapable conclusion that a forum must
13 the standards setting organizations become far less useful or 13 exist to resolve honest disputes between patent holder and
14 effective if a company who has declared its patents as 14 implementer as to what in fact constitutes a RAND license
15 essential, thereby encouraging the organization to adopt the 15 agreement', and that 'the courthouse may be the only such
16 standard, can then refuse a fair, reasonable and 16 forum.'"
17 non-discriminatory license until essentiality is proven, 17 Finally, in terms of why the court should exercise its
18 either through patent infringement litigation or otherwise." 18 jurisdiction under B, it says: "For the reasons described
19 They then cite Apple v. Motorola which was a case about ETSI. 19 above, the Court's judgment on the FRAND counterclaims in the
20 "Thus, for adjudication of the FRAND obligation, it is 20 present cases will resolve the parties' overall dispute, not
21 not necessary 'to determine whether the patents at issue are 21 only over the particular patents in dispute currently, but
22 in fact "essential" because [Motorola] has already voluntarily 22 over other patents in the same US declared essential
23 declared them essential'" -- then they cite Ericsson v. 23 portfolio, thereby preventing future litigation from
24 Samsung -- "(FRAND claims can be adjudicated separately from 24 emerging."
25 patent infringement claims)" -- they cite Rembrandt -- 25 Of course, ZTE could say, "We are different here. We

[Page 29] [Page 31]
1 "(denying motion to compel defendant to either admit 1 are now asserting contingency." The point which flows from
2 infringement or concede in the alternative that it was not 2 this document is that in parallel and important proceedings
3 entitled to a license because the patent was not essential). 3 they have taken the same view as we do, namely, that FRAND is
4 The court in Apple v. Motorola (June 2011) was aware of 'no 4 important. It facilitates the resolution of global
5 cases in which the court concluded that contractual or 5 litigation. The courts are appropriate places for the
6 antitrust claims related to licensing obligations cannot be 6 resolution, indeed, possibly the only place, where such
7 resolved before resolution of related patent infringement 7 matters can be resolved, and you do not need contingency.
8 suits.' 8 Contingency is neither a bar, nor should be, to a FRAND
9 "IDC's claims of 'contingency' as to its licensing 9 determination.
10 obligations are therefore misplaced. A live dispute over 10 That is why I submit that the issue here is ripe. We
11 those obligations now exists." What they are saying here is 11 have made a full and frank offer, cards face up on the table.
12 that whatever the position of a party, the courts take the 12 We have also stated they are free to negotiate. We have,
13 view that, in law, the moment the patent is asserted, a live 13 because we did not get a response, started litigation but we
14 dispute which is ripe for a FRAND determination arises. 14 are prepared to negotiate in good faith. Vringo has indicated
15 Then at page 17 it says: "IDC's argument on 15 that as to the absence of an agreement, it is content for an
16 'conclusivity', with its citations to the Rembrandt and Apple 16 independent Tribunal to set the terms, namely the court. ZTE,
17 cases, is basically a repetition of its argument, addressed 17 for its part, has stated that it is prepared to enter into a
18 above, that Defendants can change their minds about paying the 18 global licence to resolve, amongst other things, this dispute,
19 FRAND rate that they have asked this Court to set, and that 19 and we know that it has entered into global licences with
20 this Court's judgment would therefore not be 'conclusive'. As 20 other patentees. The key issue, and I am emphasize "the" as
21 described above, however, Defendants have committed to pay the 21 the definitive article, is the global licence with Corp.
22 rate set by the Court, unlike the parties in Apple and 22 The point which ZTE makes, which I will come to, is that
23 Rembrandt. IDC also agrees that it will be bound by the 23 they want to use the UK as a forum to measure the strength of
24 Court's judgment. The mutual obligation would not be 24 the portfolio. That raises quite an interesting issue which I
25 'voluntary,' 'one-way', merely 'suggestive' or 25 will come to which is really my second point which is that

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1 the FRAND determination will enable ZTE to gauge effectively 1 amenable to legal and logical analysis.
2 the strength of the Vringo portfolio. There is no need to 2 It shows that the issue of valuation can be broken down
3 conduct a sliver analysis combining two ten day trials, times 3 into manageable and practicable steps, which fall under three
4 two three-day reading periods, 26 days, prior to a competition 4 headings: (i) the contribution of the portfolio to the
5 analysis and a reference, in order to get a handle on the 5 standard; (ii) the contribution of the portfolio to the
6 strength of the portfolio. One has to remember that in the 6 product of the licensee; and (iii) the impact of comparables.
7 United States Judge Robart assessed the strength of the entire 7 "It shows that it is not necessary or relevant for a
8 Microsoft and Motorola portfolio in seven days. 8 court to determine issues of validity and infringement prior
9 I will come now to the Motorola v. Microsoft case. It 9 to a FRAND assessment, in that (i) the assessment is made upon
10 is a very lengthy judgment. In order to speed matters up, I 10 a hypothetical ex ante basis by assuming that the parties
11 have produced a brief aide-memoire which sets out the relevant 11 negotiate a licence before the point in time at which an
12 paragraphs and points which I hope will speed me up in going 12 infringement occurs." We point out in footnote 2 that the
13 through it. May I hand up a copy to your Lordship, please. 13 assumption set out in this judgment is not as described in my
14 (Same handed) The judgment is at C2, tab 11. I have produced 14 learned friend's skeleton, namely, that the patents were valid
15 what I hope is a reasonably concise aide-memoire. The 15 and infringed. "(iii) The strength" -- frankly, anything to
16 principal points or the forensic points that we draw from it 16 do with strength, including economic importance, utilisation,
17 we have summarised under the heading "Main points arising from 17 whether the standards, or part of them, are optional or not,
18 judgment". I should just add a correction to footnote 1. In 18 are the subject of expert evidence, and those matters -- I
19 the second line it uses the word "hornet" which should be 19 mean, this seems to be particularly important -- questions of
20 "honest". No one has ever paid me for my typing skills! 20 validity, use, infringement are an integral part of
21 Although perhaps "hornet" is appropriate. 21 comparables. If one puts in front of the court a comparable
22 The main points we say flow from this which are relevant 22 which says that the royalty rate for, let us say, Ericsson's
23 are as follows, but before just summarising them I think it is 23 or InterDigital's portfolio is 1 percent, nobody assumes that
24 right to say that this is an extremely articulate and 24 2,000 patents are all valid and infringed. There is a very
25 impressive judgment. Whether or not the High Court would 25 high discount rate applied, because everybody knows that

[Page 33] [Page 35]
1 agree with it or not is really another matter. What it 1 manifestly to be true.
2 demonstrates is the modus operandi of an effectively run 2 MR. JUSTICE BIRSS: I mean, I have to say, Mr. Green, I do not
3 FRAND trial in which the judge has set out ---- 3 have any problem with that. I have not read this Motorola
4 MR. JUSTICE BIRSS: This is the judgment of the FRAND trial. 4 judgment, but nothing you have said here sounds any different
5 MR. GREEN: This is the judgment of the FRAND trial, conducted as 5 from anything I am familiar with in a copyright tribunal. One
6 a bench trial, in other words, without a jury, by the judge, 6 can do exactly this in a copyright tribunal. It is not news
7 over the period of 13th to 20th November of last year, seven 7 that it is possible to come to this kind of conclusion.
8 days. I do not know if weekends were included but let us call 8 MR. GREEN: That is a point we have made here, that whether it is
9 it a seven-day trial in which the judge heard 18 witnesses, 9 a licence of right or a copyright tribunal case, it is really
10 including the normal run of economists that one would probably 10 not that difficult.
11 expect to find instructed in the United Kingdom. 11 Under the heading "The Proceedings", we have simply
12 We say it proves the following. It shows that a FRAND 12 given a bit of background about the proceedings: mutual
13 trial can be conducted swiftly and efficiently. I will come 13 offers, Microsoft v. Motorola. Microsoft sought a
14 back to case management in a moment. We say it proves that 14 determination of the RAND royalty. They call it sometimes
15 FRAND issues are eminently justiciable and practicable. It 15 RAND, sometimes FRAND. They sometimes do not know whether
16 identifies a methodology which would guide the High Court and 16 they want to be fair or not. But it was of the worldwide
17 provides a useful, articulate and well-structured logic for 17 portfolio.
18 any future court trying FRAND issues. It sets out many of the 18 MR. JUSTICE BIRSS: Not the first time I have heard that one.
19 economic arguments that have been discussed in the FRAND 19 MR. GREEN: There is an interesting analysis on page 5 as to how
20 literature which it is likely that experts in the High Court 20 this matter, at least, has a contractual context to it. It
21 would agree upon and which the court here would also agree 21 was a bench trial, 18 witnesses, over 13th to 20th November.
22 upon, what is known as hold-up, stacking and ex ante analysis. 22 Then at page 6: "The court observed that 'more often than
23 There is a strong indicator that the actual scope of conflict 23 not' there was no dispute about evidence and that residual
24 between witnesses of fact and experts is likely to be 24 disputes could be resolved using 'law, reason and logic'."
25 relatively small and such issues that remain are readily 25 As to methodology: "The issue is ripe for determination

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1 by a court when the patentee makes clear that it is prepared 1 it was based upon which evidence which turned out to be very
2 to license on FRAND terms and for instance makes an offer. 2 largely undisputed -- for example, this portfolio goes to the
3 However, the initial offer need not be equivalent to that 3 core of something really important in the standard. It is
4 found ultimately to be FRAND..." It just needs to be in good 4 hardly disputable. That will give a slightly higher value
5 faith, because it is the opening salvo in a negotiation. We 5 that is peripheral, and it is obviously a higher value if it
6 pointed out that the same position has been taken by the 6 is optional. They identify some diminishing factors and some
7 District Court in the Hague, in Samsung v. Apple. "The test 7 interesting factors.
8 is based upon what a willing licensor and willing licensee 8 Then, comparables. An interesting point which the court
9 would agree in a bilateral negotiation at the point in time 9 ruled upon -- and an English court might take a slightly
10 prior to an infringement." It seems to be a hypothetical 10 different view on this -- is whether settlements which are not
11 observation, because the evidence which is then relied upon is 11 freely negotiated, because of litigation, were irrelevant.
12 not measured as of an artificial date; it is up-to-date 12 The court gave four examples of licences as comparables that
13 evidence. So, you do not say: "The last time there was no 13 it did not take into account. I suspect that an English court
14 infringement was 2001; let us only look at 2001 comparables." 14 might take the view that it rather depends on the
15 It is a way of really articulating the underlying principle. 15 circumstances, but there you are; it is a comparable, it is
16 "The test is practicable and seeks to simulate a real 16 for the court to measure. We do not think there is any magic
17 world bilateral negotiation. 17 in the Motorola case. We think it is common sense. That
18 "The negotiation will take account of strength of the 18 brings me to my third point, which is that a FRAND trial would
19 portfolio in terms of validity, usage and utility. This means 19 be effective, concise and efficient. It does seem to me,
20 that evidence will be adduced on the contribution or relevance 20 perhaps coming from a more competition background, that this
21 of the patent portfolio in question to the standards in issue 21 case ----
22 and the end products and also to comparables" -- strength 22 MR. JUSTICE BIRSS: I am sorry. The only bit of this I do not get
23 always relevant. 23 at the moment -- I just have not understood it, and I want
24 Of two economic issues which were said to be taken 24 to -- is whose patents were they and who was wanting this to
25 account of in negotiation, one is "hold-up", and that simply 25 happen.

[Page 37] [Page 39]
1 reflects the fact that once you have been declared as part of 1 MR. GREEN: I think both parties wanted it to happen, and it was
2 a standard, you get a sort of surge in value, incremental 2 both parties' patents.
3 value, because what might otherwise have been a fairly routine 3 MR. JUSTICE BIRSS: Oh, really?
4 patent now becomes, as it were, accredited, and the valuation 4 MR. GREEN: Motorola's patents were in suit.
5 is designed to strip out that increment but, nonetheless, 5 MR. JUSTICE BIRSS: Right. So, Motorola was the patentee.
6 measure the patent against the standard. So, there was quite 6 MR. GREEN: What perhaps we will do is just ----
7 a lot of evidence as to whether a portfolio was core or 7 MR. JUSTICE BIRSS: Microsoft was the one wanting the court to
8 peripheral or in part optional, could be worked around. 8 settle a FRAND licence.
9 Stacking -- when you enter a negotiation, you obviously take 9 MR. GREEN: Yes. But it turned out to be a mutual assessment of
10 account of the fact you are in one patentee with one licensee. 10 both ----
11 So, it is blindingly obvious that if there was 50 licensors 11 MR. JUSTICE BIRSS: Oh, sure. Well, in the end they did it. Oh,
12 and 3.5 percent, the ---- 12 really? Okay. Well, whatever.
13 MR. JUSTICE BIRSS: There was a Micky Rooney film about that very 13 MR. GREEN: Can we just check that? We will come back with
14 thing, Mr. Green -- Mr. Ten Percent. 14 chapter and verse in a moment.
15 MR. GREEN: I did not put it in, because I knew your Lordship 15 The third heading is, really, to counter a point made by
16 would know it. 16 my learned friend that this would be a mammoth exercise. We
17 MR. JUSTICE BIRSS: He gave eleven ten percents! 17 think this would be case managed not quite out of existence,
18 MR. GREEN: There may or may not be principles which an economist 18 but certainly into shape; and frankly, if the US courts can do
19 would accept or argue for in this court but, nonetheless, they 19 the exercise between 13th and 20th November, whether that is
20 are cogent, they are principled, and they demonstrate how a 20 seven days or whatever, it rather demonstrates the point. If
21 court could examine the issues. At 19, we have simply given 21 one thinks about it in practical terms, there is likely to be
22 some examples of the court's assessment of different aspects 22 some economists. The economists which were cited here ----
23 of the mutual portfolio strength, and we have picked up a few 23 MR. JUSTICE BIRSS: Did they have depositions?
24 points -- and I am not going to read them now -- but the 24 MR. GREEN: That, I do not know. I would imagine so.
25 exercise the court engaged in was relatively high level, and 25 MR. JUSTICE BIRSS: All it is, Mr. Green, the "if the Americans

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1 can do it, we can do it too" argument is all very nice, but to 1 Cost. So far as the patents are concerned, we estimate,
2 say, well, it takes seven days of US trial time does not mean 2 that is Powell Gilbert estimate, a total for all the trials of
3 that it takes the same amount of court time and party time, 3 circa 6 million; Olswang's just south of 4 million, 3.8; so,
4 and everything else. The Supreme Court does speeches in half 4 call it between 9 and 10 million.
5 an hour, if I understand that correctly -- the US Supreme 5 MR. JUSTICE BIRSS: I see. So, Powell Gilbert's 6 million ----
6 Court. 6 MR. GREEN: For its own ----
7 MR. GREEN: The European Court does 20 minutes. 7 MR. JUSTICE BIRSS: I see.
8 MR. JUSTICE BIRSS: Quite. 8 MR. GREEN: For two trials. So, roughly, both sides say circa --
9 MR. GREEN: My point is that it is manageable. Whether it is 9 and of course this is best guesstimate -- 10 million. FRAND,
10 seven or ten is somewhat irrelevant; it is a manageable 10 2 to 2.5 million, 1 to 1.2 million per party.
11 exercise. If one thinks about it, when you have this as a 11 Utility, which is, if you like, risk of this actually
12 template, whether you agree with it or not, one can very 12 being helpful if we go ahead with the patent suit.
13 simply say to the economists, "Do you agree with stacking; do 13 Your Lordship may have seen that in Germany, there is for
14 you agree that is a relevant consideration? Do you agree with 14 November, I believe it is, the infringement trial in the 919
15 hold-up?" Almost certainly, they will say "yes", which would 15 and 119 -- October, sorry -- for the 919 and 119 Patents, and
16 limit the scope for expert evidence to be given. So far as 16 ZTE have brought a nullity claim, which is certainly far
17 experts are concerned, again, given the very strong indication 17 further advanced than we are, which would be heard some time
18 by the judge a lot of it was undisputed, at an appropriate 18 next year; and that covers a portion of the patents which
19 case management point you could break it down into bite-size 19 would be in suit here. If what they want is a feel, as it
20 chunks and order the experts to sit down and agree on various 20 were, that certainly would suffice, and there is a real risk
21 propositions, which would whittle down the scope for 21 that the UK proceedings would therefore grind into the sand
22 disagreement. We have a template. You look at the importance 22 and time would be wasted.
23 of the portfolio to standard, to the end product, and you look 23 ZTE's real agenda, I think, is evident from the
24 at the comparables. There really is not that much upon which 24 suggestion that, over and above patents in suit, if we are
25 experts would necessarily disagree, which is why it can be 25 really to get to a result as to what our obligations are, we

[Page 41] [Page 43]
1 controlled. Your Lordship understands the case management 1 need a reference to the European Court. If one postulates
2 issues. I am not going to belabour them. 2 what they are really saying, we have the patents in suit, plus
3 Point 4, time, cost and utility. Time. In relation to 3 appeals, presumably, then we have a competition case as to
4 a patent suit, there are six patents at the moment. It is 4 whether we are dominant, and then interesting questions go off
5 suggested by the defendant they be tried in two tranches of 5 to Luxembourg. It is only one's guess as to how long that
6 three. Ten days each, three days reading; so, that is 26 days 6 timescale would be -- possibly, five, six, seven years. This
7 of court time. In terms of timing, we might be looking at at 7 is what ZTE is suggesting will facilitate a global settlement
8 least two years to resolve those, if they are taken 8 with its parent company.
9 sequentially. Then there are appeals. Then there is 9 Fifth issue, changes in judicial approach; and I will
10 Mr. Burdon's point that if any of them are found to be valid, 10 try and take this relatively quickly.
11 you need to have a competition or trial to determine whether 11 MR. JUSTICE BIRSS: Just before you get to that, on utility, let
12 or not Vringo was obliged at that stage to grant a FRAND 12 us say we do the same thing that the judge in Seattle did and
13 licence, which could result in a reference to the Court of 13 do what, I am afraid, in my mind I think of as a copyright
14 Justice. Your Lordship may have in mind -- and it has been 14 tribunal hearing -- this looks exactly the same as the sort of
15 referred to by my learned friend -- that the IPCom proceedings 15 copyright tribunal hearings I have done and am familiar with.
16 started in 2008. Five years on, no FRAND determination, and 16 So, you do that, you settle a licence. You say, "Here is a
17 counting. 17 licence, there are the terms, 2s 6d per smartphone," or
18 So far as FRAND is concerned, so far as time, well, 18 whatever. Then the action continues, presumably, in
19 whether it is five or seven or ten or twelve, it is still 19 principle. It does not force the action to stop, coming to
20 likely to be shorter than two 20-day trials with six days 20 that conclusion. Let us say all six of your patents are found
21 reading. It would be one trial which could, quite 21 invalid, and assume that is not held on appeal. What happens
22 realistically, be got ready within 12 months, with careful and 22 then?
23 rigorous case management. It is already accepted by ZTE 23 MR. GREEN: So far as we ----
24 Corporation that they want a global licence. It would go to 24 MR. JUSTICE BIRSS: The royalty rate cannot be the right royalty
25 the heart of the dispute. 25 rate, if you have got no patents.

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1 MR. GREEN: Well, if it is a FRAND determination, it will have 1 and lots of UK cases ----
2 taken account of overall strength. 2 MR. JUSTICE BIRSS: Yes, I understand.
3 MR. JUSTICE BIRSS: I understand. But it still cannot be the 3 MR. GREEN: So, you are absolutely right. There is no theoretical
4 right royalty rate if you have not got any patents. 4 inevitability that it will lead to a result. It cannot do.
5 MR. GREEN: That is why a FRAND negotiation takes account of 5 But that is not what FRAND is about. FRAND is about real
6 strength. It is not a perfect solution, and no one suggests 6 world practicalities and the courts taking that on the chin
7 you are going to litigate each and every one. 7 and saying that the real dispute between the parties is the
8 MR. JUSTICE BIRSS: I understand. If you agree, if you compromise 8 terms of the licence.
9 with someone and you compromise the claim and take into 9 MR. JUSTICE BIRSS: Is that what was the case in the
10 account the strength and you do exactly what you have just 10 Microsoft v. Motorola case?
11 described, if you do that, that is because you are stopping 11 MR. GREEN: I think both parties were ----
12 the action. But that is not what this does. 12 MR. JUSTICE BIRSS: The reason I am pressing on this is, as I
13 MR. GREEN: Your Lordship's point is that you cannot compel 13 understand what is being said in the InterDigital case, the
14 someone to accept unless there was some context in which it 14 defendant (if I can call them that), i.e. the not patentee, is
15 could arise. 15 saying, "I wish to be bound by this decision." I can
16 MR. JUSTICE BIRSS: Another way of putting it -- because this 16 understand that if a defendant says he wishes to be bound by
17 seems to me to be an important point; I do not want to mislead 17 the decision, then the court is perfectly capable to do the
18 you into thinking I do not think it is important, so that is 18 same thing as a copyright tribunal and do an ex ante exercise
19 why I am asking you these questions -- is, I can tell you what 19 and say, "I am going to take into account the strength of the
20 the FRAND royalty is for any given patent if it is invalid. 20 portfolio, and the answer will be 2s 6d" -- because that will
21 The answer is nil. You have no right to a royalty on an 21 be the end of it.
22 invalid patent. You never do. You can negotiate a royalty 22 MR. GREEN: Let us assume that we have some valid patents, so
23 which is different from that, but you do not have a right to 23 there is then a question of something to be paid or something
24 it. Is that not right? 24 to be granted, at which point we have said, "Our licence, our
25 MR. GREEN: Yes. There are two answers. First of all, the 25 offer, is absolute total satisfaction of our obligations

[Page 45] [Page 47]
1 a priori step takes account of strength. You are absolutely 1 either under ETSI or under Article 102, and you are not
2 right. That is where strength comes in. You look at the 2 entitled to a UK per patent licence only." At that point, in
3 strength of the portfolio, which is what Mr. Burdon says, that 3 these proceedings, the court would have to rule on any remedy
4 you want to have a chance to look at the strength of the 4 we were entitled to, or rule on the defendant's submission
5 portfolio, in which case you would have taken account of and 5 that they were entitled to a UK licence. So, it would be an
6 provided a discount on the assumption that a percentage of the 6 integral part of that litigation after the validity action.
7 patents is invalid. That is part of the headlocking, the 7 So, that issue is integral.
8 banging of heads together, where both parties -- your Lordship 8 MR. JUSTICE BIRSS: I understand. I mean, if you do have a
9 understands that. 9 standard -- you keep talking about your patents as Standard
10 MR. JUSTICE BIRSS: I understand that. 10 Essential Patents, but they are not. They are patents you say
11 MR. GREEN: Secondly, these are six out of 500. So, my client 11 are Standard Essential Patents. There is a difference between
12 would say, you know, "If you are not prepared to accept that, 12 those two things. If you have a Standard Essential Patent
13 we will just simply continue to engage in litigation." 13 which is valid, I understand that; everything you have said is
14 MR. JUSTICE BIRSS: I understand. But let us say we get to a 14 entirely right. But that is what this case is about, is it
15 point where you have no valid UK patents. 15 not? They say you do not. You say you do and they say you do
16 MR. GREEN: Then of course ---- 16 not.
17 MR. JUSTICE BIRSS: You are not entitled to any money for the UK, 17 MR. GREEN: The logic of that is that you would never ever have a
18 Mr. Green, if you have no valid UK patents. 18 FRAND determination, save in those circumstances where it was
19 MR. GREEN: That must be right. But the point is that the law 19 utterly definitive. You will see that the European
20 does not work that way. When we are dealing with 20 Commission, for example, and the FTC ----
21 declarations, we are dealing with something which has utility, 21 MR. JUSTICE BIRSS: I am sorry to interrupt you, Mr. Green. What
22 and you are not actually asking whether or not a FRAND 22 I do want to understand -- because at the moment I am not
23 determination will lead to an inevitably inexorable definitive 23 clear -- is whether the examples you are giving me are
24 result. One is saying that it will have utility in resolving 24 examples of a -- it is not quite right to call it advisory, I
25 the dispute between the parties. InterDigital v. Nokia, lots 25 understand that -- as far as I can see, the InterDigital

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1 example is not a good example of what you are trying to get me 1 because if the global FRAND royalty rate which the court
2 to do, because in the InterDigital example, ZTE, the 2 decides upon is low enough, then no doubt ZTE will say, "Thank
3 defendant, is saying they wish to be bound by the finding the 3 you very much, we will have it," and if it is very high, then
4 court is going to make. I think you have told me, actually, 4 you and ZTE will know that ZTE are never going to agree to pay
5 that that was also true with Microsoft v. Motorola, but you 5 it and you will fighting every patent in every jurisdiction in
6 have got a rain check on it. 6 the world.
7 MR. GREEN: That is right. 7 MR. GREEN: Again, the practical reality is, if we get to that
8 MR. JUSTICE BIRSS: So, you can quite see why a court in that 8 stage, I do not think any court will say that the licensee was
9 case, it is not just a -- I have forgotten the word you used, 9 a willing licensee. You take a choice: you make an election
10 but it was a good one anyway -- it is not just something which 10 between going down a FRAND negotiation and litigating the hell
11 has utility, which may or may not resolve the dispute. It is 11 out of each other. If you get to the end of the day and you
12 actually resolving the dispute. The party, the defendant, is 12 then say, "All right, I have knocked out these six patents
13 saying, "I wish to be bound by a licence like this. You have 13 but, frankly, I know you have got another 500 and I am going
14 said you will give me one. The court will tell me what it 14 to litigate you all over the world," when you lose, the court
15 is," and it will be the end of the case. But what you are 15 is going to say that that approach -- and this is certainly
16 asking me to do is something different. I understand that it 16 the way the Dutch courts and the Commission is looking at
17 has utility. If the court can say, "Well, actually, the way 17 it -- "You are no longer entitled to a licence; you are just
18 to globally settle this case is for you to pay X," then the 18 going to be injuncted." Again, there is no absolute certainty
19 parties might say, "Okay, fine, that is all right. We will 19 about this. It does not definitively lead you to a result,
20 settle"; and that is the InterDigital declaratory relief type 20 but it does lead you to the situation that the determination
21 of situation in the case law. 21 of FRAND is highly likely to lead to a resolution. That is
22 MR. GREEN: I mean, any dispute between a court in England and 22 all I need to establish. I do not need to establish that the
23 Wales can be based upon a declaration. A declaration does not 23 patents are valid or invalid. I simply need to establish that
24 have to be simply (and certainly here would not be) predicated 24 for my claim for a declaration, for the court to determine
25 purely and simply on the patents in suit. The declaration 25 that, there is utility, and I am entitled to say that the

[Page 49] [Page 51]
1 goes broader. It is, effectively, a contractual dispute 1 defendants themselves have put before this court evidence
2 between my client and putative D2, Corporation. That is a 2 which says precisely the same thing, that this is nothing more
3 perfectly justiciable issue in the courts and does not depend 3 than a pawn in a larger game of chess called global
4 upon the validity or invalidity of the suits. 4 negotiations with Corp. That is their position. I accept
5 MR. JUSTICE BIRSS: I agree. 5 that we have not had that many cases which really thrash
6 MR. GREEN: Secondly, even in relation to UK only, since it is 6 through all of the issues either on the other side of the
7 their position that this litigation is simply one step on the 7 Atlantic or here, and there are many permutations.
8 way to a broader global licence with Corp, again, that goes 8 Microsoft v. Motorola I have cited in order to demonstrate
9 directly to the utility of the lis between the parties, which 9 that it is practical and workable and can be done;
10 is over-arching the patents in suit -- it is broader than that 10 InterDigital, to show that ZTE itself accepts the philosophy
11 -- and the court has jurisdiction to resolve that. So, one 11 that we are advancing. But they are different situations.
12 should not become fixated with the patents in suit in 12 MR. JUSTICE BIRSS: They are. But the bit I am still worried
13 circumstances where a real issue between us -- in fact, the 13 about is, in Microsoft v. Motorola the court is deciding what
14 real reason we are here is to get a declaration, because the 14 the terms of the licence will be. That is it. It does not
15 jurisdiction is much broader than that. It is, as 15 matter now what the validity of those patents would be. But
16 your Lordship knows from Nokia v. InterDigital in the Court of 16 it is not clear to me that the outcome, even if I find it "in
17 Appeal, is it commercially sensitive to facilitate the 17 your favour" -- and what I mean is the judge, whoever, finds
18 negotiation? 18 in your favour that you can have a global portfolio FRAND
19 MR. JUSTICE BIRSS: But what you are talking about, as I perceive 19 licence, assume that is right for now -- and come to a royalty
20 it, is not the same as the examples you are comparing it to, 20 figure, it cannot be a binding finding that they are required
21 because what you are talking about is the court determining 21 to pay you that money, because if your patents are all invalid
22 what a global FRAND -- there is a point about whether that is 22 they are not required to pay you that money. What worries me
23 possible; I understand that; they say it is not and you say it 23 is that if you go down the route of deciding that on that
24 is, fair enough, but let us assume you are right about that -- 24 basis, it is not binding that they are required to pay you.
25 coming to a global FRAND royalty rate, and it has utility, 25 They then establish, for the sake of argument, that every

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1 single one of your patents is invalid. I know you would say 1 court considered to be a relevant consideration. It was an
2 that is unrealistic in the real world that you would go across 2 alternative to being anything determinative. That does go to
3 the whole world and do that, but it is equally unrealistic 3 the heart of the jurisdiction to provide a declaration: will
4 that you are going to win everything everywhere. If they 4 it be utilitarian, if nothing else, to provide a platform for
5 establish that your patents are all invalid, then you just do 5 settlement? What we have in this present case are the
6 not have the right to that money; and that is what I am 6 defendants actually saying that this is not a stand alone
7 bothered about, because you have created something that looks 7 piece of litigation; it is simply part and parcel of a global
8 like a binding decision, but it cannot be. You would have to 8 negotiation with a different company. That is what is very
9 have another trial to decide what the royalty rate would 9 unusual about the present case. That is its context; that is
10 actually be, based on half the patents that are left, or 10 the guts and heart of the issue.
11 whatever it happens to be. 11 I see your Lordship's point -- I am not quibbling with
12 MR. GREEN: I think the point that you are identifying is a point 12 it -- that there are some cases where a determination may be
13 that Kitchin J addressed in the Philips v. Alba and Amino 13 utterly definitive by court order and there are other cases
14 case, which is C4, tab 19. In drawing your Lordship's 14 where it might not be, but it may nonetheless have an
15 attention to this, I am not saying that the point 15 important part to play.
16 your Lordship makes is wrong. It is a question of what 16 MR. JUSTICE BIRSS: What I am worried about -- I am sorry, I know
17 relevance does it have in the overall determination. 17 I am a bit of a dog with a bone -- what I am worried about,
18 MR. JUSTICE BIRSS: Okay. 18 Mr. Green, is the legal status of the declaration you are
19 MR. GREEN: Just so your Lordship will see the context to this, 19 asking the court to make. I do not understand, frankly,
20 there was a lengthy patent dispute involving a very large 20 bearing in mind what is bothering me, exactly what it is that
21 number of patents. 21 Kitchin J (as he then was) there is thinking, because what
22 MR. JUSTICE BIRSS: Yes, I know. I heard a claim by the defendant 22 I am worried about is, to take a simple example, you have your
23 who settled it against ---- 23 FRAND trial, the outcome is, assume in your favour, that a
24 MR. GREEN: Your Lordship will know there were competition issues, 24 FRAND licence is a global portfolio for the whole thing and
25 threats issues, FRAND issues, exhaustive issues. One of the 25 the royalty rate is X, and that is the outcome. That is a

[Page 53] [Page 55]
1 issues was whether the FRAND trial should come before the 1 declaration, so it is binding on both sides. But it does not
2 validity issues. It was common ground they should deal with 2 stop, as a matter of law -- and I understand that you say, and
3 exhaustion first of all, because that was short and snappy and 3 I totally sympathise, "Come on, get real, in the real world
4 would resolve the issues. The judge, in deciding that he 4 the case would settle after that." I follow that. But it
5 would order FRAND pleadings to be served and adjourn the 5 does not determine the parties' legal rights. The parties
6 validity trial, took account of a number of considerations, 6 have the right -- they have the right in this case -- to
7 which I think are essentially important. In particular, if I 7 fight, to say, "No, your patents are invalid." You cannot
8 start reading at page 5 of the numbering of the bundle, 8 stop them from that, as a matter of law.
9 page 182 of the transcript: "All the parties accept that the 9 MR. GREEN: I disagree. It determines the right as to what FRAND
10 outstanding patent and FRAND issues cannot be tried together. 10 it. It does not necessarily determine a separate question as
11 The question is how they should be best structured and 11 to what the validity of individual components are. So, you do
12 ordered. I have indicated during the course of this hearing 12 have an equal determination of an issue, FRAND, which even my
13 that I can see, based upon the materials before me at present, 13 learned friends plead is a lis proceedings between the
14 considerable merit in deciding the FRAND issues before the 14 parties. I accept that it does not necessarily, unless there
15 conventional patent issues for these reasons. The dispute 15 is an abuse of process argument, prevent a validity challenge
16 between the parties has at its heart the issue of money. The 16 arising.
17 claimants say they are willing to offer licences on FRAND 17 MR. JUSTICE BIRSS: That is what worries me, because I do not
18 terms. Alba and Amino say they are willing to accept licences 18 understand what this determination is. The determination that
19 on FRAND terms but they are unable to agree as to what those 19 there is a royalty rate to be paid of X per handset, that is
20 FRAND terms are. If the court decides the FRAND issues, it 20 binding on the parties. But what happens if the patents are
21 may well be determinative of a large part of the case or at 21 all invalid?
22 least provide a platform on which the parties can attempt 22 MR. GREEN: What, all 500 of them?
23 constructively to settle their differences." 23 MR. JUSTICE BIRSS: Yes, all 500 of them.
24 So, the mere fact that a determination will create a 24 MR. GREEN: That is the practical reality; it could never occur.
25 platform for a constructive settlement was something which the 25 MR. JUSTICE BIRSS: I do not agree.

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1 MR. GREEN: That the court across Europe, across the world, is 1 MR. JUSTICE BIRSS: I follow that. I follow that there are
2 going to allow 500 pieces of patent litigation? 2 actually -- I know your declarations, there a number of
3 MR. JUSTICE BIRSS: That is a different point. The question is 3 declarations, but you can break it down into sub-parts, and
4 whether 500 patents are invalid, and the answer is, plainly, 4 there is a dispute, which is a dispute between you, which is
5 they could be. There is a whole case management question 5 the kind of principal issue about whether a global portfolio
6 about whether you would get that. But it does not matter. 6 licence is possible to be a FRAND licence. You say it is;
7 What I am worried about is the legal standing of the 7 I think they say it is not. Inherently, the point they are
8 declaration. 8 taking on, "Only if they are valid, we will take a FRAND
9 MR. GREEN: A declaration is legally binding as to the matters 9 licence", that sounds like a disagreement with that position.
10 declared, and that is as to the FRAND rate. That is a part of 10 That is not like a copyright tribunal hearing or a
11 the proceedings. 11 Motorola v. Microsoft hearing. That is a very specific
12 MR. JUSTICE BIRSS: But even if your patents are in fact all 12 question of law, I guess, or whatever it is -- a question of
13 invalid, the FRAND rate that I have decided is still the FRAND 13 principle -- that could be decided, just that question. That
14 rate. 14 does not bind anybody to royalty rates.
15 MR. GREEN: Then all we are talking about is juxtaposing remedy 15 MR. GREEN: My Lord, I think it would go further than that. Let
16 with validity, because of course, if you are right, if they 16 us just work it through. Let us assume that two out of the
17 are all invalid, then even on the UK patents we do not get 17 six are valid, so that there was, therefore, a remedies
18 round to a determination of what a FRAND royalty is. 18 hearing, and they say they want a licence only on those two
19 MR. JUSTICE BIRSS: Well, you do, because you have just done it 19 and they reject our terms, but they say they are entitled to a
20 first. 20 licence, and they would ask the court to fix the licence,
21 MR. GREEN: Well ---- 21 because otherwise there has got to be a remedy. We say, "We
22 MR. JUSTICE BIRSS: That is the point. That is exactly the 22 are not offering a licence on two patents. This is it. We
23 trouble. 23 will strip out the four, because that is where we are, but we
24 MR. GREEN: Our position is that even if all six were invalid, as 24 are now offering the global licence, and that is what we say
25 ZTE itself argued in the States, even if everything is decided 25 is lawful." Now, if the court says that the practical reality

[Page 57] [Page 59]
1 in our favour, there is still utility. 1 is, under Article 102, a dominant undertaking (assuming
2 MR. JUSTICE BIRSS: Yes, but that is because that is what they 2 ex hypothesi we are) -- is only obliged to a worldwide
3 were saying. This lot are not saying that. 3 licensee, such as ZTE, obliged to offer a global licence,
4 MR. GREEN: I understand that. 4 because it is not a domestic company or a localised company,
5 MR. JUSTICE BIRSS: They could do. I have to say, Mr. Green, 5 it is not an abuse, then we would be entitled to say to the
6 I can understand if what ZTE were saying in this jurisdiction 6 court that those terms are the only terms that form the basis
7 was, "We wish to enter into this with you, this process" -- 7 of a FRAND remedy. The court would then have to determine
8 effectively, it is almost like a mediation, but it is not, it 8 whether our global FRAND terms were, in fact, FRAND. One of
9 is a court deciding as a question of fact what the outcome of 9 the questions in that exercise would be per patent or global,
10 a negotiation will be; that is all it is -- "and we wish to be 10 but there may be other questions which the court would have to
11 bound by that outcome, irrespective of the validity of these 11 decide in fixing the remedy. We may say, "We do not want
12 individual patents," then everything I am saying to you would 12 FRAND any more." The court might say, "No, it is still FRAND,
13 not apply. That is what they are saying in the InterDigital 13 it is only money, and we will fix the terms of a global
14 case. 14 licence, because that is a non-abusive, FRAND consistent
15 MR. GREEN: It is not simply because we seek permission to amend 15 offer." So, it would be live, even on the defendant's case.
16 our Particulars of Claims. It is because they have raised it 16 MR. JUSTICE BIRSS: I agree. But that is not all you are asking
17 by way of defence. Even if we do not get permission to amend 17 me to do. I understand that. That is what I was putting to
18 the Particulars of Claim, they have raised as a defence that 18 you.
19 if any one of the six patents is valid, then there will have 19 MR. GREEN: If that is your Lordship's problem, then it really
20 to be a FRAND determination. 20 just simply goes to -- we want that issue determined first. I
21 MR. JUSTICE BIRSS: I understand. 21 mean, even if you just simply look at the defendant's
22 MR. GREEN: So, even if you set aside what we are claiming, which 22 pleadings, setting aside our Particulars of Claim, the
23 is that we want a broader declaration, we are still saying, in 23 amendments to it, it broadens it out, we would simply say that
24 law, the answer to anything to do with remedies is global 24 is the crux of the issue between the parties; and that would
25 licence with Corp, not per patent with UK. 25 be determinative in relation to that issue, and that would

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1 mean that you simply determine that first. So, strip out, 1 I do not think there is any way out of it.
2 forget our Particulars of Claim, just look at their defence, 2 MR. JUSTICE BIRSS: I understand that, Mr. Green. That is what
3 and work out the consequences of that. It is live, it is 3 worries me. I do not think the point of principle that I am
4 binding, it is determinative of the litigation; and because 4 putting to you can be decided without doing what you want me
5 the court would be forced, if we are right, ex hypothesi, it 5 to do, which is decide the royalty rate, which I do not think
6 would resolve the matter between the parties, and if Corp was 6 I can without knowing what whether the patents are valid or
7 included, which we say it plainly would have to because the 7 not.
8 licence is offered to it, it would need to make its 8 MR. GREEN: With respect, I do not think that can be right. Just
9 submissions -- it is not a company that is, on its accounts, a 9 think of Motorola v. Microsoft.
10 busted flush -- and then that would be determinative between 10 MR. JUSTICE BIRSS: Sorry -- unless the putative licensee is
11 us and Corp. Then there would be a judgment, and we would 11 prepared to be bound by the outcome.
12 force it abroad, get it recognised in Europe under the 12 MR. GREEN: They are. They cannot be anything else, because when
13 Regulation. 13 it comes to remedy, if we are looking for a FRAND remedy and
14 MR. JUSTICE BIRSS: I do not want to be at cross purposes. All 14 the court says, "You are entitled to a FRAND remedy," it is my
15 I am talking about is a judgment on one very specific point of 15 right to a remedy, and the court says, "No, you cannot have an
16 principle, which is whether or not a global portfolio licence 16 injunction, but I am going to grant you a licence. The law
17 can be FRAND. I can see that, because that is something which 17 says it is either ETSI or it is Article 102, and on that basis
18 does not get falsified in future, necessarily, by a finding 18 you can have a global licence." The court might say only per
19 that the patents are invalid. But I do not understand how a 19 patent. If it says per patent, it will still have to fix the
20 royalty determination can avoid being falsified by a finding 20 royalty, but the court will say that it is lawful to grant a
21 that your patents are all invalid. 21 licence without having validity determined in advance.
22 MR. GREEN: In the situation that I have identified, which is that 22 Your Lordship may have seen that this is one of the questions
23 you ignore our Particulars of Claim, you simply take the 23 that the German courts have referred to the European Court,
24 defendant's case as pleaded, when you set the worldwide order 24 whether or not you have to have a validity challenge first of
25 you will take into account that those patents are invalid, 25 all, in the Dusseldorf proceedings, and the German courts have

[Page 61] [Page 63]
1 which have been found to be invalid. They would simply be 1 always taken the view that you do not.
2 stripped out of the FRAND assessment. If they have agreed to 2 MR. JUSTICE BIRSS: Yes. Well, that is their bifurcated view of
3 take a FRAND licence -- they have pleaded they will take a 3 patents.
4 FRAND licence in the context of UK proceedings -- if the court 4 MR. GREEN: Yes, for FRAND. Never mind bifurcating validity.
5 finds in our favour that the proper remedy is a global 5 MR. JUSTICE BIRSS: It is all driven by the fact that they hear
6 licence, not a per patent state by state, because that is 6 infringement separately.
7 consistent with our legal obligations under competition law, 7 MR. GREEN: But in principle, there is never a suggestion that you
8 which is all we are obliged to do, or obligations to ETSI, 8 actually have to find the merits before you go to FRAND. The
9 that is what the court decides is lawful, then they have 9 point is, the defendants would not have the lawful right to
10 accepted that, because that is their case, they will accept a 10 control that exercise. They would not be able to say, "We say
11 FRAND licence. They cannot pick and choose and say, "We will 11 we are entitled to a FRAND licence. We ask the court to rule
12 plead competition law, we will plead ETSI, but if it turns out 12 that a per patent UK licence is the only FRAND alternative.
13 that we are wrong on those we will not accept the remedy the 13 If the court finds against us, we will not accept it."
14 court imposes upon us, because we have been found to be 14 MR. JUSTICE BIRSS: I agree. I see that.
15 infringers," that is not ---- 15 MR. GREEN: I come back to the point your Lordship quite rightly
16 MR. JUSTICE BIRSS: I understand that. But that is not the only 16 made to me: where does it crystallise into a definitive
17 contingency they put forward. 17 ruling? It is at that stage; and even if you strip out the
18 MR. GREEN: But it is one which, you know, stripping everything 18 bit about the surplusage, it does arise, on these pleadings,
19 else aside, it does mean that the court would be required to 19 on the defendant's case. It is unavoidable. It is completely
20 make a binding declaration on FRAND terms, and the court could 20 unavoidable. It is not their right to pick and choose.
21 not just say, "I will deal with half the exercise per patent 21 MR. JUSTICE BIRSS: Okay.
22 or global," because it has got to fix a remedy, which may be 22 MR. GREEN: Can I just rattle through ----
23 damages; it may be damages wrapped up into a licence; it may 23 MR. JUSTICE BIRSS: I think I stopped you before your sixth point,
24 be lump sum plus a future licence, because it is determining a 24 if that matters. I cannot remember what your sixth point was,
25 FRAND position. So, the court would have to decide that. 25 I am afraid.

[16] (Pages 60 to 63)
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1 MR. GREEN: It really changes to the ---- 1 global negotiations with Corp, is correct. That is C4, tab 9.
2 MR. JUSTICE BIRSS: (Unclear) in human affairs. Everyone is doing 2 We have shown you ZTE's own position in the US, where they
3 it, so we should do it. 3 strongly argue, by reference to authority, that this is now
4 MR. GREEN: Certainly, there was a growing recognition that you 4 normal. I have shown you Philips v. Alba, where Kitchin J
5 just simply do not go down the old validity infringement 5 allowed the FRAND pleadings to go ahead and, effectively,
6 route. I have shown you Motorola. Samsung v. Apple, in the 6 stayed the patent litigation. I do not think I took
7 Dutch District Court, there is a fairly detailed article on 7 your Lordship to that part of the judgment. It is C4, tab 19,
8 this at C3, 20. I was not going to take you at length through 8 page 8, lines 13 to 15: "As far as the FRAND issues are
9 it. It is a detailed exposition of all the FRAND issues that 9 concerned, I hope I have made it clear that the pleadings are
10 occurred in the Apple v. Samsung litigation. 10 to progress." Lines 18 to 23: "As far as the patent issues
11 MR. JUSTICE BIRSS: Right. 11 are concerned, and as I indicated yesterday, it seems to me to
12 MR. GREEN: In particular, it focused upon what is meant by a 12 be premature, for all the reasons that I have given, to
13 "willing licensee". But we simply put it in the bundle to 13 require the defendants to engage upon prior art searches in
14 demonstrate that courts are now grappling with FRAND quite 14 relation to the 16 patents currently in issue. I will give
15 independently of validity. There is the position of the 15 directions to that effect."
16 European Commission. The relevant quotes are set out in C1, 16 It is relevant that he was not saying that simply
17 tab 4, Mr. Laakkonen's witness statement. 17 because there were 16 patents and someone had given a vast
18 MR. JUSTICE BIRSS: Yes. 18 estimate of days. He said, "Well, I am not going to do 16
19 MR. GREEN: Paragraphs 16 to 18. 19 patents. I will break it down, probably, into fours."
20 MR. JUSTICE BIRSS: No doubt, it is subtler than this but, as I 20 MR. JUSTICE BIRSS: Right.
21 understand it, the position is that if you are a willing 21 MR. GREEN: Mr. Alexander would like me to draw your attention to
22 licensee, you are not going to get an injunction against you, 22 page 6, line 18: "Amino and, I understand, Alba too, are
23 and if you are not, you will. 23 prepared to have the FRAND issues tried on the basis that all
24 MR. GREEN: That is, effectively, the position. 24 the patents in suit are valid and infringed." Obviously, that
25 MR. JUSTICE BIRSS: That is what it boils down to. 25 might have been relevant to the court's determination. But as

[Page 65] [Page 67]
1 MR. GREEN: Yes. Someone who claims to be a willing licensee but 1 to that, they still wanted the technical trials afterwards.
2 then prevaricates, engages in unreasonable delay, goes for 2 So, it was merely an assumption for FRAND. Indeed,
3 years without accepting a licence, they may -- there is not 3 Microsoft v. Motorola makes it plain that you do not have to
4 enough law on it to be definitive -- they may not be a willing 4 make that that assumption, because strength is an integral
5 licensee. But the European Commission's position is that 5 part of the assessment. But they did want to have technical
6 there ought to be independent bodies, whether by arbitration 6 issues tried afterwards. So, it was not a binding assessment;
7 or through court proceedings, under which there is a mechanism 7 it was simply an assumption which might or might not have held
8 whereby parties can agree or have agreed for them FRAND term 8 true.
9 licences. Of course, the Commission's position is, 9 MR. JUSTICE BIRSS: It would not be the best they could have got.
10 emphatically, that you may stop being a willing licensee if 10 I mean, I did something like this in the Patents County Court
11 you want to litigate every single solitary patent. You simply 11 about three or four months ago. It was a little copyright
12 take the choice. You throw strength, as it were, into the 12 case about some photographs, a photograph. The claimant said
13 negotiation, as you see in Motorola, you take a view on 13 that the nightclub in question had infringed the copyright.
14 strength, and it is factored in in a different way, but it is 14 The nightclub in question said the claim was worth £100. The
15 a jolly good analysis of overall strength, which would include 15 real question was whether, if the claimant was right, how much
16 an assumption that a very high percentage of the patents may 16 it was worth, and I said, "Let's do quantum first," on the
17 be invalidly granted. That goes into the comparables. He 17 assumption that was the case, and that is what we did.
18 also refers to fact that the Federal Trade Commission have 18 MR. GREEN: I think this point is, it may be right, it may be
19 adopted a similar position, again encouraging parties to 19 wrong. Motorola says you do not have to make that sort of
20 negotiate, and part of the FTC's consent order in Motorola and 20 assumption.
21 Google involves submitting disputes to arbitration. We rely 21 Then, finally, Nokia v. IPCom, C3, tab 8. As
22 upon the fact -- and we have set out the press release -- that 22 your Lordship knows, this was a case where validity was tried
23 ZTE has entered into a global licence with Microsoft. It is 23 first and then it went to a FRAND determination, which has now
24 obviously not litigation, but it demonstrates that what 24 been stayed.
25 Mr. Burdon has said, which is that they are after worldwide 25 MR. JUSTICE BIRSS: Oh, has it? Okay. There was a trial. It was

[17] (Pages 64 to 67)
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1 going to come on about now, was it not? 1 suit or a FRAND determination is most useful in that regard,
2 MR. GREEN: Yes. I think something happened in Munich which threw 2 to which our answer is manifestly the latter.
3 everybody into confusion. Mann J, I think. 3 MR. JUSTICE BIRSS: Right.
4 MR. JUSTICE BIRSS: Oh, excellent. I thought I might have had to 4 MR. GREEN: They also say, and indeed I think we have cited in our
5 do that. So, that is good. 5 skeleton, ZTE's position in other litigation where, having
6 MR. GREEN: You might yet! 6 lost in Mannheim, they very dramatically walked over to the
7 MR. JUSTICE BIRSS: Oh, no doubt. I am not the captain of my own 7 court and handed a €100 note to the other side. Are we going
8 fate any more. 8 to go down a very long and expensive trial for them to simply
9 MR. GREEN: It is suggested that by the time that comes on, you 9 say, "Well, it is only €100"? They probably are. Well,
10 will be in the Court of Appeal. 10 inevitably they are.
11 MR. JUSTICE BIRSS: I really, really doubt that, for a number of 11 MR. JUSTICE BIRSS: Mr. Green, I know you are not saying your
12 reasons. 12 patents are only worth €50.
13 MR. GREEN: Your Lordship knows the history. IPCom initially 13 MR. GREEN: No, but that is what they will say. After all they
14 sought a trial of validity and infringement. It then changed 14 make a £2 million operating loss so they cannot afford very
15 its mind and sought a FRAND determination. This was in 15 much, if they can afford to pay us anything. Are we going to
16 May 2009, with the validity and infringement trial set 16 go down that process when again ZTE involved in the
17 down ---- 17 litigation, a FRAND determination, is infinitely more likely
18 MR. JUSTICE BIRSS: This is the one where Floyd J says, "Well, the 18 to lead to a settlement?
19 patent case is going to be in six months. So maybe if you had 19 MR. JUSTICE BIRSS: Yes.
20 done this earlier, it might have been a good idea, but it is 20 MR. GREEN: What do these add up to? They add up to an indication
21 too late." 21 that the courts are inclined in appropriate circumstances to
22 MR. GREEN: That is the context to it. I think your Lordship will 22 order FRAND determinations to facilitate settlement. They are
23 see from -- I think it is, essentially, paragraphs 17 and 18, 23 also inclined to determine FRAND matters when it is part and
24 in particular. If Mr. Alexander wants me to cite anything, 24 parcel of the litigation which, in the light of the discussion
25 I am very happy to do so. "Mr. Meade, who appears on behalf 25 I had with your Lordship earlier, it is. I come back to the

[Page 69] [Page 71]
1 of Nokia today, raises a number of points as to why I should 1 point that the defendants cannot wriggle out of that on their
2 not go down this road. First, he says it is wrong to approach 2 own case even if our case is completely ignored.
3 questions which go to quantum before the question of liability 3 But, in this case peculiarly, ZTE Corporation's position
4 is established. That is right as a general working rule, but 4 is that this would simply be on a way to a determination of a
5 the court should exercise its case management powers in such a 5 global licence. In other words, the settlement would be
6 way, amongst other things, as to promote settlement. There 6 between putative D2 and Vringo Infrastructure. There is
7 are many examples of the way in which the court does that, for 7 nothing now that suggest the courts do not do FRAND first. It
8 example, on occasions making targeted orders for disclosure 8 is an ordinary matter of case management. There is no
9 which go to quantum even if quantum is to be decided after 9 presumption that you should do one before the other. It is a
10 liability. The purpose of doing so is to assist in the 10 matter of the court's discretion.
11 process of causing the parties to settle their dispute." 11 I simply come back to the point about we are seeking a
12 As a point of principle, we strongly endorse that. We 12 declaration of our rights as between D1 and D2, whether that
13 fully understand why the judge, given the stage of 13 arises through our particulars of claim or through their
14 proceedings, did not go down the line; but he was certainly 14 defence. That is an independent lis. It arises quite
15 attracted to it, because he thought it would facilitate 15 independently of the patents in suit. It is simply not
16 settlement, which is precisely the defendant's point, that 16 connected to those patents in suit. We would be entitled to
17 they want a settlement of a global licence with Corp. They 17 bring it as a freestanding claim without any reference to
18 say, "We would like to have a bit of a view of the UK patents 18 patents in suit but it does arise on the defendants' defence
19 to help us." But we say, "Actually, if that is what you want, 19 and counterclaim.
20 FRAND is far better and far more comprehensive in giving you a 20 That is where those cases take one to. Can I now deal
21 view of overall strength than looking at a slither of UK 21 briefly with joinder and amendment?
22 patents." If that is really their concern, which they say it 22 MR. JUSTICE BIRSS: Right. I think joinder follows from your
23 is..... (Pause) Standing back on it, if what Mr. Burdon says 23 case, does it not?
24 is right, they want to get a view to help with the broader 24 MR. GREEN: Yes. It really automatically follows. Your Lordship
25 settlement, you have to ask yourself whether the patent in 25 knows the jurisdiction under CPR 19. There are two bases.

[18] (Pages 68 to 71)
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1 Does it resolve the issues in dispute between the parties and 1 that is obviously domestic UK proceedings only and, in the
2 would joining D2 be desirable? Does an issue exist between 2 alternative, a declaration as to what would constitute an
3 the new party, that is Corporation, and an existing party 3 offer to licence the defendants on the SEPs.
4 connected to the matter in dispute? Is it desirable so the 4 Then a declaration that the defendants have no
5 court can resolve the issues? 5 entitlement to individual licences.
6 Both tests, we would submit, are plainly satisfied. 6 In issue, even on the particulars of claim directed only
7 ZTE Corporation is clearly relevant to the central issue of 7 at the patents in suit, is the issue, is the term offer
8 facilitating negotiation of a global licence. It is directly 8 compliant with FRAND and is it satisfactory assuming
9 relevant to ZTE's defence because we say the answer, if there 9 ex hypothesi that one or more of the patents is valid?
10 is any infringement, is a licence to Corp, not to (UK) and 10 The amended defence and counterclaim, just really to
11 therefore it is relevant on defendants' own pleading, even 11 bring your Lordship back to the point which we were discussing
12 setting aside our amended particulars of claim. And thirdly, 12 earlier about this really being inevitable even on their own
13 because ZTE accepts that the real issue in dispute between the 13 pleadings, at tab 4, they start off in paragraph 11 with the
14 parties is a licence between Vringo Infrastructure and Corp 14 traditional kick that we are a non-practising entity. They
15 and, fourthly, because to determine any issue as to relief 15 then plead the patents that have been declared essential.
16 will require disclosure from Corp. 16 That must be the patents in suit. To the extent that they are
17 MR. JUSTICE BIRSS: Yes. 17 declared essential and they are valid and infringed, they are
18 MR. GREEN: So far as amendment is concerned, the principles are 18 entitled to a licence under each of them on FRAND terms.
19 not seriously in dispute. Amendment will invariably be 19 The claimants and/or predecessor in title have made an
20 granted at an early stage if it clarifies the real issue in 20 irrevocable commitment to grant licences on FRAND terms which
21 dispute. For your Lordship's note, White Book, page 511, the 21 means therefore that our global offer is squarely in these
22 well-known dicta from Peter Gibson LJ: courts should 22 proceedings, even on the patents in suit.
23 effectively be slow to disallow an amendment at an early stage 23 The claimant's parent company has agreed that it and its
24 which does focus and crystallise the issues. 24 group companies, including the claimant, are bound by the
25 The issues here are important issues. Your Lordship 25 commitment in the PPA.

[Page 73] [Page 75]
1 will have seen the pleading. Can I very briefly just take you 1 Further or alternatively, having declared the patents
2 to it. Draft amended particulars of claim, bundle B, tab 2. 2 were essential, it is a breach of competition law to refuse a
3 This raises the FRAND issue. Just very briefly, paragraphs 5, 3 licence. They then cite by way of example Nokia v IPCom. A
4 6 and 7 identify the ownership of the relevant patents, 4 complaint to the Commission. The Commission say -- and one
5 identifies essentiality, and identifies the willingness to 5 does not need to get into the correctness or otherwise of this
6 offer a FRAND licence. At 9 and 10 it identifies D2 and the 6 statement -- that their position is that the Commission
7 relationship between D1 and D2. That is paragraphs 9 and 10. 7 require FRAND licences under Article 102.
8 It then goes on to plead the failure of the defendants 8 They say copies of declarations and undertakings are
9 to take a licence since 2003. It pleads infringement of all 9 likely to be in the claimant's possession. "That declaration
10 of the claimant's essential patents in the United Kingdom and 10 and those undertakings" -- this is (d) on page 7 --
11 elsewhere: paragraph 16. It identifies proceedings in a 11 "recognised the obligation of a party in the position such as
12 number of different jurisdictions. It identifies that D2 has 12 that of the Claimant to grant licences on FRAND terms ..."
13 initiated invalidity proceedings in China. 13 Then they say in relation to the Samsung proceedings
14 It identifies in 19, 20, through to 25, the offers and 14 commenced by the Commission by way of statement of objection,
15 various cross-offers. 15 the Commission take the view you cannot have an injunction.
16 In 26 through to 30 it identifies the disputes which 16 Then they say at (f) that the claimant is under a
17 arise as to the FRAND terms and the need for the declarations 17 similar obligation to licence each of the patents in this case
18 which are then set out on page 7, which is a declaration that 18 and, accordingly, licences under each of the patents asserted
19 the Confidential Term Sheet is FRAND compliant and that having 19 must be made available on the FRAND terms.
20 made the FRAND offer, the claimant is not obliged to offer 20 MR. JUSTICE BIRSS: Right.
21 terms to licenses and defendants which is D1 and D2 on other 21 MR. GREEN: And then: "... the defendant will undertake to take
22 terms. 22 such a licence under each of the relevant Patents with the
23 In the alternative, a declaration that the Confidential 23 FRAND terms of any such licences to be settled by the court if
24 Term Sheet complies with the claimant's obligations to make a 24 not agreed", by either the court or a similar procedure.
25 licence available to the defendants to the patents in suit, so 25 Then they say, in any event, order damages in lieu.

[19] (Pages 72 to 75)
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1 And then the claimant is not entitled to an injunction. 1 preliminary issues into stages, sort of theoretical issues or
2 Again that just simply establishes why and how a 2 point of principle, followed by, as it were, the detailed
3 determination of FRAND on my client's basis and the other 3 evidence. Given that the courts accept that determinations
4 side's basis will have to be determined by the court. That is 4 can be made in advance to facilitate settlements -- this is
5 because they say they will undertake a licence under each of 5 not just the settlement of ordinary litigation, this is
6 the relevant patents. If they are wrong in that, the court 6 settlement in the context of an entire worldwide
7 will say, "No, that is wrong. Your paragraph 14 of the 7 infrastructure of standards setting organisations which
8 amended defence is not right. You are bound to take a licence 8 operate upon the basis that people will negotiate strength as
9 but it is on the claimant's terms, namely it is global." It 9 part of a deal. Not to litigate makes even greater sense.
10 does not matter that they have said under each of the relevant 10 Unless I can assist further, those are my submissions.
11 patents. The court will have to determine whether that is 11 MR. JUSTICE BIRSS: Thank you, Mr. Green. I know there are a lot
12 right. 12 of sort of CMC questions to sort out. This probably is the
13 I come back to my point that even if you ignore 13 big question so let us deal with it first.
14 everything in my particulars of claim, which is really just 14 MR. GREEN: Yes.
15 the mirror image of this, we would re-raise that by way of 15 MR. JUSTICE BIRSS: Thank you. Yes, Mr. Alexander?
16 reply to the defence and counterclaim and we simply mirror 16 MR. ALEXANDER: My Lord, can I address you under broadly speaking
17 image it in response and re-raise that issue. 17 the following heads: First a few points about the background,
18 MR. JUSTICE BIRSS: Okay. 18 the portfolio, the correspondence that Mr. Green took you to,
19 MR. GREEN: Therefore, we suggest that the appropriate course is 19 the terms and the parties' respective positions.
20 to permit the amendment, whether it is right or wrong. It is 20 MR. JUSTICE BIRSS: Right.
21 not disputed that permission should be granted for the defence 21 MR. ALEXANDER: So the sort of "where we are" position. Secondly,
22 and counterclaim. It is not disputed that we have a right to 22 may I address you on the issue of what is actually being
23 plead to this in which we will simply recycle the same points 23 contemplated by the proposal that is advanced; thirdly, on
24 and join in issue these issues by way of further pleading. 24 caselaw; fourthly, including the position on the Harvard case,
25 My Lord, I do not think there is anything further I want 25 the US cases and some of the foreign cases; I do not have to

[Page 77] [Page 79]
1 to say about amendment at this stage. (Pause) A point has 1 go into that in great deal because your Lordship has read
2 been put to me which I think, my Lord, is worthy of 2 that; fifthly, briefly on what might be called jurisdictional
3 consideration which is the court has jurisdiction ---- 3 issues which I hope to take very briefly; and, finally, on
4 MR. JUSTICE BIRSS: I am sure your junior is very happy to hear 4 points relating to the amendment.
5 that, Mr. Green! 5 As your Lordship knows, our position is that the
6 MR. GREEN: Worthy of enormously deep and sincere consideration. 6 proposal that is advanced or suggested is wrong in principle,
7 Is that better? Good. One could take this in stages. Your 7 impractical, and even if one takes it on its own terms would
8 Lordship has identified the issue per patent or global. That 8 actually, if anything, recommend that this court should order
9 in its own right is an important issue which could be 9 that there should be a trial of the technical issues on this
10 determined in advance. One could do the preliminary issues in 10 sample of patents to do the very exercise of testing the
11 two stages. If one is trying to work out whether or not this 11 strength of the portfolio that both parties accept would be
12 is going to facilitate a settlement, there is probably no 12 required for this particular FRAND determination.
13 better issue to be tried which might just result in heads 13 This is not one of those cases where the parties, in
14 being banged together and the parties sitting down and 14 particular the defendant, says, "Well, I accept that you have
15 settling something, which after all is what they say they 15 valid rights that are highly likely to be infringed, I accept
16 want. If that did not lead to a settlement, then one might 16 that your portfolio is a sound one and that the only thing
17 have to go on and do the maths. 17 that we are discussing is rates and comparables". That is in
18 Coming back to where I started, the parties have both 18 a sense what might be called the Copyright Tribunal model
19 said they want a global licence with Corp. The question is 19 because that is a model where it is very rare for there to be
20 whether UK proceedings facilitate that. We say most unlikely. 20 a dispute about the existence or infringement of the
21 Germany will probably get there first of all. Increasing 21 underlying rights that are subject to the proposed terms of
22 willingness of courts to grapple with FRAND. FRAND is, 22 licence -- the terms on the licence themselves. We say there
23 whichever way one looks at it, live and mandatory on the 23 is simply no basis for it.
24 pleadings, even if one simply takes the defendants' defence 24 Perhaps I can explain briefly by reference to the first
25 and ignores the particulars of claim. The court can split 25 point on the portfolio and the way that the matter has

[20] (Pages 76 to 79)
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1 developed. This is a portfolio of Nokia patents. It is 1 served our responses and so forth. Then, in January this
2 obviously not Nokia's whole portfolio of the patents that they 2 year, we wrote to them, and your Lordship sees that at page 5,
3 have declared to be standard essential. Without putting it 3 requesting certain information. It is C2, tab 1, page 5.
4 unduly pejoratively, this is a bunch of patents that Nokia has 4 MR. JUSTICE BIRSS: Yes.
5 seen fit to dispose of to Vringo in exchange for some money 5 MR. ALEXANDER: We ask them on page 7 basically what they are
6 and a chance for a bit more cash out of a licensing programme. 6 asking for in the proceedings. They come back on 1st February
7 On one view one might say these are in a sense Nokia's 7 with an unhelpful response and do not put forward any terms of
8 cast-offs. This is not one of these situations where one can 8 any kind at that stage. So we press them again in relation to
9 say ex ante this is a portfolio where one is likely to find 9 that in March, and your Lordship sees that at page 11 of the
10 even crown jewels, even prince jewels, it is a portfolio that 10 bundle, and say, "Can you actually tell us what you are going
11 is unlikely to have a huge amount of merit. 11 to do? Can you actually provide us with some information
12 It is therefore, in our submission, particularly 12 about what is now asserted to be the absolutely essential and
13 important in a case of this kind that there is a degree of 13 core part of the case which has to be heard first?"
14 rigorous testing on any view, even my learned friend's view, 14 After considerable pressing on that we get a letter of
15 because I cannot imagine that his clients would be wanting to 15 28th March which contains what they say is their offer and
16 take money from invalid patents -- well, actually, I can 16 their only offer, their only preparedness to licence these
17 imagine they would be wanting to take money, but I cannot 17 patents on a take it or leave it basis -- on the basis of a
18 imagine they would be saying they are entitled to do that. 18 worldwide proposal under the entire portfolio and it is worth,
19 The way matters have developed between the parties and 19 without going to any of the confidential material or talking
20 your Lordship has seen some of the correspondence in relation 20 about any of the confidential material openly, just indicating
21 to it and I do not want to spend a lot of time going back 21 to your Lordship what the nature was of that request.
22 through the history, but because of some of the points that my 22 Your Lordship finds that at tab 15 of C2. Perhaps I can
23 learned friend made and the impression that he was seeking to 23 just, rather than trying to go into camera, which would be
24 give that we were being unhelpful or had given particular 24 very undesirable, try and do this by just inviting your
25 positions, I do need to just show your Lordship a few of the 25 Lordship's attention to certain of the provisions of this

[Page 81] [Page 83]
1 documents. 1 agreement and why really this debate has arisen. First of
2 The way this matter started was that Vringo basically 2 all, let us cut to the chase and look at page 4. It is
3 bought this bunch of patents in August, I think, last year. 3 clause 1(d) and your Lordship can essentially read the first
4 At the end of September they write ZTE Corporation a letter. 4 five lines of that.
5 My learned friend says no response was received to that 5 MR. JUSTICE BIRSS: Yes.
6 letter. The letter was sent on 25th September. By the first 6 MR. ALEXANDER: You see what is contemplated there both in
7 week of October they had sued us. So they did not give us a 7 relation to the phones and in relation to the other matters.
8 lot of time to respond. 8 Your Lordship will appreciate that these patents are said to
9 It is noteworthy that the letter that they first send 9 be applicable in different ways.
10 does not actually propose any terms at all. Nor does it 10 Then take a look at how that is said to apply in the
11 actually say that you need a licence under these patents. 11 definitions in clauses 1(e) an 1(f).
12 What it does is it says at page 2 of C2, tab 1: "We invite 12 MR. JUSTICE BIRSS: I do not have 1(e), do I?
13 ZTE to consider again whether any license to the patents is 13 MR. ALEXANDER: I am sorry, on page 1.
14 required." Something that one would envisage. 14 MR. JUSTICE BIRSS: What you said was 1(d) was 2(d). I have it.
15 MR. JUSTICE BIRSS: Presumably the problem with the US is if you 15 MR. ALEXANDER: My Lord, you are quite right. I am sorry, I
16 assert that you do then you get the risk of a declaratory 16 thought it was a continuation of 1 because I did not see the
17 judgment against you. 17 2 on the bottom. Absolutely. Perhaps I can just invite your
18 MR. ALEXANDER: My Lord, yes, there may be all kinds of sort of 18 Lordship to read (e), (f) and (g).
19 posturing positioning reasons and so forth why a letter was 19 MR. JUSTICE BIRSS: (Pause for reading) Okay.
20 written in those terms, but, in any event, what did not happen 20 MR. ALEXANDER: Perhaps I can just make this point which is to
21 was that any offer was put forward or any proposals were put 21 indicate what the consequence of that would be and of what the
22 forward, not even a proposal which they say now is so 22 proposed terms would be independent, if I can put it like
23 important, for a worldwide licence. Indeed no such proposal 23 that. That is where matters stood in March.
24 would have been put forward but for our asking for it. 24 MR. JUSTICE BIRSS: I am sorry, Mr. Alexander, beautifully
25 What happened next is the proceedings were issued and we 25 submitted no doubt but completely beyond me.

[21] (Pages 80 to 83)
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1 MR. ALEXANDER: I am sorry. Perhaps I should be a little ---- 1 that is essentially it and at least to that extent the issue
2 MR. JUSTICE BIRSS: I think it might be simpler if we just did it 2 is take it or leave it. It is portfolio or nothing. That is
3 in camera. 3 their approach.
4 MR. ALEXANDER: Perhaps we can do it in camera. It will not take 4 MR. JUSTICE BIRSS: Would it not be helpful if you knew whether
5 me more than a minute to make my submissions on that. 5 that was right?
6 MR. JUSTICE BIRSS: I am afraid, Mr. Green, your clients will have 6 MR. ALEXANDER: It probably would be helpful generally.
7 to say who has to leave. We will only sit in private for a 7 MR. JUSTICE BIRSS: If they are right about that, then you would
8 couple of minutes. Is everyone in this room now on one or 8 probably settle pretty quick, would you not?
9 other side in this case? It looks like it. Okay. 9 MR. ALEXANDER: It would be helpful for someone to know if it was
10 (See separate transcript for proceedings in private) 10 right. Whether or not one would view things differently who
11 MR. JUSTICE BIRSS: Yes, Mr. Alexander? 11 knows, I cannot say, but at the moment they have not indicated
12 MR. ALEXANDER: We then respond to that. When I say "we", ZTE and 12 any desire to depart from that as an approach. It might be
13 (UK) respond to that, as your Lordship has seen. That is at 13 that they say, "In that case, what we will do is we will
14 page 19 and 20. ZTE Corp also responds at 22-24. Although my 14 negotiate on a per patent basis, but in that case you have to
15 learned friend is right to say that what this letter indicates 15 pay for this patent, patent X, what you would have paid for
16 is that there is not in this sense an absolute rejection of 16 the whole portfolio". One could see that if that was said,
17 the idea of a global licence for the whole portfolio, what 17 then it would not be taking the negotiations very much
18 this is not saying is that this is the basis upon which we are 18 further. My Lord may or may not be right to say that knowing
19 going to negotiate and will only negotiate. 19 that kind of information would be of assistance. It all
20 If it is suggested by my learned friend that the real 20 depends, as with all of these cases, on the bottom line as to
21 lis between the parties is only as to the terms of a global 21 what the actual terms are with respect to what is proposed.
22 portfolio and the lis between Vringo Infrastructure and ZTE 22 But, at least in principle, knowing a bit more about it would
23 Corporation is only in relation to that, with respect, we do 23 be helpful. That is why we asked them.
24 not agree. In fact, we make that perfectly clear in the 24 We also wanted to know in a sense what their position
25 letter because in paragraph 3 the letter interrogates a number 25 was in relation to this claim. Then can I come on to the next

[Page 85] [Page 87]
1 of points to try to work out where on earth Vringo is coming 1 point which is what would be required if this approach was
2 from and in paragraph 3 says: "Please state whether Vringo 2 adopted by the court in this case.
3 would also consider specifying a royalty which would apply on 3 My learned friend tries to say that this would all be a
4 a 'per patent' basis." 4 very straightforward exercise in determining other
5 Paragraph 4: "Please state whether Vringo would consider 5 Copyright Tribunal what the right rate should be for this
6 an appropriate apportionment of revenue for the purpose of 6 portfolio. As I indicated previously, with Copyright Tribunal
7 calculating the royalty." 7 cases, generally there is no dispute as to the subsistence and
8 There are questions about the comparables and whether 8 validity of the underlying rights.
9 there are any other licences granted on the 9 One point that is not in dispute between the parties is
10 standards-essential portfolio and so forth. 10 that the strength of the portfolio is a key factor in the
11 MR. JUSTICE BIRSS: You said something about revenue. I see, 11 royalty rates. This is particularly important in this case
12 "would consider an appropriate apportionment of revenue", yes. 12 because this is not a portfolio for which there exists any
13 MR. ALEXANDER: In 2 it said: "Please confirm that the royalty 13 comparable. This is not a portfolio that has been licensed as
14 will only be payable if the patent is actually used". And 14 a group of patents. It is not that one can say here, "Ah,
15 various, in our respectful submission, perfectly reasonable 15 so-and-so has agreed to pay X and therefore this evaluation
16 interrogations of that proposal. 16 should be done on the basis of what so-and-so agreed". This
17 That is answered on 3rd May at page 32 onwards. 17 is in a sense a virgin or untested portfolio. In those
18 Essentially let us just take 3 as an example on page 33: "... 18 circumstances it might be said that it is particularly
19 the offer is of a portfolio licence and not one on a per 19 important for a test of validity of parts of it to take place.
20 patent basis. Discussing offers that have not been made does 20 My learned friend says, and on this at least I agree
21 not appear to serve any useful purpose", and essentially they 21 with him, that were this matter to go forward as a FRAND
22 decline to engage in any debate other than in respect of a 22 determination we would be able to make and they would be able
23 portfolio licence and indeed the proposed amendment suggests 23 to make such points as the parties respectively wished as to
24 that they are simply not amenable to any debate on any basis 24 the strength of the portfolio. Of course one of the points,
25 other than a portfolio licence because they have said that and 25 indeed one of the first points that we would be making, as

[22] (Pages 84 to 87)
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1 indeed any defendant in proceedings of this kind makes in this 1 the exercise of saying that the parties should be able to open
2 country and is well established, is to it say, actually, the 2 the hood and see what is in the engine of these patents is
3 patents that you yourself have selected are invalid and that 3 because it is that that actually contributes to a greater
4 itself is an indication of the strength of this portfolio. 4 likelihood of settling the disputes. Although there are these
5 Perhaps I can cut to the chase here in this way. Let it 5 threats that are put up by parties to say, "Well, you know, if
6 be supposed that in this elaborate statement of case that my 6 you do not give in, there is more of the red army coming over
7 learned friend is contemplating the parties will serve on this 7 the hill on these ones. If you manage to mow the first lot
8 FRAND issue I were to plead under my particulars of 8 down, do not worry we have more coming."
9 valuelessness, if I may put it like that, the following facts: 9 The reality is that both for the purposes of settlement
10 (a) that six patents have been asserted in this portfolio in 10 and for the purposes of what might be called court settlement
11 this country and other countries out of the whole collection. 11 of terms knowing what the real strength of the patents are
12 No other patents have been asserted. Competent advisers to 12 that are said to be the crown jewels is really important.
13 the defendant would have selected those that they believed to 13 That is why in the Nokia v IPCom litigation it was done in
14 be the most potent of the portfolio and those patents are 14 that way. IPCom obviously put forward patents that they
15 invalid or not infringed for the reasons set out in the 15 thought were jolly good to begin with. They put forward a
16 defence and counterclaim and particulars of infringement in 16 whole range of others. Ultimately, as your Lordship will
17 this action. That would be a perfectly proper way of me 17 know, they suffered a fate at least in the English courts with
18 attacking any sort of FRAND determination or answering any 18 the result that there is one sort of left, if I can put it
19 FRAND determination that my learned friend would wish to come 19 like that.
20 forward with. I would say, "Here is my way, my preferred way, 20 I do not think even my learned friend would be saying
21 indeed in a sense, it is your preferred way as well on one 21 and certainly those perhaps in cahoots is too strong with
22 view, of testing this portfolio." 22 Vringo would be saying that the price for a portfolio which
23 To an engineer it is not that surprising that 23 contains one patent which at least I think in Nokia's case in
24 occasionally when one does structural testing, if I can put it 24 IPCom can easily be got round and is neither here nor there
25 like this, or, let us think about this as my learned friend 25 could possibly be the same as the price of a portfolio where

[Page 89] [Page 91]
1 selling me a job lot of how many patents are there, let us say 1 there was a significant number of patents that were valid and
2 500 used cars effectively and 500 used cars in an industry 2 infringed.
3 where, if I may pursue this analogy, one of the leading lights 3 Even on his view we are going to need to go down this
4 in the Used Car Dealers Association have said you have to be 4 exercise. That is in a sense the heart of my reason for
5 careful with these kinds of cars, they are doggy, they are 5 saying that it is in a sense premature to be considering this
6 very likely to be clocked. If I were to say, "Well, all 6 matter.
7 right, you put forward your six best cars and I will see 7 MR. JUSTICE BIRSS: Okay. Is that a convenient moment,
8 whether actually they are clocked and whether actually the 8 Mr. Alexander?
9 engine even turns on when you turn the key slightly". That 9 MR. ALEXANDER: It is.
10 might be thought to have some relevance if the vehicle 10 MR. JUSTICE BIRSS: Obviously we will reconvene at two o'clock.
11 inspector was going around trying to determine a value for 11 I will have a think about things generally but also how we are
12 that job lot of cars. Indeed the vehicle inspector might say, 12 going to manage the hearing.
13 "Wait a moment, that is a brilliant way of testing the value 13 MR. ALEXANDER: My Lord, yes. I do not actually have a huge
14 of that portfolio, much better than this hand wavy way of 14 amount more to say. I will try and keep it to half an hour or
15 saying, 'Oh, well, somewhere in that parking lot over there 15 so. If I can invite my Lord to just perhaps refresh his
16 you are bound to find something because something always turns 16 memory of the points in our written submissions.
17 up in that pile over there'." 17 MR. JUSTICE BIRSS: That is a good idea. Where is Floyd J's
18 MR. JUSTICE BIRSS: All right. 18 judgment in ----
19 MR. ALEXANDER: The consequence even of my learned friend's 19 MR. ALEXANDER: You will find that in bundle C3, tab 8. Is it the
20 approach is that it would for practical purposes be either 20 one on the IPCom case?
21 inevitable or almost inevitable that the validity and 21 MR. JUSTICE BIRSS: Yes.
22 infringement of the patents that are currently in issue would 22 MR. ALEXANDER: Yes, in fact probably it is useful just if your
23 remain in issue on the FRAND determination and there is a good 23 Lordship is thinking of reading anything over lunch to read
24 reason for it. This is not just forensic game play. 24 that and in particular read paragraph 27.
25 The reason that historically the courts have engaged in 25 MR. JUSTICE BIRSS: Okay.

[23] (Pages 88 to 91)
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1 MR. ALEXANDER: I am not sure you were taken to that, but it is 1 be possible. Your Lordship will be aware from your knowledge
2 quite useful to have that in mind. 2 of the Nokia v. IPCom litigation which, in a sense, is the
3 MR. JUSTICE BIRSS: Very good. Two o'clock. 3 best analogue, that there was a great deal of detailed
4 (Adjourned for a short time) 4 analysis. When one comes to what was proposed to be done for
5 MR. ALEXANDER: My Lord, I was just on what would be required in 5 the FRAND trial, it was much less than what my learned friends
6 the sense of the utility aspects, if I can put it like that, 6 are contemplating would need to be done in this trial because,
7 technical aspects. Perhaps to try and speed matters up I 7 for that trial, all that was contemplated was a FRAND
8 could remind your Lordship of where the evidence is on this 8 determination for a single patent in a single jurisdiction.
9 issue, particularly in Mr. Burdon's witness statement. It is 9 That, as I said, has now been effectively adjourned and I will
10 C1 at paragraph 49 onwards where he indicates the kind of 10 hand up the judgment just for completeness. It was a few
11 matters that would be likely to be required in relation to the 11 weeks ago that it was adjourned. So none of the technical
12 technical aspects and in relation to what might broadly be 12 material would be of relevance. I do not know, and doubtless
13 called the licensing/economic aspects. 13 Mr. Green is perhaps better placed to assist your Lordship on
14 First, in relation to what may be called the "strength", 14 what points are in issue in that case but it has involved both
15 I do not think there is any dispute that "strength" is a 15 patent expertise, competition expertise, licensing expertise
16 compendious word used by my learned friend to encompass 16 from lawyers, at least as far as one can see from those
17 validity, infringement, overall economic importance and so 17 instructed in that case, and that is leaving out many of the
18 forth. Each of those would require investigation, both for 18 points that would arise in this case. That in itself is 13 to
19 specific patents and potentially more generally. Your 19 15 days. So we respectfully suggest that the optimistic
20 Lordship has seen from the matters I was addressing your 20 estimates that you can just do a quick and dirty evaluation in
21 Lordship on in private that although that may be a substantial 21 five days of the FRAND issues for a worldwide portfolio of
22 exercise to undertake, the nature of the claims that are 22 this kind is not realistic.
23 advanced in this case does not suggest that it would, or at 23 Your Lordship is also very familiar with the copyright
24 least on the basis of the claims that the claimant is making, 24 Tribunal cases where no issues of subsistence arise. Your
25 be a disproportionate exercise bearing in mind the nature and 25 Lordship may recall that there was one some years ago on

[Page 93] [Page 95]
1 size of the claims that are being made. One can think, in 1 internet use of musical works where your Lordship's
2 rough terms, about the net present value of what is sought 2 predecessor heard evidence over many days. The total costs of
3 under those terms. We are talking about very substantial sums 3 that were, I think, £12 million, and that was, in a sense,
4 and it would be proportionate to deal with them in a detailed 4 just settling licensing terms. Of course, there were
5 way. You cannot just wave your hands and say, "It looks as 5 complexities in that case which might not occur in this case.
6 though there might be a claim in there that might survive". 6 I am not saying that the analogy is a perfect one but your
7 You need to look at it on a more detailed basis. Indeed, for 7 Lordship is experienced enough in this field to know that when
8 the court, the is trying to make an evaluation in relation to 8 someone says this is just a short copyright Tribunal case,
9 strength. It is very unlikely that it will want to do it in 9 that is often an optimistic assessment.
10 what may be called "a hand-waving way". 10 Then we come to competition issues. There are serious
11 When it comes to economic issues, there will be issues 11 competition issues here in relation to the arguments. It is
12 of comparables. As I say, it is difficult in this case 12 not simply one of these cases where someone is waving their
13 because there is not another comparable portfolio directly; 13 hands about competition issues and they are not big points.
14 stacking and hold-up and so forth. That is in contrast to the 14 It is in relation to the kind of licence that is appropriate
15 position in the Microsoft case, which my learned friend likes 15 under competition law, whether it is appropriate to offer
16 so much, where it appears from the judgment that 16 simply a compendious licence or whether it is appropriate to
17 notwithstanding the fact that that judgment itself ran to 17 do things on a more divided basis.
18 probably 150 pages, much of the underlying evidence was not in 18 There may be, in a sense, two layers of analysis here if
19 dispute. It may be that that is the reason why it was 19 I can develop that very briefly. Let us divorce this entirely
20 possible to do that case in a relatively short compass. It 20 from this case. In fact, forget about this industry. For two
21 was, in a sense, a breach of contract case, a breach of the 21 parties who have portfolios in the pharmaceutical field simply
22 contract to offer FRAND terms. It is very unlikely as matters 22 to say, "We are going to engage in mutual non-assert,
23 stand, and your Lordship can see the stances that the 23 worldwide, in relation to our respective portfolios", that may
24 respective parties take here and the stances that have been 24 not raise any competition concerns at all, even though there
25 taken here with respect to patent portfolios, that that would 25 is, in a sense, a worldwide licence. It is done without

[24] (Pages 92 to 95)
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1 regard to whether the rights are used and so on. It is a 1 simply do a deal in a restaurant. So those points are of
2 simply, "Let us stop this war moratorium". Equally, there may 2 particular importance in circumstances where someone is coming
3 be circumstances in the industry with which we are concerned 3 along and saying, "I want you, as an independent licensing
4 where a worldwide moratorium, effectively, may be appropriate. 4 Tribunal, to engage in this exercise". Now, I am not in a
5 I do not think one can say ex ante the detailed evaluation 5 position to say today what the points are that will
6 that simply because of the particular structure that has been 6 necessarily arise in this case. Indeed, it is impossible to
7 adopted, it is ipso facto illegal under competition law. It 7 say that entirely in the abstract. Your Lordship has an
8 may be that that is an argument but I would say that it is 8 indication of where we are going from the evidence that has
9 premature to say that it is definitely the case. If that is 9 been submitted from our competition specialists and the issues
10 the case, one would need to look in somewhat greater detail 10 that have arisen, and specifically arisen and been
11 at what the relevant terms were that one was assessing by 11 specifically referred already to the Court of Justice. That
12 reference to the competition law. 12 is why I say this is a serious set of issues that will need to
13 Let me give your Lordship a concrete example. If you 13 be looked at.
14 think about my pharmaceutical example, there is no money 14 That brings me to my final point in relation to this
15 changing hands effectively but just people saying, "We will 15 which is the position of other parties. Although my learned
16 drop hands". Let us suppose we have a slightly different 16 friend says we can just do this among friends, just between
17 example and some person says, "All right, if you give me 17 you two, in my respectful submission at least part of his
18 £100,000, or whatever it is, I will not assert any of my 18 declaration seeks a declaration as to what FRAND licensing
19 patents against you anywhere". 19 terms are. Unless, and I do not think he has suggested, there
20 MR. JUSTICE BIRSS: Yes. What I thought, and it is the same 20 is any basis for saying that the terms would be different
21 thing, is that it occurred to me that if, in this case, Vringo 21 fundamentally with respect to other potential licensees,
22 -- I should make it clear that this is a fantasy example -- 22 essentially what the court is being invited to do is to decide
23 said to you that they would give you a worldwide global 23 on the portfolio terms for everyone in the world. That gives
24 portfolio licence for a dollar, you would not say it was not 24 rise to a number of practical issues. One of the biggest
25 FRAND. You would take it. 25 issues is, if that is the invitation then it might be that the

[Page 97] [Page 99]
1 MR. ALEXANDER: Obviously one would take it, but more important on 1 appropriate course is to extend invitations to those who are
2 the competition aspect is, not only would we take it but it is 2 potentially affected by the licensing scheme as is done in the
3 very doubtful that the competition authorities would be very 3 ----
4 interested in it in those circumstances. That is because 4 MR. JUSTICE BIRSS: Yes, I know, you advertise it and ----
5 there is an agreement between the parties. Everyone can see 5 MR. ALEXANDER: You advertise it and then people can make
6 that everyone is happy, if I can put it like that, about the 6 comments. If they are not interested they do not have to
7 terms. If, on the other hand, what is being done is that the 7 come. There may be industry bodies who want to make
8 court, or the District Inspector of Terms, is being invited to 8 representations. It could be, for all we know, that Nokia,
9 settle them, then the court has to pay, in a sense, more 9 who is a beneficiary, says,"Wait a moment, I do not agree with
10 attention, if I can put it like that, to whether or not those 10 the approach" or they could say "I do agree with the
11 terms conform with the relevant competition standards. It has 11 approach". This is not so artificial because Nokia's approach
12 to pay attention to it for a number of different reasons: 12 in relation to at least the IPCom litigation was not to say,
13 first of all, because it is the court seeking to do something 13 at least so far as one can see from the way in which they have
14 that complies with the law, if it is settling terms; secondly, 14 been knocking the patents off, "We say that it does not matter
15 and this relates to a further point that I am coming on to, 15 how many valid patents you have to the licensing rate". Their
16 because if it settles terms in relation to one case of a 16 approach is, "Actually, it really does matter", and that is a
17 portfolio with respect to one licensee, and those terms are 17 matter of principle which it would be undesirable for the
18 settled on a basis that they do not depend on the identity of 18 court to determine without the participation of those who were
19 the licensee, then those terms would also potentially be 19 interested, not even necessarily in this specific portfolio
20 applicable to other licensees, other potential licensees, who 20 but in portfolio licensing generally.
21 may also be in a similar position. The declaration is made in 21 So what is contemplated is a very lengthy, complicated,
22 a sense -- what one is doing in copyright tribunal terms -- in 22 potentially multi-party dispute that involves, at least as
23 relation to the licensing scheme in respect of that portfolio. 23 part of it, the very issue that needs to be decided before one
24 In those circumstances, legality of the scheme, both in 24 even gets to that, namely, whether or not there are any rights
25 structure and in amount, is more important than if the parties 25 that trigger a FRAND obligation in the first place.

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1 I have mentioned the Motorola case where the issues were 1 Your Lordship should take a look at that and what is said
2 different. Can I just briefly address your Lordship on the 2 there in detail, not only in the part that was drawn to your
3 other cases that are referred to, the Harvard case first of 3 attention there but also in the earlier statements because it
4 all which is in bundle C4, tab 19. It is important that your 4 becomes quite clear from that that what ZTE was essentially
5 Lordship has the context and facts of that case in mind. 5 doing there was to say .... What InterDigital was saying was,
6 There was not a separate judgment. This was a running 6 "Look, I am going to the IPC. I am going to get an injunction
7 judgment, if I can put it like that, of Kitchin J. There is 7 despite the fact that I have given a FRAND undertaking with
8 another Nokia v. IPCom judgment which is in the authorities 8 respect to these patents". I do not know the full intentions
9 bundle, and there is a judgment in the Harvard case of Lewison 9 ins and outs of the approach to US law on injunctions and when
10 J which refers to this judgment as being the least worse 10 they may be sought or resisted and so forth, but you could see
11 option of the options to take. 11 perfectly well the rationale for saying, "All right, if we
12 First of all, just a few words of context which come 12 accept that there is something in that portfolio and we accept
13 from the Lewison judgment but it is not in dispute. That was 13 that we will be bound by it and you also accept that you will
14 about the MPEG pool for digital music which was a pool of all 14 be bound by it, the rational thing to do is for a FRAND
15 of those engaged in the development of the MPEG standards. 15 determination to take place first because that is the real
16 It is one of those things where you think, "Wait a minute, 16 issue between the parties".
17 these are the guys who actually invented this stuff. This is 17 So we respectfully submit that that provides no support
18 not just the odd, stray declaration, still less the residual 18 for the position that is advanced here. In fact, one can tell
19 lump of patents sold by one of them". It is a pool which, one 19 that by looking to see what even Vringo's position is in this
20 might say prima facie, is more likely to have something 20 case. If your Lordship goes back to the evidence bundle, so
21 genuinely in it one way or another. 21 that is bundle C1 at tab 10, paragraph 12, Vringo's
22 The issues in this case are that the claimant sued for 22 preparedness to be bound by the UK court's final determination
23 infringement on 16 patents originally, and they said they had 23 is actually a contingent preparedness to be bound. It is only
24 another 16 coming on behind and so forth. The issues in that 24 prepared to be bound on the basis that ZTE Corp undertakes to
25 case, as your Lordship sees from that judgment, were really 25 enter into a global licence with Vringo on terms determined by

[Page 101] [Page 103]
1 three-fold. It was whether or not the defendant was already 1 this court. So let us suppose that ZTE Corp says, "Actually,
2 licensed as a result of the claimant having licensed the 2 we dispute, even as a matter of competition law, the
3 defendant's suppliers. Then there was the issue as to the 3 appropriateness of a global licence in this case for the
4 price of the licence which, in broad terms, was the FRAND 4 reasons set out" or "We dispute the appropriateness of a
5 issue. Then there was the patent issue. Effectively, what 5 global licence before the determination of the validity of at
6 the court did was that the court did not say, "You have got to 6 least some of the patents". On this basis, even Vringo would
7 have FRAND first". What it said was, "Actually, the issue 7 turn round and say, having been through this very expensive
8 that you ought to have first is whether you are licensed at 8 exercise before your Lordship, "I never said I would be bound
9 all and, if you are, then the FRAND issue would go away". So, 9 by what your Lordship held. I only said I would be bound by
10 effectively, what Kitchin J did was to order trials in that 10 it if they agreed to be bound by it and, since they did not, I
11 order, dealing with licensing first and then the FRAND 11 am not bound. Your Lordship has settled a royalty which is
12 determination, and only if that became necessary, the patent 12 only 3/6. We do not like that, even though you have said that
13 matters. But it is important, and this is a passage that I 13 is FRAND for this portfolio, but you must be kidding. We are
14 asked my learned friend to draw to your attention, that in 14 going elsewhere. We are now going off to the French court to
15 that case the parties were prepared to approach the FRAND 15 have another court decide on a different royalty rate, a
16 determination on the basis that all of the patents in suit 16 global royalty rate for this patent, or a US court" or
17 were valid and infringed. You see that on 183. That is a 17 wherever it is, "because we do not like it".
18 fundamental difference from the position here. Indeed, the 18 So on no view is this proposal going to be one that even
19 position here is the opposite position where we approach it at 19 binds the person seeking the determination. In those
20 least on the basis that the patents are very unlikely to be 20 circumstances, it might be said, where is the jurisdiction
21 valid and infringed. In any event, the relevance of that is 21 and, if there is jurisdiction, the discretion for invoking the
22 accepted by both sides. 22 court's power to grant declaratory relief which may be wholly
23 Similarly, when we come to the position in the United 23 hypothetical and contingent?
24 States, the ZTE InterDigital case, where there was effectively 24 I move on to jurisdiction briefly. It is not part of my
25 an acceptance that ZTE would be bound by the determination. 25 case to say that there are no circumstances in which this

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1 court can determine FRAND; nor do I say that there are no 1 patent, also being necessary and proper parties to such a
2 circumstances in which a court can consider whether or not a 2 claim for a declaration, particularly if it was said that
3 global licence would or would not be FRAND. But I do say 3 there was an element of comparables or anything that was said
4 this, that in circumstances where the real issue between the 4 in this case which affected their interests to any extent.
5 parties is whether there are any valid rights to licence in 5 So my point is this, that, first of all, they do not
6 the first place, which is the real issue between the parties 6 satisfy the relevant requirements of the rules but, if they
7 here, that until that issue has been determined, so far from 7 do, your Lordship is embarking upon a potentially difficult
8 it being ripe to determine FRAND issues, it is wholly 8 and party-wise, if no other, hard to manage dispute as to
9 premature. I also say this, that if a claimant comes along 9 which ultimately there may be no substantial benefit.
10 and says, "I am not even necessarily going to be bound by the 10 So can I just conclude with this. We have put forward
11 determination of this court because it depends on other 11 directions for the trial of the patent matters in a reasonable
12 circumstances outside my control", in those circumstances, 12 timeframe. There have been discussions between the parties in
13 although one can put it as a matter of jurisdiction, it is 13 relation to them, and I think it is anticipated that if your
14 probably better put as a matter of discretion as to whether or 14 Lordship rejects my learned friend's application, those can be
15 not the court should entertain such a declaratory claim. 15 relatively easily resolved. Those trials are, in my
16 There is, of course, a final point. I am not here and I 16 respectful submission, bound to assist the parties in their
17 am not briefed for ZTE Corp, but your Lordship will need to 17 negotiations because if they show, as it were, contrary to
18 consider this aspect. My learned friend has not really 18 past experience and expectation, that there is something here,
19 addressed your Lordship on the basis upon which it would be 19 in those circumstances whether it be ZTE (UK) or ZTE Corp,
20 appropriate to grant leave to serve ZTE Corp out of the 20 they may say "All right, let us talk". If they show in
21 jurisdiction in relation to this claim. It is, of course, 21 accordance with the ordinary practice that there are no rights
22 necessary, if that is to be done and they are to be joined 22 to license in relation to the first three, that is for any
23 into these proceedings, for the court to be satisfied that 23 rational licensee and any rational licensor, it is bound to
24 there is a serious issue to be tried, that there is a good, 24 affect the approach to licensing negotiations, whether it be
25 arguable case with respect to satisfaction of one or more of 25 for licences for these patents individually in the UK or for a

[Page 105] [Page 107]
1 the gateways under CPR Rule 6 and that, in all the 1 global licence. There is, in my respectful submission, no
2 circumstances of the case, the discretionary jurisdiction of 2 basis at all for doing what is urged upon you which is
3 the court should be invoked to require, essentially, a party 3 effectively to stay my proceedings for revocation of these
4 that is not at the foreign court to engage in litigation here 4 patents and interpose into that genuine and useful exercise,
5 in relation to a speculative declaration. In our submission, 5 which has proved useful time and again in these courts in
6 no basis has been made out for satisfaction of any of those 6 bringing parties to sensible negotiations, a claim that has a
7 heads. In those circumstances, it would be quite wrong for 7 minimal prospect of that result. It is, of course, something
8 ZTE Corp to be brought into these proceedings. But if I am 8 that your Lordship will recall which is that Vringo is not
9 wrong about that and your Lordship thinks that, in a sense, 9 suggesting that patent proceedings should stop altogether.
10 they are a necessary or proper party at this stage, and your 10 They are still happily wanting to go on with matters in
11 Lordship may say that if we are dealing with patent matters 11 Germany and France and, as I understand it, have just opened
12 they are certainly not a necessary or proper party to those -- 12 another little front in Australia. So they are not saying "We
13 no one suggests that they are or would be on any view -- if 13 will stay all those pending a FRAND determination". They just
14 that is the case, then we would say that that inevitably 14 want to keep going as far as they can with those which
15 brings into play all of those others who are potentially 15 suggests that this may be more part of a kind of international
16 affected by a declaration of this kind, because all other 16 game than a genuine attempt to determine whether there is
17 potential licensees would then potentially be necessary or 17 anything really here that they are entitled to make a claim on
18 proper parties. They would all potentially be servable by 18 at all.
19 Vringo in these proceedings on the basis that a patent claim 19 We respectfully submit that this court should not be
20 had been made not against them or any of their subsidiaries 20 engaged in the business of encouraging or supporting people
21 but on the basis that a declaration was being sought in 21 who actually have no rights by the procedural to'ing and
22 relation to the worldwide licensing terms of this portfolio. 22 fro'ings to place in difficulties those of whom they are
23 Equally, it would be very difficult to resist the 23 requesting enormous sums. This court should be doing what it
24 beneficiaries, or partial beneficiaries of this patent who are 24 has always done which is to say that if there is a real issue
25 the owners of the patent in question and developers of the 25 as to the underlying merits of the rights that are advanced,

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1 that is the issue that should be determined and should be 1 made available to them, and they are wrong. They are not
2 determined in short order. 2 entitled to a per patent licence on the facts of this case
3 The only other thing I would say, and I promised I would 3 when one is dealing with a global licensee, the fourth largest
4 finish in half an hour ---- 4 supplier in the world, where we have a substantial portfolio,
5 MR. JUSTICE BIRSS: I did not say I would hold you to it. 5 including patents which have survived Munich -- a point which
6 MR. ALEXANDER: There is just one point and perhaps I can sweep it 6 has not been referred to by my learned friend. It is
7 up. It is a matter that my learned friend raised in C2, tab 7 perfectly proper for us only to offer a global licence. We
8 4. I do not think it arises for decision today but I just 8 believe that determination of that issue, even if your
9 want to make sure your Lordship has it in mind. I think it 9 Lordship considers that at this stage a determination of the
10 was suggested that if someone puts forward a licence and they 10 broader FRAND substance would be inappropriate, would be of
11 say, "I am prepared to license from you but I actually do want 11 great utility and would determine a wide range of issues on
12 to open your bonnet and turn the ignition on first of all", 12 the pleadings and would be highly beneficial as creating, as
13 that somehow they should be regarded as an unwilling licensee 13 Kitchin J put it, a platform for settlement.
14 and, therefore, that they should be subject to an injunction 14 The logic tree I think would be as follows. If the
15 for the temerity of suggesting that they might examine the 15 court decided that the proper response was per patent, never
16 nature of the vehicle before being asked to spend huge sums of 16 mind the terms, then it would be plain that our offer was not
17 money on it and its ilk. 17 FRAND, and it would determine that, in principle, a part of
18 Page 2 of tab 4, the third paragraph, is the Commission 18 ZTE's defence was valid and a part of our claim or our
19 press release in the statement of objections in the Motorola 19 response to their defence was invalid. Then, I think,
20 case. "In addition, in the Commission's preliminary view, the 20 logically, if the court was left with the notion that there
21 fact that the potential licensee challenges the validity, 21 were only six patents in suit and they were entitled to a
22 essentiality or infringement of the SEP does not make it 22 licence on FRAND terms, I can see and we see the force of your
23 unwilling where it otherwise agrees to be bound by the 23 Lordship's point that you would need to determine validity
24 determination of FRAND terms by a third party. In the case at 24 prior to FRAND because if the validity was zero the FRAND
25 hand, Motorola required clauses that prohibited such 25 would be zero. That would be a consequence if the finding was

[Page 109] [Page 111]
1 challenges by Apple, even after Apple had agreed to be bound 1 that it was per patent. It would also enable the parties to
2 by a third party determination of the FRAND terms. The 2 know where they were, and it would avoid a full-blown FRAND
3 Commission's preliminary view is that it is in the public 3 assessment of the portfolio.
4 interest that licensees should be able to challenge the 4 If, on the other hand, the issue is determined that a
5 validity, essentiality or infringement of SEPs." 5 patentee in the position of Vringo can offer a global licence,
6 Although it might be said that it is not a final 6 then it would indicate, it would determine definitively, that
7 determination, and it is not, again, we submit that we have a 7 paragraphs 13F and 14 of the defence were bad. It would
8 perfectly respectable argument that says, "There is nothing 8 determine that issue between the parties. There is little
9 wrong with saying we are happy to take a licence in principle 9 doubt that since this is a key issue between the parties it
10 but we do need to check the infringement and validity of what 10 would facilitate settlement. It would be highly relevant to
11 you assert before we do so". 11 determine the legal point as to what was and was not a willing
12 MR. JUSTICE BIRSS: Thank you very much. Mr. Green? 12 licensee which is an absolutely pivotal issue upon which there
13 MR. GREEN: My Lord, in my reply I will deal with the issue this 13 is little case law. No doubt over the years courts will
14 way. I made fairly detailed submissions to you in relation to 14 grapple with it bit by bit, but if a willing licensor can
15 the invitation we made to the court to conduct a full scale, 15 offer a global licence and a licensee says no, that would be
16 preliminary issue on FRAND. In our reply I am going to focus 16 highly relevant as a general issue across the world, and it
17 upon a section of that or a sub-part of that which is the 17 would guide and, indeed, possibly determine the remedies in a
18 issue whether the court might, in the alternative, decide the 18 case such as the present. It is therefore a very big issue.
19 more limited question of whether or not a licence which was 19 How would it be tried? Well, first of all, what might
20 per patent or global was in fact lawful. This is, in fact, a 20 be the likely answer to that? Our submission is that it is
21 live issue on the pleadings which your Lordship sees. It is 21 inherently probable that a court would find that a global
22 live on the defendants' amended defence, paragraphs 13F and 22 licence on facts such as this was not an abuse of a dominant
23 14, where they say they are entitled to a per patent licence 23 position. That is because standard setting organisations are
24 and "that must", are the words they use in para 13F, be made 24 premised upon everybody taking a licence of the patents which
25 available to them. We dispute that and say it need not be 25 form the basis of the standard. The defendant is global. The

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1 portfolio is large. Indeed, the defendant has already 1 already seen the bit at the bottom of page 5 where the judge
2 indicated that it is prepared, in principle, to contemplate a 2 says he sees merit in deciding FRAND before conventional
3 global licence. It is, we would submit, highly improbable 3 patent issues. He then makes the point that we make: it is
4 that in these circumstances a court would find a per patent 4 money. "If the court decides the FRAND issues, it may well be
5 licence to be the only appropriate offer. However, if we were 5 determinative of a large part of the case" -- so, we say here
6 wrong on that, as I have said, there would be great utility, 6 at least a part -- and it might profit a platform for
7 and it would resolve important issues on the pleadings. 7 constructive settlement, to which we say "yea". So, both of
8 In order to get to that, Vringo would, of course ,invite 8 those factors apply, at least to the more limited preliminary
9 the court to assume that there was dominance so the court 9 issue which the court may consider. "The court is likely to
10 would not have to grapple with dominance. That is a working 10 have to decide the FRAND issues in any event, unless of course
11 assumption which the German courts are very happy to make, 11 the patent infringement claim fails in respect of each and
12 that if you have a standard-essential patent you are dominant 12 every patent in suit and, indeed, possibly other patents which
13 vis-à-vis that patent. But the logic of the underlying 13 are not yet before the court." So, the court was not taking
14 intuition is that if you have a patent which is blocking 14 the view that it was sensible to determine validity before
15 because it is against us, you have the ability to exclude 15 FRAND for having a look or "waving of hands" reasons, as my
16 third parties from a market. That is an indication of 16 learned friend would put it. "The costs and time involved in
17 dominance. So the court would simply assume dominance and 17 trying the patent issues is likely to be rather greater than
18 would go on to decide the point of law on the facts that would 18 that those involved in trying the FRAND issues...." Only then
19 be very limited in a case such as this. They would probably 19 does he come to Alba and Amino will treat them, ex hypothesi,
20 be almost incapable of dispute; the size of the defendant, its 20 for the purpose of FRAND, as valid and infringed. Actually,
21 global reach, its turnover. There could be no question but 21 that point works in my favour, because even on the broader
22 that it affected trade between member states, and the 22 preliminary issue, we would not be saying that the other side
23 background and context of the Standard Setting Organisations 23 could not argue about strength. We have seen in Motorola v.
24 would be relevant. There is quite a body of law on how they 24 Microsoft you can examine strength, and we would be saying
25 came about, and the European Commission's approach to the 25 that there is no impediment; and it seemed to me the parties

[Page 113] [Page 115]
1 analysis of standards. It would not be a difficult issue. It 1 there were viewing it as an impediment. They made the
2 would be a few days predominantly of legal argument, albeit 2 concession. We say that on a wider FRAND inquiry, that would
3 the directions could be set for it. It would, of course, mean 3 not be an impediment. That is all I want to say about that.
4 that the court did not have to decide the full terms of the 4 On the question of strength generally, your Lordship may
5 licence, and it would overcome the observation that your 5 have seen from the papers that we do have patents which have
6 Lordship made earlier, particularly in a domestic action, 6 already passed through the Technical Board of Appeal, the
7 about the circularity between validity and royalty rates. 7 EP119 patent, subject to opposition by Qualcom. It survived;
8 So our suggestion, therefore, is that if your Lordship 8 there was a hearing; it has been upheld. No evidence has been
9 concludes that is a halfway house or one step with a view to 9 put forward as to strength. My learned friend of course makes
10 enabling the court to see better how to proceed in the future, 10 a lot of assertions. We do note from their Statement of Costs
11 that would be a quick method of resolving matters. We rely 11 that their patent attorney spent 50 hours examining the
12 upon, and we probably all rely upon Kitchin J in Philips. It 12 patents, but they have come up with no evidence. They have
13 is absolutely true that, in that case, Amino and Alba were 13 made an assertion that two out of the six patents are not
14 prepared to try the FRAND issue on the basis that the patents 14 worked and are not essential, but they say nothing about the
15 in suit were valid and infringed. That is C3, tab 19. The 15 other four, which includes EP 119. It really is not a point
16 point about that, and I do not think there is any dispute 16 which your Lordship is able to take account of. There is
17 about it, is that that was not acceptance for all time because 17 simply no evidence as to the strength of portfolio. My
18 the judge then goes on to say, "I will adjourn for the time 18 learned friend says it is logical that my clients put forward
19 being the invalidity matters". More importantly, the judge 19 their top six. We purchased the portfolio. It has taken a
20 did accept, as I drew to your Lordship's attention before 20 long time in order to investigate the portfolio. In
21 lunch, that if the court decides the FRAND issue, and we would 21 Australia, for example, entirely different patents are going
22 say here a part of a FRAND issue, then I would rely on both of 22 to be -- one patent, a patent which is being sued on, which is
23 the points made by the judge on page 6 and ---- 23 entirely different. This is not, as my friend puts it,
24 MR. JUSTICE BIRSS: Where is this? 24 hand-waving. This is, we say, a perfectly valid and valuable
25 MR. GREEN: I beg your pardon. It is C4. Your Lordship has 25 portfolio. But your Lordship is not in a position to take a

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1 view at this stage. 1 utility. It is an enormously important issue. It would
2 Can I deal with a number of somewhat stray points. 2 almost certainly completely reconfigurate negotiations, which
3 First of all -- and I do not think it probably matters at this 3 both parties say they want. But if it is per patent, then we
4 stage -- it was suggested that our term offer covers 4 would probably have to accept the inevitable, that you would
5 non-standard essential patents. Your Lordship needs only to 5 have to go to trial first on validity; but if it is global,
6 make the following reference: C2, tab 15, page 4. It is 6 then this court does not have jurisdiction over the vast
7 quite plain that the term offer only covers SEPs, and nothing 7 majority of the patents in the portfolio, and the analysis is
8 else. So, there is nothing which is not a standard essential 8 utterly and totally different, and my client would be able to
9 patent in the term offer. 9 almost certainly bring this matter to a head.
10 MR. JUSTICE BIRSS: Does the standard essential patent in the 10 But that brings me to the position of ZTE Corporation.
11 offer mean patents you say are standard essential or patents 11 The real issue -- indeed, even if your Lordship goes down the
12 which are standard essential? 12 route of a PP, per patent, as against the global -- is with
13 MR. GREEN: Which have been found to be; not just which we say 13 Corporation. It is the real issue on the defendant's own
14 are, but which are standard essential. 14 pleaded case, where they say they do not want a global
15 MR. JUSTICE BIRSS: Right. 15 licence, because they say that would of course involve
16 MR. GREEN: It may not be relevant, but just so your Lordship just 16 Corporation. They only want a domestic licence. But in their
17 sees precisely what the offer is, it is tab 15 of C2, and it 17 evidence, Mr. Burdon, at paragraph 12, says that they want a
18 is page 4, just above (d), the last sentence: "Royalties 18 global licence with Corporation. That is the real issue.
19 shall only be due on Subscriber Units or Infrastructure 19 MR. JUSTICE BIRSS: You say that answers Mr. Alexander's point
20 Revenues where one or more of the ZTE activities licensed 20 about all these other people who might be joined into the
21 under the Definitive Licence Agreement with regard to such 21 case. You say that Corp are in a different position because
22 Subscriber Units or Infrastructure Revenues occurred in a 22 of the letter that they wrote and the evidence of Mr. Burdon.
23 jurisdiction where Vringo owns or controls Essential Patents." 23 MR. GREEN: We would not of course be saying that if the potential
24 MR. JUSTICE BIRSS: I see. Just out of interest, since you read 24 licensee was a localised company which operated in the UK only
25 that out, Mr. Green, that is not confidential, I take it? I 25 or in just a part of Asia or Europe, it would necessarily be

[Page 117] [Page 119]
1 mean, I do not know. You tell me. 1 appropriate to grant them a worldwide global licence; but for
2 MR. ALEXANDER: Not any more! 2 a global (unclear), it is. They are different. We therefore
3 MR. GREEN: It is a good job I did not continue to read, but that 3 suggest that Corporation is an integral part of this.
4 bit we will treat as not confidential. As I said, the 4 The final point, there was a brief mention about a stay.
5 question about confidentiality, essentially, my clients are 5 We invited Corp to negotiate. We suggested that if there was
6 very happy for the offer to be made public, but for reasons I 6 negotiations we would not start new litigation. We suggested
7 have explained. So, yes, I did trespass, but ---- 7 that if there were negotiations, they would not start
8 MR. JUSTICE BIRSS: It is your confidentiality. 8 invalidity proceedings. That offer was not taken up.
9 MR. GREEN: It is, indeed. 9 Regrettably, we are where we are, but both parties wish to
10 MR. JUSTICE BIRSS: I see. You see this sort of thing in 10 settle. A stay does not really come into it, and I do not
11 worldwide licences. So, for the sake of argument, if it 11 think it is not suggested that any order your Lordship makes
12 turned out that in Australia all your portfolio was invalid 12 is conditional upon something happening elsewhere in the
13 except for one patent, but the one patent was an essential 13 world.
14 patent, then Australia would be covered. That is what I mean. 14 MR. JUSTICE BIRSS: What happens to the foreign proceedings? Do
15 I can see why that might make sense in a global negotiation. 15 they continue -- German, Australia, and all that?
16 MR. GREEN: Yes. The other point, my learned friend provided some 16 MR. GREEN: The position which my client has adopted, he would be
17 critique and commentary of this, in particular, to the 17 very happy to have a standstill. It requires two to tango.
18 definition of infrastructure equipment, and various other 18 If the other side were prepared to say, well, let us allow a
19 things. We have made it clear in the correspondence that our 19 preliminary issue to go ahead, sort this out, have a crack at
20 clients are prepared to negotiate. That goes without saying. 20 negotiations, try and get it resolved, we would be delighted,
21 So, just pulling together a few strands, we submit there 21 and we would then do what was necessary in a foreign court.
22 are essentially two issues for your Lordship, a broader issue 22 There is this difficulty, that if the court was to say it is a
23 and a narrower issue. I am not going to repeat what I have 23 condition of a preliminary issue, it would effectively be
24 said about the broader issue, but I have made submissions 24 potentially interfering with the discretion of another court.
25 about the narrower issue, which we believe will provide real 25 MR. JUSTICE BIRSS: Yes, surely. No. I had not thought that far,

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1 anyway. 1 determination -- a determination.
2 MR. GREEN: No, quite. I did not think your Lordship had. But we 2 MR. JUSTICE BIRSS: Right. I see. Sorry, I do not want to be
3 have no objection to any form of consensual agreed standstill 3 dense. The way you are putting that, the emphasis of the
4 pending a resolution of this issue. We would obviously all 4 language is, you are saying that you are not now, on
5 have to go back to foreign courts and deal with it, but that 5 instructions, maintaining the last sentence; is that what you
6 is certainly not an issue or an objection so far as we are 6 mean, or you are? I am not trying to be difficult, Mr. Green.
7 concerned. 7 I just want to make sure I have understood it. I do not mind.
8 MR. JUSTICE BIRSS: Okay. 8 MR. GREEN: Let me just make sure there is no confusion.
9 MR. GREEN: Mr. Hinchcliffe said I should just deal with service 9 MR. JUSTICE BIRSS: Absolutely. (Pause) I should say, Mr. Green,
10 out. CPR6 effectively says -- and I think, in a sense, I have 10 I am not trying to push you anywhere.
11 made the point -- that the court will permit service out of 11 MR. GREEN: My instructions are that we would be prepared to grant
12 the jurisdiction against somebody where there is between the 12 a licence on the terms set by the court.
13 claimant and the defendant a real issue which is reasonable 13 MR. JUSTICE BIRSS: Right.
14 for the court to try. It is pretty much the same criterion as 14 MR. GREEN: So, not contingent.
15 whether or not one would bring in D2. If you bring in Corp, 15 MR. JUSTICE BIRSS: Okay. Right. Thank you very much. That was
16 it would be because we needed to bring them in and we would 16 it. Yes, Mr. Alexander.
17 therefore serve out. 17 MR. ALEXANDER: My Lord, just very briefly in relation to the
18 MR. JUSTICE BIRSS: I see. So, you say it all stand or falls 18 alternative, as it were, unmade application for a different
19 together. 19 preliminary issue. First of all, we do take some issue with
20 MR. GREEN: It does. In practical terms, when one looks at the 20 that being advanced for the first time in reply in
21 two tests under CPR19 and 6, they pretty much really amount to 21 submissions. If my learned friend wants to advance an
22 the same thing. 22 application that there should be a trial of a specific
23 MR. JUSTICE BIRSS: Okay. 23 preliminary issue, a preliminary sub-issue of the issues that
24 MR. GREEN: Thank you very much. 24 have arisen, then that is something that ought to be done
25 MR. JUSTICE BIRSS: Thank you, Mr. Green. I did have one question 25 properly, so that it can be considered. Let me deal with the

[Page 121] [Page 123]
1 for you. Sorry, Mr. Alexander. Just hang on. 1 merits of it, as far as it is possible to do so, briefly. It
2 Mr. Green, Mr. Alexander referred to paragraph 12 of 2 is really a very bad idea, for this reason. What is being
3 Mr. Laakkonen's second witness statement, which is in C1, 3 contemplated is that a determination is made entirely in the
4 tab 10, on page 5. He characterised this -- this is coming, 4 abstract of whether the mere fact that a proposal is a global
5 obviously, from Mr. Laakkonen -- he characterised this as 5 proposal means that it is or is not susceptible to competition
6 proof positive that your client's position is contingent, that 6 and criticism. No competition determination of which I am
7 your client's position on the binding nature of the 7 aware takes place in that way or could take place in that way;
8 determination you are seeking is contingent. I think he is 8 nor would it make the slightest sense for that to be the case.
9 right about that, but I just want to make sure whether ---- 9 Let us suppose that someone was to offer a royalty-free global
10 MR. GREEN: Both parties would be bound by a determination of the 10 licence in respect of a portfolio. No one would suggest that
11 issues arising on the defendant's defence. We cannot wriggle 11 that could possibly give rise to any competition
12 out of it, nor can the defendant. If, in fact, the issue 12 considerations simply on the basis that it was offering free
13 before the court is that there are, let us say ex hypothesi, 13 royalty for everything. If, on the other hand, they offered,
14 two valid and infringed patents, the question now is remedy, 14 and only offered, a royalty-bearing global licence that said,
15 the court is going to ensure that my client does not, again 15 "You must pay, regardless of whether these patents are used,"
16 ex hypothesi, having a dominant position, abuse it. You will 16 and the rate that was sought to be charged in relation to
17 set the terms, and we will be bound. 17 those that were not used or patents that were invalid was a
18 MR. JUSTICE BIRSS: I understand that. I am not sure that is 18 rate that would be wholly inappropriate were the rights in
19 quite what was being said. 19 question not to subsist, then the fact that it was a global
20 MR. GREEN: In relation to a broader privy issue. 20 "take it or leave it" (in that sense) deal would raise
21 MR. JUSTICE BIRSS: Yes. What Mr. Alexander was saying is that if 21 competition considerations. No one suggests that in any
22 you look at this, what this is saying is that Mr. Laakkonen 22 bundling case that if, as a manufacturer, you say, "If you buy
23 says, in the middle of the paragraph.... (Pause whilst 23 my computer, I will throw in a hard drive or extra hard drive
24 counsel confers) Go on. That is fine. 24 for free," it creates competition considerations. If someone
25 MR. GREEN: My client is prepared to be bound by a court 25 says, "I will only sell you my computer on condition that you

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1 buy all of my hard drives from me at the following prices," 1 that everyone agrees that there should be a global licence.
2 that, potentially, does raise tying and bundling 2 That is not the position. It is not the position in the
3 considerations of exactly the kind in the evidence. So, it is 3 correspondence; it is not the position in the evidence,
4 not possible to make an abstract determination; nor is it even 4 either. It is certainly doubtless the case that it would be
5 sensible to do so, even within the terms framed by my learned 5 convenient for there to be something that sorted out all of
6 friend, because, plainly, if one is raising an issue of this 6 the issues worldwide, and I do not think that if terms were
7 kind, that is an issue that would be paradigmatically of the 7 offered that were reasonable terms ----
8 kind at least referred to in the Huawei case. It is not 8 MR. JUSTICE BIRSS: You are straying off what you are allowed to,
9 exactly the same as that referred to in the Huawei case, as 9 Mr. Alexander. But go on anyway. Finish this one. You are
10 that relates to different questions in relation to claims for 10 straying a bit, I think.
11 an injunction, but it at least relates to those; and 11 MR. ALEXANDER: Yes. Perhaps I can just invite your Lordship to
12 your Lordship can see those in C2, tab 8. The idea that this 12 reread paragraph 12 of Mr. Burdon's evidence on that, which
13 court, or indeed any higher court, would wish to consider this 13 sets out the real position. Sorry, I was just trying to
14 issue entirely in the abstract is, in my respectful 14 explain why it was relevant.
15 submission, really nonsensical. The idea that that, of 15 MR. JUSTICE BIRSS: It is always so difficult to resist the
16 itself, would contribute to settlement is also unrealistic, 16 opportunity to say something after the other person.
17 because let it be supposed that the answer is: "Well, in 17 MR. ALEXANDER: My Lord, yes.
18 principle, a global offer is fine." Why would that advance 18 MR. JUSTICE BIRSS: Yes, Mr. Green.
19 the issue of settlement if the real issue was, "Well, 19 MR. GREEN: I should get the final word in this.
20 actually, we are not so concerned with the fact that the offer 20 MR. JUSTICE BIRSS: Absolutely. You can have the final word.
21 is global. All we are concerned about is the fact that what 21 MR. GREEN: In relation to the suggestion that we have made, this
22 you are proposing to do is charge us X in relation to it." It 22 was raised at the end of my submissions. Your Lordship
23 would not help. Suppose then that the alternative is that it 23 actually quizzed Mr. Alexander on it, and he said that it
24 was held that a global offer was illegal in principle, in 24 might actually be helpful. It was not raised for the first
25 these circumstances. Well, that would then simply lead to a 25 time in reply. It is not in the abstract. In fact, it is an

[Page 125] [Page 127]
1 question as to what the right approach was or what the right 1 integral issue which flows from their defence, where they say
2 rates were for the individual patents. So, of all of the 2 they must have made available to them a per patent licence of
3 issues that fall to be determined in this overall dispute, 3 the patents in suit, and nothing else. It is key. It is the
4 that comes very low down the list of issues that are likely to 4 critical issue, and it is almost certainly going to facilitate
5 bring about any deal between the parties, whether globally or 5 a settlement. Mr. Burdon does say in paragraph 12 that he
6 more individually. 6 wants a global licence. This is an issue which is absolutely
7 Finally, I think it is said that you do not need to pay 7 fundamental to that. The alternative, which is really where
8 any attention, really, to the practice direction and the 8 ZTE are ultimately driving the court, is to conduct a trial of
9 gateways because, as long as there is a serious issue to be 9 six patents in suit over the next two years, with appeals,
10 tried, that is enough. That is not correct, and I do want to 10 then a competition defence, and a reference, and at the same
11 just remind your Lordship of the requirements of CPR, at 11 time the German courts are likely to beat us to the post
12 Rule 6. I am not going to dwell on those in detail, because 12 anyway. So, neither may be terribly satisfactory, but that is
13 they are very, very well known. But my learned friend 13 by far and away the least satisfactory outcome. This issue is
14 blithely saying, "Oh well, it is just the same as bringing in 14 squarely on the pleadings. Whichever way it goes, it will
15 someone in this country to proceedings," that is not and has 15 take a great chunk out of one side or the other's pleadings,
16 never been the law, and for very good reasons; and if 16 and it is very much at the heart of it. We all accept that
17 your Lordship wants us to address your Lordship on this in a 17 this is really a money matter, a licensing matter. This is
18 supplementary note with reference to the (unclear) principles, 18 fundamental.
19 the recent case of the Supreme Court in VTB, which requires 19 My Lord, service out. I have not said that the test of
20 consideration of all kinds of issue of forum conveniens, and 20 amendment is the same as service out. I have said on the
21 so forth, and the approach to the exercise of discretion in 21 facts of this case; and I can go through, if it really needs
22 circumstances where there is leave to serve out, we can 22 to be done, the practice direction. It is a clear issue
23 certainly do this. But my learned friend's handwaving on this 23 between us; it is a serious issue; it is reasonable. It is
24 occasion will not really do. 24 central to the litigation. It will facilitate efficiency of
25 There was one final point, which is that he keeps saying 25 court proceedings to have the second defendant here. Those

[32] (Pages 124 to 127)
MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
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[Page 128]
1 are reasons which apply to both amendment and service out, but
2 I accept the test is different.
3 MR. JUSTICE BIRSS: Right. Okay. Thank you.
4 Now, I am not giving you a judgment now. I will give my
5 judgment at two o'clock tomorrow. I hope that is not
6 massively inconvenient. I am prepared to negotiate a bit, if
7 you want to ask me now. I cannot give you a judgment in the
8 morning, but if you would rather it was three o'clock tomorrow
9 afternoon, I can do that. I am even prepared to countenance
10 doing it the day after, if you really I would rather did that.
11 MR. GREEN: We believe that two o'clock is fair, reasonable and
12 non-discriminatory.
13 MR. JUSTICE BIRSS: Excellent.
14 MR. ALEXANDER: On this matter, we entirely agree.
15 MR. JUSTICE BIRSS: Excellent. So, I will give you my judgment on
16 this question, which is the critical question, and then I
17 guess, depending on what happens, we will have to sort out
18 what is going to happen. So, I am not at all dogmatic about
19 who turns up and represents the parties. If it is convenient
20 to have both you fine silks, that is great. If not, well,
21 fine, whatever. That is obviously a matter for your clients
22 and you. Thank you both very much for your arguments. I will
23 see you tomorrow.
24 (Adjourned till 2.00 p.m. tomorrow)
25

[33] (Page 128)
MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
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A 33:23 86:21 109:1 120:3 20:20,24 59:23 applies 25:18 army 90:6
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actual 7:1,11 74:23 75:24 128:1 3:16,21 55:16 121:11 assumes 34:23
87:15,16 103:10 amendments applied 34:25 armstrong 25:15 assuming 34:10

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
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[Page 130]

59:1 74:8 bar 31:8 111:18 114:1 117:4 broken 34:2 22:12,22 24:1
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banging 45:8 big 78:13 95:13 86:22 111:14,14 92:12 20:23 21:19 90:21 105:12

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
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[Page 131]

118:2,9 120:6 59:22 60:2,23 121:6,7 128:21 53:2 69:20 connected 71:16
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25:23 42:16 20:4,5 76:3 27:21 29:21 comply 25:4 confusion 68:3 54:9 61:4 68:22
44:9 50:24 80:15 84:6 common 1:19 components 55:11 122:8 78:6 100:5,12
52:22 57:18 115:18 117:5,20 22:21 38:17 comprehensive conkers 3:13 112:23

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 132]

contingency 25:20 119:5 120:15 114:10 115:9 22:10,19 25:8 73:7,12,21 97:21 98:18,18
26:2 28:1 29:9 corporation 0:13 118:15,23 28:4 29:12,20 120:15 100:18 105:5,16
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72:10,14,16 56:16 65:9 courtdetermined d03895 0:1 50:24 54:3,18 69:16 71:1,18
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104:17,20 105:8 104:16,21 107:7 courts 2:5,23 7:19 d2 17:6 49:2 71:6 71:12 73:18,23 77:24 101:3
106:19 118:21 112:8 113:3 14:19 21:13 71:12 72:2 73:6 74:2,4 75:9 109:22 118:13

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 133]

121:11 57:20 60:20 118:21 119:2 72:19,21 79:20 dwell 125:12 107:20
defined 6:2 66:25 67:23 122:18 124:10 87:7,9 92:15 endorse 69:12
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26:4 29:14 30:5 37:22 38:10 20:22 29:10,14 drives 124:1 32:1 111:1 ep 115:15
31:9 32:1 35:14 44:23 48:16 30:20,21 31:18 driving 127:8 enabling 113:10 ep119 115:7
35:25 41:16 51:11 54:8 56:3 35:23 41:25 drop 96:16 enclose 9:20 equal 55:12
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52:17 53:24 97:12 98:20 49:1 52:20 dusseldorf 62:25 encompass 92:16 equipment 5:15
54:12 55:12,18 100:2 103:15 53:15 58:4,4 dutch 50:16 64:7 encouraging 13:21 117:18
55:18 56:18 115:21,23 118:8 69:11 72:1,4,13 duty 21:9 28:15 65:19 equivalent 36:3

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 134]

equivocated 27:16 102:20 115:8,12 expertise 94:15,15 73:8 findings 30:3 forced 11:22 60:5
ericsson 28:23 115:17 118:17 94:15 fair 28:8,16 35:16 finds 51:17 61:5 foreign 78:25
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essential 6:2,8 126:3,12 40:17,20,25 fairly 5:3,3,8 37:3 fine 48:19 121:24 120:5
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37:7 38:1 40:16 experienced 95:7 failed 25:4 finding 26:6 28:6 34:12 33:19 34:9
51:1 78:3 92:8 expert 34:18 fails 114:11 48:3 51:20 force 43:19 60:12 35:15 36:2,4
93:18 95:2 98:8 40:16 failure 27:9,12 60:18,20 110:25 110:22 38:18 39:8

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 135]

41:12,16,18 92:16 93:15 107:11 66:5 69:2,3,9,14 96:10 114:17 108:4
42:9 44:1,5,20 98:16 101:14 getting 2:22 70:8,16 77:17 green 0:21 1:1 3:9 halfway 113:9
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MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 136]

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idea 68:20 84:17 included 6:15 86:19 instructions 122:5 invitations 99:1 119:19,23 120:4

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 137]

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judges 3:1 81:15 82:4 83:5 knowing 62:6 88:25 89:19 43:17 46:8,24 licensees 97:20,20
judgment 2:8 8:3 83:12,14,19,24 86:18,22 90:11 90:20 92:16 47:2,5 48:13 98:21 105:17

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 138]

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107:12 111:8,13 92:8,20,21 56:5 69:5 71:8 member 112:22 127:17 116:5 127:21

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 139]

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nonpractising 125:24 opening 16:13 ownership 73:4 65:20 66:7 67:5 87:19

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 140]

party 10:3 29:12 25:3,13,18 payment 6:6 102:15 104:6 110:5,23 111:11 16:12 18:13
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19:1,14,17 paying 27:10 place 11:3 31:6 98:14 104:16 9:18,19 14:11 58:25 89:20
20:15 24:4,9 29:18 87:19 99:25 106:5 108:6 14:14 15:3,10 98:24 120:20

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 141]

practicalities 46:6 prima 100:20 119:14 125:15 45:6 117:16 105:25 109:19 30:10 58:14
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price 90:22,25 82:6 84:10 88:1 53:22 54:3,4 58:13 67:13,14 103:15,16 123:2
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prices 124:1 107:3,9 119:8 provided 6:3 7:22 77:19 78:13 rates 16:10 22:16 28:8,16 85:15

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 142]

106:11 120:13 rejects 106:14 28:25 29:16,23 30:13,20 31:18 44:4,21,23,24 44:4,20,21,22
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reject 58:19 remaining 15:14 31:4,6 50:21 19:25 25:2 18:5,6,24 24:7 117:20 118:23
rejected 10:20 remains 8:21 120:4 27:18 32:24 24:12 34:22 121:21,22 122:4
rejection 84:16 rembrandt 27:15 resolve 12:3 25:12 35:9 39:5 43:24 35:14 43:24,24 125:14,25

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 143]

says 1:15 7:8 6:21 17:19 20:8 20:12 22:25 106:17,20 skills 32:20 127:14
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seek 13:17 26:4 servable 105:18 73:19,24 57:19 58:17 speeches 40:4 state 0:10 4:4
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seen 4:3,16 6:16 set 3:3 16:10 show 51:10 80:25 70:5 squarely 74:21 14:9 64:17 75:6

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 144]

75:14 88:6 92:9 stuff 100:17 suggestion 42:24 sweep 108:6 93:3 127:19 128:2
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structure 5:2 96:6 108:10 116:4 survived 110:5 talk 106:20 122:12 124:5 thought 68:4
97:25 119:5,6,11 115:7 talking 47:9 49:19 126:6,7 69:15 83:16
structured 13:19 suggesting 43:7 susceptible 123:5 49:21 56:15 terribly 127:12 89:10 90:15
53:11 107:9 108:15 suspect 38:13 60:15 82:19 test 36:7,16 87:19 96:20 119:25

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 145]

thrash 51:5 42:14 52:9 53:1 127:9 128:5,11 undertake 75:21 45:21,24 48:11 vehicle 89:10,12
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40:2 41:11,21 120:21 121:14 38:23 122:7 42:11 43:11 vast 66:17 118:6 42:19 44:17

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 146]

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MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864
VRINGO v ZTE 05 JUNE 2013 PROCEEDINGS
[Page 147]

124:12
84 4:9

9
9 42:4 66:1 73:6,7
919 42:14,15

MARTEN WALSH CHERER LTD 1ST FLOOR, 6-9 QUALITY COURT, CHANCERY LANE LONDON, WC2A 1HP
TEL: (020) 7067 2900 E-MAIL: info@martenwalshcherer.com FAX: (020) 7831 6864