Apple wins latest round of UK patent dispute with Optis

Although the Court of Appeal in London rejected Apple’s claims that the patent owned by telecoms company Optis Cellular Technology was invalid, it accepted its case that the patent was not ‘essential’ to a communications standard and that it had not infringed the patent.

The Court of Appeal’s judgment represents a significant victory for Apple in its long-running dispute with Optis, according to patent litigation experts at Pinsent Masons. The dispute has played out across a number of different patent trials between the two companies which concern patents from Optis’ portfolio.

While the Court of Appeal decision related to so-called ‘Trial A’ in the series of litigation, the latest ruling – by the High Court in so-called ‘Trial C’ – also favoured Apple, as the court found that Optis’ family of patents at issue in that case were all invalid on the basis that the inventions claimed were obvious. However, Optis was successful in ‘Trial B’ and ‘Trial F’ earlier this year, which meant Apple has effectively been left with a choice between accepting a temporary sales ban on some of its devices or agreeing to be bound by yet-to-be-determined patent licensing terms that the High Court is expected to set next year.

The Court of Appeal judgment related to a patent which concerns the process of ‘handover’ between different radio access technologies, such as 2G, 3G and 4G. Phone calls or data connections can be disrupted if there is not a seamless handover between the different technologies when devices are being used are in transit and connectivity to one technology begins to weaken.

Optis’ patent specifically refers to handover between GSM, a communication standard for 2G connectivity, and UMTS, a standard for 3G connectivity, but its claims were not limited to handovers between those technologies only.

Optis had been successful in convincing the High Court that Apple had infringed its patent in relation to the handover from GSM to LTE, which is one of the standards for 4G connectivity. However, the Court of Appeal has now overturned the High Court’s decision.

In its earlier ruling in the case, the High Court had found that Optis’ patent was ‘essential’ to the implementation of a 2G standard.

A standard essential patent (SEP) is a patent that protects technology believed to be essential to implementing a technical standard. In other words, you cannot operate a standard compliant device without necessarily using the patented invention. As a result, the bodies through which businesses collaborate to develop standards – such as ETSI in the context of telecoms standards – require SEP rights holders to make SEPs available for others to use by way of a licence on fair, reasonable and non-discriminatory (FRAND) terms.

“The main purpose of ETSI, and other standards bodies, is the creation of technical standards,” said Mark Marfé, patent litigation expert at Pinsent Masons. “These standards bodies have created policies to deal with the standard-essentiality of its members’ patents. For instance, ETSI members are asked to disclose to the organisation, and therefore publicly, which of their patents might be standard-essential. However, ETSI is not obliged to interrogate the information it is provided and so implementers should not simply accept that an alleged SEP is in fact essential.”

In overturning the High Court’s decision on the essentiality of Optis’ patent, the Court of Appeal said Optis had failed to show that the method covered by its patent corresponded to how the standard at issue operated. Apple had claimed that there were important differences between the two. The finding of non-essentiality meant Apple was absolved of liability for infringement.

The issue of the validity of Optis’ patent was considered separately to the questions of essentiality and infringement by the Court of Appeal.

Apple has claimed that Optis’ patent is invalid because it is obvious. However, the High Court rejected that view. On appeal, Apple argued that Optis’ patent claim contained an arbitrary limitation and that this undermined its defence that the patent was not obvious. However, the Court of Appeal said Optis’ claim did not in fact contain the arbitrary limitation Apple claimed, and therefore upheld the earlier ruling that the patent is valid.

“This is an important victory for Apple in this extensive dispute” said Sarah Taylor, patent litigation expert at Pinsent Masons. “The next 12 months look to be increasingly crucial for the parties, with the final technical trial, Trial D, due to take place in January, followed by the FRAND trial, at which the court will determine any FRAND licence rates, in June 2022.”