Paris Court of Appeal: Trade secrets protection and assessment of the essentiality of Standard Essential Patents (SEPs)
The decision of the Paris Court of Appeal on April 16, 2019, between Core Wireless Licensing and LG Electronics is interesting for two reasons.
For the first time, the Court had the opportunity to decide on the essentiality of the Standard Essential Patents (SEPs) at issue (1) and to use the provision given by the French Law of July 30, 2018, regarding the protection of trade secrets (2).
1-The essentiality evaluation of the SEPs (Standard Essential Patent) at issue
The declaration of a patent as SEP (Standard Essential Patent) is usually based on the good faith and personal knowledge of the company representative making the declaration, and SSOs (Standard Setting Organizations) do not carry out any check of the claim that a patent is standard-essential.
That’s the reason why it is up to Courts to determine if a SEP is truly essential.
The French judges of the Court of Appeal first reminded that ETSI’s Annex 6 of the Rules of Procedure defines in its Article 15-6 a patent as essential to a standard when it is not possible, for technical reasons (but not for commercial reasons), considering the normal technical practice and the state of the art generally available at the time of standardization, to manufacture, sell, lease, otherwise dispose, repair, use, or operate a product or methods that conform to a standard without infringing this patent.
After a thorough examination of each of the invoked patents, the judges considered that their essentiality was not sufficiently established by the plaintiff. The court considers here that the LTE standard allows the manufacture of a material that does not infringe the teachings of EP 0 978 210 belonging to the plaintiff.
As a consequence, the requests of the company Core wireless licensing relating to this preliminary recognition became without object: the injunction to prevent future infringement by the defendant, the request for fixation of a “FRAND” (fair, reasonable, and non-discriminatory) royalty rate applicable to all the patents of the company Core wireless licensing within the framework of a world license, the appreciation of the “FRAND” character of the projects of license contract.
2-The use of the provision provided by the French Law of July 30, 2018, regarding the protection of trade secrets
Besides defining the trade secret and infringement sanctions, the French Law July 30, 2018, aims at efficiently protecting secrecy in the course of a trial.
To that purpose, Article L. 153-1 of the Code of commerce now offers several tools to judges including, notably, the possibility to decide to restrict the communication or production of a document that is likely to undermine trade secrets, to order the communication or production in summary form or to restrict access to it for each of the parties, to adapt the motivation of its decision and the methods of advertising it to the needs of the protection of trade secrets.
In “Core Wireless Licensing Vs LG Electronics France” case, the parties have put in place a mechanism to ensure the protection of trade secrets, including
- Communicate in restricted access a certain number of documents, in particular, license agreements concluded by the company Core Wireless Licensing, accessible only to the parties’ lawyers, to the court, and to persons having signed confidentiality commitments (interpreters, economists, experts)
- Provide the court two versions of their written submissions: -a version containing references to the agreements disclosed in full; references to any confidential information resulting from these disclosed agreements to be highlighted with a view to drawing the court’s attention to the passages that should be avoided in its decision, being the only official version for the court; – and another redacted version without any reference to any confidential information resulting from any disclosed agreement.
In conclusion, had the decision included secret information, the Law of 30 July 2018 would have enabled the judge to accordingly adjust the statement of reasons for the decision and its mode of publication.