Wednesday, February 28, 2007

MP3 patent dispute closer to home

It seems Microsoft are not the only organisation to lose out in MP3 patent litigation recently. In a complex case SanDisk Corporation v Koninklijke Philips Electronics and others [2007] EWHC 332 (Ch), an England and Wales Chancery Division, Mr Justice Pumfrey ruled against SanDisk which had been importing MP3 players to the EU without paying a license fee to Sisvel. Apparently, according to IPKat, most MP3 makers are licensees of these patents, which Sisvel claim are essential for anyone who wants to make or sell an MP3 player in the EU.

The decision merits careful reading and consideration but it's not one for the fainthearted. It involves, patent law, EU competition law, seisure of goods at borders regulations, jurisdictional issues and a host of other subtlties. IPKat in summary says Sandisk sued

"in March 2006 for declarations relating to essentiality and non-infringement. Philips and friends counterclaimed for infringement (the trial date is fixed for February 2008).

In retaliation, Sisvel sought and obtained Border Detention Orders under Regulation 1383/2003, the result being that all MP3 players except those originating with a manufacturer or destined for a consignee whose name appears upon a list will be detained at its point of entry to the EU for ten days, during which Sisvel can sue for patent infringement in order to prevent the goods detained being released and entering free circulation in the EU. These orders have resulted in pending proceedings for infringement against SanDisk in Germany and the Netherlands (non-border-related infringement proceedings are also outstanding in Germany and Italy). There were also some very embarrassing high-profile seizures of allegedly infringing SanDisk MP3s at trade fairs.

SanDisk maintained that that Sisvel and the owners of the patents it administers had a dominant position which, it argued, was being abused by Sisvel's policy of harassment. This abuse being a wrong under Article 81 and 82 of the EC Treaty, interim injunctive relief against its enforcement activities was sought. Sisvel argued that there was no jurisdiction to grant interim relief in this sort of situation."

IPKat and the judge lament the fact that although Sisvel have European Patent Office granted patents, they are obliged to pursue any enforcement actions on a state by state basis. Yet far from being the open un-IP-encumbered standard it was widely perceived to be, MP3 is proving in recent weeks to be another money making landscape for the lawyerly classes. Neither the Microsoft v Alcatel-Lucent nor the Sandisk cases had really registered on the radar of even the tech press yet both have important implications for the future of the knowledge economy.

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