Nokia v HTC the importance between damages and injunctions

HTC v Nokia 2013 EWHC 3778 (Pat) – Injunction and damages

The court in HTCC Corp v Nokia Corp 2013 EWHC 3247 held that HTC had infringed Nokia’s patent “Modulator structure for a transmitter and a mobile station” which resulted in Nokia seeking a final injunction to prevent further infringement.

Prior to these proceedings HTC were in the process of launching a new phone and the company alleged it was unaware whether the chips inside the new handset were infringing. HTC argued the court should rather award damages rather than an injunction or alternatively it sought a stay of any injunction awarded pending an appeal.

The injunction was partially granted pending an appeal. Article 3(2) Directive 89/104(Enforcement Directive) requires remedies shall be effective and proportionate and applied in order to prevent barriers to legitimate trade.

Section 50 Senior Courts Act states where a court (Appeal or High Court) has jurisdiction to entertain an application for an injunction it may award damages in addition to an injunction (Which is an equitable remedy) or a specific performance.

The court will rarely grant damages in lieu of an injunction. It is generally “a good working rule” established in Shelfer v City of London Electric Lighting Company

(1.) If the injury to the claimant’s legal rights is small,

(2.) And is one which is capable of being estimated in money,

(3.) And is one which can be adequately compensated by a small money payment,

(4.) And the case is one in which it would be oppressive to the defendant to grant an injunction:—

then damages in substitution for an injunction may be given.

The underlying principle of Shelfer establishes that a claimant is entitled as a legal right to an injunction to prevent a defendant infringing the IP right. However where the claimants objective is purely monetary, then under Gafford v Graham “It would be oppressive and therefore unfair to the defendant to allow the judge’s injunctions to stand. The plaintiff should receive an award of damages instead”

It was finally ruled that in relation to the new handset which was to be released soon there would be no stay as the harm to Nokia clearly outweighed the harm HTC would/might face. However in the resulting ongoing claim in relation to the current infringing mobile phones a stay of injunction was granted following an appeal as the ruling would not be disproportionate. The costs bared from each party were relatively small i.e. the infringing chip was a small component of the phones and the royalty was small. HTC could use new chips which it already had that were non-infringing. For proportionality the most important consideration to take into account is the availability and cost to the other party of non-infringing alternatives.

Daniel Selby on work experience at Lawdit

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