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English court cannot hear SanDisk MP3 patent case

Action needs to be taken where harm was done

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An attempt by Flash memory card maker SanDisk to take on a group of MP3-related patent holders has failed in an English court. The High Court said all of SanDisk's claims fell outside the court's jurisdiction of England and Wales.

SanDisk claimed that Philips, France Telecom, TDF, and Institut Für Rundfunktechnik, all of which own European patents relating to MP3 sound encoding technology, were using the courts to bully and harass it and were abusing their dominant position in the licensing terms they offered for their patents.

Justice Pumfrey saidt the High Court did not have jurisdiction on any of the issues involved, and that action needed to be taken where the harm was actually done, which was in a number of other European countries.

SanDisk makes a number of MP3 players outside Europe which are sold in the European Economic Area, where it has a number of subsidiary companies, two of which are based in the UK. In February 2006 it refused to buy a licence offered to it by Sisvel, a fifth defendant which is an Italian licensing company representing the other four's patent interests.

The dispute between the companies came to a head at a German trade show where the Berlin Public Prosecutor raided SanDisk's exhibition stand and seized 37 MP3 players. Sisvel has also obtained seizures in Italy and Border Detention Orders across Europe, which stop the transfer of the machines for sale at the border into the EU.

SanDisk took a case in the UK in which it said the patent owners had refused to deal individually with it; had tied the licensing of essential MP3 patents to deals for non-essential patents; had demanded excessive royalties; had abused the patents system to acquire a collective dominant market position; had "brought sham, vexatious legal and administrative actions" in order to harass SanDisk into buying licences to patents it did not need; and had sought to prolong the life of their patents.

"[The patent holders' lawyer] submits that in order for the English court to possess the exceptional jurisdiction pursuant to Article 5(3) of the Brussels Regulation to adjudicate upon the alleged abuses of a dominant position in the present case, I must be satisfied that either the event setting the tort in motion was in England and Wales or, alternatively, that the claimant must show that it is the immediate victim of that abuse suffering direct harm in England and Wales," said Pumfrey. "In my judgment this submission is entirely justified.

"On the assumption that it is legitimate to consider the damage arising in these unusual circumstances to arise from any general inhibition on trade within England and Wales caused by the fact that SanDisk does not enjoy a lawful licence, I cannot see where the damage accrues other than to SanDisk in Delaware."

SanDisk is headquartered in Delaware in the US.

Pumfrey ruled for each of SanDisk's claims in turn that the court had no jurisdiction because any damage suffered was said to have been suffered elsewhere.

SanDisk had claimed that it was being harassed by the patent holders by a number of law suits, but Pumfrey found that that was simply in the nature of patent law.

"Generally, in relation to all the legal proceedings, I was attracted at one time by the thought that such proceedings were merely duplicative and so potentially oppressive, but on reflection, it seems to me that that cannot be the case. While all the patents in question derive from the same European patent applications, it is a consequence of the way in which European patent applications mature into domestic patents in the designated contracting states that enforcement has regrettably to be undertaken state by state.

"Nor is it possible to litigate infringement for all designated states in one only of them: if validity is or will come into issue, it is now settled that the only available manner of enforcement is on a country-by-country basis," he said.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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