UK Court refuses to stop party using US procedure to obtain disclosure

In an application to the English High Court, InterDigital Technology Corporation has been unable to prevent Nokia Corporation from applying to a US court for disclosure of documents held by a third party under Section 1782 of the US Federal Rules of Civil Procedure. InterDigital argued that the information sought was irrelevant and applied for either an injunction or a declaration to that effect, but Mr Justice Pumfrey held that there was no bar to Nokia seeking the disclosure in the US. This decision confirms that the Section 1782 procedure offers a useful alternative to disclosure in this or other jurisdictions.

Nokia's US Application

In a claim by Nokia Corporation (Nokia) for revocation of certain patents owned by InterDigital Technology Corporation (InterDigital), InterDigital has been refused various forms of relief for which it applied in connection with Nokia's application in a US court for disclosure of documents from the US entities Ericsson Inc. and Sony Ericsson Mobile Communications AB (together "Ericsson") on the grounds that the application was neither unlawful nor an abuse of process.

Section 1782 of the US Federal Rules of Civil Procedure sets out a procedure by which an overseas entity may apply to a US Federal District Court for disclosure of documents by a US entity (the "1782 Procedure"). In the recent US Supreme Court decision in Intel Corporation v AMD, the court set out certain key characteristics of the 1782 Procedure:

• the Federal District Court is authorised but not required to grant the disclosure applied for;
• the proceedings in relation to which disclosure is sought need not be pending or imminent, though they must be reasonably contemplated; and
• the court need not limit the documents over which disclosure is granted to those that would be disclosable in the foreign jurisdiction were the application to be made there, though whether the application conceals an attempt to circumvent foreign proof-gathering limits or other policies of a foreign country or of the USA is relevant to the court's exercise of its discretion.

Background

InterDigital is the owner of a large number of patents which it considers are essential to the practice of GSM standards for digital mobile telephones. Nokia took a licence from InterDigital to develop its 2G and 2.5G services. The licence was structured such that after the initial payment no further royalty was payable unless certain conditions were satisfied. Meanwhile, InterDigital settled an infringement claim it had brought against Ericsson, one of the terms of the settlement being that Ericsson would also take a licence from InterDigital.

InterDigital claimed that the grant of the Ericsson licence triggered a further royalty payment from Nokia. Nokia disagreed and the dispute went to a US arbitration. Nokia raised issues of non-infringement and validity in the arbitration but InterDigital objected and those issues were removed from the remit of the arbitration. Consequently Nokia brought separate proceedings in England for the revocation of three InterDigital patents which it regards as representative of InterDigital's patent portfolio. In connection with the English proceedings, Nokia made an application in the US seeking disclosure of documents from Ericsson on the basis that, following its extended litigation against InterDigital, Ericsson must have information relating to the scope and validity of corresponding US patents.

InterDigital applied to the English court for relief under the following heads:

• an injunction restraining Nokia from pursuing its applications for disclosure from Ericsson; or, alternatively
• a declaration that such disclosure would be irrelevant to any issue in the English proceedings; and
• a stay of proceedings until the conclusion of the arbitration.

Decision

Injunction

Pumfrey J considered the House of Lords decision in South Carolina Insurance Co v Assurantie Maatschappij "de 'Zeven Provincien NV" [1987] AC 24. This set out the principles governing whether English courts may grant an injunction interfering with a US application.

He concluded that the English courts do not in general exercise any control over the way in which a party obtains the evidence it wishes to present to support its case; the disclosure ordered by the court is the minimum that will be available to the party applying for it, but if further evidence is voluntarily disclosed to a party, the court will not prevent him from using it. This is not inconsistent with the procedure of the English court, and should normally be permitted. The court should only restrain a party from making the application if it is satisfied that the use being made of it is either a breach of a legal or equitable right of the objecting party or is vexatious, oppressive or in some other way unconscionable.

InterDigital argued that the applications amounted to a "fishing trip" and, moreover, closely mirrored the terms of a subpoena issued by the arbitrators against Ericsson, suggesting that the collateral purpose of Nokia's US application was to produce documents for use in the arbitration. Pumfrey J's view was that the disclosure sought would be of doubtful utility, but that this did not amount to abuse of process. The fact that the US court is authorised but not required to order disclosure also suggested that there was no abuse of process, as Nokia would have to persuade a court that the disclosure it sought was appropriate. It was up to the US court to decide on the alleged collateral purpose.

Declaration

Pumfrey J concluded that although his view was that many of the documents to be disclosed would be likely to be irrelevant, he could not state categorically that they all would be. He therefore refused the declaration.

Application for a stay

InterDigital argued that Nokia's purpose in bringing the English proceedings was to obtain an advisory opinion on the validity of the patents, that the court should encourage alternative dispute resolution and that the existing ADR proceedings would achieve this. However, Pumfrey J noted that InterDigital had itself objected to the issues of infringement and validity being considered in the arbitration and had been unable to identify any other form of alternative dispute resolution that could dispose of these issues. This was a properly constituted action which could not be said to be an abuse of process, and in these circumstances, the primary duty of the court is to bring the proceedings on for trial as quickly as circumstances permit and not to stay them.

Conclusion

Pumfrey J applied a light-touch approach to these applications, refusing to limit a party's freedom to gather information unless its activities were unlawful, amounted to a breach of process or were otherwise unconscionable. However he gave particular weight to the discretion of the US court and made it clear that, had the US court lacked such discretion, he would have been more willing to find an abuse of process.

This decision highlights a potential alternative to standard disclosure, and in particular another avenue for a party to obtain disclosure of documents denied to it in the English courts. Although the US court applying the 1782 Procedure will consider the fact that the disclosure applied for might not be allowed in the English court, this will not be determinative.