INTEL CORPORATION v. VIA TECHNOLOGIES INC. AND ANOTHER

HCA 4265/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4265 OF 2001

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J U D G M E N T

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1. The application before me is by summons dated 10th June 2002 taken out by the defendants for a stay of all further proceedings in the action pending the outcome of English proceedings.

2. There were two other matters also before me but by consent of the parties those were adjourned pending the decision on the defendant's application for stay. By consent I ordered that the application for directions on the plaintiff's notice of motion dated 27 May 2002 for leave to amend the specifications and claims of Hong Kong Patent No. 101671 be adjourned until after the decision on the said application for stay. I was informed that it is likely that there would be agreement on the directions to be given. I gave leave to the parties to apply before any judge for directions on the notice of motion in the absence of agreement. By consent I also ordered that the plaintiff's summons for directions dated 28 May 2002 be adjourned until after the decision on the said application for stay. I was also informed that it is likely that there would be agreement on the directions to be given. I gave leave to the parties to apply for directions at the same time as the application for directions under the notice of motion in the absence of agreement.

Background

3. This action ("the Hong Kong action") is brought by the plaintiff against the 1st and 2nd defendants for infringement of three Hong Kong Patents, namely, HK Patent No. 931073, HK Patent No. 1006754 and HK Patent No. 1016711. The plaintiff is the world's largest manufacturer of microprocessors for use in computers. The 1st defendant is Via Technologies Inc., a Taiwan company ("Via"). The 2nd defendant is Trend Electronics (HK) Ltd., a Hong Kong company ("Trend").

4. The plaintiff's complaints are in respect of microprocessors, namely, central processor units ("CPUs") manufactured by Via and distributed by Trend for use in computers and said to be in infringement of the claims in the said patents.

5. HK Patent No. 931073 is a deemed standard patent corresponding to UK Patent No. 2230118 in respect of an invention for "microprocessor providing selectable alignment checking on memory references." Claims 1-12 are alleged to be infringed.

6. HK Patent No. 1006754 is a standard patent corresponding to UK Patent No. 2261753 in respect of an invention for "multi-mode microprocessor with electrical pin for selective re-initialization of processor state". Claims 1-19 are alleged to be infringed.

7. HK Patent No. 1016711 is a standard patent corresponding to UK Patent No. 2326494 in respect of an invention for "means for executing two types of instructions that specify registers of a shared logical register file in a stack and a non-stack referenced manner''. Claims 1-26, 35-41 and 43-44 are alleged to be infringed.

8. The defendants allege that each of the Hong Kong patents are invalid and they deny that Via's CPUs infringe any valid claim of any of the patents. There is a counterclaim to revoke the three Hong Kong patents on the grounds that each claim is not a patentable invention in that it was not new or did not involve an inventive step. As is pleaded in the Particulars of Objection, prior art is relied on in addition to common general knowledge.

9. The plaintiff as claimant has also instituted proceedings in England in the Patents Court in the Chancery Division in HC 01 No. C04136 of 2001 ("the English action") against Via who is also the 1st defendant in the English action and against two other defendants as distributors of the CPUs in the United Kingdom namely, Via Technologies (Europe) Ltd. ("Via Europe") as the 2nd defendant and Realtime Distributors Ltd. ("Realtime") as the 3rd defendant. These two defendants are not parties in the Hong Kong action and Trend is not a party in the English action. The claims against the defendants other than Via in both the English action and the Hong Kong action are on the basis that the other defendants infringed the patents and also acted pursuant to a common design with Via to do the acts complained of.

10. The Hong Kong action and the English action were both commenced on 26 September 2001. However, the English action has reached an advanced stage with trial dates fixed for February 2003 whereas in the Hong Kong action directions have not yet been given. Mr. Liao SC, for the defendants, contended that save for two features in the English action, the English action and the Hong Kong action relate to the same patents and the same complaints. Also, the documents filed and served in the Hong Kong action closely followed those filed and served in the English action save for the two features in the English action

11. The first of the two features is that in the English action Jacob J. exercising his powers under the English Civil Procedure Rules ("the CPR") in a case management conference on 21 December 2001 made an order, inter alia, that :

“ The Claimant shall by 1 February 2002 serve a statement on the Defendants (verified by a statement of truth to the effect that proper consideration has been given to each of the individual claims) of which claims of each Patent in suit the claimant alleges has independent validity."

The judge thus limited the claims, to be verified by a statement of truth, to the claims of each of the patents in suit which the claimant alleges has independent validity i.e. validity which is not dependent on any other claims. As a result of the said order a 'Limitation of Issues' dated 8 February 2002 together with the required statement of truth was served on the defendants in the English action. So in England the claims have been narrowed down whereas in Hong Kong they have not.

12. The second feature in the English action relates to European Community competition defences ("the competition issues") relied on by the defendants which are not available in the Hong Kong action. The competition issues were on 21 December 2001 ordered by Jacob J. to be tried separately from the other issues, i.e. the issues of validity and infringement of the patents in suit ("the patent issues") and the trial of the patent issues was fixed for 10 days commencing on 3 February 2003.

The application

13. As the English action has progressed to an advanced stage with trial dates fixed for 3 February 2003, the defendants seek a stay of the Hong Kong action pending the outcome of the trial of the patent issues in the English action. In the alternative, although not prayed for in the summons for stay, the defendants seek an order that the Hong Kong action should not be set down for trial and that trial dates should not be fixed until after the outcome of the patent issues in the English action.

The jurisdiction

14. Section 16(3) of the High Court Ordinance (Cap. 4) provides that:

“ Nothing in this Ordinance shall affect the power of the Court of Appeal or the Court of First Instance to stay any proceedings before it, where it thinks fit to do so, either on its own motion or on the application of any person, whether or not a party to the proceedings".

15. It is not disputed that the Court retains an inherent jurisdiction to stay proceedings in the exercise of its discretion.

The principles

16. It is to be observed that the defendants' application is not a true lis alibi pendens type of application. This is not the type of case as in The Abidin Daver [1984] AC 398 involving an application for stay of English proceedings in the Admiralty Court when there was already a suit concerning the same subject matter between the same parties in Turkish proceedings. Nor is this the type of case as in Hing Fat Plastic Manufacturing Co. Ltd. v. Advanced Technology Products (HK) Ltd. [1992] 2 HKLR 350 where there was an application for stay of Hong Kong proceedings when there was already a suit concerning the same subject-matter, i.e. a claim for the price of goods sold and delivered, between the same parties pending in the Middle Court of the People's Court in the Mainland.

17. Mr. Garland SC, for the plaintiff, emphasized, correctly in my view, that to redress the wrongs committed by the defendants in Hong Kong the plaintiff must bring and continue the Hong Kong action in Hong Kong. It has exclusive jurisdiction. Hong Kong is the only forum for the Hong Kong action. Also, the parties in England and the parties in Hong Kong are not identical parties although it has been pointed out to me that Trend and Via Europe are subsidiaries of Via.

18. Mr. Garland in opposing the defendants' application submitted that the principles applicable for a stay in circumstances such as these should (save for one variation) be the principles as stated by Ma J. in the recent case of Linfield Ltd. v. Taoho Design Architects Ltd. [2002] 2 HKC 204. In that case the plaintiff as owner of a residential development brought an action against five defendants in respect of defects in the construction of the properties in the development. The contracts between the plaintiff and some of the parties contained arbitration agreements and three of the parties applied for a stay of the relevant proceedings in favour of arbitration. The 4th defendant applied for a stay of the action against it pending the outcome of the arbitrations between the plaintiff and the three defendants. It was held by Ma J. that the summons approximated roughly to a lis alibi pendens application whereby a party seeks a stay on the basis that there are concurrent proceedings elsewhere involving the same or a similar subject matter and identical parties. Although there were multiple proceedings in that case the same parties were not involved throughout. In such a case, the starting point was to apply lis alibi pendens-type principles, viz:

(i) the court must consider what would serve the ends of justice between the parties to the litigation and the administration of justice generally;

(ii) a stay should not cause an injustice to the plaintiff;

(iii) the applicant for a stay must satisfy the court that continuing the proceedings would be oppressive or vexatious to him or an abuse of process , i.e. unjust; and

(iv) where a plaintiff commences proceedings as of right, he should not be deprived of the right to continue those proceedings in the absence of very good reasons to the contrary.

19. Save for one variation, I accept that the applicable principles are as stated by Ma J. in Linfield namely:`

(i) the court must consider what would serve the ends of justice between the parties to the litigation and the administration of justice generally;

(ii) a stay should not cause an injustice to the plaintiff;

(iii) the applicant for stay must satisfy the court that continuing the proceedings would be unjust to him. This is the one variation to what Ma J. decided. In my view in the light of what Lord Brandon said in The Abidin Daver [1984] AC 398 at 419C-D there is no need for the applicant to show that continuing the proceedings would be oppressive or vexatious to him or an abuse of process. It is sufficient for the applicant to show that continuing the proceedings would be unjust to him;

(iv) where the plaintiff commences proceedings as of right, he should not be deprived of the right to continue those proceedings in the absence of very good reasons.

20. Mr. Liao did not really dispute the applicable principles but correctly submitted that as stated by Lord Brandon in The Abidin Daver at 419H the exercise of the court's discretion necessarily involves the balancing of all the relevant factors on either side, those favouring the grant of a stay on the one hand and those militating against it on the other. In my view that is the correct approach in the exercise of the discretion and the applicable principles are as set out above.

The relevant factors

21. It is common ground that the prior to the promulgation of the Patents Ordinance (Cap. 514) on 27 June 1997 the governing patent law in Hong Kong was the Registration of Patents Ordinance (Cap. 42) which merely extended to Hong Kong, upon completion of the formalities by the patentee, the privileges and rights enjoyed by the holders of patents recognized in the United Kingdom namely, those granted in the United Kingdom Patent Office and in the European Patent Office. HK Patent No. 931073 was registered under the former Registration of Patents Ordinance. However, the old system of registration which had the effect of extending the privileges and rights enjoyed by the holders of the patents recognized in the United Kingdom was done away with by the promulgation of the Patents Ordinance.

22. It is important to bear in mind that questions of validity and infringement are matters of Hong Kong law. As Rogers V.P. observed in Re Merck, Sharp and Dohme Ltd., (15 May 2002 CACV 186/2002) in a recent judgment at [5] :

“ Under the patent regime as it existed in Hong Kong prior to July 1997, the registration of a patent in Hong Kong was dependant upon the patent in the United Kingdom because it was the rights and privileges granted in the United Kingdom which were extended to Hong Kong. Since June 1997, Hong Kong patents, once granted, have a life, independent of the designated United Kingdom patent. It can also be noted that once a European patent has been granted and opposition proceedings have been concluded, the United Kingdom patent itself is subject to United Kingdom patent law and any question of infringement, validity or amendment is decided in accordance with United Kingdom law. Likewise, once a patent has been granted in Hong Kong any question of infringement, validity or amendment is decided in accordance with Hong Kong patent law".

23. The Patents Ordinance is a self contained code governing patent law in Hong Kong. The Patents Ordinance is a creature of Hong Kong law and subject to one exception, which has no relevance to the matters before me, the Hong Kong patents are not legally affected by anything which happens to the designated patent upon which it is based, e.g. amendment elsewhere, although I accept, as Mr. Liao contended, that in practice it would mean that the patent holders would undoubtedly also apply to have their patents amended here as well. But, unlike the former position, an application to amend the HK Patent will have to be made here. The only instance in which revocation or amendment of a designated patent takes effect in Hong Kong is where a designated patent granted in the European or Chinese Patent Offices is revoked or amended following prescribed opposition or revocation proceedings as defined in section 2(1) of the Patents Ordinance and section 54 of the Patents (General) Rules. These relate to post-grant revocation or opposition proceedings. Those proceedings, although instituted after the grant of the patent, are in fact part of the process of the grant in those two designated patent offices. Any patent revoked in such proceedings is therefore treated as though it had never been granted and any patent amended in them is treated as though it had been granted in the amended form. That being so, the proprietor must apply to revoke or amend the standard patent as the case may be (sections 43 and 44 of the Patents Ordinance) and the Court has a corresponding power to revoke following such proceedings (section 91(1)(i) of the Patents Ordinance). This exception, however, has no relevance to the matters before me.

24. Even though HK Patent No. 931073 was registered under the old Registration of Patents Ordinance, it became a deemed standard patent under the Patents Ordinance (Section 3 of the Patents (Transitional Arrangement) Rules). HK Patent No. 1006754 and HK Patent No. 1016711 are standard patents under the Patents Ordinance.

25. There can be no doubt that civil proceedings for infringement in Hong Kong can only be brought in Hong Kong which has exclusive jurisdiction to grant relief. Also, applications to amend patents can only be made in Hong Kong. It is thus important to recognize that the plaintiff is asserting his right to bring and continue the Hong Kong action for relief which he can only seek in Hong Kong.

26. Trend and Via Europe are said to be wholly owned subsidiaries of Via but there is a further defendant in England namely, Realtime which is not said to be a subsidiary of Via. In my view, there is no identity of parties in both sets of proceedings.

27. There is also in my view no identity of subject matter in both sets of proceedings. Although the UK patents and the nature of the amendments sought are in the same form as the Hong Kong patents they are different creatures. The allegedly infringing items are identical in both actions. However, the questions of infringement and validity in England will be governed by the Patents Act 1977 whereas the questions of infringement and validity in Hong Kong will be governed by the Patents Ordinance. It is common ground that the issues on validity and the principles used for construing the claims in the patents are the same in England and in Hong Kong. However, on the provision for infringement there is a difference in wording in the relevant legislation. In dealing with the meaning of infringement in the legislation there is a difference in wording in the Patents Act 1977 (section 60) and the Patents Ordinance (section 73). It is not necessary for me to set out these out here. Section 60 of the Patents Ordinance is taken from the Irish Act and that is the reason for the difference in wording. It is not suggested, however, that the difference in wording makes any material difference but the point was made that the provisions were not identical.

28. Mr. Liao pointed out that in England the plaintiff has limited the patents issues whereas in Hong Kong it has not. It is still relying on all the claims made although in the English action these have been narrowed down only to those claims which the plaintiff contends have independent validity and which are verified by a statement of truth. That being so, it was submitted that the defendants have to spend a lot of time, effort and costs in dealing with the preparation for trial of all the claims in the Hong Kong action when all that may well become unnecessary after the patent issues are decided in England. Hence the application for stay pending the outcome of the patent issues in England.

29. The practice and procedure in Hong Kong is different from the practice and procedure in England. The promulgation of the English CPR has changed the practice and procedure in England. It was in the exercise of the powers under the CPR in a case management conference that Jacob J. limited the patent issues. We have no such procedure in Hong Kong as yet although the Chief Justice's Working Party on Civil Justice Reform in Hong Kong has completed its interim report and consultation paper and the consultation period has ended. I do not see how the plaintiff can be required at the present time to limit the issues in the Hong Kong action in the same way.

30. The realities of the situation are that once the decision on the patent issues in the English action is pronounced by a specialist judge in the Patents Court in England it will have a profound effect on the Hong Kong action. It seems inevitable that the parties will have to re-assess their position on the claims and the defences and I have no doubt that the decision will have a profound effect. I accept also that there may even be questions of issue estoppel between the plaintiff and Via on e.g. matters of scientific fact and realistically the claims of the plaintiff in the Hong Kong action may well be narrowed down after the decision in England. But this does not mean that a trial in Hong Kong can be avoided in the absence of a settlement.

31. Mr. Liao emphasized that a great deal of time, effort and costs would be duplicated and unnecessarily wasted in the preparation for trial of the Hong Kong action. However, the evidence does not support this. Undoubtedly there will be some duplication of work in the preparation for trial but this will not be substantial on the evidence before me.

32. Mr. Hancock, for the defendants, in his 2nd affidavit dealt with the pre-trial steps in the Hong Kong action at para. 4 where he stated :

“ ............... in order to emphasize the duplication of work which might be involved, I wish to clarify how matters might proceed in Hong Kong in the event that no stay is ordered. Patent proceedings are different from other proceedings in the High Court as they normally involve complex technical issues. Developments leading to trial in Hong Kong will be approximately as anticipated in the Plaintiff's Summons for Directions, which I would paraphrase as follows :-

（1） Discovery - there will be a considerable amount of overlap in the discovery to be given in England and Hong Kong. Discovery to be given by the Defendants in Hong Kong is likely to be very substantially similar to discovery given by the Defendants in England and will involve mainly documents in relation to technical issues.

Any additional discovery to be given in Hong Kong by the Defendants will be confined to facts of particular relevance to the position in Hong Kong and, as such, will be minimal.

（2） Experiments - any experiments required for the purposes of the Hong Kong proceedings are highly likely to be exactly the same as any experiments required for the purpose of the English proceedings.

（3） Primer - paragraph 5 of the Plaintiff's Summons for Directions proposes that the terms of a "primer" be agreed between the parties. Such a document would be necessary for the purpose of educating the Court on the technical issues. Such a document has already been produced by the Plaintiff in draft in the English proceedings. If such a document is ordered to be produced as contemplated by paragraph 5 of the Plaintiff's Summons for directions, that document will almost inevitably be substantially the same as the Primer used in England.

（4） Exchange of Witness Statements - such statements in relation to issues of fact should not be complicated. I do not anticipate disputes of fact playing a significant part in trial. The main dispute will relate to technical issues on the validity of the claims, construction of those claims and whether the products in issue infringe those claims. These issues will not involve significant evidence from witnesses of fact.

（5） Expert Witnesses - the Defendants' solicitors in England have already identified expert witnesses who will probably give evidence at the trial in England. Whatever Mr. Laight may say in his Affidavit, the fact remains that the technical issues are substantially the same in both England and Hong Kong. The Hong Kong Defendants anticipate using the same expert witnesses in Hong Kong as are being used in England. I anticipate that the Plaintiff's expert witnesses will also be the same in both jurisdictions.

（6） Models, apparatus, drawings etc. - I anticipate that any party wishing to rely on these items in England will also wish to rely on the same or substantially the same items at a trial in Hong Kong.

（7） Trial bundles - a large number of the documents involved at trial in Hong Kong would be the same as those used at trial in England."

33. It has also been pointed out that in the Hong Kong action there are further additional claims of independent validity of the three patents which are no longer made in the English action. However, as explained by Mr. Hancock in his 2nd affidavit at paras. 11 and 12, the additional independently valid claims either do not raise further technical issues not already covered when considering the independent claims relied on by the plaintiff in its "Limitation of Issues" in England or if they are not substantially dealt with at the English trial, they will be very limited indeed.

34. It appears from the evidence that although there will be duplication of work in the Hong Kong action involving extra time, effort and costs, such will not be substantial as little additional work will be involved.

35. The main purpose of the application is, as stated by Mr. Hancock, to avoid a long trial in Hong Kong. He said at para. 6 of his 2nd affidavit that :

“ The principal purpose of the Defendant's application is to avoid a very lengthy trial in Hong Kong (perhaps as long as 6 weeks) which will duplicate time and effort of both the parties and the Courts as it will deal with issues which will have already been covered in the English trial."

36. That is the stated purpose of the application. As the preparation for trial in the English action is far advanced with trial dates fixed for 3 February 2003 and as directions have yet to be given in the Hong Kong action, I see no reasonable prospect of the Hong Kong action coming on for trial before a decision is pronounced on the patent issues in the English action. Mr. Laight, for the plaintiff, said at para. 9 of his 2nd affidavit that a judgment is likely to be given towards the end of April 2003. There is in my view no reasonable prospect of a trial in Hong Kong before then and there is no necessity to grant a stay pending the outcome of the English action.

37. An important consideration is also that there is a likelihood that there would be an appeal to the Court of Appeal after judgment is pronounced in England. The parties are obviously in hostile litigation and the history of the English action shows that it is likely that the parties would pursue the matter on appeal. The history of the English action shows that the competition issues were the subject of a successful summary judgment application by the plaintiff as claimant in the English action. On 14 June 2002 Lawrence Collins J. gave judgment on the competition issues granting summary judgment to the plaintiff as claimant to all of them. However, Via applied for leave to appeal but the judge gave leave to appeal on one issue only. As set out at para. 10 of the 2nd affidavit of Mr. Haight, it is anticipated that Via will seek leave to appeal on a number of issues. If, as is likely, the decision on the patent issues will be appealed, then, on the evidence, it is unlikely that a hearing could take place before at least May 2004. It would be manifestly unjust to the plaintiff for the Hong Kong action to be delayed until then. If there is a further appeal to the House of Lords, then it is likely that the matter will be even further delayed if there is a stay. Mr. Liao submitted that the application for stay was only until the decision of the patent issues and not any appeal therefrom but in my view it would be wholly unrealistic not to consider the likelihood of an appeal which could have the effect of prolonging any period of stay.

38. As I have said there is no reasonable prospect of a trial in the Hong Kong action before judgment is given on the patent issues in England. It seems to me that realistically it is unlikely that the trial in Hong Kong would be before the long vacation in 2003. After judgment in the English action has been given the parties would have an opportunity to consider their respective positions to see how the Hong Kong action should proceed further to trial. It seems to me that the parties would have enough time to do so before trial of the Hong Kong action. It would not be right to stay the Hong Kong action until after the determination of the English action.

39. I also do not think that it is right to grant the defendants' alternative application that the Hong Kong action should not be set down for trial and that trial dates should not be fixed until after the determination of the patent issues in the English action. This ignores the likelihood of an appeal from that decision to the English Court of Appeal and a further delay to at least May 2004 because of this. It cannot be right to delay the setting down and the fixing of trial dates as suggested.

40. It should also be borne in mind that in any event there will be no question of setting the action down for trial until the parties are ready for trial at which time the proper application will be made to the Listing Judge or Listing Master. In view of the directions that are being sought it will take some time anyway for the parties to be ready for trial.

41. There is no doubt that a trial is necessary in Hong Kong and that the parties need to prepare for trial. Although there may well be questions of issue estoppel between the plaintiff and Via e.g. on issues of scientific fact this does not mean that a trial in Hong Kong can be avoided. In my view it would not be just to delay the plaintiff in seeking to enforce its rights and to seek the remedies in the Hong Kong action.

42. In my judgment it would not be just to the plaintiff to order a stay until the outcome of the patent issues in the English action nor would it be just to make the alternative order sought that the Hong Kong action should not be set down and that trial dates should not be fixed until then. I do not see how it can be said that continuing the Hong Kong action would cause an injustice to the defendants. The defendants have failed to establish this. There has to be a trial here and the preparation for trial would involve little extra time, effort and expense on the part of the defendants.

43. A further consideration is that it is conceded that the plaintiff's application to amend HK Patent No. 1016711 should proceed and should not be stayed. This is because of the public interest involved. Mr. Hancock at para. 2 of his 2nd affidavit accepts that any amendments may affect parties other than those involved in the proceedings and that there should be no undue delay in the application to amend. Mr. Garland submitted that where amendment of a patent is sought in the course of infringement proceedings, as is the case here, the usual course is for the amendment application and the trial to be ordered to be heard together. As is stated in Terrel on the Law of Patents, 15th Edn. para. 9.52 :

“ The usual procedure in recent years has been for the court to order the application to amend and the trial of the action to be heard together since this avoids duplication of evidence and the necessity to "educate" the court twice in the art."

This seems to me to be an eminently sensible course to adopt. It is clear that the application for amendment of the patent should not to be stayed and this is a further reason for refusing the defendants' application.

Conclusion

44. In all the circumstances the defendants' application is refused and the summons is dismissed.

45. I also make an order nisi for costs of the application in the plaintiff's favour against the defendants.