Patents: UK jurisdiction over global FRAND licence

By Audrey Horton

03-2019

The Court of Appeal has confirmed that the UK Patents Court has jurisdiction to try a claim for infringement of UK standard essential patents against Chinese as well as UK defendants where the relief sought was a global fair, reasonable and non-discriminatory (FRAND) licence.

Background

The European Telecommunications Standards Institute (ETSI) sets standards for mobile telephones. Members are obliged to inform ETSI about any essential intellectual property rights (IPRs) which they own, known as standard essential patents (SEPs). They must agree to license these rights to users of the standard on FRAND terms.

Persons domiciled in an EU member state shall, whatever their nationality, be sued in the courts of that member state (Article 4(1), recast Brussels Regulation (1215/2012/EU)). In proceedings concerning the registration or validity of patents, the courts of the member state in which the registration was applied for have exclusive jurisdiction (Article 22(4), recast Brussels Regulation).

The Court of Appeal recently confirmed the English High Court's jurisdiction to award a licence rate for a global patent portfolio, and also to order an injunction in respect of unlicensed infringements for SEPs (Unwired Planet International Ltd v Huawei Technologies Co Ltd, see Briefing "Patent licensing and FRAND: a new approach", www.practicallaw.com/w-011-0614).

Facts

C sued UK and Chinese companies (together, H) for infringement of the UK designations of four of its European patents, and sought a determination of FRAND terms for its global SEP portfolio. H manufactured and sold in China and also to a lesser extent sold in the UK.

H applied to dismiss or alternatively to stay the claim. H challenged jurisdiction on the basis that the English courts did not have jurisdiction, and that the UK was forum non conveniens. H argued that as most of its profits were generated in China, if a global portfolio licensing rate was to be determined, the Chinese patents in C's global portfolio would be disproportionately significant in value compared to the UK elements. By asking for a licence fee for a global portfolio to be determined in the UK, C's claim amounted to an allegation of infringement and request for relief in respect of foreign patents. As the jurisdiction of the English courts is limited to deciding on validity and infringement of UK patents, there was no jurisdiction to hear this claim.

The High Court rejected both challenges to its jurisdiction, and dismissed both the application to dismiss and the application to stay.

H appealed on the forum non conveniens point only, in light of Unwired, and applied for new evidence of Chinese law to be admitted in the appeal. H also proposed that if the appeal failed on this point, questions should be referred to the European Court of Justice (ECJ).

Decision

The court dismissed the appeal. It refused H's request to refer questions of EU law to the ECJ.

The proper characterisation of the dispute was particularly important here. The claim could not be characterised simply by looking at C's claim, but at the overall dispute between the parties including how it was answered by H. The dispute characterised as a whole still involved questions of essentiality, infringement and validity of the UK patents.

Different answers to the forum conveniens questions might result from the level of generality at which the dispute was characterised. To define a dispute as focusing on the relief which would be granted in the English court was too narrow. But to define it so generally that C was left to pursue a claim based on a different property right and different underlying facts in the foreign forum was too broad.

C's claim here was closely analogous to the claim advanced in Unwired. It was that the UK patents were essential to the standard. C had complied with its ETSI undertaking, in that the offers which it had made were FRAND. H had not complied without any reasonable ground for so doing. Therefore C was entitled to enforce its UK SEPs and obtain the usual relief for infringement, including a FRAND injunction and damages.

C  also sought determination of the terms of a FRAND licence of its portfolio. H's answer was likely to be that C's patents were neither essential nor valid and C had not complied with its FRAND undertaking and so was not entitled to an injunction even if it established that its UK patents were valid and essential. The content of C's FRAND undertaking was thus an inseparable part of the dispute about whether C was entitled to relief for infringement of valid UK patents.

Here, leaving C to seek a remedy in China would be to compel them to advance a case based on different patents. The Chinese patents were different property rights applied for and registered in China. They would have different claims and different prior art would be relevant to their validity. The issue of essentiality of those patents would give rise to different technical issues from those for the UK patents. The acts of infringement relied on would be acts in China, not acts in the UK. It was impossible to view such a dispute as being the same dispute as that which would arise in the English court.

The claim here could not be characterised as a claim for infringement of a "local" patent since patents are national rights. Nor was it a claim for enforcement of a global portfolio right. No such right existed, as was accepted in Unwired.

Applying these principles, the forum conveniens question answered itself. Resolution of the dispute would involve determining infringement, essentiality and validity of UK patents. A UK forum was clearly the most appropriate forum, indeed the only possible forum, to try this dispute. Admitting further evidence of Chinese law could not change this outcome. The Chinese court could not inquire into the validity of UK patents. It was not a case of enforcing a global right, nor one where Chinese law was the law which governed the dispute between the parties, nor were the Chinese patents the key patents which determined the dispute.

Although, ideally, decisions taken with regard to the validity and infringement of patents in one jurisdiction ought to be taken by the courts of that jurisdiction, this principle applied with less force where the issue was the impact of an undertaking with international effect, such as the FRAND licensing undertaking given to ETSI. The effect of decisions taken by the courts in one country could be felt elsewhere in the world. Although the English court would be deciding the royalty for China, it would do so without precluding the Chinese court from deciding on the validity and essentiality of the Chinese patents and having that court's decision considered in the context of fixing the royalty, if any, for China.

Comment

This decision follows logically from the decision in Unwired, which resolved the issue of jurisdiction by distinguishing between an action relating to the validity and infringement of a UK patent, which is national, and the remedy of a FRAND licence, which under ETSI rules will normally need to be global. What would happen if different national courts came up with different FRAND licence conditions for the same licensees and the same portfolio of SEPs remains to be seen.

Case:).Huawei Technologies Co Ltd v Conversant Wireless Licensing SARL [2019] EWCA Civ 38.

First published in the March 2019 issue of PLC Magazine and reproduced with the kind permission of the publishers.  Subscription enquiries 020 7202 1200.