Judge Upholds UK Power to Set FRAND Terms

“This decision, which may now be appealed, confirms the UK as a forum for resolving FRAND disputes…. It is likely to be welcomed by SEP owners but will increase concerns among implementers about the long arm of the UK courts.”

United Kingdom flag with gavelA judge has affirmed the ability of the UK courts to settle fair, reasonable and non-discriminatory (FRAND) terms of a patent license covering foreign patents, despite the defendants challenging the court’s jurisdiction. (Nokia Technologies OY & Nor v Oneplus Technology (Shenzhen) Co., Ltd & Ors (Rev1) [2021] EWHC 2952 (Pat).)

But in his judgment, published on November 4 20201, His Honour Judge Hacon noted that the current framework for settling a global license between owners of standard essential patents (SEPs) and implementers “is plainly not satisfactory.” He explained: “[I]t does encourage expensive parallel litigation in several jurisdictions and more uncertainty than is necessary. I doubt that it can be sustained in the long term.”

The case is one of many that SEP owners have brought before the courts since the UK Supreme Court judgment in the Unwired Planet and Conversant litigation established English courts’ jurisdiction to set global FRAND terms in August 2020. ([2020] UKSC 37, reported on IPWatchdog here.)

In this dispute, Nokia is seeking a declaration that its UK patents are essential to the relevant telecoms standards, are valid and infringed and that the terms of a global license offered are FRAND. The seven defendants are manufacturers/suppliers of phones, and five of them are not domiciled in the UK.

The defendants had a license to Nokia’s patents, but after it expired on June 30, 2021 the parties could not agree on renewal terms. On the basis that the defendants were therefore infringing the UK patents, Nokia brought its claim in the England and Wales High Court on July 1, 2021. It has also brought infringement claims in Germany, India and Indonesia.

On July 13, 2021, however, Oppo (one of the defendants) brought an action in the No. 1 Intermediate People’s Court of Chongqing Municipality in China to set the terms of a global FRAND license with Nokia. The company also sought a declaration from the Chongqing Court that Nokia’s licensing negotiations were not FRAND.

Dispute Over UK Jurisdiction

The implementers challenged the jurisdiction of the UK courts, arguing that England is not the appropriate forum for the proceedings or that the case should be stayed given the proceedings underway in China. HHJ Hacon’s judgment addressed a number of procedural issues including some arising from Brexit, as the Recast Brussels Regulation no longer applies in the UK.

Concerning whether England is the appropriate forum (forum conveniens) for the trial, he said that the recent decision of the Chinese Supreme Court in OPPO v Sharp confirmed that there is an available forum for settling FRAND terms in this case in China. (Guangdong OPPO Mobile Telecommunications Corp. Ltd v Sharp Corporation ((2020) Zui Gao Fa Zhi Min Xia Zhong No. 57).)

However, he found the dispute in this case could be characterized in the same way as that in Conversant, i.e. as a case concerning allegations of infringement of UK patents, and for relief in terms of a global FRAND license, and concluded: “England is the appropriate forum to hear the dispute so far as the law of forum conveniens is concerned.”

Stay Rejected

The defendants further argued for a stay, at least of the FRAND element of the case, given that proceedings are already underway in China. HHJ Hacon noted that a stay may be ordered “where there are concurrent proceedings abroad and there are compelling reasons to conclude that there would be a saving in costs and that the stay would afford greater convenience. However, such circumstances will be rare.”

Bearing that in mind, he discussed the arguments made by both sides, including the risk of irreconcilable judgments, timing, the scope of the license, royalty rates, sanctions and enforcement, and concluded that there was no reason to grant a stay: “I do not take the view that the circumstances of the present case are of the rare and compelling nature contemplated by the Court of Appeal … such that the balance of justice favours a stay of the FRAND issues before this court.”

This decision, which may now be appealed, confirms the UK as a forum for resolving FRAND disputes, despite the different circumstances compared to the Unwired Planet and Conversant cases. It is likely to be welcomed by SEP owners but will increase concerns among implementers about the long arm of the UK courts. In this case, for example, the defendants claimed that over 50% of the sales of the devices proposed to be licensed were in China, compared to less than 0.5% in the UK.

The judge acknowledged the difficulties posed by a multiplicity of proceedings and quoted the UK Supreme Court’s observation that one potential solution would be the establishment of an internationally recognised tribunal to which patentees and implementers must refer their disputes. However, he added that “until that or an alternative mechanism for settling global licences is internationally agreed, national courts must deal with circumstances as they are.”

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