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You are here: BAILII >> Databases >> England and Wales High Court (Patents Court) Decisions >> Nokia Technologies OY & Nor v Oneplus Technology (Shenzhen) Co., Ltd & Ors (Rev1) [2021] EWHC 2952 (Pat) (04 November 2021) URL: https://www.bailii.org/ew/cases/EWHC/Patents/2021/2952.html Cite as: [2021] EWHC 2952 (Pat) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
Fetter Lane, London EC4A 1NL |
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B e f o r e :
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(1) NOKIA TECHNOLOGIES OY (2) NOKIA SOLUTIONS AND NETWORKS OY |
Claimants |
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- and - |
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(1) ONEPLUS TECHNOLOGY (SHENZHEN) CO., LTD (2) UNUMPLUS LIMITED (t/a OnePlus) (3) GUANGDONG OPPO MOBILE TELECOMMUNICATIONS CORP, LTD (4) OPPO MOBILE UK LTD (5) ASCENSION INTERNATIONAL TRADING CO., LTD (t/a Realme) (6) REALME MOBILE TELECOMMUNICATIONS (SHENZHEN) CO., LTD (7) REALME CHONGQING MOBILE TELECOMMUNICATIONS CORP LTD |
Defendants |
____________________
Alexander Layton QC, Andrew Lykiaradopoulos QC and Josephine Davies (instructed by Hogan Lovells International LLP) for the Defendants
Hearing dates: 27-28 September 2021
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Crown Copyright ©
Judge Hacon :
Introduction
Background
The two legal frameworks
"[71] On an application for permission to serve a foreign defendant (including an additional defendant to counterclaim) out of the jurisdiction, the claimant (or counterclaimant) has to satisfy three requirements: Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 453-457. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: e g Carvill America Inc v Camperdown UK Ltd [2005] 2 Lloyd's Rep 457, para 24. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context 'good arguable case' connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, 555-557, per Waller LJ affirmed [2002] 1AC 1; Bols Distilleries BV v Superior Yacht Services (trading as Bols Royal Distilleries) [2007] 1 WLR 12, paras 26-28. Third, the claimant must satisfy the court that in all the circumstances the Isle of Man is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction."
"Where the plaintiff is entitled to commence his action in this country, the court, applying the doctrine of forum non conveniens will only stay the action if the defendant satisfies the court that some other forum is more appropriate. Where the plaintiff can only commence his action with leave, the court, applying the doctrine of forum conveniens will only grant leave if the plaintiff satisfies the court that England is the most appropriate forum to try the action. But whatever reasons may be advanced in favour of a foreign forum, the plaintiff will be allowed to pursue an action which the English court has jurisdiction to entertain if it would be unjust to the plaintiff to confine him to remedies elsewhere."
The first hurdle: an alternative jurisdiction must be available
"[96] … But we think, like the judge, that there is a compelling reason why the appellants must fail on this issue which would apply even if the appellants' characterisation had been correct, so that the dispute was in substance about the terms of a global FRAND licence. A challenge to jurisdiction on forum conveniens grounds requires the challenger to identify some other forum which does have jurisdiction to determine the dispute. Even in a case where permission is required to serve out of the jurisdiction, so that the burden then shifts to the claimant to show that England is the more appropriate forum, that still requires there to be another candidate with the requisite jurisdiction. In the present case, China is the only candidate which the appellants have put forward. There may be others, but the court is not required to carry out its own independent search, and such other jurisdictions as might exist in theory may not be remotely convenient.
[97] After hearing extensive expert evidence, the judge found that the Chinese courts do not, at present, have jurisdiction to determine the terms of a global FRAND licence, at least in the absence of agreement by all parties that they should do so. Even in the event of such an agreement, he described the prospect that the Chinese courts would embark on the exercise as no more than speculative. Notwithstanding the admission of fresh evidence on this issue, the Court of Appeal reached the same conclusion. In sharp contrast, we have decided, for the reasons set out above, that the English court does have such a jurisdiction, even in the absence of consent by the parties, and it has of course exercised that jurisdiction in the Unwired case. Directions have been given in the Conversant case (subject to the outcome of this appeal) for it to be done again. Furthermore, against the speculative possibility that the Chinese courts might accept jurisdiction to settle a global FRAND licence by consent, there is the judge's finding that Conversant had acted reasonably in refusing to give its consent, for reasons connected with the conditions which the appellants sought to impose, a conclusion which was not met with any persuasive challenge in this court.
[98] We therefore agree with the judge that the forum conveniens challenge falls at this first hurdle, notwithstanding the fresh evidence introduced in the Court of Appeal."
"It can be seen from the above facts that first, the parties concerned are all willing to reach an agreement on the global licensing conditions for the SEPs in question, and have negotiated with each other about the licensing. The scope of the willingness of the parties concerned to negotiate constitutes a factual basis for determining the global licensing conditions for the SEPs in question. Second, obviously, the SEP licensing dispute in this case is more closely related to China. The close relation specifically lies in that: In this case, most of the SEPs involved in the licensing negotiation of the parties concerned are Chinese patents; China is the main place of implementation, principal place of business or main source of revenue of the implementer of the SEPs in question, the place of patent license negotiation, and also the location of the property available for seizure or enforcement of the applicant for patent license. Making judgment on the global licensing conditions for the SEPs in question by the Chinese court is not only more helpful for ascertaining the implementation of the SEPs in question by OPPO and OPPO Shenzhen, but also can make the adjudication of the case more easier. Last, it should be noted that if the parties concerned can reach an agreement on the adjudication of the global licensing conditions for the SEPs by the court in a country, the court of such country can certainly exercise jurisdiction and adjudication over the global licensing conditions for the SEPs between the parties concerned, but the agreement on jurisdiction is not a necessary condition for a specific court to govern and deal with the global licensing conditions of the SEPs. The Court of First Instance, based on its jurisdiction over this case, properly determined that it is appropriate for it to rule on the global licensing conditions for the SEPs in question if the parties concerned are willing to reach an agreement on global licensing, and the case is more closely related to the Chinese court."
Brexit
"[98] … Had it not done, a number of further issues would have arisen, in particular arising from the application of the Owusu principle (Owusu v Jackson (t/a Villa Holidays Bal-Inn Villas) (Case C-281/02) EU:C:2005:120, [2005] 2 All ER (Comm) 577, [2005] QB 801 (ECJ)) to the English defendants, set against the possibility that there might be a reflective application of art 24 of the Brussels I Regulation (European Parliament and Council Regulation 1215/2012/EU of 12 December 2012), and the recent decision of this court in Lungowe v Vedanta Resources plc [2019] UKSC 20, [2019] 3 All ER 1013, [2019] 2 WLR 1051. But we consider that those issues, which may well arise in future if and when other countries decide to exercise jurisdiction to settle global licences, would best be determined in a context when they might be decisive."
"[16] Jurisdiction against the anchor defendant derives directly from article 4(1) of the Recast Brussels Regulation, which provides that: 'Subject to this Regulation, persons domiciled in a member state shall, whatever their nationality, be sued in the courts of that member state.' That basic provision is designed not only for the protection of EU domiciliaries, but also to enable a claimant to know, with reasonable certainty, where he may sue. In Owusu v Jackson (Case C-281/02) [2005] QB 801 the Court of Justice held, contrary to earlier English jurisprudence, that this conferred a right on any claimant (regardless of their domicile) to sue an English domiciled defendant in England, free from jurisdictional challenge upon forum non conveniens grounds, even where the competing candidates for jurisdiction were England (part of a member state) and some other non-member state such as, here, Zambia. The decision related to article 2 of the earlier Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968, which was in identical terms to the present Recast Brussels Regulation."
"[113] The fact that the two UK defendants are domiciled here means that the court cannot decline jurisdiction as against them unless the case presents an exception to Owusu. Huawei and ZTE argue that it does present such an exception, because there is scope for the reflexive application of art.24(4). …
[114] The argument depends critically on the passage in Dicey at 12-024, cited in [28] above, which states that art.24 should not be applied 'slavishly'. This is a slim basis for suggesting that the reflexive application of the article should be extended to cases where it would not apply substantively in its direct application. … It would be absurd if the reflexive application of art.24(4) expanded the exclusive jurisdiction beyond the scope it would have if the patent was that of another member state, where the article would apply directly. Mr Layton's suggestion that art.24(4) should be applied reflexively in a case which is 'closely allied' to a case which would fall under art.24(4), is untenable, and unsupported by any authority."
Forum conveniens and the nature of the dispute
"[94] Leaving aside questions as to the burden of proof, at common law the forum conveniens doctrine requires the English court to decide whether its jurisdiction or that of the suggested foreign court is the more suitable as a forum for the determination of the dispute between the parties. The traditional way in which this question has been framed speaks of the 'forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice' (per Lord Collins in AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, [2011] 4 All ER 1027, [2012] 1 WLR 1804 (at [88]), adopting the language of Lord Goff in Spiliada Maritime Corp v Cansulex Ltd, The Spiliada [1986] 3 All ER 843, [1987] AC 460). The requirement in complex litigation to define, at the outset, what is 'the case' to be tried runs the risk that the court will by choosing a particular definition prejudge the outcome of the forum conveniens analysis, as the Court of Appeal decided had occurred at first instance in Re Harrods (Buenos Aires) Ltd [1992] Ch 72. Harman J had characterised 'the case' as a petition under the English Companies Act for relief for unfair prejudice in the conduct of the affairs of an English registered company, which made it 'blindingly obvious' to him that England was the appropriate forum. But the company carried on business entirely in Argentina. The matters complained of all occurred there, where there was a parallel jurisdiction to provide relief under Argentinian legislation. So the Court of Appeal preferred Argentina as the appropriate forum. Like the Court of Appeal in the present case, we therefore prefer for present purposes to identify the dispute between the parties as the matter to be tried, lest reference to 'the case' should introduce undue formalism into the analysis of a question of substance.
[95] The question how the dispute should be defined has been the main bone of contention between the parties, both in this court and in the courts below. Is it, as the appellants say, in substance a dispute about the terms of a global FRAND licence, or is it, as the respondent maintains, both in form and in substance about the vindication of the rights inherent in English patents, and therefore about their validity and infringement, with FRAND issues arising only as an aspect of an alleged contractual defence? Thus far the respondent has had the better of that argument, both before the judge and the Court of Appeal. At the heart of the analysis which has thus far prevailed is the recognition that the owner of a portfolio of patents granted by different countries is in principle entitled to decide which patents (and therefore in which country or countries) to seek to enforce, and cannot be compelled to enforce patents in the portfolio granted by other countries merely because a common FRAND defence to the enforcement of any of them raises issues which might more conveniently be determined in another jurisdiction than that which exclusively regulated the enforcement of the chosen patents.
[96] Were it necessary to choose between the rival characterisations of the substance of the dispute, we would have agreed with the choice made by the courts below."
"[95] Before one can decide whether the English court is the proper forum for the determination of a dispute, a critical initial question is how the dispute is properly to be characterised. The proper characterisation of the dispute has an impact in the subsequent analysis: it may affect whether the foreign court is available to try the dispute and whether it is the appropriate forum. It is of particular importance in the present case.
[96] I accept Mr Layton's submission, supported by Mr Bloch, and not contested by Mr Speck, that in characterising the claim one does not look simply at Conversant's claim: one must look at the overall dispute between the parties. That may involve looking at how the claim is to be answered insofar as that is known: see the passages from VTB v Nutritek identified in [32] above. That consideration alone does not assist the appellants, because the dispute characterised as a whole still involves, as Ms Dagg has explained, the questions of essentiality, infringement and validity of the UK patents. Although Ms Dagg does not speak on behalf of ZTE, it is quite unrealistic to suppose that, with the proceedings structured as they are, ZTE would not join in the attacks on validity as well, just as it has done in China.
[97] It is clear that one may get different answers to the forum conveniens questions depending on the level of generality at which one characterises the dispute. It is possible to define the dispute both in a way which is too specific and in a way which is too general. Thus, to define a dispute in a way which focuses on the relief which would be granted in the English court was to define it too specifically: see re Harrods (Buenos Aires). On the other hand, to define the dispute in so general a way that the claimant is left to pursue a claim based on a different property right and different underlying facts in the foreign forum is, in my judgment, likely to define it too broadly.
[98] The way in which claims of the type which Conversant wishes to bring are to be analysed was considered in some depth in Unwired CA. The points which emerge from that judgment which are relevant to this appeal are the following:
(i) At [52] the court pointed out that it was accepted that there was no such thing as a global portfolio right, and that the court in this country will only determine disputes concerning infringement and validity of UK patents or European patents designating the UK. Moreover, if a UK patent is found valid and infringed the relief by way of injunction and damages will relate only to acts of infringement of those patents within that territory.
(ii) At [53] the court contrasted the territorial nature of patent rights with the position in relation to the FRAND undertaking given to ETSI. The undertaking, like the standard to which it relates, was of international effect, applying to all patents which belong to the same family irrespective of the territory in which they subsist. This was necessary in order to protect implementers whose equipment may be sold in a number of different jurisdictions and then used by members of the public who may travel with that equipment from one jurisdiction to another.
(iii) However, just as it was necessary to protect implementers by giving them global protection in this way, it was necessary to protect SEP owners from the need to negotiate patent licences on a country by country basis, and the need to litigate on such a basis. As the court pointed out at [55], Huawei's witness had accepted that the costs of such litigation to the SEP owner would be impossibly high.
(iv) Thus, the court pointed out at [56], in such circumstances it was possible, depending on the facts, that a global licence could be FRAND.
(v) Where a SEP owner brings proceedings for infringement against an implementer in one jurisdiction in respect of the SEPs which it owns there and makes good its case, two outcomes might follow. First, if the evidence establishes that a willing licensor and a willing licensee in the position of the parties would agree a FRAND licence in respect of that jurisdiction but the SEP owner refuses to offer it such a licence then no injunction should be granted. If on the other hand, the implementer refuses to enter into the FRAND licence for that jurisdiction then the SEP owner can properly seek an injunction to restrain further infringement there. Secondly, however, if the evidence establishes that a willing licensor and a willing licensee in the position of the parties would agree a global FRAND licence, that such a licence would conform to industry practice and that it would not be discriminatory but the SEP owner refuses to grant such a licence to the implementer then once again it should be denied an injunction. If on the other hand, the implementer were to refuse to enter into such a licence then the SEP owner should be entitled to an injunction in that jurisdiction to restrain infringement of the particular SEPs in issue in those proceedings: see [57] and [58].
(vi) Were the position otherwise then the SEP owner seeking to recover the FRAND licence monies for all of the SEPs in the same family from an uncooperative implementer who is acting unreasonably would be required to bring proceedings in every jurisdiction in which those rights subsist, which might be prohibitively expensive for it to do. This result would not involve any alteration of the territorially limited characteristics of any SEP; nor would it involve any jurisdictional expansionism. To the contrary, it would amount to a recognition by the court (i) that the SEP owner has complied with its undertaking to ETSI to offer a licence on FRAND terms; (ii) that the implementer has refused or declined to accept that offer without any reasonable ground for so doing; and (iii) that in these circumstances the SEP owner is entitled to the usual relief available for patent infringement including an injunction to restrain further infringement of the particular SEPs in issue in the proceedings.
[99] Conversant's claim in the present case is closely analogous to the claim advanced in the Unwired Planet case. It is (i) that the UK patents are essential to the standard, (ii) that it has complied with its ETSI undertaking, in that the offers which it has made are FRAND, (iii) that Huawei and ZTE have not so complied without any reasonable ground for so doing, and (iv) that it is therefore entitled to enforce its UK SEPs and obtain the usual relief for infringement, including a FRAND injunction and damages. Conversant also seeks a determination as to the terms which are FRAND for the licensing of its portfolio. Huawei's and ZTE's answer is likely to be (i) that Conversant's patents are neither essential nor valid, and (ii) that Conversant has not complied with its FRAND undertaking and so is not entitled to an injunction even if it establishes that its UK patents are valid and essential. The content of Conversant's FRAND undertaking is thus an inseparable part of the dispute about whether Conversant is entitled to relief for infringement of valid UK patents.
[100] I do not accept that this analysis, by referring throughout to the UK patents in Conversant's portfolio, commits the error which the Court of Appeal identified in re Harrods (Buenos Aires). In that case the dispute was about prejudice to the minority shareholders of a company registered in England. By focussing on the place of registration of the company and on the specific remedy of a buyout provided in English law, Harman J. had prejudged the question of appropriate forum, particularly as, through the lens of Argentine law, the company was an Argentine company. If the case were to be tried in Argentina, the relief available would be different, but the underlying dispute would be the same. The facts relied on to establish prejudice would be the same, as would the shareholdings, and the company, about which the parties were fighting. It was possible to say that the appropriate forum for deciding that dispute was Argentina.
[101] In the present case, leaving Conversant to seek a remedy in China would be to compel them to advance a case based on different patents. The Chinese patents are not the UK patents viewed through the lens of Chinese law, but are different property rights applied for and registered in China. They are not even in the same families as the UK patents. They will have different claims. Different prior art will be relevant to their validity. The issue of essentiality of those patents will give rise to wholly different technical issues from the issues which would arise on the essentiality of the UK patents. The acts of infringement relied on will be acts in China, not acts in the UK. I find it impossible to view such a dispute as being the same dispute as that which would arise in the English court.
[102] I therefore do not accept it is legitimate to generalise out the claim made in the present proceedings and characterise it as a claim for infringement of a 'local' patent. That characterisation suggests that it is a matter of indifference to Conversant which national patents they sue on, when that is plainly not the case. It is a way of characterising the dispute so as to make it suitable for determination in any jurisdiction where Conversant has a patent, no matter how different the scope of that patent may be to the scope of the UK patents in suit. Of the two ways in which the parties seek to characterise the dispute, it seems to me that the appellants' way is the one which offends against the warnings in Harrods Buenos Aires against building the answer into the way in which one formulates the question.
[103] It is also not legitimate to characterise the claim as one for enforcement of a global portfolio right. No such right exists, as this court readily accepted in Unwired CA. I therefore reject the appellants' challenge to the way in which the dispute is to be characterised. The question which the judge asked himself was the correct one."
"… a case which concerns allegations of infringement of UK patents, and for relief in terms of a global FRAND licence."
"[104] If one characterises the case in the way in which the judge characterised it, with which I agree, then it seems to me that the forum conveniens question answers itself. The fact that the dispute concerns UK patents is a matter of substance and not of form. Resolution of the dispute will involve determining infringement, essentiality and validity of UK patents. A UK forum is clearly the most appropriate forum, indeed the only possible forum, for this dispute to be tried."
The correct characterisation of the present dispute
The forum conveniens in the present case
Case management
"[111] I can also see no basis for a case management stay, so as to allow the patent issues to be determined up to but not including the grant of an injunction. Such a stay would only work if there were some proceedings on foot elsewhere which will result in an adjudication on the offers made by the parties and determine the terms of a global FRAND licence, or at least some licence which would extend to the UK. At present the proceedings in China only seek a FRAND determination in respect of the Chinese patents. A FRAND licence under the Chinese patents determined by the Chinese courts would not clear away the obstacles to the enforcement of the UK patents or provide Huawei with an answer to the claim for infringement of the UK SEPs. The age of the Conversant Portfolio is also a factor which weighs against the grant of such a stay."
"[99] We therefore turn to case management. The English courts have wide case management powers, and they include the power to impose a temporary stay on proceedings where to do so would serve the Overriding Objective: see CPR 1.2(a) and 3.1(2)(f). For example a temporary stay is frequently imposed (and even more frequently ordered by consent) in order to give the parties breathing space to attempt to settle the proceedings or narrow the issues by mediation or some other form of alternative dispute resolution. A temporary stay may be ordered where there are parallel proceedings in another jurisdiction, raising similar or related issues between the same or related parties, where the earlier resolution of those issues in the foreign proceedings would better serve the interests of justice than by allowing the English proceedings to continue without a temporary stay: see Reichhold Norway ASA v Goldman Sachs International [2000] 2 All ER 679, [2000] 1 WLR 173. But this would be justified only in rare or compelling circumstances: see per Lord Bingham CJ [2000] 2 All ER 679 at 690, [2000] 1 WLR 173 at 185–186, and Klöckner Holdings GmbH v Klöckner Beteiligungs GmbH [2005] EWHC 1453 (Comm), [2005] All ER (D) 111 (Jul).
[100] No such application has thus far been made in the Conversant case. At first instance the defendants went all-out to obtain the permanent termination of the proceedings, by having service on the Chinese defendants set aside, and by having the proceedings against the English defendants permanently stayed. The whole basis of their application was that the Chinese courts were the appropriate forum to decide the whole dispute, or that the dispute should be split into its Chinese and English parts, leaving only (in England) the question what royalty or compensation for infringement they should pay in relation to the English patents.
[101] At the hearing of case management issues consequential upon Henry Carr J's judgment, the appellants did suggest that the FRAND trial should be stayed to await the outcome of pending proceedings in China. The judge provided some accommodation by directing that the FRAND trial should not take place before November 2019, so that the outcome of the Chinese proceedings, to the extent relevant, could be factored into the determination of a FRAND global licence.
[102] A case management alternative was put forward by Huawei in the Court of Appeal, but still on the basis that the global FRAND issues could and therefore should first be determined in China, before any determination in England of the claim for infringement of UK patents. It was rejected by the Court of Appeal first because the pending proceedings in China sought only to determine the terms of a FRAND licence for Conversant's Chinese patents, not a global licence which would extend to the use of its English patents, and secondly because the age of Conversant's portfolio militated against allowing further delay.
[103] In this court the case management solution was briefly resurrected during argument, although not as a distinct ground of appeal. Meanwhile the FRAND trial had by then been fixed to start in April 2020 and was no doubt the subject of intensive preparation. It has since then been adjourned due to the Coronavirus pandemic. We think it sufficient to confine ourselves to the issue whether the Court of Appeal was wrong to refuse any case management solution, for the reasons it gave, as summarised above.
[104] In our view the Court of Appeal's reasons cannot be faulted. We have already concluded that the prospect that the Chinese courts might determine a global FRAND licence, even if the parties consented, is no more than speculative. The current proceedings in China relate only to Conversant's Chinese patents, and Conversant has been held to have acted reasonably in refusing (even if it were possible) to confer a wider global jurisdiction on the Chinese courts. Further the adverse commercial effect of further delay in the reinforcement of Conversant's elderly patents is a factor which, in a case management context, the Court of Appeal was plainly entitled to take into account, and to attribute such weight as it thought fit."
The framework of law on a case management stay
"(3) Nothing in this Act shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings."
"(2) Dealing with a case justly and at proportional cost includes, so far as is practicable –
…
(a) ensuring that the parties are on an equal footing and can participate fully in proceedings, and that parties and witnesses can give their best evidence;"
"(2) Except where these Rules provide otherwise, the court may –
…
(f) stay the whole or part of any proceedings or judgment either generally or until a specified date or event;"
"[Counsel for the respondents suggested] that the court was well able to control its own business, and he accepted that the grant of stays such as this would be a rarity, account always being taken of the legitimate interests of plaintiffs and the requirement that there should be no prejudice to plaintiffs beyond that which the interests of justice were thought to justify. It is plain that in exercising this jurisdiction the court would have to be mindful of the effect of article 6 [of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953)].
I for my part recognise fully the risks to which [counsel for the appellants] draws attention, but I have no doubt that judges (not least commercial judges) will be alive to these risks. It will very soon become clear that stays are only granted in cases of this kind in rare and compelling, circumstances. Should the upholding of the judge's order lead to the making of unmeritorious applications, then I am confident that judges will know how to react."
The arguments
The risk of irreconcilable judgments
"[90] Finally, Huawei submits that if a national court were prepared to determine that a worldwide licence is FRAND and that entering into such a licence is a precondition of the refusal of an injunction to prohibit infringement of a national patent, there is a risk of forum shopping, conflicting judgments and applications for anti-suit injunctions. In so far as that is so, it is the result of the policies of the SSOs which various industries have established, which limit the national rights of a SEP owner if an implementer agrees to take a FRAND licence. Those policies, which either expressly or by implication provide for the possibility of FRAND worldwide licences when a SEP owner has a sufficiently large and geographically diverse portfolio and the implementer is active globally, do not provide for any international tribunal or forum to determine the terms of such licences. Absent such a tribunal it falls to national courts, before which the infringement of a national patent is asserted, to determine the terms of a FRAND licence. …"
Timing
Whether the Chongqing Court will settle the cross-licence
"30. As explained above, I understand that the intention of the plaintiffs in the Chongqing Proceedings is that the Chongqing Court will set FRAND licensing conditions for a global licence. I also note that it would also be open to the Nokia defendants to seek a global cross-licence to OPPO's patents portfolio by way of a counterclaim in the Chongqing proceedings. I note that it would also be possible for OPPO to amend its claim to make this point expressly should they consider it necessary to do so."
"1. Judgment is sought to affirm that the Defendants' behaviours in the licensing negotiations violated the fair, reasonable and non-discriminatory obligation, or principle of good faith;"
"In addition, since the negotiations also involved cross-licensing, the reasonable value of [OPPO's] standard essential patents should be equally considered and reflected in the cross-licensing. However, throughout the negotiation process, [Nokia's] offer to [OPPO] did not reflect their reasonable recognition of the value of [OPPO's] standard essential patents."
"28. This has involved making numerous offers of a FRAND licence to Nokia's portfolio of SEPs, … . Importantly, each of Nokia's offers have been for a worldwide cross-licence between Nokia and all of the Defendant groups (which are, as above, under common ownership). Under the ETSI IPR Policy, Nokia is entitled to insist upon reciprocity of licensing as part of the FRAND terms to its SEPs, and the notification form contains a tickbox to this effect."
A licence for devices other than OPPO-branded devices
"28. I understand that the intention of the plaintiffs in the Chongqing Proceedings is that the Chongqing Court will set FRAND licensing conditions for a global licence of Nokia's patents for all Licensed OPPO Products (as defined in the 2018 Licence) but with 5G added as a Licensed Standard. OPPO has not limited its claim to OPPO branded devices. However if it were considered that the current formulation of the Chongqing Proceedings did not for any reason cover all Licensed OPPO Products, then OPPO has confirmed to me that the plaintiffs would take such steps as were necessary to change this."
Whether the Chongqing Court would settle lower royalty rates
"[63] … FRAND royalty rates for Chinese patents have been lower than in other parts of the world, no doubt because China considers this to be in accordance with the current needs of its population. This is not a question of an inability to obtain justice in accordance with the laws of a different jurisdiction. However, the significantly lower royalty rates explain why Conversant will not agree to the Defendants' 'concessions'. No owner of a global portfolio would voluntarily submit to determination of a FRAND licence for the entirety of its portfolio where the rates applied would be lower than in the rest of the world."
"(a) Chinese courts have recognised that different royalty rates may apply to China compared to developed countries. In Huawei v Conversant, the Nanjing Intermediate People's Court accepted expert evidence that 'the Chinese handset market is different from that of foreign countries in terms of market landscape, competitive dynamics, and the new product development speed, etc. Therefore it is inappropriate to apply the aggregate royalty rate of developed countries to China directly'"
"Seventhly, a stay will not be refused simply because the claimant will thereby be deprived of 'a legitimate personal or juridical advantage', provided that the court is satisfied that substantial justice will be done in the available appropriate forum."
The relevance of French law
"[8] The ETSI IPR Policy ('the IPR Policy') is a contractual document, governed by French law. It binds the members of ETSI and their affiliates. It speaks (clause 15(6)) of patents which are inevitably infringed by the sale, lease, use, operation etc of components which comply with a standard as 'Essential IPR'. By requiring an IPR holder whose invention appears to be an Essential IPR to give an irrevocable undertaking to grant a licence of the IPR on FRAND terms, it creates a 'stipulation pour autrui', in other words an obligation which a third-party implementer can enforce against the IPR holder. The IPR Policy falls to be construed, like other contracts in French law, by reference to the language used in the relevant contractual clauses of the contract and also by having regard to the context. In this case, that context is both the external context and the internal context of the IPR Policy document itself, such as the policy objectives declared in the document."
"[106] Huawei's case is that the non-discrimination limb of the undertaking must be given its ordinary and unadorned meaning, which is that like situations must be treated alike and different situations differently. The non-discrimination limb of the undertaking means that the SEP owner must grant the same or similar terms to all similarly situated licensees, unless it can be shown that there are objective grounds for treating them differently. Huawei says that this corresponds with the usual meaning given to obligations not to discriminate in other contexts. Birss J used the term 'hard-edged' in relation to the non-discrimination obligation to describe the interpretation contended for by Huawei. The practical effect of Huawei's submission is that the non-discrimination obligation means that a SEP owner is required to grant licence terms equivalent to the most favourable licence terms to all similarly situated licensees.
…
[107] … "[Unwired Planet] said that the non-discrimination element in the FRAND undertaking did not involve a distinct 'hard-edged' discrimination obligation as submitted by Huawei. Instead, Unwired said that the non- discrimination element is to be read as part of a single, unitary obligation to license on terms which are 'fair, reasonable and non-discriminatory'. To comply with that obligation, a licensor has to offer a royalty rate set by reference to the true value of the SEPs being licensed; that is, a standard fair market royalty rate available to market participants for use of the SEPs. A rate set in this way, which is available to all licensees without discriminating between them by reference to their individual characteristics, does not cease to be FRAND because the SEP owner has previously granted a licence on more favourable terms. The judge referred to the obligation interpreted in this way as a 'general' non-discrimination obligation. … .
…
[112] This court upholds the judgment of Birss J and the Court of Appeal on the second of Unwired's arguments. They were right to find that the non-discrimination element in the FRAND undertaking is 'general' and not 'hard-edged' and that there had been no breach of it. Accordingly, the third argument does not arise.
[113] The choice between regarding the non-discrimination obligation as 'general' or 'hard-edged' is a matter of interpretation of the FRAND undertaking in clause 6.1 of the IPR Policy. The obligation set out in that provision is that licences should be available 'on fair, reasonable and non-discriminatory … terms and conditions'. In our view, the undertaking imports a single unitary obligation. Licence terms should be made available which are 'fair, reasonable and non-discriminatory', reading that phrase as a composite whole. There are not two distinct obligations, that the licence terms should be fair and reasonable and also, separately, that they should be non-discriminatory. Still less are there three distinct obligations, that the licence terms should be fair and, separately, reasonable and, separately, non-discriminatory.
[114] The text of clause 6.1 lends itself naturally to being read in this unitary way. The 'non-discriminatory' part of the relevant phrase gives colour to the whole and provides significant guidance as to its meaning. It provides focus and narrows down the scope for argument about what might count as 'fair' or 'reasonable' for these purposes in a given context. It indicates that the terms and conditions on offer should be such as are generally available as a fair market price for any market participant, to reflect the true value of the SEPs to which the licence relates and without adjustment depending on the individual characteristics of a particular market participant. Put another way, there is to be a single royalty price list available to all."
Sanctions imposed under Chinese law
"7. To clarify, the position is as follows:
(a) It is correct that the current practice before the Chinese courts is that a rate-setting claim can be brought independently from any patent infringement action. Under the amended Provisions on the Causes of Action for Civil Cases, which took effective on 1 January 2021, it is possible to bring a dispute over royalty rates for SEPs as an independent cause of action in the PRC.
(b) However, the determination in such a dispute is not advisory, and can be enforced if it is not complied with by the parties. The process is that, firstly, the royalty rates and other conditions decided by the court decision shall be followed and incorporated into the license agreement reached following negotiation after the decision, unless both parties mutually agree on other rates and conditions to replace the decision.
(c) If either party refuses to obey the decision of the Chinese court, then the other party may file a petition to the court. The court has full discretion as to whether or not to impose a penalty, which can include a monetary fine or up to 15 days judicial detainment of responsible management (such as legal representative, executive director or general manager), on the breaching party. Further, a refusal to enforce an effective court decision may also constitute a criminal offence under Chinese law. This is confirmed by Article 111 of Civil Procedure Law of PRC, which states:
"If any litigant or any other person in the proceedings commits any of the following acts, the people's court shall, according to the seriousness of the act, impose a fine or detention on him; if the act constitute a crime, the offender shall be investigated for criminal responsibility according to the law: … (6) refusing to comply with legally effective judgments or orders rendered by the people's court.
If a unit commits any of the acts specified above, the people's court may impose a fine or detention on its principal head or the person who is held responsible for the act; if the act constitutes a crime, the offender shall be investigated for criminal responsibility according to the law."
and by Article 115 of Civil Procedure Law of PRC, which states:
"A fine on an individual shall be up to than RMB 100,000; a fine on a unit shall be between RMB 50,000 and RMB 1,000,000. The period of detention shall not be longer than 15 days."
(d) To date, no such penalty has been imposed by a Chinese court with respect to failure to comply with a FRAND rate-setting decision. This is because, as I understand it, all such cases were finally settled by the parties. However, there are precedents of such penalties being imposed in other cases.
(e) It is also very likely that the Chinese courts will deem the breaching party to be a bad faith party in any subsequent legal proceeding between the parties. For example, the Chinese court may refuse to grant an injunction to a patentee refusing to comply with the effective rate setting decision in further infringement cases filed against the other party. The court may refuse to acknowledge and enforce a foreign court's decision which is in conflict with the effective decision in the PRC.
8. Therefore, if following the effective decision of the Chongqing Court, Nokia does not offer to license OPPO on the global FRAND conditions set by the Chongqing Court, it will be open to the Chongqing Court to impose a penalty, including a monetary fine or detainment of responsible management."
Ease of enforcing a FRAND licence
Discussion
The filing of the UK defendants' acknowledgment of service
"(2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10."
"(4) An application under this rule must –
(a) be made within 14 days after filing an acknowledgment of service; and
(b) be supported by evidence."
"(1) The general rule is that the period for filing an acknowledgment of service is –
(a) where the defendant is served with a claim form which states that particulars of claim are to follow, 14 days after service of the particulars of claim; and
(b) in any other case, 14 days after service of the claim form."
Conclusion