“3. It is generally accepted that the publication of such a standard supports innovation and growth by ensuring the interoperability of the digital technologies to which it relates. It leads to an increase in the range and volume of products which meet the standard and it allows consumers to switch more easily between the products of different manufacturers. Standards are set by standard setting organisations (“SSOs”). SSOs bring together industry participants to evaluate technologies for inclusion in a new standard, encourage those participants to contribute their most advanced technologies to that standard and promote the standard once it has been agreed. There are various SSOs around the world and each of them operates in much the same way. The SSO with which these proceedings are most concerned is the European Telecommunications Standards Institute (“ETSI”). 4. As the European Commission has recognised, SEPs can be of great value to their holders. These holders can expect a substantial revenue stream from their SEPs as the standard for which they are essential is implemented in products sold to millions of consumers. This revenue stream is supported by the fact that alternative technologies which do not meet the standard may well disappear from the market. But the potential for anticompetitive behaviour is obvious. The owner of a SEP has the potential ability to “hold-up” users after the adoption and publication of the standard either by refusing to license the SEP or by extracting excessive royalty fees for its use, and in that way to prevent competitors from gaining effective access to the standard and the part of the telecommunications market to which it relates. ETSI and other SSOs therefore require the owners of SEPs to give an irrevocable undertaking in writing that they are prepared to grant licences of their SEPs on fair, reasonable and nondiscriminatory (“FRAND”) terms. This undertaking is designed to ensure that any technology protected by a SEP which is incorporated into a standard is accessible to users of that standard on fair and reasonable terms and that its owner cannot impede the implementation of the standard by refusing to license it or by requesting unfair, unreasonable or discriminatory licence fees. 5. As we shall explain the negotiation of licences for SEPs on FRAND terms may be far from straightforward, however. The owner of a SEP may still use the threat of an injunction to try to secure the payment of excessive licence fees and so engage in hold-up activities. Conversely, the infringer may refuse to engage constructively or behave unreasonably in the negotiation process and so avoid paying the licence fees to which the SEP owner is properly entitled, a process known as “hold-out”.”
“33. Huawei intends to challenge validity, essentiality and infringement of the Chinese patents in particular, and of the other Asia-Pacific and other European patents as well, and also of the UK Patents. This would be done before signing any global portfolio licence and in defence to these English proceedings if they continue. Huawei intends to challenge the validity of the patents on the basis that (i) the patents are obvious over the prior art; (ii) the patents are not novel; (iii) the patents contain added matter; and / or (iv) there is a lack of priority. … 36. As I have said, there would be no reason to require Huawei to pay to license foreign patents which are not valid or not essential or not infringed under the law of the relevant country. Moreover, Huawei should not be required to enter into a licence covering countries in which Conversant has no patent protection. It would be wrong, and contrary to competition law to require Huawei to take a licence to invalid or non-essential or noninfringed patents in order to access UK SEPs.”
“If Conversant does not persist with this English litigation and instead proceeds in China for a global FRAND determination, the Huawei Defendants will agree to the Chinese court determining essentiality, infringement and FRAND terms for Conversant’s whole portfolio, and will not in those Chinese proceedings challenge the validity of the non-Chinese patents in the portfolio. This agreement is limited to Conversant’s claims in this action and does not apply to any further claims, whether by Conversant or any other party. This agreement is restricted to proceedings in such Chinese courts. It is not an agreement to refrain from challenging the validity of any patents in these English proceedings.”
“… It remains our clients' case that the FRAND licensing issues are most appropriately determined in China. We have invited your client to accept our clients' offer to ask the Shenzhen Intermediate People's Court (the "Shenzhen Court”) to address the global FRAND dispute. In order to facilitate the Chinese case proceeding without raising issues that may not be justiciable by the Shenzhen Court, we would propose (for the purpose of determining the current dispute as between your and our clients as to appropriate forum only) the following: a. The parties will not ask the Shenzhen Court to rule on the validity of any non-Chinese patents; b. Our client will agree (provided your client also agrees) that the Chinese patents should stand as proxies for the non-Chinese members of the Relevant Families (as defined in the pleadings in these proceedings) (where applicable); c. Both parties may refer to the contents of public records and public judicial outcomes (whether final or otherwise) for the truth of what they show or declare in relation to a particular patent (whether Chinese or otherwise); and d. Both parties accept that the validity of the remainder of your client's Relevant Families may be presumed to be average for the industry.”
“25. Conversant seeks that Huawei and ZTE enter into licences that are FRAND, and pay the royalties that would have been due under such a licence for their respective periods of unlicensed activity. Accordingly, Conversant seeks a declaration that it has made the Defendants, and each of them, offers in accordance with its FRAND obligations and on FRAND terms, or in the alternative, being as there is an extant, clearly defined and commercially real dispute between the parties as to what the FRAND terms for licencing the Patents are, a determination of the FRAND terms for the licensing of the Patents to Huawei and/or ZTE and a declaration that such terms are FRAND.”
“(1) A declaration that the Huawei Offers and the ZTE Offers … were made in accordance with Conversant's FRAND obligations and were themselves FRAND, or in the alternative a determination of the FRAND terms for the licensing of the Patents to Huawei and/or ZTE and a declaration that such terms are FRAND. (2) A declaration that Huawei and ZTE, and each of them, have failed to comply with their FRAND obligations. (3) A declaration that the Patents and each of them is Essential. (4) A declaration that the Patents and each of them have been or will be infringed by the Defendants' actual or intended unlicensed actions. (4A) An injunction to restrain the Defendants and each of them, … from infringing the Patents and each of them, the said injunction to be lifted if and insofar as the Defendants or any of them enter into a licence for the Patents on terms held to be FRAND. … (5) An inquiry as to damages for patent infringement (including damages in accordance with theIP (enforcement etc.) Regulations 2006 ) or at the Claimant's option an account of profits made by the Defendants and each of them by their unlicensed actions. (6) An order that the Defendants pay the Claimant all sums found due together with interest pursuant tosection 35A of the Senior Courts Act 1981 or pursuant to the Court's equitable jurisdiction for such period and at such rate as the Court thinks is fit. (7) An order for appropriate measures for the dissemination and publication of the judgment to be taken at the expense of the Defendants and each of them. (8) Further or other relief. (9) Costs.”
“Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.”
“… the Brussels Convention precludes a court of a contracting state from declining the jurisdiction conferred on it by Article 2 of that Convention on the ground that the court of a noncontracting state would be a more appropriate forum for the trial of the action, even if the jurisdiction of no other contracting state is in issue or the proceedings have no connecting factors to any other contracting state.”
“Where the dispute before the court concerns … the validity of certain forms of intellectual property right … it is most improbable that an English court, seised with jurisdiction on the basis of [Article 4], is obliged to exercise it if the defendant applies for a stay on the ground that a non-Member or nonConvention state is the forum conveniens” “It is submitted that the proper course for an English court is to use [Articles 24 and 25] to identify the classes of case in which a court may continue to apply its national law. It is inappropriate to go further and to insist on the articles being applied slavishly. So, for example, it would not be necessary to show that the proceedings had as their object rights in rem in, or a tenancy of, land in a non-Member State; it would suffice that the case was one which required a court to rule on a question of title to foreign land or on the validity of a foreign patent.”
“42. In service in cases, Lord Goff set out the law in six propositions at 476C – 478E. In summary: i) The basic principle is that a stay will only be granted on the ground of forum non conveniens when the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice. ii) In service in cases, the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay. However, each party will seek to establish the existence of factors which it relies upon, and in respect of any such matter the evidential burden will rest on the party who asserts its existence. If the court is satisfied that there is another available forum which is prima facie the appropriate forum, the burden will shift to the claimant to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country. iii) In service in cases, the defendant has the burden not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. iv) Since the question is whether there exists some other forum that is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. The natural forum is that with which the action has the most real and substantial connection. Connecting factors will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction, and the places where the parties respectively reside or carry on business. v) If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay. vi) If, however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless the circumstances by reason of which justice requires that the stay should nevertheless not be granted. In this enquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors. One such factor can be the fact, if established objectively by cogent evidence, that the claimant will not obtain justice in the foreign jurisdiction, and the burden is on the claimant to prove this. 43. In service out cases, where the court exercises its discretionary power underCPR 6.37 , the key principles identified in The Spiliada continue to apply. These were considered by the Supreme Court, in relation toCPR 6.37 , in VTB Capital plc v Nutritek International Corp and others[2013] UKSC 5 ; in particular in the judgment of Lord Mance at [12] – [18]. In summary: i) The underlying aim in all cases of disputed forum is to identify the forum in which the case can suitably be tried for the interests of all parties and for the ends of justice. ii) However, there is an important distinction in the starting point and onus of proof between cases where permission is required to serve proceedings out of the jurisdiction and situations where service is possible without permission. In the former case, the modern rules reflect Lord Goff’s statement of general principle, in providing that permission is not to be given unless the court is “satisfied that England and Wales is the proper place in which to bring the claim”:CPR 6.37 (3). iii) The ultimate overarching principle is that stated in The Spiliada. If the court is not satisfied at the end of the day that England is clearly the most appropriate forum, then permission to serve out must be refused or set aside.”
“Harman J. plainly appreciated that the factual issues in dispute favoured trial in Argentina. … But in considering which was the more appropriate forum he seems to have put the factual issues to one side, and concentrated only on the fact that the remedies sought by Ladenimor by the petition were remedies made available by English statutes in respect of a company incorporated in England.”
“With every respect to the judge, the answer is only "blindingly obvious" to him because of the premises which are built into the way he has posed his question. … in my judgment he has failed to keep in mind at this crucial stage in his judgment that this company is by Argentine law to be considered as a local, Argentinian company. I do not regard it as at all blindingly obvious that relief for the dishonest management of an Argentinian company in Argentina should be granted by a court other than the Argentinian court. That illustrates that the question formulated may by limiting the premises on which it is formulated dictate the answer. That is in my respectful view what the judge has done here, instead of concentrating on the question as put in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460.”
“Before applying The Spiliada … test, the judge posed the question: “What is this action?”
“In my judgment, the totality of the evidence establishes that the Chinese courts do not have jurisdiction to determine essentiality or infringement of non-Chinese patents, nor do they have jurisdiction to determine FRAND rates in respect of non-Chinese patents without agreement from both parties. The furthest that the Defendants’ evidence goes is to suggest that, if Conversant were to agree to the terms of the Defendants’ offers, then the Chinese courts might or would accept jurisdiction. However, no reasons are advanced to support the conclusion that the Chinese courts would accept jurisdiction conferred by agreement to determine infringement of UK patents and to set a global FRAND rate. There was no evidence that this has ever been done before in China, and, with great respect to Mr Shen and Ms. Mu, I regard their somewhat tentative suggestions as speculative.”
“These claims are concerned with infringement of UK patents, and the relief that should be granted if infringement is established. If one or more of the four patents in suit is held to be valid and infringed, then the court will consider what relief should be granted. Conversant says that it is willing to grant a licence on FRAND terms and (subject to some equivocation) the Defendants say that they are willing to take a licence on FRAND terms. There is a dispute between the parties as to whether a global licence would be FRAND.” global licence would be FRAND.”
“For the purpose of appropriate adjudication of disputes concerning standard-essential patents (hereinafter referred to SEPs) in the field of communications, these guidelines are formulated in accordance with relevant provisions of the laws, administrative regulations, and judicial interpretations of the Supreme Court, and with reference to business practices, and judicial practices.”
“For adjudication of disputes concerning SEPs, with regard to issues including, but not limited to, the interpretation of the FRAND principles, the determination of the scope and exercise of the rights of the relevant SEPs, and the definition of the nature of related actions, etc., the court shall in general, consider applying of the local laws of the place where the protection is claimed or the lex fori.”
“Where the claimed territory scope of the related licensed SEPs on which judicial determination is requested by the patentee or the implementer of the SEP exceeds the territory scope of the court, and the other party does not explicitly raise an objection in the judicial proceedings or the objection raised is deemed unreasonable after examination, determination can be made on the royalty for such claimed territory scope.”
“This provision confirms that the Guangdong Courts (including the Shenzhen Intermediate People's Court) will determine the FRAND royalty rate for a global licence in certain circumstances, even where one party does not agree. These circumstances would include the situation where the licensor - Conversant in this case - seeks itself to rely on global offers and has brought proceedings in multiple jurisdictions, namely the UK and Germany. This provision also suggests that the Guangdong Courts will make findings relating to the essentiality and infringement of foreign patents in so far as necessary to determine a FRAND royalty rate for a licence covering territories outside of China.” territories outside of China.”
“… the claimant may seek to contend that the foreign court is not available to him on the ground that the claim which he makes in the English proceedings, or the remedy he seeks, would be unavailable to him in the foreign court, or that because of the foreign court’s choice of law rules, he would lose in the foreign court. It is submitted that these matters are irrelevant to the issue of whether the foreign court is available, but that they may be taken into account under the second limb of the test in determining whether the claimant can show that it would be unjust to deprive him of a trial in England.”
"For myself I would not welcome the task of having to decide whether a person had infringed a foreign patent. Although patent actions appear on their face to be disputes between two parties, in reality they also concern the public. A finding of infringement is a finding that a monopoly granted by the state is to be enforced. The result is invariably that the public have to pay a higher price than if the monopoly did not exist. If that be the proper result, then that result should, I believe, come about from a decision of a court situated in the state where the public have to pay the higher prices. One only has to imagine a decision of this court that the German public should pay to a British company substantial sums of money to realise the difficulties that might arise. I believe that, if the local courts are responsible for enforcing and deciding questions of validity and infringement, the conclusions reached are likely to command the respect of the public. Also a conclusion that a patent is infringed or not infringed involves in this country a decision of validity as in this country no one can infringe an invalid patent. In the present case the plaintiffs admit the validity of the patent and therefore there is no dispute upon the matter. However, it will be implicit in the judgment of this court that there has been infringement, and that, between the parties, the patent is valid. Thus, I believe it is at least convenient that infringement, like validity, is decided in the state in which it arises."
“The Guidelines provide guidance on how Chinese courts determine disputes related to SEPs, but they have not been construed or applied in any case in China to date. Huawei understands them to indicate that a global royalty-setting exercise may proceed with the consent of the parties (which has never been in dispute in these proceedings). There is no decided case in which the Chinese courts have gone further, as the English courts did in these proceedings, by conducting a global royalty-setting exercise without the consent of the parties and then imposing the result thereof as a condition of avoiding a territorial injunction. Whether they might do so in the future remains unknown to Huawei and the Chinese courts may well be influenced by the approach of the courts in other jurisdictions, which further underlines the importance of this case.”