“16. But what is to happen if the courts of more than one country are seised with proceedings concerning the SEPs in question? If more than one country’s courts proceed to determine the terms of a global FRAND licence, there is an obvious risk of inconsistent decisions (not to mention a huge waste of legal costs). The only way to avoid the risk of inconsistent decisions is to ensure that only one court determines the terms of the global FRAND licence. As a matter of principle, one might expect this to be the court first seised of the dispute, with its determination being binding on the parties (by way of res judicata) in any other proceedings. This has three potential consequences. The first is a rush by each party to the court to establish jurisdiction in a forum which is perceived to be favourable to that party’s position. The second is an application by one party for an anti-suit injunction to restrain the other party from commencing or pursuing proceedings in a different jurisdiction to that considered favourable by the applicant party. The third is an application by the respondent party in the forum sought to be enjoined for an anti-anti-suit injunction restraining the first party from making or pursuing its application for the anti-suit injunction in the other forum. All of these consequences have manifested themselves in disputes between patentees and implementers in recent years. 17. The only sure way to avoid these problems is to use a supranational dispute resolution procedure, and the only supranational procedure currently available is arbitration. If the parties do not agree to arbitration, however, the national courts must deal with the resulting jurisdictional disputes as best they can. Because there are no bespoke jurisdictional rules applicable to such disputes, still less any internationally agreed ones, national courts must apply their ordinary jurisdictional rules. In doing so national courts must have due regard to comity (that is, the need to respect the jurisdictions and judicial systems of other nations), but national courts cannot solve the problems inherent in the present system of resolving SEP/FRAND disputes.”
“77. My second point, raised late on the first day, was exploring whether there were ways to craft an interim licence which did not specify the Court or methodology by which any adjustment to the interim licence may be made. Samsung prepared a note overnight addressing this issue, which persuaded me that (a) these ideas would only create unnecessary uncertainty and procedural complexity and (b) the nettle should be grasped now. 78. Accordingly, I leave aside any consideration of how, at the final FRAND trial, the Judge may consider whether, and if so how, to adjust the FRAND terms (including the royalty) in the light of developments elsewhere.”
“I do not find it necessary to address any of these criticisms advanced on behalf of Samsung for a number of reasons: i) First, because the evidence in support of these criticisms was less than compelling. There was no expert evidence filed in support. In this regard I accept Ms Abram KC’s point, founded on Altimo Holdings v Kyrgyz Mobil[2011] UKPC 7 at [93]-[98] that any allegation of bias or procedural unfairness needs to be made in crystal clear terms and be supported by cogent evidence. ii) Second, if I was forced to assess these criticisms based on the inadequate evidence base, I would be likely to reject them or place no weight on them. iii) Third, even if appropriate expert evidence had been filed as to the current practice of the Chinese courts, I have my doubts whether accurate predictions could be made as to how the Chinese courts might develop their law and procedures in the future. iv) Fourth, I acknowledge the point made by Arnold LJ in Nokia CA at [79] regarding the significance of the Chinese Courts applying Chinese law and not French law to the interpretation of the ETSI terms, but I had no evidence to indicate the significance, if any, of that point. v) Fifth, what the Chinese courts do or don’t do in the action brought by ZTE against Samsung in Chongqing is a matter entirely for them. … vi) Sixth, because although it is apparent that Samsung felt the need to argue these points, I do not find any of them necessary for a decision on Samsung's application. I suspect that, on reflection, Samsung will accept that these points should not have been raised. ….”
“what is the point of ZTE pursuing the Brazilian, German, UPC and Hangzhou proceedings and attempting to exclude Samsung’s products from those commercially important markets, with all the massive attendant effort and expense for both parties?”
“104. … It is perfectly possible that ZTE had several aims in mind in seeking injunctive relief in various markets: (a) to put pressure on Samsung to agree to Chongqing as the forum for determination of global FRAND terms; and (b) to put pressure on Samsung to agree to supra-FRAND rates. I acknowledge that the offers put forward by ZTE do place the emphasis on the first aim because the price for Samsung of avoiding injunctive relief was acceptance of Chongqing. For the purposes of analysis I will proceed on the basis that the aim was the first, as stated by Dr Laakkonen. 105. However, that aim gives rise to a slightly different but equally obvious question: why are ZTE spending so much effort and cost on insisting that the global FRAND terms are determined in Chongqing? As I have indicated, I proceed on this application without taking into account Samsung’s criticisms of the Chinese approach to FRAND or of the Chinese courts. But the answer can only be that ZTE perceive an advantage, an advantage which must be a substantial one in view of the cost and effort devoted to achieving this aim. 106. In her oral submissions, Ms Abram submitted that there were so many reasons why parties want to litigate in their home court: ‘Parties want to litigate where they do business because they are familiar with the legal system, because they are familiar with court procedures, because the language of the litigation is familiar to them, because of the location of documents or witnesses, because of the desire not to lose management time through travel, because of relative legal costs in China compared to England.’ 107. I did not recall these reasons being covered in the evidence for this application, so I asked where they were set out in the evidence. I was given the reference to Laakkonen 1, [26]. This witness statement was made in ZTE’s opposition to Samsung’s Listing Application. Although in the bundles, it did not form part of my pre-reading for this application. 108. In his first witness statement at [26], Dr Laakkonen set out 4 factors for ZTE’s preference for a FRAND determination in Chongqing. In summary, these are: i) China is a major manufacturing and sales market for both parties, but especially ZTE. ii) Both parties have significant patent portfolios in China. iii) Chinese courts (including in Chongqing) have substantial experience in rate-setting litigation. iv) The cost of litigation in China is substantially lower than the cost of FRAND litigation in the UK. 109. I make these observations: i) First, if these reasons (both sets) were the real answer to the question I posed above, I would have expected them to have been set out in the evidence on this application. After all, the parties did not skimp on the preparation of evidence. ii) Second, the fact that a number of the points submitted by Ms Abram were not in any evidence suggests they were a bit of an afterthought, even though in some ways they are obvious. iii) Third, in any event, whilst these reasons (both sets) would support a preference for Chongqing, given a free choice, I find them insubstantial in the present circumstances. They would matter if ZTE were an SME but they do not, in my view, provide a justification for the wave of litigation which ZTE set in motion, with all the attendant effort and expense, let alone for the costs which ZTE have incurred in fighting tooth and nail on this application.” ‘Parties want to litigate where they do business because they are familiar with the legal system, because they are familiar with court procedures, because the language of the litigation is familiar to them, because of the location of documents or witnesses, because of the desire not to lose management time through travel, because of relative legal costs in China compared to England.’ i) China is a major manufacturing and sales market for both parties, but especially ZTE. ii) Both parties have significant patent portfolios in China. iii) Chinese courts (including in Chongqing) have substantial experience in rate-setting litigation. iv) The cost of litigation in China is substantially lower than the cost of FRAND litigation in the UK. i) First, if these reasons (both sets) were the real answer to the question I posed above, I would have expected them to have been set out in the evidence on this application. After all, the parties did not skimp on the preparation of evidence. ii) Second, the fact that a number of the points submitted by Ms Abram were not in any evidence suggests they were a bit of an afterthought, even though in some ways they are obvious. iii) Third, in any event, whilst these reasons (both sets) would support a preference for Chongqing, given a free choice, I find them insubstantial in the present circumstances. They would matter if ZTE were an SME but they do not, in my view, provide a justification for the wave of litigation which ZTE set in motion, with all the attendant effort and expense, let alone for the costs which ZTE have incurred in fighting tooth and nail on this application.”
“In the absence of a global dispute mechanism for determining FRAND disputes, or an ad hoc agreement to arbitration, the possibility of jurisdictional conflict is inescapable. … the principled answer to this might be that the court first seised should determine what terms are FRAND. In the present case, however, it is plain that Ericsson do not want the EDNC to determine FRAND terms for the cross-licence any more than they want the English courts to do so. … Ericsson’s stance is not driven by jurisdictional preference with respect to FRAND determination. It is driven by a preference for the exclusionary power of a national injunction (or equivalent relief) over FRAND determination by any court. This is hold up.”
“117. … In my view, [ZTE’s argument on jurisdictional preference] is based on a misunderstanding of [153] of Lenovo CA. In that case, just because Ericsson was determined to avoid a FRAND determination by any court does not mean that it is good faith for a SEP licensor to use the exclusionary power of national injunctions to enforce its jurisdictional preference. 118. On the closely related topic of ‘first-seised’, what I think was being indicated in [153] was that there was a principled basis for Ericsson to choose the EDNC forum for the determination of global FRAND terms because it was first seised of the dispute. If Ericsson had made that choice, then Lenovo’s offer (to accept the EDNC’s determination as to FRAND terms provided Ericsson dropped their campaign to obtain injunctions and equivalent relief) would have come into sharp focus, and it is difficult to see how Ericsson could have resisted abandoning their campaign without being branded an unwilling licensor. 119. I do not consider that Arnold LJ was suggesting that ‘first-seised’ necessarily is a trump card in all situations, but it may be a tie-breaker in an appropriate case. In these paragraphs, Arnold LJ was explaining why, in the current situation in which ETSI does not mandate a global FRAND dispute mechanism, forum shopping (although to be deprecated) can be an inevitable feature of global FRAND disputes. Implicit in this is that someone has to choose a forum.”
“127. In my judgment, a willing licensor in the position of ZTE would have engaged with this action and proceeded as speedily as possible to the FRAND trial, in the absence of earlier agreement between the parties. In my view, a willing licensor would not commence a wave of injunctive proceedings, whatever the aim of the pressure which those proceedings would exert on the SEP licensee. The wave of injunctive proceedings commenced by ZTE were completely unnecessary since Samsung were and are actively seeking fresh global FRAND cross-licence terms, to replace the previous global cross-licensing terms which the parties abided by for several years. There is no suggestion that Samsung were operating other than as a willing licensee (and as a willing licensor). … 129. Of course, from ZTE’s standpoint, the wave of injunctive proceedings was necessary to fulfil a principal aim of ZTE: to force Samsung into accepting a global FRAND determination in Chongqing. 130. Overall, and notwithstanding the manoeuvring by ZTE to narrow the gap between the two sides, the conclusion in my judgment is inescapable. ZTE have acted in bad faith with their wave of unnecessary injunctive proceedings, and by using the continuing threat imposed by them to seek to sideline or displace the jurisdiction of this Court and in seeking to secure their preference for a determination in Chongqing.”
“… I reiterate that I have rejected Samsung’s arguments about the abilities of the Chinese Courts in this area and I have proceeded on the basis that the Chinese Courts are as well-equipped to engage in global FRAND rate-setting.”
“152. … The reasoning in Panasonic CA at [96]-[97] and Lenovo CA at [149] is equally applicable here. If the declaration does induce ZTE to reconsider their position and grant Samsung an interim licence on the terms Samsung seek, that would promote comity because it would relieve the courts and tribunals of Brazil, Germany, the UPC and Hangzhou of a great deal of burdensome and wasteful litigation commenced by ZTE, but also the retaliatory litigation in those jurisdictions plus the USA commenced by Samsung. 153. In saying that, I acknowledge that the various offers made by ZTE would, if accepted, also relieve the same courts of the same amount of burdensome and wasteful litigation. The March Offer required Samsung to abandon this action and the April Offer does not. The April Offer allows this action to proceed. 154. As above, it is for the Chinese Courts to decide what they should do with the Chongqing Proceedings. I have no role in that process. 155. However, to similar effect, it is for Judges in this jurisdiction to decide what should happen to this action. The Court has jurisdiction. ZTE dropped their challenge to jurisdiction, thereby accepting the jurisdiction of this Court over the claim brought by Samsung. Not surprisingly, ZTE did not attempt to seek a case management stay of this action in favour of the Chongqing Proceedings. A trial date has been set, along with directions to that FRAND trial. 156. In these circumstances there is no basis, in my judgment, for criticising Samsung for not accepting ZTE’s terms. At best, ZTE’s approach results in unnecessary duplication of determination of global FRAND terms between these parties. 157. As for ZTE, there is a basis for criticising ZTE’s conduct in trying, through their interim licence terms, backed by their wave of litigation, to either derail or displace this action. ZTE’s terms interfere with the jurisdiction of this Court which they have accepted…. In practical terms, ZTE’s terms are designed to render this action pointless, so that Samsung effectively has to abandon it, unless they can bear the prospect of the costs of two FRAND determinations.”
“1. ZTE are in breach of their obligations of good faith under clause 6.1 of the ETSI IPR Policy. 2. A willing licensor in the position of ZTE, and in light of the undertaking given by Samsung, would enter into the interim cross-licence with Samsung on terms and including the sum to be paid by Samsung by way of royalty in respect of the interim licence period as set out in Confidential Annex 1 to this Order (the Interim Licence). 3. The terms (including the sum to be paid) of the Interim Licence are subject to adjustment and amendment so as to bring the terms into line with the terms of the final cross-licence determined to be FRAND by the Patents Court after the FRAND Trial in these proceedings (subject to any later adjustments or amendments following any appeals). 4. In the event that, within seven days of the date of this Order, ZTE refuse either 4.1 or 4.2 below, ZTE are in breach of their FRAND commitments under the ETSI IPR Policy and are unwilling licensors (and unwilling licensees). 4.1 To offer Samsung the Interim Licence and to enter into the same with Samsung; or 4.2 Give the following undertaking to the Court on condition that Samsung give the reciprocal undertaking set out above: Pending any application for permission to appeal or the determination of any such appeal, ZTE undertake that they shall abide by the terms of the Interim Licence as if the same were in full force and effect and shall enter into the Interim Licence within seven days of any such appeal or permission to appeal being refused or withdrawn. If any appeal is finally allowed, ZTE shall repay any sums paid by Samsung under their undertaking given above which the Court decides should be repaid (including interest if appropriate)”