“[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 anti-competitive 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’.”
“70. In the premises: (i) Each declared SEP incorporated within the HEVC standard constitutes its own market (or, to put the same point in different language, the market for licences for each such patent is a separate market to the market for licences for any other such patent); and (ii) The patentee of each such declared SEP holds a dominant position (in fact a legal monopoly) on the market for the granting of licences to each such SEP. In any event, each such patentee holds such a dominant position prior to joining a patent pool whereby licences to SEPs incorporated within such standard are licensed on a collective basis. 71. The markets on which Vestel operates are the downstream markets for the various Products in question. The Defendants do not operate on these markets, but their conduct on the markets on which they do operate has the potential to affect the conditions of competition on such downstream markets.”
“1. It is not the Claimants’ case that the geographic extent of the market for each declared SEP incorporated within the HEVC standard and the market for granting of licences to each SEP corresponds solely to the territory in respect of which each SEP is designated. 2. The Claimants’ case does not place any particular reliance upon the geographic extent of the market(s) relied upon. The Claimants will say that the strict concept of the geographic extent of the market for SEPs individually is of limited application in the context of patent rights, and in particular SEPs, because of inter alia the unusual nature of the market in question (as described in Unwired Planet[2017] EWHC 2988 at [660]), the nature of global patent families, the nature of the relevant standards which apply across multiple jurisdictions, and the commercial practices of those who implement the relevant standards (where products are manufactured for sale across multiple jurisdictions). The detailed analysis of these factors and how they affect the nature and scope of the market(s) in respect of SEPs owned by the Claimants will be a matter for expert and factual evidence at trial. For the avoidance of doubt, whatever the correct analysis of the geographical market, that does not detract from or otherwise affect the Claimants’ case on dominance as pleaded at paragraphs 68-88 of the Particulars of Claim, for the reasons there set out.”
“[660] Ultimately the determining factor is that what is being made available for sale is a licence. The market should be defined in that way. Nevertheless, this is an unusual sort of market. What the customers (implementers) really want is access to the standard, which they can obtain without paying SEP owners in advance. If they have to pay licence fees then they will of course do so, but the idea that implementers are all rushing to pay licence fees is fanciful. The structure of the market inevitably gives rise to the possibility of licensees holding out.”
“89. The First alternatively Second Defendant (by itself or together with all other members of the HEVC Advance patent pool) has abused its dominant position on the markets set out above in the ways set out above, and in particular by – (i) Failing to offer on FRAND terms a licence to the patents in the HEVC Advance Pool which it is in a position to licence; (ii) Offering to license such patents only on terms which are not FRAND for the reasons set out herein; (iii) Offering to licence such patents only on terms which result in rates which are excessive and which (if necessary so to aver) would result in harm to competition on the downstream market on which Vestel operates; (iv) Offering to license such patents on terms which discriminate against the Claimants for the reasons set out above and which (if necessary so to aver) would result in harm to competition on the downstream markets on which Vestel operates; (v) Failing to provide sufficient information to enable the Claimants to satisfy themselves that they are not being discriminated against; and (vi) Threatening to seek injunctions against the Claimants. 90. Further, in the event that, in accordance with their threats to do so as referred to above, the Defendants (or any of them) were in fact to seek injunctive or similar relief (such as the recall of products) against the Claimants (or any of them) in respect of their SEPs, based on the Defendants’ conduct and licensing offers to date, that would constitute a further abuse of their dominant position.” (i) Failing to offer on FRAND terms a licence to the patents in the HEVC Advance Pool which it is in a position to licence; (ii) Offering to license such patents only on terms which are not FRAND for the reasons set out herein; (iii) Offering to licence such patents only on terms which result in rates which are excessive and which (if necessary so to aver) would result in harm to competition on the downstream market on which Vestel operates; (iv) Offering to license such patents on terms which discriminate against the Claimants for the reasons set out above and which (if necessary so to aver) would result in harm to competition on the downstream markets on which Vestel operates; (v) Failing to provide sufficient information to enable the Claimants to satisfy themselves that they are not being discriminated against; and (vi) Threatening to seek injunctions against the Claimants. Defendants’ conduct and licensing offers to date, that would constitute a further abuse of their dominant position.”
“91. Such conduct has resulted in loss and damage to the Claimants, or would do so if persisted in.”
“It therefore follows that any royalties over and above that which can be categorised as FRAND will lead to Vestel UK suffering loss in the UK in that either: a. The acquisition costs of the products will be higher than at present, but it will be selling at the same prices, leading to a reduction in the profits of Vestel UK; or b. Vestel UK will be forced to seek to raise its prices to reflect the higher input costs but, in my view, this is likely to result in a reduction in sales, thereby also leading to reduction in profits of Vestel UK.”
“93. The Second Claimant seeks declarations as follows: (i) That the First alternatively Second Defendant (on its own or in common with all other members of the HEVC Advance patent pool) have abused their dominant position; (ii) That the terms of the HEVC Advance draft PPL are not FRAND; (iii) That the Defendants’ conduct and licensing offers to date are not such as to entitle the Defendants to seek an injunction or similar relief (including the recall of any products) against the Claimants in respect of any alleged infringement of the declared SEPs in the HEVC Advance Pool (and that any attempt by the Defendants (or any of them) to seek injunctive or similar relief against the Claimants (or any of them) in respect of the SEPs, based on the Defendants’ conduct and licensing offers to date, would constitute an abuse of their dominant position); (iv) That in its negotiations with the Claimants, HEVC Advance and/or its pool members have failed to comply with their FRAND obligations; (v) That the terms of the Claimants’ counter-offer of18 January 2019 are FRAND; (vi) Alternatively, a declaration as to the terms which are FRAND for the patents within the HEVC Advance patent pool (alternatively, such patents within that pool as are owned by the Second Defendant).” (i) That the First alternatively Second Defendant (on its own or in common with all other members of the HEVC Advance patent pool) have abused their dominant position; (ii) That the terms of the HEVC Advance draft PPL are not FRAND; (iii) That the Defendants’ conduct and licensing offers to date are not such as to entitle the Defendants to seek an injunction or similar relief (including the recall of any products) against the Claimants in respect of any alleged infringement of the declared SEPs in the HEVC Advance Pool (and that any attempt by the Defendants (or any of them) to seek injunctive or similar relief against the Claimants (or any of them) in respect of the SEPs, based on the Defendants’ conduct and licensing offers to date, would constitute an abuse of their dominant position); (iv) That in its negotiations with the Claimants, HEVC Advance and/or its pool members have failed to comply with their FRAND obligations; (v) That the terms of the Claimants’ counter-offer of18 January 2019 are FRAND; (vi) Alternatively, a declaration as to the terms which are FRAND for the patents within the HEVC Advance patent pool (alternatively, such patents within that pool as are owned by the Second Defendant).”
“[40] The Court finds that, where the market affected by the anti-competitive conduct is in the Member State on whose territory the alleged damage is purported to have occurred, that Member State must be regarded as the place where the damage occurred for the purposes of applying art.5(3) of Regulation 44/2001. That approach, based on the alignment of those two elements, is consistent with the objectives of proximity and predictability of the rules governing jurisdiction, since, first, the courts of the Member State in which the affected market is located are best placed to assess such actions for damages and, secondly, an economic operator engaging in anticompetitive conduct can reasonably expect to be sued in the courts for the place where its conduct distorted the rules governing healthy competition.” 46.The Court further held (at [43] and ruling 1): “ … in the context of an action seeking compensation for damage caused by anticompetitive conduct, the ‘place where the harmful event occurred’ covers, in situation such as that at issue in the main proceedings, inter alia, the place where the loss of income consisting in loss of sales occurred, that is to say, the place of the market which is affected by that conduct and on which the victim claims to have suffered those losses.”
“[31] As regards the nature of the damage alleged, it should be noted that it is not merely a financial consequence of the damage that could have been suffered by direct purchasers, such as Hungarian vehicle dealerships, and which could have consisted of a loss of sales following the price increase. By contrast, the damage alleged in the case in the main proceedings results essentially from the additional costs incurred because of artificially high prices and, therefore, appears to be the immediate consequence of an infringement pursuant to art.101 TFEU and thus constitutes direct damage which, in principle, provides a basis for the jurisdiction of the courts of the Member State in which it occurred. [32] As regards the place where such damage occurred, it is apparent from the decision at issue that the infringement established in art.101 TFEU extended to the whole of the EEA . It thus entailed a distortion of competition in that market of which Hungary is also a member since1 May 2004 . [33] Where the market affected by the anti-competitive conduct is in the Member State on whose territory the alleged damage is purported to have occurred, that Member State must be regarded as the place where the damage occurred for the purposes of applying art.7(2) of Regulation 1215/2012 (see, to that effect, judgment of5 July 2018 , flyLAL-Lithuanian Airlines (C-27/17) EU:C:2018:533; [2019] 1 W.L.R. 669; [2018] I.L.Pr. 32, [40]). [34] That approach is consistent with the objectives of proximity and predictability of the rules governing jurisdiction, since, first, the courts of the Member State in which the affected market is located are best placed to assess such actions for damages and, secondly, an economic operator engaging in anticompetitive conduct can reasonably expect to be sued in the courts having jurisdiction over the place where its conduct distorted the rules governing healthy competition (see, to that effect, judgment of5 July 2018 , flyLALLithuanian Airlines (C-27/17) EU:C:2018:533; [2019] 1 W.L.R. 669; [2018] I.L.Pr. 32, [40]).”
“[3] Before permission can be given for the service of originating process out of the jurisdiction, it is necessary for the claimant to establish (i) that the case falls within at least one of the jurisdictional gateways in paragraph 3.1 ofPractice Direction 6B supplementing CPR Pt 6, (ii) that she has a reasonable prospect of success, and (iii) that England and Wales is the proper place in which to bring the claim.”
“What is meant is (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.”
“Limb (i) [73] It is in my view clear that, at least in part, the Supreme Court confirmed the relative test in Canada Trust[1998] 1 WLR 547 . This is plain from the express endorsement of that test in Brownlie[2018] 1 WLR 192 and nothing in Goldman Sachs[2018] 1 WLR 3683 detracts from that analysis but on the contrary operates upon the basis that Brownlie was correct. The reference to ‘a plausible evidential basis’ in limb (i) is hence a reference to an evidential basis showing that the claimant has the better argument. It is perhaps relevant that in the Court of Appeal in Brownlie[2016] 1 WLR 1814 Arden LJ expressly linked the formulation of Waller LJ in Canada Trust with a concept of relative plausibility: at para 23. The use of ‘plausibility’ as a guiding relative principle in Brownlie and in Goldman Sachs was not therefore a novelty plucked from a jurisprudential void. [74] What is the correct name for the test? In Aspen Underwriting Ltd v Kairos Shipping Ltd (The Atlantik Confidence) [2018] 1 All ER (Comm) 228, on appeal[2019] 1 Lloyd's Rep 221 (‘Aspen’), the Court of Appeal at para 34 construed Brownlie as endorsing the ‘good arguable case’ test which boiled down to who had (relatively) the better of the argument. Aspen was however heard before the judgment in Goldman Sachs was handed down, and, even though it was handed down afterwards, it does not take account of that judgment. It is notable that in Goldman Sachs the court does not use the terminology of ‘good arguable case’ save in respect of limb (iii) where it is combined with plausibility. In limb (i) – which is the basic test – the test is plausibility alone. Yet it is true (as the Court of Appeal accepted in Aspen) that in the Supreme Court judgments the court was seeking to restructure the good arguable case test. In my view, provided it is acknowledged that labels do not matter, and form is not allowed to prevail over substance, it is not significant whether one wraps up the three-limbed test under the heading ‘good arguable case’ and since this was the understanding in Aspen there remains currency in this rubric. [75] Various points surrounding the test were not in issue in Brownlie or in Goldman Sachs. The burden of proof remains upon the claimant: see e g VTB Capital plc v Nutritek International Corpn[2013] 2 AC 337 , paras 90–91. For the avoidance of doubt the test under limb (i) is not balance of probabilities: see e.g. Cherney v Deripaska (No 2) [2009] 1 All ER (Comm) 333, para 44; and Brownlie in the Court of Appeal per Arden LJ[2016] 1 WLR 1814 , paras 22– 23. The expression ‘balance of probabilities’ is apt for use at trial when the court can weigh the evidence in its totality but is not therefore an appropriate expression for use at the interim stage. The test is context-specific and ‘flexible’: see e.g. Canada Trust[1998] 1 WLR 547 , 555H, per Waller LJ; and Brownlie per Arden LJ in the Court of Appeal, at para 21. [76] In expressing a view on jurisdiction, the court must be astute not to express any view on the ultimate merits of the case, even if there is a close overlap between the issues going to jurisdiction and the ultimate substantive merits: see e.g. per Waller LJ in Canada Trust, at p 555F, Teare J in Antonio Gramsci Shipping Corpn v Recoletos Ltd[2012] 2 Lloyd's Rep 365 (‘Antonio Gramsci’), para 39; and Aikens LJ in JSC Aeroflot Russian Airlines v Berezovsky[2013] 2 Lloyd's Rep 242 , para 14. [77] Next, the adjunct ‘much’ in the Canada Trust formulation must be laid to rest. This was the view expressed by a variety of judges prior to Brownlie (see for instance per Aikens LJ in the JSC Aeroflot case at para 14) and the word was, rightly in my view, deemed superfluous in Brownlie by Lord Sumption JSC. There is no discernible logic for saying that jurisdiction arises if the claimant, having established that it has the better case (relatively), then has to proceed upwards and onwards and show that it has ‘much’ the better case. A plausible case is not one where the claimant has to show it has “much” the better argument. Limb (ii) [78] Limb (ii) is an instruction to the court to seek to overcome evidential difficulties and arrive at a conclusion if it ‘reliably’ can. It recognises that jurisdiction challenges are invariably interim and will be characterised by gaps in the evidence. The court is not compelled to perform the impossible but, as any judge will know, not every evidential lacuna or dispute is material or cannot be overcome. Limb (ii) is an instruction to use judicial common sense and pragmatism, not least because the exercise is intended to be one conducted with ‘due despatch and without hearing oral evidence’: see per Lord Steyn in the House of Lords in Canada Trust[2002] 1 AC 1 , 13; and per Lord Rodger of Earlsferry in Bols[2007] 1 WLR 12 , paras 27 and 28. It should be borne in mind that it is routine for claimants to seek extensive disclosure (as was done on the facts of the present case) from the defendant in the expectation (and hope) that the defendant will resist, thereby opening up the argument that the defendant has been uncooperative and is hiding relevant material for unacceptable forensic reasons and that this should be held against the defendant. Where there is a genuine dispute judges are well versed in working around the problem. For instance, it might be possible to decide an evidential dispute in favour of a defendant on an assumed basis and ask whether jurisdiction is none the less established. Equally, where there is a dispute between witnesses it might be possible to focus upon the documentary evidence alone and see if that provides a sufficient answer which then obviates the need to grapple with what might otherwise be intractable disputes between witnesses. Limb (iii) [79] The relative test has been endorsed ‘in part’ because limb (iii) is intended to address an issue which has arisen in a series of earlier cases and which has to be grappled with but which as a matter of logic cannot satisfactorily be addressed by reference to a relative test: see e g Antonio Gramsci[2012] 2 Lloyd's Rep 365 , paras 39 and 44–48, per Teare J citing WPP Holdings Italy Srl v Benatti[2007] 1 WLR 2316 , para 44 (‘WPP’) per Toulson LJ. This arises where the court finds itself simply unable to form a decided conclusion on the evidence before it and is therefore unable to say who has the better argument. [80] What does the judge then do? Given that the burden of persuasion lies with the claimant it could be argued that the claim to jurisdiction should fail since the test has not been met. But this would seem to be unfair because, on fuller analysis, it might turn out that the claimant did have the better of the argument and that the court should have asserted jurisdiction. And, moreover, it would not be right to adjourn the jurisdiction dispute to the full trial on the merits since this would defeat the purpose of jurisdiction being determined early and definitively to create legal certainty and to avoid the risk that the parties devote time and cost to preparing and fighting the merits only to be told that the court lacked jurisdiction. In Antonio Gramsci and in WPP the court recognised that a solution had to be found. In WPP, at para 44, Toulson LJ stated that the court could still assume jurisdiction if there were ‘factors would exist which would allow the court to take jurisdiction’ and in Antonio Gramsci, at para 48, Teare J asked whether the claimant's case had ‘sufficient strength’ to allow the court to take jurisdiction. The solution encapsulated in limb (iii) addresses this situation. To an extent it moves away from a relative test and, in its place, introduces a test combining good arguable case and plausibility of evidence. Whilst no doubt there is room for debate as to what this implies for the standard of proof it can be stated that this is a more flexible test which is not necessarily conditional upon relative merits.”
“This has been held to correspond to the test for resisting an application for summary judgment: Altimo Holdings and Investments Ltd v Kyrgyz Mobil Tel Ltd[2012] 1 WLR 1804 , para 71.”
“The jurisdictional gateways and the discretion as to forum conveniens serve completely different purposes. The gateways identify relevant connections with England, which define the maximum extent of the jurisdiction which the English court is permitted to exercise. Their ambit is a question of law. The discretion as to forum conveniens authorises the court to decline a jurisdiction which it possesses as a matter of law, because the dispute, although sufficiently connected with England to permit the exercise of jurisdiction, could be more appropriately resolved elsewhere. The main determining factor in the exercise of the discretion on forum conveniens grounds is not the relationship between the cause of action and England, but the practicalities of litigation. The purpose of the discretion is to limit the exercise of the court’s jurisdiction, not to enlarge it and certainly not to displace the criteria in the gateways. English law has never in the past and does not now accept jurisdiction simply on the basis that the English courts are a convenient or appropriate forum if the subject matter has no relevant jurisdictional connection with England.”
“ …the ‘valuable safety valve’ of discretion…which…can concentrate on the real question, which is ‘the proper place for the resolution of the dispute’ (as Professor Briggs puts it).” and added: “[54] I do, of course, take the point that the claimant should not be in the position of choosing where to bring the claim. But in my view, the discretion should be robust enough to prevent that. It is looking for a substantial reason to allow a claim against a foreign defendant to be brought in the courts of this country and the courts have always treated such cases with caution.”
“Claims in tort (9) A claim is made in tort where – (a). damage was sustained, or will be sustained, within the jurisdiction; or (b). damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction.”
“[97] The first claimant is incorporated in England and Wales. The second claimant is incorporated in the Republic of Ireland. If the first claimant claims as a buyer who has paid an overcharge which it has not passed on, then the first claimant can say that it has suffered a loss in this jurisdiction. If the first claimant claims as a seller who has passed on an overcharge but has lost sales in this jurisdiction, then it can say that it has suffered a loss in this jurisdiction. The position of the second claimant is to be analysed in the same way but the difference will be that the second claimant as a buyer pays an overcharge in the Republic of Ireland but it may wish to say that it passes on the overcharge and loses sales in the market in this jurisdiction. … [99] As to where any such losses might be made, if the loss is paying an overcharge when buying the goods, the loss would seem to be made where the goods are bought. If the loss comes from reduced sales then the loss would seem to be in the market where the seller suffers the loss of sales.”
“[757] It was common ground between the economists but I hold as a matter of law that the boundary of what is and is not a FRAND rate is different from the boundary of what is and is not an unfair price contrary to art.102(a). If the rate imposed is FRAND then it cannot be abusive. But a rate can be higher than the FRAND rate without being abusive too.”
“(11) The subject matter of the claim relates wholly or principally to property within the jurisdiction, provided that nothing under this paragraph shall render justiciable the title to or the right to possession of immovable property outside England and Wales.”
“93A. In the alternative to paragraphs 93(ii) and 93(vi) above, the Claimants seek the following declarations: (i) That the terms of the HEVC Advance draft PPL in so far as they relate to any patents in the HEVC Advance patent pool which designate the United Kingdom are not FRAND. (ii) Alternatively, a declaration as to the terms which are FRAND for the patents within the HEVC patent pool which designate the United Kingdom. (Alternatively, such patents within that pool as are owned by the Second Defendant.) (For the avoidance of doubt, it is Vestel’s case that the licence terms which would be FRAND for a licence for the patents which designate the United Kingdom would be the terms of a global licence.)”
“(3) A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and – (a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.” (a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.”
“(4A) A claim is made against the defendant in reliance on one or more of paragraphs (2), (6) to (16), (19) or (21) and a further claim is made against the same defendant which arises out of the same or closely connected facts.”
“[63] First, this case may well be the first appellate case to have considered the new 4A gateway which came into effect on1 October 2015 . The intention of this new gateway must be that claims arising out of the same or closely connected facts should be tried together. That is eminently sensible and should be encouraged. The fact that some defendants may now be capable of being sued as necessary or proper parties to claims which now pass the 4A gateway should not give rise to any concern because it is also eminently sensible that relevant claims against all defendants should be tried together. Any legitimate concern that there is no sufficient connection with England and Wales should be dealt with under the head of the third issue in this case namely whether England and Wales is the appropriate forum.”
“[52] These considerations force me strongly to the conclusion that the questions on which the court’s declaratory judgment is sought are far better decided in the foreign court where those questions arise, if they ever do. It would be an exercise in jurisdictional imperialism to foist this court’s view as to whether ZyXEL were unwilling licensees, or holdingout on an unknown foreign jurisdiction. Far less can it be said that it is in the interests of justice for it to do so.”