The Court Of Appeal Reaffirms That English Courts May Determine Global FRAND Licences

Author:Mr James Tumbridge and David Pountney
Profession:Venner Shipley LLP
 
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The Court of Appeal has dismissed Huawei and ZTE's appeal that the English court did not have jurisdiction and is not the correct forum to hear a dispute concerning the infringement of standard essential patents (SEPs). In doing so, it has confirmed that the English courts remain an attractive forum for determining the terms and royalty rates of global FRAND licences.

Background to the dispute

In July 2017, Conversant brought proceedings against Huawei and ZTE alleging infringement of four of its European standard essential patents (SEPs). Conversant also sought a declaration that their earlier offer of a licence to the defendants had been on terms that were fair, reasonable and non-discriminatory (FRAND), and if they were not, what those FRAND terms should be for its global SEP portfolio. On their part, the defendants had already brought validity actions against the equivalent Chinese patents before the Chinese court.

The defendants sought to stay the action, arguing that the English court had no jurisdiction to decide the claims and that England and Wales is not the proper or appropriate forum (forum non conveniens).

In April 2018, the High Court rejected the defendants' arguments and held that as the English court has jurisdiction to hear a claim concerning the infringement of a UK patent, it is also able to remedy any infringement found by determining the FRAND licence on a global basis. Our earlier coverage of Mr. Justice Carr's judgment in the High Court can be read here.

The Court of Appeal's judgment

The Appellants had challenged jurisdiction on two grounds. Firstly, that Conversant's claim was not justiciable in the English court because it related not only to the validity and infringement of UK patents, but also to Conversant's foreign patents. Secondly, that the Chinese court is the natural and appropriate forum as over 50% of Huawei's global sales are in China, and that as such the English court should have refused service out of the jurisdiction.

The Appellants sought...

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