Acronyms abound in UKSC

The UKSC recently considered appeals alleging infringement of SEPs relating to ETSI standards for GSM, UMTS and LTE.

Glossary

Background

It is not often one has to preface a case note with a glossary!  

If you haven’t caught on yet, this is a case about mobile phones. More particularly, it is a case about the alleged infringement of UK patents relating to them. 

ETSI sets the standards for its 800 members across five continents. Once a standard has been set, it requires its members to declare any related patents or SEPs. The SEP owner is then required to licence their SEP on a FRAND basis under ETSI’s IPR Policy. You may wish to refer back to the Glossary at this point?

Huawei and ZTE manufacture mobile phones while Unwired and Conversant are IP licensing companies deriving their income from royalties. 

In the first appeal, Unwired claimed Huawei had infringed five SEPs that Unwired had acquired from Ericsson. Ericsson has previously licenced the SEPs to Huawei. That licence expired in 2012.

The second appeal arises out of an action by Conversant against Huawei and ZTE for infringement of four of its UK patents. Conversant acquired these patents, including SEPs, from Nokia in 2011. 

Huawei and ZTE contended that the English courts didn’t have the jurisdiction to determine the validity of foreign patents. 

Alternatively, they argued that the English courts were not the appropriate forum.   

The Court of Appeal upheld the trial judge’s decision in favour of Unwired and Conversant. Huawei and ZTE appealed to the UKSC. 

Judgment

Jurisdiction

English courts have the jurisdiction to determine cases involving SEPs, whether the parties agree or not: 

(a) to grant an injunction restraining the infringement of a UK SEP unless the defendant enters Into a global licence on FRAND terms of a multinational patent portfolio and (b) to determine royalty rates and other disputed items for a settled global licence and to declare that such terms are FRAND.

ETSI’s IPR Policy gives the English courts the jurisdiction to “to determine the terms of a license of a portfolio of patents which includes foreign patents”. 

Suitable forum

In respect of the second appeal, there was an argument that the Chinese courts would be the more suitable forum for determining the dispute. This was rejected on the basis that the Chinese courts do not have the jurisdiction needed to determine the terms of a global FRAND licence, at least, without all parties’ agreement that they should do so. The English courts do. 

Non-discrimination

In respect of the first appeal, the requirement that license terms must be non-discriminatory was identified. Accordingly, Huawei argued that Unwired must therefore grant the same or similar terms to all licensees unless it can be shown that there are objective reasons for treating them differently. This argument was dismissed.

Competition

In respect of the first appeal, Huawei contended that the Unwired claim for an injunction should be regarded as an abuse of its dominant position. The Court noted that Unwired was willing to grant a licence to Huawei on FRAND terms. Accordingly, this claim was rejected.

Remedies

In both appeals, an award of damages would not be an adequate substitute for an injunction. 

Accordingly, the appeals of Huawei and ZTE were dismissed.

Comment

The acronyms make this case seem complex.  The point of principle, less so.  If you want to use something belonging to someone else, it is only polite to ask their permission.

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