14/07/2022

English courts give green light to parallel proceedings in FRAND/SEP disputes

The English courts began July 2022 by giving two important judgments which will encourage a multiplicity of parallel litigation in Standard Essential Patent (SEP) licensing disputes.

There are obvious downsides to such litigation (e.g., a risk of inconsistent decisions and a waste of legal costs) and these were recognised by the Patents Court (in the Philips case) and the Court of Appeal (in the Nokia case). However, the English court’s two recent decisions recognise these as unavoidable.

• In Koninklijke Philips NV v Guangdong Oppo Mobile Telecommunications Corp Ltd & others [2022] EWHC 1703 (Pat) (1 July 2022), Meade J held that an anti-suit injunction should not be granted to stop the Defendant companies from pursuing and enforcing any judgment resulting from parallel proceedings in the PRC (China).
• In Nokia Technologies OY v Oneplus Technology (Shenzhen) Co Ltd [2022] EWCA Civ 947 (11 July 2022), Arnold LJ (Peter Jackson and Philips LJJ agreeing) refused to stay English proceedings against the Defendant companies on either jurisdictional grounds (forum non conveniens) or case management grounds (despite parallel PRC proceedings being on foot).

Lord Justice Arnold expressed the view (echoing his extra-judicial writing) that “The only sure way to avoid these problems is to use a supranational dispute resolution procedure …. arbitration … but national courts cannot solve the problems inherent in the present system of resolving SEP/FRAND disputes.”

Given how much has changed since its decision in the Conversant litigation ([2020] UKSC 37) – Brexit removing anchor defendants and the PRC People’s Supreme Court confirming it could set global FRAND terms – it remains to be seen whether the Supreme Court will consider these important issues afresh. In the meantime, the English Patents Court can expect to be busy with telecoms patents trials.

Key takeaways from Philips v Oppo

Meade J reviewed the law on quia timet injunctions, anti-suit and anti-anti-suit injunctions. He concluded that:

• A quia timet anti-anti-suit injunction could be justified on the basis that anti-suit relief was available in the PRC and that the Defendants had obtained such relief on one occasion (the Oppo v Sharp litigation) even though in later cases the Defendants had not adopted that approach and had stated this was not their intention.
• An injunction should not be granted to prevent the pursuit of parallel PRC rate setting proceedings or the enforcement by usual judicial means of any resulting judgment.
• An injunction should not prevent the Defendants from “interfering with” the English proceedings brought by Philips because in the context of parallel litigation, there was a risk that the words “would or could penalise the defendants from taking procedural arguments in China”.
• The English court would simply have to case manage any knock-on effects on the English proceedings resulting from case management decisions quite properly taken by the PRC court.

Key takeaways from Nokia v Oneplus

In relation to jurisdiction, Arnold LJ’s judgment has the effect that there appear to be no circumstances in which the English court will not take jurisdiction over a FRAND/SEP dispute no matter how little connection there is to England provided there is a UK patent on which a claim can be brought.

• Arnold LJ accepted that this case was different to the Conversant litigation (which reached the Supreme Court) because, unlike Huawei and ZTE, the Defendants in this case had accepted the need for a global licence and had undertaken to take one. Indeed, some of the Defendants had begun proceedings in PRC to obtain a judicial determination of appropriate FRAND terms.
• Despite this difference Arnold LJ held that the dispute was still to be characterised as a UK patent infringement claim which meant that the appropriate forum was necessarily England.
• If the dispute was characterised as a FRAND licence dispute, Arnold LJ confirmed that the PRC court was an alternative forum for determination of the dispute. He rejected the Claimant’s criticisms of the PRC court’s approach to determining FRAND rates. However, the Judge went on to decide that there was “no “natural” forum” to determine such a dispute and that the PRC court was “at best no more appropriate a forum than England”.

The problem of parallel litigation might have been solved by a case management stay as suggested by the Supreme Court in Conversant. Arnold LJ declined to reverse HHJ Hacon’s refusal to grant a stay and concluded that no such stay would be appropriate.

In Philips v Oppo, Twenty Essex’s Lawrence Akka QC and Josephine Davies represented the Defendants. In Nokia v Oneplus, Twenty Essex’s Alexander Layton QC and Josephine Davies represented the Defendants, together with Daniel Alexander QC of 8 New Square.

They were instructed in both cases by Hogan Lovells International LLP.