Patents - Samsung Electronics Co., Ltd v ZTE Corporation

Chongqing Municipal People's Auditorium

Author Iswzo  Licence CC BY-SA 4.0  Source Wikimedia Commons

Jane Lambert

Court of Appeal (Lords Justices Jackson, Arnold and Birss) Samsung Electronics Co., Ltd and another v ZTE Corporation and others [2025] EWCA Civ 1383 (31 Oct 2025)

This was an appeal by ZTE Corporation and others ("ZTE") against the decision of Mr Justice Mellor in Samsung Electronics Co Ltd and Another v ZTE Corporation and others [2025] EWHC 1432 (Pat) (25 June 2025) to grant Samsung Electronics Co Ltd and Samsung Electronics (UK) Ltd ("Samsung"), the following interim declarations:

"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. If, 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and shall enter into the Interim Licence within seven days of any such appeal or permission to appeal being refused or withdrawn.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).'"

The appeal came before Lords Justices Jackson, Arnold and Birss on 28 Oct 2025.  By their judgment which was handed down on 31 Oct 2925, their lordships allowed the appeal (see Samsung Electronics Co., Ltd and Another v ZTE Corporation and Others [2025] EWCA Civ 1383 (31 Oct 2025)).

The Issue
, 
In para [1] of his judgment, Lord Justice Arnold said that this was another appeal raising the question as to whether a willing licensor of a portfolio of patents declared essential to one or more European Telecommunications Standards Institute ("ETSI") standards ("standard-essential patents" or "SEPs") would grant an implementer of those standards who has undertaken to take a licence to that portfolio on the terms to be determined by the Patents Court to be fair, reasonable and non-discriminatory ("FRAND") an interim licence pending that determination.  The parties had agreed that there should be an interim cross-licence, and even agreed as to the terms of the interim cross-licence, and in particular how much should be paid for it (the amount was confidential). They disagreed as to whether the terms of the interim cross-licence, and in particular the amount payable, should be subject to adjustment so as to bring them into line with the terms of the final cross-licence determined to be FRAND by the Patents Court, as Samsung contended or so as to bring them into line with the terms of the final cross-licence determined to be FRAND by the Intermediate People's Court of Chongqing Municipality ("the Chongqing Court"), as ZTE contended.

Grounds of Appeal

ZTE appealed on the following grounds:-

• Ground 1: The judge had been wrong to hold that ZTE had acted in bad faith. 
• Ground 2: The judge had been wrong to treat the fact that the English courts were first seised as a decisive factor. 
• Ground 3: The declaration went beyond what was necessary to remedy the mischief he had identified. 
• Ground 4:  The judge had been wrong to hold that the declarations he granted were not contrary to comity.

Respondents' Notice

By a respondent's notice, Samsung contended that Mr Justice Mellor's decision should be upheld on two additional or alternative grounds. The first was that the general law and practice relating to choice of forum in the arbitration of international commercial disputes supports the selection of a neutral forum to determine FRAND disputes. Secondly, ZTE's proposed interim licence amounted in effect to a forum non conveniens application by the back door when no such application has been made by ZTE.

Bad Faith

Lord Justice Arnold took the first and second grounds of appeal and the respondents' notice together because they were interrelated.  He noted that the Supreme Court had held in Lifestyle Equities CV v Amazon UK Services Ltd  [2024] UKSC 8, [2024] 3 All ER 93, [2024] WLR(D) 105, [2024] 2 All ER (Comm) 663, [2024] Bus LR 532, [2024] FSR 21 and Iconix Luxembourg Holdings SARL v Dream Pairs Europe Inc  [2025] UKSC 25, [2025] Bus LR 1391, [2025] WLR(D) 337 that a decision reached after an evaluative assessment could only be interferred with on the limited grounds identified in those cases but considered that the grounds in this appeal raised an issue of principle.  

He distinguished the appeal before him from the decisions in Panasonic Holdings Corp v Xiaomi Technology UK Ltd [2024] EWCA Civ 1143, [2005] RPC 2 and Lenovo Group Ltd v Telefonaktiebolaget Ericsson (Publ) [2025] EWCA Civ 182, [2005] RPC 11 on the ground that the SEP owners in those cases had brought infringement proceedings in several jurisdictions in an attempt to force implementors to accept licence terms that were not FRAND but Mr Justice Mellor had acquitted ZTE of any such intention in this case and Samsung had not challenged his lordship's finding.  The learned judge had concluded that ZTE was acting in bad faith only by bringing actions in multiple jurisdictions in order to pressure Samsung into agreeing FRAND determination by the Chongqing Court rather than the London Patents Court. Neither Panasonic nor Lenovo involved the SEP owner seeking to force the implementer to accept the SEP owner's preferred forum for FRAND determination.

The question for the Court was whether ZTE did anything wrong in seeking the determination of the licence terms in Chongqing.  Samsung argued that the Patents Court was first seised of the dispute, that it was a neutral forum and that it had experience of setting FRAND terms.  Lord Justice Arnold accepted those arguments but observed that that did not mean that other tribunals, such as the Munich regional court or the Unified Patent Court, would not be equally competent.  Samsung had criticized the Chongqing Court but the judge had rejected its criticism.  Samsung had not challenged that part of the judge's decision.

Samsung had argued in its respondent's notice that it would be inappropriate for the FRAND determination to take place in ZTE's country and submitted that it was the practice in international arbitrations to choose tribunals of neutral nationality.  ZTE replied that that was not the case with litigation and pointed to art 4 of European Parliament and Council Regulation 1215/2012/EU of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) which provides that the normal rule of jurisdiction is that a defendant should be sued in the courts of the Member State in which it is domiciled.  There were arguments of a practical nature in favour of both jurisdictions but Lord Justice Arnold concluded at para [70] that unless there is a legitimate and substantiated objection to the forum in question, it does not constitute bad faith for a SEP owner to seek to force an implementer to accept determination of FRAND terms by the SEP holder's preferred court rather than the implementer's preferred court.   He added at para [73]:

"If it is not illegitimate for the Chongqing Court to determine FRAND terms, I do not see how it can be bad faith for ZTE to use legal proceedings which it is not suggested are not otherwise properly open to ZTE to put pressure on Samsung to agree to that course. Such conduct is unattractive, and I should not be taken to endorse it, but that is not sufficient to constitute bad faith."

Whether the Relief was Unduly Excessive

As ZTE had not developed this point in oral argument, Lord Justice Arnold did not need to say anything more about it.

Comity

It was not necessary for Lord Justice Arnold to rule on this point as he had allowed the appeal on ZTE's first and second grounds.   However, he added that comity was a real concern in this case.

Further Argument

 His lordship called for written submissions on whether all the declarations should be set aside or just declarations 1, 3 and 4. Declaration 2 simply reflected what had been agreed between the parties. It was jurisdictionally neutral because it left open whether, and if so by which court, the terms of the interim licence should be adjusted to reflect the terms of the final cross-licence.

Lord Justice Birss

The learned lord justice agreed with Lord Justice Arnold that this case should be distinguished from Panasonic and Lenovo.   He said in para [82]:

"In this dispute there are two competent courts both seised with the issue of making a global FRAND determination as between these two parties. The judge rejected Samsung's criticisms of the Chongqing Court and there is no appeal from that conclusion. The judge also found (and again there is no appeal) that the behaviour of ZTE which was said to be in bad faith was not directed to extracting supra-FRAND rates. These points alone make the case very different from Panasonic v Xiaomi and Lenovo v Ericsson."

Lord Justice Birss also said at [84] that the concept of an interim licence is inherent in C-170/13 Huawei v ZTE  [2015] 5 CMLR 14, [2015] EUECJ C-170/13, EU: C:2015:477, ECLI:EU: C:2015:477, [2016] RPC 4:

"There at [67] the CJEU identified the idea that in some circumstances it might be for the implementer, in advance of a final resolution of the dispute between the SEP holder and the implementer, to provide appropriate security for the royalties which will end up being due in a licence agreement. Naturally, the CJEU did not need to dwell on this point in detail or work through all the possible permutations, many of which have only emerged in the decade since that decision was given. The key thing was to identify the principle. Once that principle is identified, one is then entitled to ask: what is it that the implementer is getting in return for the financial commitment they are making? Although not spelled out explicitly by the CJEU, the answer is fairly simple. The implementer is demonstrating their willingness to pay for the licence, once the terms can be agreed or resolved, and so, in the meantime the SEP holder ought not to be able to take the implementer's products off the market by means of an injunction. In other words what the implementer gets in return for the financial commitment is, at least implicitly, a form of licence pending the final resolution of the dispute. It could be called an interim licence. Assuming the sum being committed or paid is calculated on a global basis, then the willingness of the implementer which it embodies is also global in nature."

He also regretted that ground 3 had not been developed in oral argument.   In his view, there was scope for argument about the terms of the declarations in this case even if some form of response to what ZTE was doing was appropriate.  He would have liked to have heard full argument about the merits and proportionality of declarations designed to force a party to do or not do something they are clearly unwilling to do, even if their conduct was to be deprecated.

Finally, he observed at [87] that the consequences of how to deal with more than one court being seised with the issue of determining what is FRAND will have to be worked out internationally over time on a case-by-case basis.   However, the possibility of payment or security from the paying implementer in advance of that determination, and the interim licence implicit in it, ought not to be turned into a tool to force that issue.

Concurring Judgment

Lord Justice Peter Jackson agreed with both Lord Justice Arnold and Lord Justice Birss.

Conclusion

This case sets the boundary between unattractive conduct and bad faith. Bad faith involves pressuring implementors to pay more for a licence than a court would find to be FRAND by bringing multiple proceedings in different jurisdictions for the infringement of corresponding patents for the same invention. Unattractive conduct seems to be bringing multiple proceedings in different jurisdictions to press the SEP owner into accepting the determination of the licence terms by its home court rather than any other. Anyone wishing to discuss this case may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form at any other time.