FRAND - Conversant Wireless Licensing v Huawei and Another

Huawei's Head Office

Author: Dr Bernd Gross
Licence Copyright waived by the owner

Jane Lambert

Patents Court (Mr Justice Henry Carr) Conversant Wireless Licensing SARL v Huawei Technologies Co. Ltd and others  [2018] EWHC 808 (Pat)

Although the precise relief sought in these proceedings is not mentioned in this judgment, it must have been a strike out or stay of a claim for patent infringement.  The applicants were the Chinese companies, Huawei Technologies Co. Ltd. ("Huawei") and the ZTE Corporation ("ZTE") and their respective British subsidiaries which are defendants to a claim by Conversant Wireless Licensing S.A.R.L ("Conversant") for patent infringement.

The patents alleged to have been infringed are part of a worldwide portfolio that Conversant has offered to license on FRAND (fair, reasonable and non-discriminatory) terms. I discussed such licences in FRAND on 8 Oct 2017 and FRAND - a Postcript on 16 Jan 2018. Huawei and ZTE have not yet taken up Conversant's offer.  They  dispute the validity of Conversant's patents. They deny that those patents are essential to standards with which they wish to comply. They argue that even if the patents are valid and essential they have not infringed them.  They contend that if they are wrong on any of the foregoing points they are still entitled to a licence on FRAND terms, but they further contend that the terms that they have been offered by Conversant are far from FRAND.

As Conversant intends to license its patents and as Huawei and ZTE intend to take a licence this litigation is essentially over the terms of such licence. Because those terms will depend ultimately on which patents are valid, which are essential to the standard and which have been infringed that cannot be decided by an English court since most of the disputed patents are in China where Huawei and ZTE do most of their business, those companies argued that an English court did not have jurisdiction to decide the terms of a worldwide FRAND licence or, if it did, it was not the appropriate forum.  Huawei and ZTE further argued that they have not been properly served in England and urged the court not to allow Conversant to serve them in China on the grounds that it had no jurisdiction to determine the issue or was not the appropriate forum.

The application came on before Mr Justice Henry Carr who dismissed the application and gave Conversant permission to sue Huawei and ZTE outside the jurisdiction at paragraph [117] of his decision.

It was common ground that the court lacked jurisdiction to determine the validity of any foreign patent or whether it had been infringed but the judge reasoned that that did not affect the court's jurisdiction to determine the terms of a worldwide licence.  If a Chinese patent is held to be invalid or not infringed that patent and any royalties payable in respect of it will simply fall away. Moreover, the question whether the licence proposed by Conversant was or was not FRAND was irrelevant to the infringement proceedings that were already before the judge or any invalidity counterclaim that the defendants might bring.

His Lordship rejected the plea of forum non conveniens on the grounds that art 4 (1) of the recast Brussels Convention regulation (Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ L 351, 20.12.2012, p. 1–32) required the British subsidiaries of Huawei and ZTE to be sued in England as they had been incorporated and were thus domiciled in this country. The proceedings already before him concerned the infringement of the British designations of a number of European patents the validity of which was likely to be contested.  It did not appear from the evidence of experts on Chinese law that the Chinese courts had any jurisdiction to decide those issues except possibly with Conversant's consent which it was not obliged to give.  It followed that there was no convenient alternative Chinese forum.

The remainder of the judgment was concerned with whether the Chinese companies had been validly served and, if not, whether permission should be given for them to be served outside the jurisdiction.  The proceedings were served on a companies in England that were neither defendants nor subsidiaries of the Chinese defendants.  The judge held that was not good service and gave Conversant permission to serve those companies abroad.

In this case Mr Justice Henry Carr referred to and relied heavily on the decision of Mr Justice Birss in Unwired Planet International Ltd v Huawei Technologies Co. Ltd and another (Rev 2) [2017] EWHC 2988 (Pat) (30 Nov 2017). Mr Justice Henry Carr was urged not to follow that judgment on the ground that it had been decided wrongly but he refused to do so. However, Unwired Planet is under appeal. If that appeal is successful it may also be necessary to revisit this decision. 

Anyone wishing to discuss this case or FRAND generally should call me on 020 7404 5252 or send me a message through my contact form.