FRAND - Nokia Technologies v Oneplus Technology

Supreme People's Court of the Peoples' Republic of China

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Jane Lambert

Patents Court (HH Judge Hacon) Nokia Technologies OY and another v Oneplus Technology (Shenzhen) Co., Ltd and others (Rev1) [2021] EWHC 2952 (Pat) (4 Nov 2021)

This was an application to HH Judge Hacon sitting as a judge of the Patents Court to set aside service of patent infringement proceedings on defendants that had been incorporated in China and to stay the action against the defendants that had been incorporated here to abide the outcome of proceedings in China to determine the terms of a FRAND licence for the claimants' patent portfolio on the basis that China was the more appropriate forum.  Alternatively, a stay of the whole action or at least the determination of the licence terms was sought on case management grounds.

      

The applicants contended that the circumstances that had led to the Supreme Court's decision in Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd, Conversant Wireless Licensing SÀRL v Huawei Technologies Co Ltd and Conversant Wireless Licensing SÀRL v ZTE Corporation [2020] UKSC 37 had changed.   First, the Supreme People's Court of the People's Republic of China ("the Chinese Supreme Court") had held in Guangdong OPPO Mobile Telecommunications Corp. Ltd v Sharp Corporation ((2020) Zui Gao Fa Zhi Min Xia Zhong No. 57).that the Chinese courts had jurisdiction to settle the global terms of a FRAND licence even in the absence of agreement between the parties as to the forum in which terms are to be determined.  Secondly, Council Regulation (EU) No. 1215/2012 ("the Recast Brussels Regulation") which might have required the Conversant proceedings to take place in England under the Owusu principle no longer applies to the UK.

The learned judge directed himself at para [21] of his judgment that the burden rests on Nokia to show that the requirements of CPR 6.36 and 6.37 had been met. He referred to para [71] of the decision of the Privy Council in Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7:

"[71] On an application for permission to serve a foreign defendant (including an additional defendant to counterclaim) out of the jurisdiction, the claimant (or counterclaimant) has to satisfy three requirements: Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 453-457. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: e g Carvill America Inc v Camperdown UK Ltd [2005] 2 Lloyd's Rep 457, para 24. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context 'good arguable case' connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, 555-557, per Waller LJ affirmed [2002] 1AC 1; Bols Distilleries BV v Superior Yacht Services (trading as Bols Royal Distilleries) [2007] 1 WLR 12, paras 26-28. Third, the claimant must satisfy the court that in all the circumstances the Isle of Man is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction."

The defendants accepted that the first two requirements had been satisfied.   The only issue in dispute was whether England was the most appropriate forum.

Judge Hacon noted at para [28] of his judgment that there had been a challenge to the jurisdiction of the courts in Conversant.   Citing paras [96] to [98] of the Supreme Court judgment, he said that the challenge failed because there was no evidence that the Chinese courts did not have jurisdiction to determine the terms of a global FRAND licence, at least in the absence of agreement by all parties that they should do so.  Since the Supreme People's Court's decision in OPPO v Sharp, that was no longer the case.  He held at para [30] that there was an available forum for settling FRAND terms in the present case in China.  The judge also agreed that following the end of the transitional period when EU law continued to apply to the UK, the Owusu principle no longer had any relevance.

The availability of an alternative forum and the elimination of the Owusu principle did not mean that Conversant was no longer good law.  The Supreme Court had agreed with Mr Justice Birss that the dispute, in that case, was about the infringement of a UK patent rather than the terms of a FRAND licence.  That was also the case in the matter before him. He said at para [43] that the change in the factual context of this case, specifically the newly confirmed jurisdiction of Chinese courts to settle global terms of a FRAND licence, did not alter the correct characterisation of the present proceedings.  He added at [48]:

"In Conversant Floyd LJ said that having characterised the dispute, the forum conveniens question answered itself. Since the dispute in the present case is properly characterised in the same way, England is the appropriate forum to hear the dispute so far as the law of forum conveniens is concerned."

Turning to the applicants' alternative argument for a stay on case management grounds, the judge considered his power to stay proceedings under s.49 (3) of the Senior Courts Act 1980 and CPR 3.1 (2) (f) and his duty to deal with cases justly and at proportional cost under CPR 1.1 2 (a). He also referred to the Court of Appeal's judgment in Reichhold Norway A.S.A. v Goldman Sachs International [2000] 1 WLR 173.  He concluded at [59] that "a stay of an action which is in no way abusive may be ordered in the interests of justice where there are concurrent proceedings abroad and there are compelling reasons to conclude that there would be a saving in costs and that the stay would afford greater convenience" but not that such circumstances will be rare.

Judge Hacon summarized the arguments in favour of a stay between [60] and [64] and the arguments against between [65] and [73].   He considered some of those issues in detail between [75] and [114].  Weighing those arguments against each other he concluded at [126] that none of the factors raised by the parties tipped the balance of justice between the parties in favour of a stay or no stay.  Accordingly, he did not take the view that the circumstances of the present case were of the rare and compelling nature contemplated by the Court of Appeal in Reichhold Norway such that the balance of justice favoured a stay of the FRAND issues before him. He, therefore, dismissed the application for a stay.

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