This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
THE LENS
Digital developments in focus
| 5 minutes read

SEPs and FRAND – English Courts Remain Essential

SEPs and FRAND have been hot topics for a while and there are no signs of that changing any time soon. In the last couple of months alone there have been three English court decisions relating to SEPs and FRAND terms and the UKIPO has published a summary of responses to its Call for Views on SEPs and Innovation. We summarise some of the key takeaways from these below.  

Background

As technology continues to advance at a rapid pace, the need for interoperability and compatibility is becoming increasingly important in various sectors. One way industries look to achieve that is through standardisation. The relevant standards are set by standard-development organisations (such as the European Telecommunications Standards Institute (aka ETSI) in the telecoms sector) and often encapsulate technology that is patent protected. Those patents that would necessarily be infringed by implementing a particular standard are known as Standard Essential Patents (or “SEPs” for short) and owners of those SEPs are typically required to give an undertaking to grant licences of their SEPs on fair, reasonable and non-discriminatory (FRAND) terms. This has led to tension between implementers of standards and SEP holders, resulted in increased litigation and led the UKIPO to launch its “Call for Views on Standard Essential Patents (SEPs) and Innovation” - gathering views on whether the SEP ecosystem is functioning effectively and striking the right balance for those involved.

Recent Case Law

1. Nokia v OPPO

The dispute between Nokia and OPPO is a complex one. In a nutshell, Nokia owns certain SEPs relating to 3G, 4G and 5G telecoms standards. OPPO markets mobile devices under various brands and had been licensed to use Nokia’s SEPs until 30 June 2021. However, negotiations for a new licence broke down and Nokia sued for infringement. In response, OPPO challenged validity, disputed essentiality and infringement, and claimed that Nokia had failed to offer a licence on FRAND terms (as it was required to do under ETSI’s IPR Policy). OPPO also took action in the Chinese courts, asking them to determine the terms of a global FRAND licence for Nokia’s SEPs and sought a stay of the English proceedings pending the outcome of the case in China.

The Court of Appeal case centred on two main questions: (1) whether the English courts should accept jurisdiction; and (2) even if jurisdiction is accepted, should there be a stay on case management grounds?

The key to answering the first question depended on the proper characterisation of the claim. Was this a case about the terms of a global FRAND licence or was it about the validity and infringement of Nokia’s UK patents (with FRAND only arising as part of an alleged contractual defence)? The Court of Appeal found it to be the latter and therefore concluded that the English courts were the appropriate forum to try the dispute. However, the Court went on to note that if the dispute had been characterised as one about the terms of a global FRAND licence, then: (i) there would be no ‘natural’ forum to determine it; and (ii) the Chinese court would be an alternative forum.

On the second question relating to a stay on case management grounds, the Court of Appeal upheld the first instance decision and refused to grant a stay. OPPO was not concerned with saving time or costs. They just wanted the case to be determined in China, their forum of choice (having started proceedings there after Nokia had commenced the English proceedings). The Court determined that was not a good reason for granting a stay.

2. Koninklijke Philips v Guangdong Oppo Mobile

It is becoming increasingly common in SEP/FRAND cases for one party to seek an anti-suit injunction to prevent the other party from commencing or continuing proceedings in another forum or jurisdiction. Some courts, including the English courts, are also willing to grant injunctions to prevent parties from seeking or enforcing anti-suit injunctions – so called “anti-anti-suit injunctions” (“AAS Injunctions”). This case concerned the latter. An AAS Injunction had been previously obtained by Philips on an ex parte and without notice basis, which was effective until the determination of this, inter partes, hearing. Effectively, the Patent Court had to determine whether the AAS Injunction should be continued.

Whilst AAS Injunctions have been granted in previous SEP/FRAND cases by English courts (see e.g. IPCom v Lenovo and Philips v Xiaomi), the Court emphasised that they are not the default position - they have to be justified on the facts of each case. The following two-stage test is applied, with multiple factors relevant to the assessment of each stage:

  • Is there a strong chance that, unless an injunction is granted, the defendant will infringe the claimant's rights; and
  • If the defendant did infringe the claimant's rights, would the harm be so grave and irreparable that, notwithstanding the interlocutory injunction (at the time of actual infringement of the claimant's rights) to restrain any further acts, a remedy of damages would be an inadequate form of relief.

With respect to the first stage, the Court focussed on whether there was a real threat that Oppo would seek anti-suit relief against Philips in China. It found that there was such a threat, in part due to the past history of Oppo – in a separate but similar dispute (Sharp v Oppo), Oppo had sought and obtained an anti-suit injunction in China which ultimately ended related infringement proceedings in Germany. As for the second stage, the Court accepted Philips’ submissions that if Oppo obtained an anti-suit injunction in China, that would have been irreversible and terminal for the English proceedings. So the Court agreed to continue the AAS Injunction, but subject to two limitations. First, it amended the scope of the injunction down, from worldwide, to only cover China (as that was the only place where a real threat existed). Second, it made it clear that the injunction wouldn’t stop the Chinese courts from conducting global rate-setting if Oppo were to initiate such proceedings and the Chinese courts considered it appropriate. The AAS Injunction was simply intended to defend the English court’s proceedings in relation to infringement of a UK patent.

3. Godo Kaisha IP Bridge v Huawei

The final decision to update on is the Patents Court’s CMC judgment in Godo Kaisha v Huawei. Put simply, the Court indicated that where foreign law issues arise in FRAND cases, the relevant principles of foreign law should be pleaded. The Court’s view was that this would tie the parties down to what they are going to say and often leads to a large measure of agreement.

UKIPO’s Call for Views on SEPs and Innovation 

Moving away from recent English court judgments, on 5 August 2022, the UKIPO published a summary of responses to its ‘Call for Views on Standard Essential Patents (SEPs) and Innovation’. The aim was to obtain information on whether the ecosystem around SEPs is working in an efficient and effective manner, or whether any form of government intervention is required.

A total of 56 submissions were made by representatives from the telecoms and automotive industries, tech sector, academia, legal and IP professions. Responses were provided on six main areas: (i) the balance of the ecosystem and benefits to innovation and consumers; (ii) competition and market functioning; (iii) transparency; (iv) patent infringement and remedies; (v) licensing of SEPs; and (vi) SEP litigation.

A wide range of views were expressed, and it is evident that there is no consensus between patent holders and implementers of standards on any of the big ticket SEP issues. Given the breadth of issues raised and range of responses received, the UKIPO has said it will require more time to assess the issues and consider the merits of the proposals submitted – it has promised to report its findings to UK ministers in 2023.  

Conclusion

SEPs for various tech and industrial sectors are increasingly important. Although English courts are playing a central role in trying to navigate this rocky landscape, it does not look like we will have a unified international approach any time soon. In light of recent English court decisions, it seems that we will continue to have parallel SEP and FRAND licence proceedings across multiple territories.

“The IPO believes that standards and standard essential patents will be of growing importance to the UK economy, and the government’s ambition for the UK to be a science and technology superpower and innovation hub by 2035”.

Tags

ip, frand, seps

Latest Insights