English court rejects ZTE and Huawei calls to relocate FRAND case
The English Court of Appeal has rejected an appeal from Chinese companies Huawei and ZTE in their bid to have a standard-essential patent (SEP) infringement case thrown out on grounds of lack of jurisdiction.
In the ruling, issued yesterday, January 30, the appeals court rejected Huawei’s and ZTE’s argument that a Chinese court was the appropriate forum for the dispute.
In July 2017, Conversant Wireless Licensing, an IP licensing company based in Luxembourg, sued the Chinese companies in July 2017 for allegedly infringing its SEPs relating to mobile phone technology (UK patent numbers 1,031,192; 0,978,210; 1,797,659; and 1,878,177).
Conversant sought a declaration from the court declaring that its patents are essential to “certain telecommunications standards”] and that the terms it had offered to the Chinese companies during licensing negotiations were compliant with fair, reasonable and non-discriminatory (FRAND) rules.
In April 2018, the English High Court dismissed Huawei’s and ZTE’s claim that the case should be tried in China on the grounds of forum non conveniens, a legal doctrine whereby courts may refuse to hear matters where there is a more appropriate forum available to the parties.
The Chinese companies argued that a Chinese court would be a more appropriate forum to hear the dispute.
According to the appeals court’s ruling, China accounts for 56% of Huawei’s global sales on which Conversant claimed royalties, and China is the place of manufacture of the allegedly infringing products.
If Conversant’s Chinese patents were not infringed, Huawei argued, then 75% of the royalties it was claiming would “fall away”.
ZTE argued that the issue “at the heart of the appeal was how global SEP owners should go about securing adequate reward for their portfolios”.
As the UK represents less than 1% of ZTE’s global mobile device sales, ZTE claimed, it was unreasonable for Conversant to “go about” the litigation by asserting its UK patents in a British court.
The appeals court ruled that “leaving Conversant to seek a remedy in China would be to compel them to advance a case based on different patents”.
It was therefore “impossible to view such a dispute as being the same dispute as that which would arise in the English court”, the court found.
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