In a context where standards are global in nature, the market for patent implementers usually spans multiple countries, and patents are also regional, standard-essential patent disputes usually present a situation of parallel litigation in multiple countries.  In this situation, there is a game of jurisdiction in various countries around the world, such as the issue of anti-suit injunctions, and the parties also have disputes over jurisdiction.  For example, China, the United Kingdom, and Germany have all made relevant rulings in the recently widely watched case of standard-essential patent disputes between Huawei, ZTE and Convenson.

Overall, in the UK, the Supreme Court’s ruling is beneficial to patent holders. Following Germany, the UK may become the preferred litigation venue for SEP holders.  At the same time, in view of the strong position of the British courts on the issue of jurisdiction and global licensing fee clauses, the patent implementers whose global license fee clauses are judged will be in a passive position.  In the United States, because the US standard-essential patent injunction rules follow the four-factor analysis method, it is relatively difficult to obtain the standard-essential patent injunction.  Under the US jurisdiction, the US court's ruling on global licensing fees will not make patent implementers excessively passive.  However, under the circumstance that British and American courts tend to rule global license fees, it is foreseeable that conflicts and coordination issues between the global license fee clauses decided by various courts around the world may arise in the future for the same case.  In addition, the time sequence of case acceptance and the matters involved are also decisive for the jurisdiction of the British and American courts.

Regarding the jurisdictional dispute over standard-essential patents, the Intellectual Property Court of China's Supreme People's Court (hereinafter referred to as the Supreme Intellectual Property Court) rejected Convenson’s appeal against jurisdiction over the standard-essential patent dispute with ZTE on August 21.  The Intellectual Property Court of the Supreme Law held that Convenson is a foreign company without a domicile or representative office in China.  Whether China has jurisdiction depends on whether the dispute has proper connections with China.  The Supreme Intellectual Property Court analyzed the characteristics of standard-essential patent disputes and held that China has jurisdiction in terms of the causes of standard-essential patent disputes, core disputes, dispute types, and licensing targets. Regarding the principle of court convenience, the Supreme Intellectual Property Court believes that the ongoing parallel litigation abroad does not affect the jurisdiction of the Chinese courts.  Since the standard essential patent disputes involved are obviously more closely related to China, the Chinese courts are more convenient to hear.

The Anglo-American courts tend to expand the interpretation of the standards organization’s intellectual property policies and the nature of the FRAND clauses, believing that the two are contractual and global, and then consider them to be reasonable in jurisdiction; The Supreme Intellectual Property Court tends to believe that the FRAND clause does not mean that the contract has been established, which is basically consistent with the previous view of the Chinese courts on the nature of the FRAND clause.  Judging jurisdiction issues by considering the characteristics of standard-essential patent disputes and the close connection of case facts is actually based on more objective characteristics and reasons, and strictly follows the consideration factors and principles of international judicial jurisdiction rules.

At present, although China does not have statutory provisions related to anti-suit injunctions, China's behavior preservation system actually covers the rule function of one party requesting the other party to do or not to do a certain behavior.  On August 28, the Supreme Intellectual Property Court ruled on Huawei's application for preservation of Convenson's behavior.  Since the behavior of this kind of behavior preservation is a litigation behavior of one party in another country, the Supreme Intellectual Property Court in this case clarified the legitimacy of China’s jurisdiction over the case, and on the premise of routine judicial comity, based on the consideration of the relevant elements of the behavior preservation system in China, it is believed that the Chinese lawsuit preceded the German lawsuit, and the German ban interfered with the Chinese lawsuit and even made the Chinese lawsuit meaningless.  The behavior preservation effect on the German courts was within a moderate range.  Therefore, we support Huawei’s application. It is ruled that Convenson shall not apply for the enforcement of the ban on infringement in Germany.

The rules in the field of standard-essential patents are still undergoing development and changes.  The emergence of every typical case on a global scale affects the application of rules in various jurisdictions to varying degrees.  Related companies need to keep track of the rules and practices of various jurisdictions around the world to maintain sensitivity to the rules, so that we can respond quickly and effectively whether it is active prosecution, passive response, or early stage of litigation risk prevention and control.

 From IPRCHN

September 17th, 2020