On August 26, as the British Supreme Court announced that the original verdict was upheld, the Unwired Planet v. Huawei case and the Conversant v. Huawei and ZTE case completely came to an end in the UK. Both patent infringement lawsuits ended in the loss of two Chinese companies, Huawei and ZTE. . This means that related products withdraw from the UK market or sign a global licensing agreement for standard essential patents, which are the only two remaining options for Huawei.

This is a judgment called "milestone." The Supreme Court of the United Kingdom believes that, in accordance with ETSI's intellectual property policy, the participants of the standards organization have reached a contractual relationship, which gives the British court jurisdiction to determine the global licensing rate of the patent involved in this case. Through further interpretation of the FRAND principle, it was determined that although Unwired Planet's license fee rate for Huawei is higher than that previously provided to Samsung, this rate is still in line with the FRAND principle. At the same time, infringements of standard-essential patents were rarely issued a market sales ban.

For standard essential patent licensors, this is undoubtedly a major benefit, and it is foreseeable that more patentees will choose to file lawsuits in the UK. The potential international intellectual property risks of Chinese companies are also increasing. Gao Huanyong, a partner of Shengzhi Law Firm in the United States, suggested that "doing enough homework and complying with the laws of each country is the only choice for multinational companies. Especially in SEP negotiations. , Must not respond negatively."

Litigation

The judgment involved three lawsuits. The first was a case involving Huawei as the appellant and Unwired Planet as the appellee. Unwired Planet is a pure intellectual property operating company (NPE). In 2013, Unwired Planet acquired a batch of patent portfolios from Ericsson, including 276 standard essential patents and patent applications, covering 42 countries around the world, 29 of which are UK patents. Just the previous year, the patent license agreement signed between Huawei and Ericsson expired.

In 2014, Unwired Planet filed a patent infringement lawsuit against Huawei, Samsung and Google in the United Kingdom, accusing the three companies of infringing their European patent numbers ending in 744, 287, 514, 818, and 991 (hereinafter referred to as EP744, EP287, EP514, EP818, EP991) and other 6 patents, and requested the court to issue an injunction. At the same time, a similar lawsuit was initiated in Germany.

From 2015 to 2016, Google and Samsung reached a settlement with Unwired Planet. During this period, the British courts conducted three trials on whether the aforementioned patents involved were valid or infringing. In the first trial, EP744 was found to be valid and necessary. This result was later supported by the Court of Appeal; the result of the second trial was that EP287 and EP514 were declared invalid; in the third trial, EP818 was deemed valid and necessary. Ended, and EP991 related case trial work was postponed indefinitely.

On April 5, 2017, the British court issued a ruling that determined the global licensing rate and other terms of the patent in question. In June of the same year, the court signed a marketing ban. The ban was temporarily shelved due to Huawei's appeal.

At the same time, Unwired Planet's litigation in Germany also progressed. EP744 was found to be valid but not infringed by the German court; EP287 and EP514 were found to be infringing, but the European Patent Office considered these two patents invalid; EP818 was found to be valid and infringing; EP991 was found to be invalid.

As a counterattack, Huawei initiated invalidation applications for certain Unwired Planet patents in China (including some Chinese families of the patents involved). According to relevant announcements from the Patent Reexamination Board of the State Intellectual Property Office, 3 of them were deemed invalid, 3 remained valid, and 3 Partially invalid.

With the release of the British Supreme Court’s decision, the six-year Unwired Planet v. Huawei patent infringement case has been settled in the UK. In addition to infringement compensation and the global patent licensing terms in favor of Unwired Planet, Huawei has to pay The sales ban will also take effect unless Huawei and Unwired Planet reach a global patent license.

In addition to the aforementioned Unwired Planet v. Huawei case, the August 26 judgment also involved two other appeals. The appellants were Huawei and ZTE, and the appellees were both Conversant Wireless (Conversant for short). Conversant is an NPE registered in Luxembourg. In July 2017, the company filed a lawsuit against Huawei and ZTE in the UK on the grounds of infringement of European patents such as EP177 and EP659. In 2018, the company filed a similar lawsuit in Germany. The patents involved are 2,000 patents acquired by Conversant from Nokia in 2011 and some of the telecom standard essential patents in the patent application.

During this period, Huawei and ZTE launched litigation counterattacks in China and the UK respectively. In the UK, Huawei and ZTE filed objections to the jurisdiction of the British courts. The British courts issued a ruling in April 2018 to reject the jurisdictional objections. The two companies subsequently appealed. On January 30, 2019, the appeal of the jurisdictional objection was rejected; in China, Huawei and ZTE challenged the validity of Conversant's 11 Chinese patents, and the Reexamination Board declared 8 valid and 2 invalid , One item is partially valid, of which all the Chinese family members of the patent involved have been declared invalid.

Although the lawsuits between ZTE and Huawei in China are progressing smoothly, and there are pending lawsuits in the United Kingdom and Conversant, the ruling made by the Supreme Court of the United Kingdom against Huawei and ZTE this time has a huge impact on the overall trend of the "patent war".

Jurisdiction debate

In the Unwired Planet v. Huawei and Conversant v. Huawei and ZTE cases, the most controversial topic is the issue of jurisdiction.

As we all know, patent right is a territorial right, and the validity or infringement judgment of the same patent may vary from country to country. Huawei and ZTE believe that the British courts have no right to rule on global patent licensing fees, even if a national court must rule the global patent licensing fees. In the Unwired Planet or Conversant case, compared with the United Kingdom, China may act as a magistracy. More appropriate, after all, only a very small part of the global sales of Huawei and ZTE related products come from the UK market. According to Huawei’s arguments in the Conversant case, the sales of Huawei’s products in the UK market accounted for only 1% of global sales, while the Chinese market accounted for 56%. Similarly, more than 60% of ZTE's operating income comes from China, while the UK market only accounts for 0.07% of its revenue.

Huawei’s attorney Mark Howard believes that the British judge has set the jurisdiction of the United Kingdom as "the de facto international or global licensing court for the telecommunications industry." The Supreme Court of the United Kingdom believes that the above-mentioned case does not involve other countries' discretion on the validity and infringement of patents in their own countries. "ETSI's contractual arrangements in its intellectual property policy give the (UK) court the jurisdiction to rule FRAND licenses."

Wang Minsheng, general manager of Shenzhen Guardian Intellectual Property Services Co., Ltd., believes that from the perspective of patent infringement litigation, the practice of the British courts is not without "long-arm jurisdiction", which is not common in intellectual property litigation experienced by Chinese companies. Of course, the practice of a certain country’s court ruling on the SEP global patent licensing rate is not the first in the UK.

In its 58-page judgment on August 26, the British Supreme Court referred to Microsoft v. Motorola, Huawei v. Interdigital, Pioneer v. Acer and other relevant cases in the United States, China, Germany, and Japan. The judgment stated that in the Microsoft v. Motorola case, the circuit judge mentioned in the judgment that the U.S. court has jurisdiction over contract litigation; in the Pioneer v. Acer case, the German court emphasized the importance of complying with industry practices and held that, in view of this, the Limiting German licensing fees does not comply with the FRAND principle. In the Huawei v. Interdigital case, although the Chinese court only ruled on the licensing fees in China, it does not mean denying the legality of the global fees. Therefore, the Supreme Court of the United Kingdom believes that the global licensing rates and licensing terms of the Unwired Planet and Conversant cases are appropriate for the British courts.

Gao Huanyong was not surprised by the British Supreme Court's statement on jurisdiction. He said that the US courts have ruled the global licensing fees for the previous lawsuits between TCL and Ericsson in the United States. "As long as Huawei has a market, sales, and branch in the UK, then the British courts have jurisdiction over Huawei. The Supreme Court of the United Kingdom determined from the perspective of contract disputes that the British courts can rule on global licensing fees. If Huawei wants to continue operating in the UK, it must Follow its decision."

Regarding this issue, the courts of various countries obviously have certain differences. Different from the British and American courts’ ruling methods that use contract disputes as the entry point, in the judgment of the lawsuit filed against Huawei on September 16, 2019, the Nanjing Intermediate People’s Court of Jiangsu Province criticized Conversant for not obtaining the validity of the Chinese patent from the Chinese court. And in the case of opinions on infringement issues, where to try to obtain global rates for their patents from foreign judges.

Therefore, it is not impossible for national courts to give contradictory judgments in global patent litigation. In the judgment of the British Supreme Court, it is clearly mentioned that Conversant has made a commitment to resolve possible conflicts between the judgments of the British and German courts. As a lawyer, Gao Huanyong suggested, "Different countries’ courts may have different rates of SEP patent licensing. As a company, there is no choice in this process. The only choice is to respect the laws of each country and comply with the decisions of the courts of each country. ."

FRAND battle

As Shu Hai, a partner of Beijing Zhonglun (Shanghai) Law Firm, said in the Intellectual Property Forum of the 2020 Jiwei Semiconductor Summit, licensing fees, licensing methods, licensing geographic scope, licensing period and other elements It is the focus of the cross-border intellectual property licensing transaction process, and the determination of the licensing fee rate is the top priority. In the Unwired Planet case and the Conversant case, the core of the dispute between the two parties is undoubtedly the issue of licensing fees.

In the Unwired Planet case, Unwired Planet’s global patent license fee to Huawei was higher than the rate previously agreed with Samsung. Based on this, Huawei believed that the company violated the “non-discrimination” principle of the FRAND principle. Huawei proposed that the judge should believe that Unwired Planet's FRAND commitment means that it should provide Huawei with a global royalty rate consistent with Samsung.

The Supreme Court of the United Kingdom had a different interpretation of this. The court held that: “Samsung’s licensing fee rate was agreed upon by Unwired after its acquisition by PanOptis. At that time, Unwired’s financial situation was very bad, and Samsung was able to use this to lower the licensing fee rate. , PanOptis has established a strategic relationship with Samsung and has broader commercial interests, which gives Samsung special bargaining power in negotiations with Unwired.” In view of these special circumstances, even if Unwired Planet provides Huawei with a higher rate than Samsung , It still does not violate the FRAND principle.

Wang Minsheng told reporters that the understanding of the FRAND principle has always been controversial. One view is that FRAND means a license fee rate that is consistent or different but does not exceed a certain range; another view is that FRAND does not necessarily provide the same rate for all patent implementers. He said: "Just like buying something, if the purchase quantity is large enough, the merchant will generally give a certain discount. The SEP license rate is the same. Factors such as shipment volume may cause the patent licensor to give different rates, but this is not It must violate the FRAND principle."

SEP lawsuit injunction

In the judgment given by the Supreme Court of the United Kingdom, the biggest obstacle to Huawei may be the market sales ban. In view of the indispensability of standard-essential patents, courts rarely issue injunctions in standard-essential patent litigation. ETSI's intellectual property policy even requires that standard-essential patent holders waive the right to exclude patent implementers from a certain market.

However, the Supreme Court of the United Kingdom believes that while ETSI requires standard-essential patent holders to waive the injunction, it also requires the patentee to determine the validity and infringement of their patents. This is the principle of balancing the interests of the patentee and the implementer with the intellectual property policy. Run in the opposite direction. The Supreme Court of the United Kingdom also cited the judgment of the US Federal Circuit in the Apple v. Motorola case that if the implementer refuses to sign a FRAND license or unreasonably delays negotiations, an injunction against patent infringement may be an appropriate remedy.

Gao Huanyong reminded: “In standard-essential patent litigation, the court issued an injunction generally because it believed that the patent implementer was negative in the negotiation. Therefore, it is very important to show an active negotiation attitude in the patent licensing negotiation.” The Supreme Court of the United Kingdom said in its judgment. It also stated that in any case, the ETSI system requires the SEP owner to provide a FRAND license, and the implementer’s rejection of the license is a prerequisite for granting an injunction.