FRAND case against Huawei and ZTE to proceed in UK

Huawei’s and ZTE’s attempt to escape a patent dispute with a licensing company by questioning the jurisdictional legitimacy of the English courts has been thwarted.

Mr Justice Henry Carr delivered the decision at the English High Court on Monday, April 16.

Conversant Wireless Licensing is a subsidiary of Luxemburg-based Conversant IP Management, an IP management firm specialising in technology patents and licences. The subsidiary licenses wireless patents covering technologies used in mobile devices, including many standard-essential patents (SEPs).

A patentee declaring patents as standard-essential commits to licensing them on fair, reasonable and non-discriminatory (FRAND) terms.

In July 2017 Conversant accused Chinese telecommunications companies Huawei and ZTE Corporation of infringing the UK designations of four of its European SEPs (UK patent numbers 1,031,192; 0,978,210; 1,797,659; and 1,878,177).

The licensing company claimed it had made FRAND offers to license its SEP portfolio to both Chinese companies and asked the court to confirm the same or, alternatively, to determine the FRAND terms that such a licence would warrant.

In response, the Chinese companies argued that the English court lacked the jurisdiction to rule on the matter as the claims were for infringement of foreign patents of disputed validity. Huawei and ZTE said the English court should decline to hear the case and it should rather be heard in China.

After a four-day hearing in February and March, these arguments were rejected by Carr. He said the English court has jurisdiction over UK patent infringement claims, which includes the global FRAND licence remedy for infringement of related patents.

“The English court is clearly the appropriate forum,” Carr said, and made reference to Unwired Planet International v Huawei (2017), which set out the standards to be applied in FRAND cases such as this.

Carr confirmed that a court is able to determine a FRAND licensing issue on a global basis; otherwise Conversant would have to obtain “separate licences for each individual country where it held SEPs, by commencing separate litigation in each such territory”.

“China is not an alternative available forum in which infringement of the UK patents can be determined, nor in which the terms of a global FRAND licence can be set,” he added.

The High Court agreed with Conversant that the arguments put forward by Huawei and ZTE were made as a “hold-out charter” to enable their “continued infringement without payment of royalties”.

According to Carr there will be a further hearing “in the coming weeks” in order to determine a remedy.

Conversant said it will ask for the repayment of its costs, and it expects the Chinese companies to seek permission to appeal against the ruling.

Boris Teksler, president and CEO of Conversant, said Huawei and ZTE continue to infringe Conversant’s global SEP portfolio without paying a FRAND royalty so his company looks forward to having the matter adjudicated.

He said his company has “repeatedly explained to each of the defendants how they are using our SEPs and made clear Conversant’s willingness to negotiate and conclude a FRAND portfolio licence” but neither “Huawei nor ZTE has accepted any of Conversant’s offers”.