Xiaomi unsuccessful in interim licence bid at UK High Court

Xiaomi is not entitled to an interim licence in its dispute with Panasonic. The UK High Court rejected this last Friday. An interim licence could have blocked injunctions by the UPC and German courts, which are expected in autumn.

Panasonic’s dispute with Xiaomi and Oppo is becoming a leading case that could regulate the interplay between the Unified Patent Court and continental patent courts and the UK High Court in SEP and FRAND actions. The UK High Court has now made one of the first important decisions in the global dispute.

In July 2023, after years of negotiations, the Japanese electronics company Panasonic launched a global patent dispute with the two Chinese implementers. Xiaomi and Oppo are facing 24 lawsuits filed by Panasonic in Europe. All patents-in-dispute are relevant for the WCDMA and LTE standards.

Panasonic has launched actions against the two implementers not only at the UPC, but also at the UK High Court and the regional courts in Mannheim and Munich. Further actions are pending in China.

No interim licence for Xiaomi

Xiaomi had applied to the UK High Court for an interim licence until the court hands down its ruling on a FRAND rate. However, last week the court ruled the Chinese handset maker is not entitled to an interim licence (case ID: HP-2023-000025). Oppo did not participate in the application.

However, a legally binding FRAND ruling is still a long way off. The trial begins in October and a ruling is not expected until at least the end of 2024 or early 2025. After that, it remains to be seen whether one of the parties will appeal the ruling.

Judge Thomas Leech rejected the interim licence application in an interim judgment. Leech is judge of the Chancery Division of the High Court and chairman of the Competition Appeal Tribunal.

The interests of comity

Leech ruled in favor of Panasonic, “I refuse to make the declarations requested by Xiaomi. Moreover, even if I had been satisfied to a high degree of assurance, I would have declined to exercise the court’s jurisdiction to make the declarations both in the interests of comity with the German courts and because there was no utility in doing so.”

Should Panasonic in the meantime obtain injunctions from continental European courts, judge Leech does not see this as a violation of FRAND obligations.

In an immediate response to the ruling Xiaomi announced an appeal. A spokesperson told JUVE Patent, “Xiaomi disagrees with today’s decision and will seek to appeal the decision in order to achieve a fair and reasonable interim regime to protect the integrity of the UK FRAND determination.”

In the statement Xiaomi emphasised its “willingness to enter into a short-term FRAND licence now to cover the period until the English court’s determination of the FRAND licence after the trial in October 2024”.

Next stop FRAND trial

Following the ruling on the interim licence, the parties will now prepare their pleadings and experts for the FRAND trial in London. The trial will begin on 28 October.

Panasonic had sued Xiaomi and Oppo based on four patents. The UK High Court has already heard the case management proceedings. In November 2023, UK High Court judge Richard Meade ordered an initial FRAND trial for both Xiaomi and Oppo in October. Two technical trials based on Oppo’s invalidity action will only start two and four months after the FRAND trial. Both Oppo and Xiaomi are challenging the validity of the patents-in-suit in the UK.

FRAND first

Thus, the court is following previous reasoning from London, in that courts should first clarify the FRAND rate before entering into the often lengthy technical trials. As a result, UK proceedings could become quicker, and thus establish the UK High Court as the central court worldwide for determining FRAND rates.

Panasonic and Xiaomi had previously agreed to accept a global FRAND rate set by the court. While Panasonic wanted to attach certain conditions to this, Xiaomi pushed for a greatly accelerated procedure for the summer of 2024 in order to anticipate the first injunctions of the UPC and the German courts, which could also come in the fourth quarter of 2024. Richard Meade took a slightly different view and suspended the technical trials against Xiaomi for the time being.

In contrast, Oppo focused entirely on the technical trials and did not commit to accepting a FRAND rate from the court.

Autumn 2024 decisive

During the case management proceedings in November, Panasonic changed its position on an important detail. The company dropped its original waiver of the enforcement of possible injunction judgments from Germany or the UPC. As a result, the Japanese company reserves the right to enforce such judgments despite the FRAND trial in London.

Meanwhile, Mannheim Regional Court has scheduled an initial hearing in September. Other hearings, including at Munich Regional Court and the UPC, will follow in the subsequent weeks. Xiaomi and Oppo may thus face their first injunctions on the continent by the end of the year.

Hot FRAND summer

The decision by High Court judge Thomas Leech not to grant Xiaomi an interim licence is not the first decision of its kind. Lenovo also applied for such a licence in its dispute with InterDigital, but the UK High Court also rejected this application. Lenovo has since had to withdraw from the German market after the Munich Regional Court ordered the company to cease and desist due to patent infringement.

On 12 July the UK Court of Appeal will announce its judgment in the appeal against the UK High Court’s FRAND-rate-setting judgment. The judgment is seen as a landmark for the future direction of the UK courts in FRAND disputes.

Lenovo has also applied for an interim licence in its dispute with Ericsson. A decision on the application is to be made in October.