High Court of England grants Samsung provisional patent license declarations, awaiting conclusion of Fair, Reasonable, and Non-Discriminatory (FRAND) determination.
In a significant development, the Patents Court in England has handed down a landmark decision in the case of ZTE v Samsung, granting Samsung a declaration for an interim licence. This marks the first time a court of first instance in England has issued such a declaration, signalling a progressive and pragmatic approach by English courts to interim FRAND licence declarations.
The Patents Court, in its ruling, has emphasised that interim licence declarations are intended as persuasive, rather than compulsive, measures. These declarations serve as a signal of expectations for good faith negotiations and interim licensing, but they do not prevent other jurisdictions from deciding their own cases.
In the ZTE v Samsung case, Mr Justice Mellor criticised ZTE for acting in bad faith by launching multiple parallel lawsuits to sideline the UK proceedings. The court held that a willing licensor would agree to an interim licence while final FRAND terms are determined. Consequently, a licensor that fails to enter into an interim licence on the terms declared is likely to be declared unwilling and may have to pay the costs of the FRAND trial.
It is worth noting that this decision follows a series of judgments from the Court of Appeal on the same issue. Previous cases like Alcatel Lucent v Amazon and Lenovo v Ericsson saw English courts accept short-term licences during ongoing FRAND disputes, although those cases were eventually settled before final rulings.
However, there is debate and concern within the industry and among patent holders about interim licence declarations potentially serving as de facto anti-suit injunctions that might limit litigation in other jurisdictions. For example, representatives from Nokia and Ericsson have voiced reservations about one jurisdiction effectively controlling FRAND terms globally or limiting litigation in others.
In response to these concerns, the court has made it explicitly clear that the granting of interim licence declarations does not interfere with the proceedings in other jurisdictions, including Chongqing. If multiple courts determine FRAND terms, each court might take account of specific points in the other court's judgment (within sensible limits to avoid going around in circles). The effects of the declaration of unwillingness on proceedings in the courts of other jurisdictions would be a matter for those courts to determine.
In conclusion, English courts have demonstrated a progressive and pragmatic approach by granting interim FRAND licence declarations to facilitate fair negotiations and avoid litigation deadlock. However, they stop short of enforcing these orders as global injunctions that bind other jurisdictions. This reflects a balancing act between fostering goodwill in licensing and respecting international legal sovereignty.
[1] [Court of Appeal judgments on the same issue] [2] [The Patents Court's decision in ZTE v Samsung] [3] [The Patents Court's statement on the consequences for licensors who refuse to enter into an interim licence] [4] [Industry concerns about interim licence declarations]
Intellectual property holders in the industry may find themselves navigating the interplay between interim FRAND licence declarations and banking-and-insurance arrangements, as the financial implications become increasingly significant in the context of patent disputes. Notably, these declarations, while influential, do not preempt the right of other jurisdictions tomake their own decisions in similar cases.
The financial sector should be cognizant of the potential effects of court decisions regarding intellectual property on their portfolios and the associated risks, given the potential for repercussions in multiple jurisdictions as a result of interim FRAND licence declarations.
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