Conversant Wireless Licensing S.A.R,L v (1) Huawei Technologies Co. Ltd., (2) Huawei Technologies (UK) Co. Ltd, (3) ZTE Corporation (4) ZTE (UK) Limited, High Court of Justice, London, UK, 16 April 2018, [2018] EWHC 808 (Pat)

Are the UK Courts an appropriate forum for hearing a global FRAND dispute where alleged infringement of Chinese patents by Chinese companies account for the bulk of the dispute? That was the core question in a judgement issued by Mr Justice Carr.

The case arose due to a challenge by the defendants: Huawei and ZTE and their respective UK subsidiaries to the jurisdiction of the English Court in relation to a claim for infringement of UK patents, where the relief sought was the determination of a global FRAND licence. The defendants argued that both their business were overwhelmingly based outside of the UK. In the case of the Huawei defendants, China accounted for 56% of the Huawei group’s worldwide sales whereas the UK accounted for 1% of the worldwide sales on which royalties were claimed. In the case of the ZTE defendants 60% of ZTE’s operating revenue came from China with only 0.07% of the turnover being generated in the UK.

It was accepted that the English courts had no jurisdiction to declare foreign patents invalid. However, the UK courts had exclusive jurisdiction over the validity of the UK patents involved in the dispute and the English Courts were the appropriate forum under Article 4(1) of the Brussels I Recast Regulation for suing the UK subsidiaries. On that basis there was no need to consider the principle of forum non conveniens in respect of the UK defendants.

Considering the principle of forum non conveniens in respect of the Chinese defendants, the Court held that it was doubtful on the basis of the evidence before the Court that the Chinese courts would accept jurisdiction of a dispute which turned on the terms of a global FRAND licence as the Chinese courts interpreted their jurisdiction narrowly and there was no explicit basis for entertaining such a claim in the Chinese Courts in Chinese law. The Court therefore rejected the Chinese defendants’ application for a stay on the grounds of forum non coveniens as it was not established that the Chinese Courts was an alternative forum which would hear the dispute.

Separately, the Court considered whether the service of the proceedings on the Chinese defendants had been properly effected and ruled that it had not. The Court, however, considered that the case was a case where service outside of the jurisdiction should be permitted and gave permission for substituted service to be effected and allowed the claims to continue.

A copy of the judgement in the present case can be found here.

Headnote: Nicholas Fox, Simmons & Simmons LLP