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UK – Godo Kaisha IP Bridge 1 v Huawei Technologies

16 Jul 2021

Godo Kaisha IP Bridge 1 v Huawei Technologies Co. Ltd & Ors [2021] EWHC 1261 (Pat) (14 May 2021)

In this Patents Court judgment deputy High Court Judge Mr Nicholas Caddick Q.C. set aside the Order of Chief Master Marsh insofar as he permitted alternative service on two of the defendants, Huawei Technologies Co. Limited and Huawei Device Co. Limited (the “Two Defendants”).

Good Kaisha IP Bridge 1 (the “Claimant”) claims to own patents declared to be essential under the IPR Policy of the European Telecommunications Standards Institute and under that policy the Claimant is obliged to grant licences to willing licensees on terms that are fair reasonable and non-discriminatory (“FRAND”).

The Two Defendants are incorporated under the laws of the People’s Republic of China which is a member of the Hague Service Convention (the “HSC”). Huawei Technologies (UK) Co. Limited (the “Third Defendant”) is a UK subsidiary of Huawei Technologies Co. Limited. The Claimant has brought various proceedings against the defendants in Germany and the UK with respect to its standard essential patents (“SEPs”) and is seeking injunctions.

On 22 February 2021 Chief Master Matthew Marsh made an order permitting the Claimant to serve the UK proceedings on the Two Defendants out of the jurisdiction and, in place of service pursuant to the provisions of the HSC, to serve those Two Defendants in the UK by two alternative means.

The two alternative means were

(i) the UK registered office address of the Third Defendant and
(ii) the London offices of solicitors Allen & Overy LLP. Service by those means took place on 25 February and 27 February, respectively.

Set Aside Application
The challenge to the grant of permission for service on the Two Defendants by alternative means was successful. To understand how an order for alternative service on a defendant in a country that is a signatory to the HSC (such as China) can be justified, the Judge distilled his analysis of numerous authorities and summarised the principles as follows:

1. A court has the power under CPR 6.37(5)(b)(i) and 6.15(1) to make an order permitting service by an alternative method/address when permission has been given to serve a claim form out of the jurisdiction;
2. The court must be satisfied that there is “a good reason”;
3. Where the defendant’s country is a party to a convention as regards service, then service in accordance with that convention is “the prime way of service”. Further, because China has stated its objection under Article 10 of the HSC to service otherwise than through the authority that it has designated to deal with the service under the HSC, an order for alternative service will only be made in “exceptional circumstances”;
4. Determining “exceptional circumstances” involves balancing various factors and each case will turn on its own particular facts;
5. Mere delay or additional expense arising from having to serve in accordance with the HSC do not on their own constitute exceptional circumstances; and
6. Examples of exceptional circumstances are set out in M v N [2021] EWHC 360 (Comm) and include the need for urgent interim injunctive relief.

Application of these Principles
The Judge considered the evidence from each side with respect to the disputed likely delay if service had to be effected in accordance with the HSC and decided that it seemed likely that the service could take up to 12 months. The Two Defendants had offered to accept alternative service if the service under HSC took more than 11 months. However, the Judge did not consider that a cut-off of 11 months could be deemed to be of such exceptional length as to be incompatible with the due administration of justice.

To justify an order for alternative service there had to be some other factor or combination of factors that, taken together with delay, would give rise to exceptional circumstances. The argument made by the Claimant that any delay in service extends the delay to remuneration for their SEPs was not deemed to be exceptional as it is “fairly normal as opposed to exceptional” in litigation. The fact that the Claimant had been in negotiations with the defendants for 6 years before bringing proceedings also did not suggest that this form of prejudice was particularly serious or exceptional.

One possible exceptional circumstance would be if the Two Defendants were guilty of “holding out” as defined by the Supreme Court in Unwired Planet v Huawei. There was no clear evidence in this case of such holding out and because each side had argued that their proposed terms are FRAND, until the issue is resolved, the Judge found that he was not in a position to say whether the Two Defendants are holding out.

The Judge also dismissed the Claimant’s concern that the related Chinese proceedings would move more quickly than the English action, allowing a Behaviour Preservation Order (“BPO”) of some other form of Order from the Chinese court that would operate to fetter the discretion of the English court.

The Judge did consider that delaying the cases of the Two Defendants relative to the Third Defendant in the English proceedings to be a relevant factor. However, this situation is a fairly normal one in patent litigation and the proceedings should be capable of case management to minimise further unnecessary delay. Again, this factor was not considered to be exceptional.

Further, although he acknowledged that the Two Defendant’s acts in not agreeing to accept alternative service could be interpreted as “tactical gamesmanship”, he stated that abiding by the process for service agreed under the HSC is a matter of international comity and it is therefore a game which the Two Defendant’s “are entitled to play”.

Accordingly, the Judge concluded that the factors identified by the Claimant did not, whether taken in isolation or collectively, amount to the exceptional circumstances required to justify departure from service in accordance with the HSC.

The defendants successfully set aside the Chief Master’s decision permitting alternative means of service, thereby mandating service according to the HSC.

The full judgment can be accessed here.

Headnote: Allison Swinbank and Amy Crouch, Simmons & Simmons LLP