Vestel Elektronik Sanayi Ve Ticaret AS v Access Advance LLC (formerly HEVC Advance LLC) [2021] EWCA Civ 440

<center><span class="news-text_italic-underline">Date: 26 March 2021</span></center>

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Summary

The English court lacked jurisdiction to hear claims regarding the fairness, reasonableness and non-discriminatory (“<span class="news-text_medium">FRAND</span>”) terms of licences offered by Dutch and US companies for certain standard-essential patents (“<span class="news-text_medium">SEPs</span>”) related to high-definition television technology. The claims were not properly characterised as requests for declarations of non-liability for patent infringement, thus falling outside the scope of Article 7(2) of EU Regulation 1215/2012 and CPR PD 6B para 3.1(9). Although the claims involved UK patents, they did not fall under para 3.1(11) as there was no legal claim asserting a right to a FRAND licence.

Abstract

The appellant companies (“<span class="news-text_medium">V</span>”), part of a Turkish group manufacturing televisions, appealed the lower court’s decision setting aside service of the claim form outside of the jurisdiction and ruling that the court lacked jurisdiction to hear V’s claim. The second respondent (“<span class="news-text_medium">P</span>”), a Dutch technology company, owned patents deemed essential to a specific standard for a form of high-definition television technology, while the first respondent (“<span class="news-text_medium">R</span>”), a US company, managed a patent pool for this standard, including P's SEPs. V claimed abuse of a dominant position and sought a declaration that the licence terms proposed by R were not FRAND.

V argued that the English court had jurisdiction over P under Article 7(2) of EU Regulation 1215/2012 because England was the location of the harmful event and over R: (i) under CPR PD 6B para 3.1(9), asserting that the claim was in tort for damage within the jurisdiction; or (ii) under para 3.1(11) because it related to property within the jurisdiction, specifically P's UK patents. The judge ruled that the court lacked jurisdiction and on appeal, V revised their claim, seeking negative declarations concerning the tort of patent infringement and declarations about the FRAND terms for a licence under the UK SEPs in the pool managed by R.

V contended that their claims should be viewed as claims for negative declarations regarding patent infringement and that their claim for a licence under UK patents fell within para 3.1(11), as it related primarily to property within the jurisdiction, despite the patents comprising only a small percentage of the patents in the pool.

Held

The appeal was dismissed.

• <span class="news-text_medium">Negative Declarations in Patent Infringement:</span> A claim for a declaration of non-liability for infringing P's UK SEPs could fall under Article 7(2), as per the <span class="news-text_italic-underline">Folien Fischer</span> case, but V’s claims for FRAND declarations were not properly characterised as declarations of non-liability. The UK court's jurisdiction over FRAND declarations arises from the ability to enforce a contractual obligation for a SEP owner to offer a licence on FRAND terms. However, V did not claim a legal right to a FRAND licence, as the claim for abuse of dominance was abandoned, meaning the declarations sought were not non-liability declarations under Article 7(2).
• <span class="news-text_medium">Claims Regarding Property Within the Jurisdiction:</span> UK designations of European patents are considered property within the jurisdiction under para 3.1(11). However, for a claim to fall under this provision, there must be a legally enforceable right to a FRAND licence under the UK SEPs. Even if the UK patents represented only 5% of the patents in the pool, the subject matter of the claim would still relate to those UK patents. Nevertheless, since V did not assert a legal right to a FRAND licence, their claim did not fall under para 3.1(11), as there was no legal claim involved. This was consistent with the <span class="news-text_italic-underline">Unwired Planet</span> case, which confirmed that a standalone FRAND claim cannot be brought without a legal basis.