Conversant Wireless Licensing S.a.r.L v Huawei Technologies Co Ltd

The Court of Appeal dismissed the appellants' appeal against the High Court's refusal to stay or to refuse service out on forum non conveniens grounds. The court held that the dispute was properly characterised as an action to enforce specific United Kingdom patents (standard-essential patents) and that the proper forum to determine validity, essentiality and relief for those UK patents was the English court. Key legal principles applied included the Spiliada framework on forum non conveniens, the constraint on declining jurisdiction under Article 4(1) Brussels I Recast/Owusu for defendants domiciled in a Member State, and the territorial nature of patent rights contrasted with the international character of a FRAND undertaking. The court rejected the appellants' submission that the dispute should be reframed as a portfolio or global claim to be tried in China, and concluded that recent Guangdong Guidelines and Chinese decisions did not show that the Chinese courts could or would resolve the validity and infringement of UK patents or routinely determine a global FRAND licence without clear consent. The judge's findings on jurisdictional gateways (CPR permission to serve out) and the existence of a serious issue to be tried were not disturbed.

Background and parties:

• Conversant (Luxembourg) sued Huawei (China and UK companies) and ZTE (China and UK companies) in England seeking relief for alleged infringement of four UK patents said to be standard-essential patents (SEPs) and declarations/determinations about whether offers made were FRAND and the terms of any FRAND licence.
• Conversant alleged a global portfolio and sought damages, an injunction (a FRAND injunction), and declarations about the FRAND status of offers. Huawei and ZTE challenged jurisdiction on two grounds: (i) non-justiciability of issues concerning foreign patents in England, and (ii) that England was not the natural or appropriate forum (forum non conveniens) and that service out on the China parties should be refused or stayed.

Procedural posture:

• The judge in the Patents Court (Henry Carr J) dismissed the jurisdictional challenge, finding the claim passed relevant CPR gateways (including gateway for injunctions and gateway 11 for property in the UK) and that there was a serious issue to be tried. The appellant defendants obtained permission to appeal. Subsequent Court of Appeal authority (Unwired CA [2018] EWCA Civ 2344) rendered the justiciability limb effectively unarguable at this level; the appeal therefore concentrated on forum non conveniens.

Issues framed:

1. How should the dispute be characterised for forum conveniens purposes (a local UK-patent infringement action or a global portfolio claim)?
2. Was China an available and clearly more appropriate forum to determine the overall dispute including FRAND terms and patent validity/essentiality?
3. Were the Guangdong Guidelines and recent Chinese decisions such as Huawei v Samsung sufficient to show Chinese courts would or could determine global FRAND licences and adjudicate foreign patent validity/infringement?
4. Could the presence of UK domiciliaries (Huawei UK, ZTE UK) be neutralised so as to require the case to proceed in China?

Reasoning and conclusions:

• The court emphasised that the dispute must be characterised by reference to the totality of the dispute, not merely the claimant's pleading, and that an over-broad characterisation that forces the claimant to sue on different national patents with different facts is inappropriate. The correct characterisation was an action to enforce UK patents and the related FRAND issues as they bear on entitlement to relief for those UK patents.
• On that characterisation, the court held England was the appropriate and indeed the only suitable forum to determine validity, essentiality and relief for UK patents, and the judge had properly reached that conclusion under the Spiliada framework and CPR. The presence of UK-domiciled defendants meant the court could not decline jurisdiction under Owusu; reflexive application of Article 24(4) Brussels I Recast to expand exclusive jurisdiction was rejected.
• The Guangdong Guidelines and the Huawei v Samsung material did not establish that Chinese courts currently determine validity/infringement of UK patents or routinely impose global FRAND licences without consent. On the admissibility of further evidence, the court would have admitted the Guidelines if necessary, but concluded they did not change the result.
• The court also rejected fall-back proposals to sever or stay different parts of the claim or to use case management to defer FRAND determination to China, because a Chinese determination of Chinese patents would not resolve the English claim based on different UK patents.

Result: the appeal was dismissed and the High Court's orders as to jurisdiction and service/ stay were upheld.

Appeal dismissed. The Court of Appeal held that the dispute was properly characterised as an action to enforce United Kingdom patents and related FRAND questions, that the English court was the appropriate forum to determine validity, essentiality and relief for those UK patents, and that the evidence (including the Guangdong Guidelines and recent Chinese decisions) did not demonstrate that China was an available and clearly more appropriate forum to resolve the English dispute. The presence of UK-domiciled defendants meant jurisdiction could not be declined under the Owusu/Brussels I Recast framework.

Appeal from the High Court of Justice, Business and Property Courts (Patents Court), Henry Carr J: [2018] EWHC 808 (Pat). Permission to appeal was granted; appealed to the Court of Appeal which delivered judgment at [2019] EWCA Civ 38. The Court of Appeal treated Unwired Planet International Ltd v Huawei [2018] EWCA Civ 2344 as making the justiciability challenge no longer arguable at this level and therefore focused on forum non conveniens.