Lenovo Group Limited & Ors v Telefonaktiebolaget LM Ericsson (publ) & Anor

The court considered competing applications on jurisdiction, strike-out and permission to amend in complex cross-border disputes about standard-essential patents (SEPs) and FRAND obligations under the ETSI IPR. The applicable procedural principles included the merits tests for strike-out (CPR 3.4(2)), permission to amend (CPR 17.3) and permission to serve out (CPR 6.37 / PD 6B) which were treated as requiring a coherent pleading, adequate particulars and evidential support. The court applied the Spiliada two-stage forum conveniens analysis and relevant authorities on stay and expedition.

Concretely, the court found there was a realistic prospect of Lenovo's claims for (i) a FRAND injunction, (ii) FRAND declarations and (iii) interim declarations, and therefore refused to strike out and granted permission to amend in large part. The court declined to order a case-management stay behind the parallel EDNC proceedings, in part because the EDNC trial was unlikely before late 2026 and because there was a realistic possibility the EDNC might not determine global FRAND terms. The court directed further case management to set a realistic timetable for trial and for the interim-declaration application.

Background and parties: Lenovo (claimants) and Ericsson (defendants) are major owners and implementers of ETSI-encumbered SEPs and have long-running global licence negotiations. D1 (an Ericsson group company) owns UK patents challenged by Lenovo (the "Challenged Patents"). C2 owns a UK SEP asserted by Lenovo (the "Lenovo Patent"). Both groups have given ETSI undertakings under Clause 6.1 of the ETSI IPR (the FRAND Commitment).

Procedural posture and relief sought: These are first-instance applications in England and Wales arising from Part 7 proceedings issued 13 October 2023. Lenovo sought, inter alia, declarations of SEP essentiality and infringement, revocation/invalidity of the Challenged Patents, FRAND Declarations about the effect and scope of Ericsson's FRAND Commitment, a FRAND injunction restraining Ericsson from infringing the Lenovo Patent pending entry into a FRAND licence, and interim declarations about the form of an interim licence. The Defendants challenged jurisdiction in part, applied to strike out aspects of the claim, sought a stay on case-management grounds behind parallel proceedings in the Eastern District of North Carolina (EDNC), and opposed acceleration.

Issues framed by the court: (i) Whether the proposed amendments and causes of action (notably the FRAND injunction, FRAND declarations and interim declarations) satisfied the relevant merits tests for amendment, strike-out and service out; (ii) Whether the English court had and should exercise jurisdiction in the face of parallel EDNC proceedings; (iii) Whether a case-management stay was justified; and (iv) Whether the action should be expedited.

Court reasoning and findings:

• The court adopted established interlocutory merits principles: a claim must be coherent, properly particularised and supported by evidence that gives it some degree of conviction (Kawasaki approach).
• The English court has jurisdiction over the claims against D2 (an English company) and, subject to gateway analysis under PD 6B and AK Investment criteria, may permit service out on D1. Claims passing through Gateways 4A and 9 were recognised as available in the circumstances (FRAND declarations and injunction respectively).
• On the contested substantive prospects, the court found a realistic prospect that the FRAND injunction, FRAND declarations and interim declarations could be granted and therefore the proposed amendments met the merits test. Some drafting defects in the amended pleading were identified and to be corrected.
• The court examined the EDNC parallel proceedings and identified a material risk that the EDNC might not determine global FRAND licence terms (owing to how the pleadings were framed and the different possible approaches to analysing SSO obligations), and the EDNC was unlikely to reach trial before late 2026. For those reasons and because no "rare or compelling" case for a stay was shown, the court refused a case-management stay.
• The court accepted there was a good reason to consider expedition (prejudice from foreign injunctions and business disruption) but deferred a final decision on expedition to a further CMC so that the remaining WL Gore expedition factors could be addressed practically.

Subsidiary findings: the judge did not accept at interlocutory stage that Ericsson would necessarily be a net recipient of royalties under any global cross-licence and was not prepared to resolve disputed factual matters on untested witness evidence.

This is a first-instance decision. The court refused the Defendants' strike-out application in large part and granted the Claimants' application to amend their particulars, permitting the amended claims (including the FRAND injunction, FRAND declarations and interim declarations) to proceed subject to correction of drafting defects. The court refused a case-management stay behind the EDNC proceedings because an EDNC trial is unlikely before late 2026 and there is a realistic possibility the EDNC will not determine global FRAND terms; the court also declined to set aside the permission to serve out obtained previously. The court was sympathetic to expedition but deferred a final expedition order pending a further case management conference to address practical timetable and prejudice issues.