Acer Incorporated & Ors v Nokia Technologies Oy

An ITU-T patent licensing declaration creates an enforceable contract for the benefit of third parties. Its obligation is to make a RAND offer capable of acceptance and to grant the resulting licence. RAND terms are objectively determinable, even though their assessment may be complex and more than one set of terms may satisfy the standard.

An offer to arbitrate is not an offer of a RAND licence and, without an arbitration agreement, does not provide an alternative forum or justify a stay. Declaratory relief may be granted where it clarifies the parties’ legal relationship and serves a useful purpose. Interim licence declarations may therefore be made where they assist the parties and do not interfere with foreign proceedings.

The claimants, manufacturers and suppliers of computers, smartphones and televisions, brought three related actions against Nokia concerning patents declared essential to the ITU-T H.264 and H.265 standards. They sought declarations concerning the validity and essentiality of patents, their entitlement to RAND licences, and the terms of interim licences pending a final RAND determination.

Nokia challenged the court’s jurisdiction, relying principally on adjustable arbitration offers and contending that its ITU-T obligation required only good-faith negotiation. It also disputed the availability of declaratory relief under Swiss law, the service-out gateways, forum, full and frank disclosure, and the usefulness and comity of the proposed declarations.

1. Disposition. Nokia’s jurisdiction challenge was rejected. Declarations concerning the ITU-T commitment and the terms of interim licences were granted. The proposed declaration that Nokia would be an unwilling licensor if it failed to offer the interim licence was refused.
2. ITU-T commitment. The signed Licensing Declaration was the principal document forming the contract between Nokia and the ITU-T. It created a contract for the benefit of objectively identifiable third-party beneficiaries and operated as a transferable encumbrance on the patent rights. The commitment required Nokia to make RAND offers capable of acceptance and to grant the resulting licences. Good-faith negotiation was part of the required process, but was not the whole obligation.
3. Swiss certainty rules. Essential terms had to be determined or determinable by objective criteria. This did not require a single mechanical answer. RAND terms could be assessed by a court or tribunal without further agreement or negotiation by the parties. The fact that negotiation remained possible did not invalidate an objectively determinable term.
4. Declaratory relief. Swiss law permitted declaratory relief where the claimant had a substantial interest worthy of protection, including an interest in establishing the validity of an underlying legal relationship for future performance. The relief was procedural and therefore governed by the law of the forum under Rome I principles.
5. Jurisdiction and forum. The claims raised a serious issue to be tried and satisfied the service-out requirements. A claim for a licence concerning UK patents remained within Gateway 11 even where the licence sought was global. Arbitration was consensual alternative dispute resolution, not an available alternative forum in the absence of an arbitration agreement. A case management stay would achieve nothing and risk compelling arbitration.
6. Interim licences. The declarations served legitimate useful purposes in the United Kingdom and did not direct or prevent foreign courts from deciding issues concerning foreign patent rights. The interim sums were calculated at the midpoint between the parties’ proposed rates, with a non-refundable component and a refundable balance adjustable against the final RAND determination.