NOKIA TECHNOLOGIES OY v OPPO MOBILE UK LTD. and Ors. – [2021] EWHC 2952 (Pat)

4 November 2021 - Case No. HP-2021-000022

http://caselaw.4ipcouncil.com/english-court-decisions/england-and-wales-high-court/nokia-technologies-oy-v-oppo-mobile-uk-ltd-and-ors-2021-ewhc-2952-pat

A. Facts

The claimants are two companies belonging to the Nokia group (Nokia), a multinational telecommunications company headquartered in Helsinki Finland. Nokia holds a large portfolio of patents which are essential to telecommunications standards.

The defendants are subsidiaries of the OPPO group incorporated in the UK, China and Hong Kong (OPPO). OPPO is a consumer electronics company which sells inter alia smartphones and smart devices that utilise various standardised technologies. OPPO had a three-year licensing agreement with Nokia which expired on 30 June 2021. The parties' efforts to negotiate a new license were unsuccessful.

On 1 July 2021, Nokia lodged proceedings against OPPO in the High Court of Justice England and Wales in the UK (UK proceedings). Nokia sought a declaration that its UK patents were valid, standard-essential, and infringed upon by OPPO; a declaration that its licensing offers to OPPO were FRAND; and an award of damages and injunctive relief. Subsequently, Nokia also sought a determination of the FRAND terms for licensing its UK patents and an injunction, in case Oppo would not commit to take a licence on the terms determined by the High Court to be FRAND.

OPPO subsequently filed proceedings against Nokia on 13 July 2021 before the Intermediate People's Court of Chongqing (Chongqing Court) in China (Chinese proceedings). Oppo requested the Chongqing Court to – among other claims – determine the terms of a global licence for Nokia's SEP portfolio. Oppo committed to sign a licence on the terms set by the Chongqing Court. Oppo later applied to the High Court seeking a stay on the UK proceedings, contesting the jurisdiction of English courts over the claims asserted by Nokia as far as the non-UK based defendants are concerned.

On 4 November 2021, the High Court dismissed the defendants' applications and confirmed it had jurisdiction to consider the claims raised by Nokia.
 

B. Court's Reasoning

1. Jurisdiction

In determining whether it had proper jurisdiction to make judgement on the claims before it, the court first distinguished the UK domiciled defendants and the non-UK domiciled defendants. Regarding the latter, and whether the court had the power to serve notice on a foreign defendant domiciled out of jurisdiction, the court concluded that the fundamental question was whether Nokia had shown 'that in all the circumstances England was clearly or distinctly the appropriate forum for the trial of the dispute.' [1]

As regards the defendants domiciled in the UK, they sought a stay on legal proceedings in light of their argument that another forum, namely the Chongqing court in China, was more appropriate. [2]
 

Forum Conveniens v Forum Non-Conveniens

In assessing whether to grant the defendants application to stay the proceedings, the court referred to the prior case of Spiliada Maritime Corporation v Cansulex Limited [1987]. [3] In that case, the court noted that in cases where a claimant is entitled to initiate proceedings in their country, the court will only grant a stay on proceedings if the defendant(s) can satisfy the court that an alternate forum is more appropriate; this is known as forum non-conveniens.Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 para 24 Meanwhile, in circumstances where a claimant is seeking to instigate an action against a foreign, non-domiciled defendant, the court will only allow them to do so if the claimant can satisfy the court that England is the most appropriate forum to try the action; this is forum conveniens. However, regardless of the arguments for a forum elsewhere, a plaintiff will be allowed to pursue their action in England if it would be unjust to confine them to seek remedies from a foreign forum. [5] As neither the claimant nor the defendants made any distinction between the issue of forum conveniens and non-conveniens during the proceedings, the court found that there was a singular issue to be tried: whether England was the appropriate forum for the proceedings to be tried. [6]
 

The existence of an alternate jurisdiction

To determine if England was the appropriate forum to host the proceedings in question, the court referenced the Supreme court decisions of Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd and Conversant Wireless Licencing SARL v Huawei Technologies Co Ltd and ZTE [2020] UKSC 37 [7] (hereinafter Conversant) in which the court affirmed that the suitability of England as a forum for the proceedings is contingent on the existence (or not) of an alternate forum in which the matter could be tried.Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 para 28 In line with this decision, and citing the case of OPPO v Sharp, the court determined that the defendants had demonstrated the existence of an alternative forum in which the proceedings could be held, namely China. [9]
 

Forum Conveniens and the nature of the dispute.

Having established the existence of an alternative forum where the proceedings could be held, the court sought to answer the question of forum conveniens i.e., which of the available forums (England or China) was the most appropriate. To do so, the court again referenced again referred to the Supreme Court's ruling in Conversant in which the court affirmed that when determining the most appropriate forum to hear a case, the court should first accurately define the nature of the dispute in question. [10] Indeed, the supreme court in Conversant reaffirmed the view that a when 'dispute involves determining infringement, essentiality and validity of UK patents… A UK Forum is clearly the most appropriate forum, indeed the only appropriate forum” for such disputes to be tried.Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 para 40; Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd and Conservant Wireless Licencing SARL v Huawei Technologies Co Ltd and ZTE [2020] UKSC 37, para 104
 

The correct characterisation of the present dispute

The defendants argued that the case in hand differed from that of Conversant on several counts. Firstly, in Conversant, England was the only forum available to settle the dispute. By contrast in this case, China was an alternative jurisdiction where the dispute could be tried and was also the jurisdiction where the global FRAND determination would be settled.Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 Para 41 Secondly, the defendants contended that 'if all that matters when deciding the appropriate forum is that this is an action for infringement of a UK patent, a UK jurisdiction will always be the appropriate forum for settling FRAND terms.' [13] The court rejected the defendants arguments and clarified that the the Supreme court's ruling in Conversant, 'applies equally to the dispute in the present case,' [14] and concluded that Nokia's claim is accurately characterised in the same way as the claim in Conversant. [15] The court then went on to answer the question of forum conveniens, ruling that as the case in had is characterised in the same way as in Conversant, England is the appropriate forum to hear the dispute. [16]
 

Arguments for a stay on proceedings

The defendants submitted five arguments in support of their application for a stay. First, they submitted that the absence of a stay would result in concurrent proceedings in England and China. They argued this would be a waste of resources and could lead to irreconcilable judgements. [17] Secondly the defendants claimed that if FRAND terms were settled in China, a result would be obtained much faster. [18] The defendants third argument was that Nokia could seek a 'carve out' from the terms set in China so as that it would exclude a UK license. [19] Fourthly, the dispute is more closely linked with China as 50% of device sales occurred in China compared to just 0.5% in the UK. [20] Finally, the defendants submitted that the implications of not granting a stay would be that SEP holders would always choose a jurisdiction in which FRAND terms are to be settled, to suit their best interests. [21]

Nokia offered several counter arguments. Firstly, Nokia noted that regardless as to whether the proceedings in Chongqing went ahead, it would not solve the FRAND issues before the English court, and therefore there would be a FRAND trial in England in any event. [22] Regarding concurrent proceedings in England and China producing irreconcilable judgements, Nokia noted that two different judgements are not necessarily irreconcilable, claiming that 'more than one set of terms may be FRAND.' [23] Furthermore, Nokia submitted that following proceedings in China, it would be prejudiced by the likelihood that the royalty rate set there would be lower than the rate settled by the English court. Further to this point, Nokia argues that the Chinese court would be applying Chinese law when calculating a FRAND rate, however Nokia submitted that it was entitled to have rates set by a court applying French law. Nokia also submitted other arguments including the importance of the English language to the dispute and the experience of the English court in FRAND disputes. [24]

Responding to the defendants' arguments about speed of judgement, the court concluded that there were too many variables and uncertainties from which any reliable conclusions could be drawn. The court assessed the estimates of timelines for a final verdict in both England and China and concluded that there 'would not be much in it' in terms of one jurisdiction finalising proceedings quicker than the other. [25]
 

Whether the Chongqing court would settle lower royalty rates

To assess the validity of Nokia's claim that the court in Chongqing would set a lower rate than the English court, the court examined a paragraph from the first instance proceedings in Conversant. There, the court noted that royalty rates in China have been lower than in other parts of the world and concluded that that no SEP owner 'would consent to have the applicable royalty rate determined in a jurisdiction where the rates are lower than the rest of the world.' [26] However, the court reverted to the agreement made by Nokia and the defendants 'that the Chongqing court, when it rules on royalty rates, it will do so justly. On that basis, the rate decided will be FRAND.'Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 Para 98 The fact that both parties had agreed that the Chongqing court would rule in a just manner, was a declaration that the resulting judgement would be FRAND.
 

The Relevance of French law

The court also addressed Nokia's claim about the relevance of French law. Once an SEP holder makes a declaration to ETSI, it is under an obligation to offer licenses on FRAND terms, and this obligation is governed by French law. [28] This was accepted common ground between the parties to the depute. [29] However, the court noted that whilst the obligations created by a declaration to ETSI are governed by French law, it does not necessarily follow that the terms offered on foot of that declaration be recognised as FRAND according to French law. [30] Furthermore, the court opined that the Chongqing court will very likely assess FRAND terms in accordance with Chinese law, however this does not mean that FRAND will be assessed in a manner that differs from other jurisdictions. [31]
 

Discussion

The court first addressed the defendant's argument that the claimant should not be allowed to select the jurisdiction for the settlement of FRAND terms. [32] The court commented that the current framework for the settling of global licences is not satisfactory noting that whilst it is not a 'recipe for chaos' as suggested by the defendants, it does encourage expensive concurrent litigation in multiple jurisdictions. [33] To remedy this, the court reiterated previous suggestions from the supreme court for the establishment of an alternative international mechanism for resolving such disputes. [34] Regarding Nokia's assertion that it should be able to choose the jurisdiction which will likely offer FRAND terms most favourable to it, the court noted that this could lead to a 'race to the top' in terms of royalty rates between jurisdictions which would not be a positive outcome for the telecommunications industry. [35] However, the converse is also true. If implementors could select any jurisdiction that offered the lowest FRAND terms available, this would lead to an equally unattractive race to the bottom. [36]

Furthermore the court highlighted that whilst the disadvantages inherent to concurrent proceedings help to establish the benefits of resolving FRAND terms in a singular forum, they do not assist in determining what the appropriate forum should be. [37] In light of this, the court rejected the defendants suggestion that Nokia could ask the Chongqing court to carveout the UK from any settled terms as; a) the Chongqing court would be unlikely to agree to this, and b) to do so would erode the very purpose of a global license. [38]

Regarding Nokia's arguments in relation to the relevance of the English language, and the experience of English courts, the court dismissed their relevance, in particular noting that England has only dealt with one FRAND trial. [39] In light of all the arguments put forward by both sides, the court was not convinced that the balance of justice between the parties was tipped in either direction of stay or no stay. [40]

The court dismissed the applications of the defendants and refused to stay proceedings. [41]

• [1] Ibid, para 22
• [2] Ibid, para 23
• [3] Spiliada Maritime Corporation v Cansulex Limited [1987] para 464
• [4] Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 para 24
• [5] Ibid, para 24
• [6] Ibid, para 26
• [7] Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd and Conversant Wireless Licencing SARL v Huawei Technologies Co Ltd and ZTE [2020] UKSC 37.
• [8] Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 para 28
• [9] Ibid, para 30
• [10] Ibid, Para 36; Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd and Conservant Wireless Licencing SARL v Huawei Technologies Co Ltd and ZTE [2020] UKSC 37, para 94-95
• [11] Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 para 40; Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd and Conservant Wireless Licencing SARL v Huawei Technologies Co Ltd and ZTE [2020] UKSC 37, para 104
• [12] Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 Para 41
• [13] Ibid para 42
• [14] Ibid para 43
• [15] Ibid para 47
• [16] Ibid, para 48
• [17] Ibid para 60
• [18] Ibid para 61
• [19] Ibid, para 62
• [20] Ibid, para 63
• [21] Ibid para 64
• [22] Ibid, para 65-66
• [23] Ibid, para 67
• [24] Ibid, para 72-73
• [25] Ibid, para 77
• [26] Ibid Para, 95; and Conservant Wireless Licencing SARL v Huawei Technologies Co Ltd [2018] EWHC 808
• [27] Nokia Technologies Oy v Oppo Mobile UK Ltd. And Ors. – [2021] EWHC 2952 Para 98
• [28] Ibid para 99
• [29] Ibid, para 100
• [30] Ibid, para 105
• [31] Ibid, para 106
• [32] Ibid, para 115
• [33] Ibid, Para 116
• [34] Ibid
• [35] Ibid, Para 117
• [36] Ibid, para 118
• [37] Ibid, para 122
• [38] Ibis, para 123
• [39] Ibid, 124-125
• [40] Ibid, para 126
• [41] Ibid para 141