Agrégateur de flux

1. Background

The UK Supreme Court delivered the landmark judgment on Unwired Planet v Huawei and Conversant v Huawei and ZTE, [2020] UKSC 37 on 26 Aug 2020. In 2014, the US company Unwired Planet sued Huawei and other smartphone manufacturers for infringing its UK patents obtained from Ericsson. Some of these patents are essential to the 2G, 3G and 4G wireless telecommunication standards set by the European Telecommunications Standards Institute (ETSI), an international standards setting organization (SSO). Since Ericsson and Nokia are subject to various ETSI policies including patent policies, these policies continue to apply after they are acquired by Unwired Planet. The ETSI patent policy requires that holder of patents that are indispensable for the implementation of ETSI standards, referred to as standard essential patents (SEP) , must grant licence to implementers (such as the smartphone manufacturers) on “fair, reasonable and non-discriminatory ” (FRABD) terms. In 2017, Canadian company Conversant filed similar lawsuits against Huawei and ZTE.

Unwired Planet and Conversant proposed to grant the worldwide licence, but Huawei proposed a UK only licence. Huawei believes that the UK litigation only concerns the UK licence and the licence fees paid to resolve disputes under the UK procedure should cover only British patents and not global patents. The UK Supreme Court upheld the High Court and Court of Appeal judgments, ruling that the FRAND licence will need to be global between large multinational companies. If Huawei refuses to pay the FRAND global licence rate determined by the court, the court will issue an injunction restraining Huawei’s sale of infringing products in the UK.

2. Legal Issues

The Supreme Court answers five legal questions: 1. Does the English court have the power or jurisdiction without the parties’ agreement to require the parties to enter into a global licence under a multinational patent portfolio? 2. Is England the proper forum for such a claim? 3. What is the meaning and effect of the non-discrimination component of the FRAND undertaking? 4. Does the CJEU’s decision in Huawei v ZTE mean that a SEP owner is entitled to seek an injunction restraining infringement of those SEPs in circumstances such as those of the Unwired case? 5. Should Court grant damages in lieu of an injunction?

Given our focus on private international law, this note only focuses on the private international law related issue, namely the English court’s “long arm” jurisdiction to grant a global licence for dispute concerning the infringement of the UK patent and to issue an injunction if the global licence rate is not complied.

 

3. Territoriality of Patents and Globalisation of Telecommunication

Telecommunication industry faces the conflict between territoriality of patents and globalisation of telecom products and equipment. Products made in different countries should be able to communicate and inter-operate and keep operational in different jurisdictions. It would be unrealistic to require patent holders to defend their patent country by country. It is also harmful to the industry if SEP holders demand unreasonable licence fees and prohibit the use of its invention within a national jurisdiction. It is unreasonable for consumers if they cannot use their mobiles smartphones or other telecom devices when travel abroad. To reconcile the conflict, the ETSI policy requires the SEP holders to irrevocably license their SEP portfolios on fair, reasonable and non-discriminatory (“FRAND”) terms. The policy reconciles conflict of interest between SEP holders and SEP implementers but does not, at least directly, resolve the conflict between territoriality and globalisation. In terms of the later, the industry practice shows that multinational SEP holders and implementers usually negotiate worldwide licences, bearing in mind that the SEP holders and implementers cannot test validity of each patent of the portfolio in each country. The licence rate is thus based on the understanding that some patents may be invalid in some countries.

The Supreme Court confirmed the territoriality principle. English court only has jurisdiction to determine validity and infringement of the UK patent. But the English court, based on the jurisdiction on the UK patent, has the competence to grant a global licence rate.

This judgment includes a few private international law matters. Firstly, the granting of global licence rate is a matter in relation to applicable law instead of jurisdiction from the private international law perspective. The case concerns the infringement and validity of the UK patents and the English court has no problem to take jurisdiction. After ruling the defendant indeed infringed the valid UK patents the English court moved to remedy. The remedy to the infringement of SEPs is the grant of FRAND rate pursuant to the ETSI policy and industry practice. This, however, does not mean the English court directly treats business custom or ETSI policy as the governing law, which, standing alone, may not be able to acquire the status as other non-state norms under the current legal framework. (Rome I Regulation) They are applied pursuant to the contract principle. The judgment heavily relies on the ETSI policy, including its language and purpose. The court concludes that the ETSI policy creates a contractual arrangement between SEP holders and implementers and it is the intention of the policy to grant global licences for SEP portfolios taking into account of industry practices and the purpose. English courts’ power to determine a global FRAND licence rate is inherently consistent with the ETSI policy, given there is no alternative international forum available. There is no consideration of any choice of law rules, as the court naturally applies these non-state norms as part of the contract between the parties. Relying on contract to seise the power to determine the global rate helps the court to avoid the necessity to determine the validity of foreign patents of the same patent family.

The Supreme Court also considered the forum non conveniens in Conversant case (forum non conveniens was not plead in Unwired Planet). The court refused to accept that China would be the more appropriate alternative forum. Although 64% of Huawei’s sales occur in China and only 1% in the UK and 60% of the ZTE’s operating revenue in the first six months of 2017 was from China and only 0.07% from the UK, the Supreme court held that Chinese courts might not assume jurisdiction to determine the global FRAND term. It seems possible that if China, or any other country, which maybe the most important global market for the disputed patents, follows the UK approach to grant global licence for SEP portfolios, the English court may apply forum non conveniens to decline jurisdiction. In fact, Chinese law does not prevent a Chinese court from issuing licence with broader territorial coverage, though there is not yet any case on this matter. The “Working Guidance for Trial of SEP disputes by the Guangdong Province Higher People’s Court (for Trial Implementation)” of 2018 provides in Art 16 that if the SEP holder or implementer unilaterally applies for the licence covering areas exceeding the court’s territory, and the other party does not expressly oppose or the opposition is unreasonable, the court could determine the applied licence rate with broader geographic coverage.

A more controversial point of the judgment is that the Supreme Court concludes that the ESTI policy would allow the court to issue injunction if the implementer refuses to pay the global licence rate. It is important to know that the ESTI policy does not expressly state such an effect. The UK court believes that an injunction would serve as a strong incentive for the patentee to accept a global licence. Damages, on the other hand, may encourage implementers to infringe patents until damages are applied and received in each jurisdiction. This conclusion is rather surprising as the injunction of SEPs in one jurisdiction may have the potential to disturb the whole telecommunication market for the given manufacturer. There is even argument that the purpose of ESTI is to prohibit injunction for SEPs (here; and here) The use of injunction may not “balance” the conflicting interests, but significantly favours the SEP holders to the disadvantage of the implementers

4. Forum Shopping and Conflict of Jurisdiction

It is important to note that regardless of the current geopolitical tension between the US and China, the UK Supreme Court’s judgment should not be interpreted as one that has taken the political stance against China’s High-Tech companies. (here) It upholds the judgments of the lower courts dated back to 2014. It is also consistent with the principle of judicial efficiency, protection of innovation and business efficacy. Although the final result protects the patent holders more than the implementers, it is hard to argue anything wrong in terms of policy. Furthermore, since Huawei and Unwired Planet had already settled and the rate set by the court had been paid, this judgment will not result in additional payment obligations or an injunction. (here) Finally, although Huawei lost this case as the implementer, Huawei is also the biggest 5G SEP holder. Pursuant to this judgment, although Huawei has been banned from the UK’s 5G network, it can still require other 5G implementers for a global FRAND licence rate and apply for injunction upon a refusal.

If there is any political drive, it may be the intention to become an international litigation centre for patent disputes after Brexit. This judgment allows the English court jurisdiction to determine a global licence rate simply based on the infringement of a UK patent, no matter how small the UK market is. The one-stop solution available in the English court would be particularly welcome by patent holders, especially SEP holders, who would no longer need to prove validity in each jurisdiction. This judgment also enhances the negotiation power of the SEP holders versus implementers. It is likely that more FRAND litigation would be brought to the UK.

On the other hand, some implementers may decide to give up the UK market, especially those with small market share in the UK. Some companies may decide to accept the injunction instead of paying high global licence rate. This may also suggest that the UK consumers may find it slower and more expensive to access to some high-tech products.

Furthermore, the Supreme Court’s judgment does not depend on any unique domestic legislation but the ETSI contractual arrangement which applies to its members and the industry practice and custom. There is no barrier for other countries, including China, to follow the same reasoning.  It is possible many other countries may, fully or partly, follow this judgment. If the courts of multiple countries can set the global FRAND rate and they apply different standards to set this rate, forum shopping and conflict of jurisdictions may be inevitable. Anti-suit injunction and anti-enforcement injunction may be more frequently applied and issued. The China Supreme Court IP Tribunal recently restrained the Conversant from applying the German court to enforce the German judgment in a related case, which awards Conversant the FRAND rate 18.3 times of the rate awarded by the Chinese courts on the infringement of the Chinese patents of the same family. This is called act preservation in China with the similar function as the anti-enforcement injunction. ((2019) Supreme Court IP Tribunal Final One of No 732, 733 and 734) This case suggests Chinese courts would be ready to issue the similar act preservation order or injunction to prevent the other party from enforcing a global FRAND rate set by the foreign court against the Chinese implementers, whether or not Chinese court could issue the global FRAND licence. The long term impact of the Unwired Planet v Huawei may be the severer competition in jurisdiction between different courts which may require reconciliation either through judicial cooperation arrangement or through the establishment of a global tribunal by the relevant standard setting organisation.

Cali Apartments
Liberté d'établissement
Une réglementation nationale soumettant à autorisation la location, de manière répétée, d’un local destiné à l’habitation pour de courtes durées à une clientèle de passage qui n’y élit pas domicile est conforme au droit de l’Union

Autriche / Commission
Aide d'État
La Cour de justice confirme la décision de la Commission approuvant les aides britanniques en faveur de la centrale nucléaire de Hinkley Point C

Tilman Imm has written a thesis on the mechanism of equivalence in Financial and Capital Markets Law (Der finanz- und kapitalmarktrechtliche Gleichwertigkeitsmechanismus – Zur Methode der Substitution in Theorie und Praxis).

The author has kindly provided the following summary:

The concept of equivalence or substituted compliance is of considerable importance in today’s financial and capital market law. This is a regulatory mechanism which, roughly speaking, works as follows: A rule provides for favourable legal consequences – such as the registration of a company for the provision of investment services – in the event that its object of regulation is already achieved in an equivalent manner by the regulations of another standard-setting body. Numerous implementations of this mechanism are to be found in the European Union’s regulations on third countries, which have recently gained considerable relevance against the backdrop of Brexit. So far, however, there has been a lack of clarity in practice and science about various aspects of equivalence.

This dissertation shows that the widespread equivalence rules are cases of legally provided substitution and demonstrates the practical consequences of this finding. For this purpose, first of all, the current state of knowledge in private international law regarding the instrument of substitution is examined. This includes the term, object and autonomy of substitution as well as its preconditions in order to define a conceptual understanding for the further course of the analysis. Especially the substitution requirement of equivalence is analysed more closely, which entails an examination of the criterion of functional equivalence and the occasional criticism of the requirement of equivalence.

The second part of the thesis turns to the equivalence mechanism in financial and capital market law. At the beginning, the so-called third country regime of European financial and capital market law is presented in an overview to illustrate to what extent and under which conditions third country companies can become active in this area of the internal market. This is followed by an analysis of the equivalence mechanism, which includes not only the history and functions of this regulatory technique, but also the determination of equivalence by the European Commission or national authorities. In this context, the main thesis of the treatise, namely that equivalence rules are cases of legally provided substitution, is reviewed and the widespread criticism of the mechanism is presented and acknowledged.

Finally, the third part of the dissertation features the exemption options for third-country companies within the framework of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) to show how the equivalence mechanism works in practice and to what extent its potential can be limited by regulatory deficits, starting with an analysis of the equivalence of US law in terms of Section 46 WpHG. This is followed by an examination of Section 91 WpHG, which has recently been added to the WpHG, and includes a critical examination of the status quo with regard to the equivalence requirement of this provision.

Pourvoi c/ cour d'appel de Toulouse, 20 février 2020

Cour d'appel d'Aix-en-Provence, 26 aout 2020

Tribunal judiciaire de Bordeaux, 27 août 2020

Tribunal de police de Rouen, 1er septembre 2020

Pourvoi c/ Cour d'appel de Fort de France, 30 avril 2020

Pourvoi c/ Cour d'appel d'Aix en Provence, 3 juillet 2020

Cour d'appel d'Aix en Provence, 31 août 2020

Pourvoi c/ Cour d'appel de Nîmes, 6 février 2020

Pourvoi c/ Cour d'appel de Lyon, 23 juillet 2020

The author of this post is Carlos Santaló Goris, research fellow at the MPI Luxembourg and PhD candidate at the University of Luxembourg.

On 3 August 2020, a Polish notary referred a request for a preliminary ruling to the Court of Justice of the European Union (“CJEU”).

The facts are simple: a Ukrainian citizen living in Poland asked a Polish notary to draft her will. She wanted Ukrainian law to apply to the succession. The notary refused, arguing that the law applicable to the succession cannot be chosen under the 1992 Ukrainian-Polish bilateral treaty on civil and criminal matters.

The applicant complained against the refusal; she claimed that the Succession Regulation, which allows the de cujus to choose the law of her nationality to rule the succession (Article 22), should apply instead. According to Polish law, the complaint procedure is to be brought before a notary.

The CJEU is asked to interpret the Succession Regulation, as follows:

1. Must Article 22 of [the Succession Regulation] also be interpreted as meaning that a person who is not a citizen of the Union is also entitled to choose his maternal law as the law applicable to the succession as a whole?
2. Is Article 75 in conjunction with Article 22 of [the Succession Regulation] to be interpreted as meaning that, where a bilateral convention binding a Member State to a non-member country does not govern the choice of law on succession but designates the law applicable in matters of succession, a national of that non-member country who resides in a Member State bound by that bilateral agreement may choose the law?
3. In particular: must a bilateral agreement with a non-member State expressly preclude the choice of a particular law, and not only the status of succession by means of objective criteria, in order for its provisions to prevail over Article 22 of [the Succession Regulation]? does the freedom to choose the succession law and to standardize the applicable law by choosing the law — at least to the extent defined by the EU legislature in Article 22 of [the Succession Regulation] — fall within the principles underlying judicial cooperation in civil and commercial matters within the European Union and cannot be affected even in the event of the application of bilateral conventions with third countries which prevail over Regulation No 650/2012?

The questions

In my view, the CJEU will not struggle to provide an answer to the first question of the request. The Succession Regulation applies to the wills drafted by authorities of the Member States; Article 20 declares its “universal application”; Article 22 does not make any difference between “States” and “Member State”; like EU nationals, third-State citizens can choose their national law.

The second question is trickier. It starts with the interpretation of the last sentence of Article 75(1) of the Regulation (“this Regulation shall not affect the application of international conventions to which one or more Member States are party at the time of adoption of this Regulation and which concern matters covered by this Regulation”). Since the bilateral convention has no provision on the choice of law in relation to successions, it could be argued that this particular aspect is not foreseen, hence the Succession Regulation applies.

However, the convention does rule on the law applicable to movable and immovable estate, just like the Regulation, and therefore it should prevail. Should this be the case, the second part of the question would come into play. The CJEU is asked here to produce a declaration on values, likely to end up with the need to strike a balance – or not, for there is no doubt the negotiators knew about the contents of the conventions Article 75 intends to preserve, and about the fact that choice of law is not a widely accepted rule in succession matters. Should the principle of choice of law always prevail, Article 75 would be deprived of much of its sense.

Are Notaries Courts (in the Sense of Article 267 TFEU)?

Rather than the actual questions of the preliminary reference, what is more intriguing is whether Polish notaries deciding on complaints against the refusal to carry out a notarial act can address themselves directly to the CJEU via the preliminary reference. According to Article 267 of the TFEU, only courts can make preliminary references. In C-658/17, W.B., the CJEU determined that Polish notaries issuing a certificate of succession are not “courts” for the purpose of the Succession Regulation. Nonetheless, whether a notary reviewing a decision taken by another notary fits with the Article 267 of the TFEU is something different.

With a view to provide an autonomous notion, the CJEU has elaborated a list of prerequisites a domestic authority needs to comply with to be considered a court under Article 267: the body under examination must have been established by law, be permanent, have compulsory jurisdiction, adjudicate in an inter partes procedure, apply the rules of law, and be independent (C-54/96, Dorsch Consult, para. 23).

The analysis of the admissibility of the preliminary reference, focused on whether a notary fulfils the conditions just mentioned, will surely be the first step of the CJEU in the case at hand. In this regard, it is worth mentioning that the Polish Supreme Court and the Polish Constitutional Court have already explored whether, under Polish law, notaries acting in complaint procedures like the one at stake have the status of courts, and concluded that they may be considered first instance courts, performing ancillary functions of the administration of justice.

At any rate, the CJEU is not bound by the determinations of the national courts. It will decide on the basis of its own findings. And it will do so at a moment when the whole Polish judicial system is under suspicion (see C 354/20 PPU, and soon, C-412/20 PPU,  both widely reported in the press), and the future of judicial cooperation, also in civil matters, is an issue of legitimate concern.