Richard Lloyd

The growing status of London’s High Court as a venue of choice for licensing disputes involving standard essential patents (SEPs) was reinforced this week when Conversant filed a lawsuit against ZTE and Huawei, accusing the Chinese telecoms giants of patent infringement (you can see Conversant’s statement announcing the case here).

The four patents that are being asserted herald originally from Nokia and relate to 2G, 3G and 4G wireless technology. Conversant acquired the assets in 2011 as part of a portfolio of around 2,000 rights that it picked up from the Finnish company.

The NPE has seen mixed results in its attempts to monetise the portfolio, although recently it has notched up significant court victories in the US against LG and Apple. Despite those wins, filing this latest case in London shows that, like many patent owners that have become frustrated with the US courts, Conversant believes that in certain circumstances Europe offers a much more conducive climate for patent assertion.

In its eight-page claim Conversant highlights both the essentiality of the patents in question and insists that it has made the grants available for license to both ZTE and Huawei on FRAND terms.

The suit comes just three months after the London court issued a highly significant judgment in Unwired Planet v Huawei on the licensing of SEPs under FRAND terms. That decision, from Mr Justice Birss, stated that a FRAND licence should typically be worldwide and laid out a framework for calculating FRAND royalty rates. In a subsequent judgment Justice Birss then introduced the concept of what has become known as the “FRAND injunction”, which although based on a normal injunction is subject to special provisions designed to reflect the unique complications created by patents that have been declared subject to FRAND terms. The case is now the subject of an appeal.

Although he left the company before the Unwired Planet v Huawei case reached a conclusion, the CEO of the NPE during much of the time it was being argued was Boris Teksler, who is now in charge of Conversant. In recent years the former Apple and Technicolor IP executive has become increasingly vocal on some of the problems around SEP/FRAND licensing, which has long been dogged by criticisms of its lack of transparency. While at Unwired Planet, Teksler also expressed his admiration for the way in which the courts in the UK had handled cases the firm was involved in.

Should the patents in this current suit be found valid and infringed, and a decision handed down before any settlement is reached then it may only be the second FRAND/SEP dispute to reach a conclusion in London – the Unwired Planet one being the first, of course. That in part reflects how few of these kinds of disputes ever reach a courtroom; but is also because for a long time Germany has been the go-to country for NPEs in Europe.

If the UK starts to challenge Germany, though, it would represent something of a turnaround for a jurisdiction that has traditionally been seen as tough on owners. It will also be welcome news to London’s large band of patent litigators as they face up to the uncertainty caused by Brexit and the yet to be determined future of the Unified Patent Court. If for any reason the UK did not become a contracting state to the UPC agreement most lawyers practising in the country would be excluded from representing clients before the court; while if it never actually gets off the ground, like all other patent litigators in Europe, for UK lawyers only national work would be on offer. With so many firms having invested so much in preparing for the UPC either scenario is an unpleasant one, to say the least, so any rise in NPE interest in British courts would be a relief.

For the owners of SEPs generally – not just NPEs – Europe is looking more attractive with every passing day. The situation in the US is well known, of course; but only yesterday this blog carried news of proposed IP reforms in Japan which raise the prospect of what some see as compulsory licensing there. That could prove highly unpopular with patent owners if that becomes a mechanism to favour Japanese manufacturers that typically implement patented technology. In China, meanwhile, things do not look quite as bleak, but until new IP and antitrust guidelines are issued, doubts about enforcement and the ability to leverage deals will remain.

In Europe, by contrast, the Huawei v ZTE decision – and its subsequent interpretation by national courts – has created a reasonable amount of certainty and the kind of level playing field that is becoming rarer elsewhere. The originator/implementer balance in Europe, of course, is weighted far more to the former than is the case in many other parts of the world.

Additional reporting by Joff Wild