UK court concludes it has no jurisdiction over Vestel’s claim for FRAND determination

05.11.2019

On 21 October, the High Court gave judgment on jurisdiction in Vestel v HEVC Advance & Philips, deciding that it has no jurisdiction over the claims brought by Vestel against either of the defendants.  Below we provide a quick recap on Vestel’s claim; outline the court’s main findings; and briefly consider the potential implications of the judgment for future FRAND cases.

Vestel’s claim

Vestel is a Turkish-based manufacturer of consumer electronics products, including TVs.  Domiciled in Delaware, HEVC Advance (“Advance“) administers a global patent pool for SEPs relating to the HEVC standard for video compression.  Philips is one of the participating patent holders in the Advance pool and is domiciled in the Netherlands.

As we reported here, Vestel issued a claim against Advance and Philips in the UK earlier this year, seeking declaratory relief in respect of alleged abuse of dominance. It claimed in particular that the licence terms offered by Advance and Philips were contrary to Article 102 TFEU and Chapter II of the UK Competition Act.  The main purpose of the claim was to serve as a means of inviting the UK court to settle the terms of a global FRAND licence.  Unlike other UK FRAND cases such as Unwired Planet and Conversant v Huawei & ZTE, there was no associated patent cause of action.

Advance and Philips each brought applications challenging the UK court’s jurisdiction to hear Vestel’s claims.

Philips’ jurisdiction challenge

Philips’ main argument was that Vestel had no arguable case that it would suffer damage in the UK, as required to establish the UK court’s jurisdiction over the claim against Philips under Article 7(2) of the Recast Brussels Regulation. The judge agreed, holding that there was no evidence of Philips having done anything which could have the effect of forcing Vestel to take a licence.  Furthermore, there could be no damage to Vestel if it were to enter into a licence on terms settled by a court: it had to be assumed that “whichever court settles the licence, the terms will be FRAND and therefore not contrary to Article 102 TFEU”.

Advance’s jurisdiction challenge

Vestel sought to rely on various jurisdictional gateways under the UK Civil Procedure Rules against Advance, but without success.  As well as deciding that Vestel had no arguable case that it would suffer damage in the UK, Judge Hacon noted that less than 5% of the SEPs in the Advance pool were UK patents.  Since Vestel’s claim related to all of the patents in the pool, the claim was not “wholly or principally related” to UK property.  The judge also indicated that he would not in any event have allowed the part of Vestel’s claim which sought to limit the defendants’ ability to seek injunctive relief in foreign courts, citing with approval comments made by the Court of Appeal in TQ Delta v ZyXEL about “jurisdictional imperialism”.

Implications

The judgment illustrates that, depending on the facts, an implementer who proactively seeks judicial determination of FRAND licence terms may face difficulties in establishing UK jurisdiction over foreign defendants. There were a number of factors in this case that affected the judge’s findings: (i) the claim was brought on the basis of competition law alone; (ii) there was no patent-related cause of action; (iii) no contractual FRAND undertaking was identified by Vestel; and (iv) the issues in dispute were not closely connected to the UK.

The case leaves open the interesting question of whether the UK court may be able to exercise an ‘inherent’ jurisdiction to determine FRAND terms by means of declaratory relief under the principles set out in Rolls Royce v Unite the Union. The judge alluded to this possibility in paragraph 60 of the judgment, but concluded that “that would be for another day”.

It remains to be seen whether Vestel will appeal.

Bristows acts for Philips in these proceedings.  The views expressed in this article are personal and do not necessarily represent those of Bristows LLP or any of its clients.

Pat Treacy

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Edwin Bond

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