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Judge declines request to split competition law claims from broader patent dispute


A UK judge has declined a request to transfer competition law aspects of a patent dispute relating to technology for smartphone devices to the Competition Appeal Tribunal (CAT) for adjudication.

Unwired Planet has sued Huawei and Samsung over alleged infringement of standard-essential patents it acquired from Ericsson. However, it has faced counterclaims from Huawei and Samsung that it has breached EU competition laws by not seeking to licence those patents on fair, reasonable and non-discriminatory (FRAND) terms, something which Unwired Planet has denied.

Unwired Planet is obliged to licence its SEPs on FRAND terms under the terms of an intellectual property rights (IPR) policy established by the European Telecommunications Standards Institute (ETSI), which facilitated the development of the underlying technological standards the SEPs reflect.

Under the ETSI IPR policy, prospective licensees of relevant SEPs can raise claims for breach of contract against owners of those patents if they feel the licensing terms they are being asked to sign up to are not FRAND. According to the ruling, in addition to the competition law claims, Huawei has pursued a claim for breach of contract against Unwired Planet under the ETSI IPR policy as part of the broader dispute between the companies.

Samsung asked the Patents Court within the High Court in London to transfer the competition law claims in the case to the CAT. However, the judge hearing the application decided against doing so.

In his ruling Mr Justice Birss said that the competition law claims are too closely linked with other aspects of the case, including the question of whether Unwired Planet has met its contractual obligations in relation to FRAND licensing, to merit transferring that aspect of the case to the CAT. Splitting those issues "would create a division in the handling and decision making process", he said.

The judge said that a further reason for not transferring the competition law claims to the CAT is that the Tribunal "cannot or should not" deal with issues of relief for patent infringement, should such infringement be found.

In considering the merits of transferring the competition law issues to the CAT to resolve, Mr Justice Birss had assessed the possibility of his acting in a dual role in the case as both chair of a three-person CAT panel and as a Patents Court judge able to rule over separate issues of patent law.

However, the judge said: "Transferring competition law FRAND but not transferring contractual FRAND would be a recipe for confusion. Not without some regret, I will decline to transfer this case to the CAT."

Patent law expert Deborah Bould of Pinsent Masons, the law firm behind Out-Law.com, said that the case is the first UK patent infringement case in which a number of complex FRAND patent licensing issues could be determined. She said the ruling highlighted the potential overlap in jurisdiction between the Patents Court and the CAT.

Competition law specialist Ben Lasserson of Pinsent Masons said that the CAT's new power to hear stand-alone competition claims, following the Consumer Rights Act 2015 that came into force last year, had made the CAT "a more attractive forum" and that "where possible, parties are increasingly looking to bring competition claims there rather than in the High Court".

Bould said: "Mr Justice Birss appeared to be disappointed not to be able to transfer the competition aspects to the CAT. He felt that the resources available – the outstanding logistical and legal support provided by CAT staff and legal assistants and also the two other Tribunal members who would hear the issues, one of whom would be a distinguished economist and the other an expert in a related field such as accountancy, industry or law – was a positive factor supporting transfer."

"This indicates that the judge may be willing to transfer another FRAND case that is more limited in scope to the CAT for adjudication," she said.

Bould also said that the expected trial in the case this autumn "should provide very valuable European FRAND case law".

"It will be particularly interesting to see whether the Court thinks that provisions in the agreement between Ericsson and Unwired Planet are anti-competitive," Bould said. "Relevant terms in the contract that the Court could look at include those that see Ericsson win a set minimum percentage of net sales revenue generated by Unwired Planet from licensing the SEPs regardless of whatever royalty rate Unwired Planet has agreed with licensees, and further terms that require Unwired Planet to seek Ericsson’s consent if basing royalties on anything other than the licensee’s net sales revenue."

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