Lenovo v Ericsson

Lenovo brought claims against Ericsson including declarations (a) that one of its patents (the “Lenovo Patent”) had been infringed (the “Lenovo Patent Claim”), (b) certain of Ericsson’s patents were invalid, not essential and would not be infringed by Lenovo (“Ericsson Patent Claims”) and (c) for the terms of a FRAND cross-licence between the parties (the “FRAND Declarations”). Lenovo sought to amend its Particulars of Claim to include (a) a FRAND injunction restraining the Defendants from infringing the Lenovo Patent subject to the Defendants entering into a FRAND licence and (b) Interim Declarations as to the terms of an interim licence.

Ericsson conceded that the Lenovo Patent Claim and the Ericsson Patent Claims fell within the Court’s jurisdiction, but contested the claims for FRAND Declarations, a FRAND Injunction and the Interim Declarations on all three criteria for permission to serve out of the jurisdiction pursuant to CPR r. 6.36 (i.e. the merits test, the jurisdictional gateways and convenient forum).

Merits test: Ericsson contended that the claim for the FRAND Injunction failed the merits test for two broad reasons:

1. Under a cross-licence, Ericsson would be a net recipient of royalties, therefore even if Ericsson had been infringing,
   Lenovo will have suffered no loss, and
2. There were proceedings before the Eastern District of North Carolina (“EDNC”) that will determine a FRAND
   cross-licence and it is for Ericsson, as “net licensor”, to determine the jurisdiction in which a FRAND cross-licence is
   determined.

Richards J rejected both contentions. First, Richards J was not satisfied that Ericsson would be the net recipient of royalties under any FRAND global cross-licence. Secondly, Richards J held that even if Ericsson were the net recipient of royalties under a FRAND global licence, the claim for a FRAND Injunction would have passed the merits test because, in light of Meade J’s judgment in Nokia v Oppo, there is a realistic possibility that an English Court would grant an injunction if Ericsson is unwilling to give an undertaking to take a licence on terms the English court considers to be FRAND. Further, Richards J did not accept Ericsson’s argument that an English court would necessarily refrain from making a FRAND Injunction because a licensor is entitled to choose which FRAND terms to offer.

In light of his judgment on the FRAND Injunction, Richards J likewise found that there was a realistic prospect of success that the Court would grant the FRAND Declarations.

Richard J found that the Interim Declarations had a realistic prospect of success. Notwithstanding his earlier judgment in Lenovo v InterDigital, he noted that over the past few months a number of cases had come to the court in which implementers complained that SEP holders were using the threat of foreign injunctions as a means to secure supra-FRAND rates, which suggested that there is some demand for a court-sponsored interim regime to regularise the position until FRAND licences or cross-licences are determined (at [113]).

Gateways: Ericsson accepted that, if permission to amend was granted in relation to the FRAND Injunction, that claim passes through Gateway 9 in PD 6B and that the FRAND Injunction was permitted, the claim for the FRAND Declarations and the Interim Declarations passed through Gateway 4A in PD 6B. Therefore, since the FRAND Injunction passed the merits test (the same test applying both to the amendment application and the jurisdiction application) and permission to amend was granted, the relevant claims passed through the jurisdictional gateways.

Convenient forum: Ericsson submitted that the case should be analysed as a dispute about what the FRAND rate for a global cross-licence of ETSI encumbered SEPs should be. However, Richards J preferred Lenovo’s characterisation of the “case” as being, both in form and in substance, about the vindication of the rights inherent in the Lenovo Patent, raising questions about whether that patent is valid and/or infringed, with Ericsson being likely to raise a contractual defence based on Lenovo’s FRAND Commitment. Accordingly, the UK forum was clearly the most appropriate form and indeed the only possible forum where the claim can be tried.

Richards J dismissed Ericsson’s application for a case management stay. Richards J found that the EDNC would not result in the “earlier resolution” of the dispute between the parties.

The Judgment can be found here.

Michael Bloch KC, James Segan KC and Femi Adekoya appeared for Lenovo.