Insights Court of Appeal dismisses appeal in relation to service out of jurisdiction in proceedings for FRAND declaration, finding that the court did not have jurisdiction



The first claimant, Vestel Elektronik Sanayi Ve Ticaret AS, is based in Turkey and makes televisions under various brands, including Toshiba, Hitachi and Panasonic. The second claimant, Vestel UK Ltd, sells the TVs in the UK.

Vestel’s TVs use the form of high definition TV technology called High Efficiency Video Coding (HEVC), which is defined in the International Television Union (ITU) H.265 standard. There are a large number of Standard Essential Patents (SEPs) relating to this standard. Patentees who declare SEPs to the standard must, under ITU rules, commit to licensing them on FRAND terms.

The second defendant, Koninklijke Philips NV, has declared some patents as essential to the standard.

The first defendant, Access Advance LLC, a US company, administers a patent pool for the ITU H.265 standard, which includes Philips’ SEPs (the Pool). Access Advance operates as a representative for the holder of the relevant patents and offers a licence on that basis. It does not own any patents.

Vestel need a licence from the Pool or from Philips directly. Access Advance offers a worldwide licence (therefore including UK patents) called the Patent Portfolio Licence Agreement (PPL). Vestel contend that the terms of the PPL are not FRAND, as the royalty due is too high.

The action began as a competition law claim by Vestel for abuse of dominance by the defendants. Vestel sought declarations that: (i) the defendants had abused their dominant position (ii) the PPL was not FRAND; (iii) Vestel’s counter-offer was FRAND; and (iv) if neither set of terms were FRAND then the court should declare what the licence terms should be.

Since the defendants were overseas, the court’s jurisdiction had to be established. The Master allowed service on Access Advance out of the jurisdiction, i.e. in the USA, and Philips was served without permission under the terms of the Recast Brussels Regulation (1215/2012/EU). The defendants applied to set aside the Master’s decision and the service out of jurisdiction on Philips and the judge ruled in their favour. Vestel appealed and served draft amended statements of case in which the abuse of dominance claim was deleted.


Giving the lead judgment, with which the other Justices agreed, Lord Justice Birss allowed Vestel’s amendments to the Claim Form, the Particulars of Claim and the Grounds of Appeal. The amendments raised two new points, but he found that they were both pure points of law arising from the same facts and evidence and were therefore allowable.

The first new point was an argument based on the tort of patent infringement and the second was based on the court’s inherent jurisdiction to grant declarations.

Vestel submitted that they could satisfy Gateway 9 in relation to Access Advance, and Article 7(2) of the Recast Brussels Regulation in relation to Philips, on the basis that all its claims for declarations could be characterised as claims for a negative declaration (i.e. a declaration of non-liability) in a claim based on tort (i.e. the tort of patent infringement). For Philips, the relevant patents were its UK SEPs and for Access Advance, the patents were all the UK SEPs in the Pool at least at the date the claim began.

Patent infringement — Recast Brussels Regulation — service on Philips

Birss LJ found that there was no doubt that patent infringement was a tort covered by Article 7(2). Further, Birss LJ agreed with Vestel that a claim for a declaration of non-liability for infringing any of Philips’ UK SEPs would fall within Article 7(2), following Case C-133/11 Folien Fischer v Ritrama [2013] QB 523 (which was authority for allowing the rights holder and the putative infringer to bring a claim in the UK courts under Article 7(2) where the alleged infringement is of a UK IP right committed in the UK). However, Birss LJ said, this was not the right way to characterise Vestel’s claims.

In Unwired Planet v Huawei [2020] UKSC 37, the Supreme Court held that the UK courts had jurisdiction to grant FRAND declarations in relation to a portfolio of patents that included foreign patents because the patentee had given contractual undertakings to offer licences on FRAND terms to the relevant standard setting body. In other words, an implementer can enforce a contractual obligation on the SEP owner to offer a licence on FRAND terms and national courts can determine the terms of worldwide FRAND licences in order to enforce the contract. However, the Supreme Court also said that the legal basis (i.e. the contract in the Unwired case) for the particular FRAND obligation on which the court was being asked to adjudicate must be identified.

Birss LJ noted that, having deleted the abuse of dominance claim, the declarations sought by Vestel did not provide that they had a legal right to a FRAND licence. Vestel had not pleaded it either. Therefore, the legal basis for the declarations had not been identified. It was true, he said, that if Vestel had a licence from Philips then any sale of a standards compliant television would not infringe the UK patents, but that fact did not turn the declarations sought into declarations of non-liability in tort.

Therefore, Vestel’s claim for the declarations was not within Folien Fischer and so not within Article 7(2). Accordingly, the Recast Brussels Regulation did not confer jurisdiction on the court to hear it.

Patent infringement — Gateway 9 — service on Access Advance

Vestel said that they could serve Access Advance out of jurisdiction on the basis of Gateway 9 (CPR 6 PD 6B) pursuant to FujiFilm v Abbvie [2016] EWHC 2204 (Pat), in which it was held that a claim for a negative declaration that no tort had been or would be committed falls within Gateway 9. Vestel claimed, again, that this was because their claim could be characterised as a declaration of non-liability for the tort of patent infringement. Birss LJ said that if that was the correct way to characterise Vestel’s claim, then it would indeed satisfy the gateway. However, for the same reasons explained above, that was not Vestel’s claim. Further, Access Advance was not the owner of any of the patents concerned and therefore Vestel could not be liable for patent infringement against it.

Court’s inherent jurisdiction — Gateway 11 “property within the jurisdiction”

Birss LJ agreed that the UK designations of European patents were property within the jurisdiction for the purposes of this gateway. However, the UK patents only made up a small share (5% or less) of the property concerned. Therefore, because Vestel’s claim related to all the patents in the Pool, the subject matter of the claim related neither wholly nor principally to property within the jurisdiction.

Vestel responded by saying that their sole claim was, in fact, for a declaration of what the FRAND terms would be for a licence under the UK SEPs in the Pool and that it fell within the court’s inherent jurisdiction because it would serve a useful purpose by establishing the licence that they would need to avoid infringing the UK patents. The subject matter of the claim was UK property, i.e. the UK patents, because it was a claim about what terms were available for a licence in respect of that property specifically. Therefore, it fell within Gateway 11.

The defendants argued that this submission did not work either because no legal right was involved. Birss LJ agreed: Vestel did not claim to have a legally enforceable right against the patentee or the licensing agent of the patentee whereby they were entitled to be offered a FRAND licence under the UK SEPs in the Pool. Their claim was for the court to exercise the inherent jurisdiction to make a FRAND declaration, despite the absence of any assertion of a right to such a licence.

Vestel argued that Pfizer v Hoffmann La Roche [2019] EWHC 1520 (Pat) showed that “useful purpose” was the only criterion that had to be satisfied for the court’s declaratory jurisdiction to be engaged and that the absence of a putative legal right did not preclude it.

On a reading of that case as a whole, Birss LJ disagreed. In any event, he said, even if there were some arguable “useful purpose”, the attempt to invoke the court’s declaratory jurisdiction had no reasonable prospect of success because it was not based on the existence or non-existence of a legal right. Therefore, Birss LJ said, the proceedings did not fall within Gateway 11.

The appeal was dismissed. (Vestel Elektronik Sanayi Ve Ticaret AS v Access Advance LLC (formerly HEVC Advance LLC) [2021] EWCA Civ 440 (26 March 2021) — to read the judgment in full, click here.