HomeInsightsHigh Court finds that administrator of patent pool could continue as claimant in FRAND case despite not having legal interest in the patents concerned

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In this FRAND case, the claimants, Mitsubishi Electric Corporation and Sisvel International SA, are seeking to persuade the defendants, Oneplus Technology (Shenzhen) Co Ltd and others, to take FRAND licences of a pool of patents (the Pool), administered by Sisvel, which are alleged to be essential to one or more telecoms standards.

The case involves three European patents in the Pool, two owned by Mitsubishi and one owned by Sisvel. In the first technical trial, Mr Justice Mellor found that the patent owned by Sisvel was valid, but not infringed and therefore not essential to the 4G standard. In the second technical trial (see item below), judgment on which was given after this application was decided, Mellor J found that the other two patents, owned by Mitsubishi, were valid and essential to the 4G standard. A third trial to consider the relief claimed, which will include a determination of the FRAND terms for licensing the Pool, is set to be heard in October 2021.

The group of defendants known as the Xiaomi defendants applied to have Sisvel dismissed from the claim on the basis that, following judgment in the first technical trial, it had no right or standing to participate in any future FRAND trial based solely on a finding of a valid, essential and infringed patent that it does not own (it being owned by Mitsubishi). The Xiaomi defendants said that, whilst Sisvel may be interested in the outcome of any FRAND trial between Mitsubishi and the defendants, that did not give it standing to be a party to that trial.

The Xiaomi defendants also said that Mitsubishi was not entitled to seek a licence to the entire Pool in circumstances where no patent belonging to any other Pool patent owner had been found valid, essential and infringed.

Further, the Xiaomi defendants said that a bilateral FRAND licence to the Mitsubishi portfolio would be the appropriate remedy for Mitsubishi if it was found to have a valid, essential and infringed patent, and the claimants had given no valid reason why it would not.

Considering the authorities, Mellor J said that Vestel Elektronik Sanayi Ve Ticaret AS v Access Advance LLC [2021] EWCA Civ 440 confirms that before the court makes any determination to FRAND relief, a claimant must establish a legal right on which the FRAND relief sought can be granted. If the legal right asserted is patent infringement, then it is necessary to show that at least one patent is valid, infringed and essential to the standard whose rules require FRAND licensing. However, Vestel says nothing about the position of an administrator of a patent pool if at least one patent from the pool is found to be valid, infringed and essential.

Mellor J found that, in the real world, FRAND licences are agreed covering pools of patents, not least because of the obvious efficiencies and cost savings involved, and he was prepared to assume this occurs whether the whole pool is owned by a single proprietor or by several.

Further, Mellor J said that, for an implementer to refuse a pool licence but to insist only on a bilateral licence would require justification in a case where the pool comprises patents claimed to be essential to a particular standard which had been implemented by the products in question.

Mellor J agreed with the Xiaomi defendants that Sisvel did not have a right of action to bring proceedings for infringement of the two patents owned by Mitsubishi. However, the central point of the claimants’ case was that the Pool licence was FRAND, not just whether there was infringement. As administrator of the Pool, Sisvel had a greater interest than the proprietors of the other patents in the Pool, even though an administrator was not within the categories of persons who can bring patent infringement proceedings.

In Mellor J’s view, Xiaomi’s application amounted to an application for partial summary judgment against the claimants which would have had two effects: (i) preventing consideration at the FRAND trial of whether licences to the Pool were or could be FRAND; and (ii) limiting the consideration to a bilateral licence of patents owned by Mitsubishi. A ruling resulting in such effects was, at this stage, of the action unwarranted and unjustifiable.

Further, whether Sisvel was excluded from the claim or not, the court was going to have to determine whether the offered licence to the Pool was FRAND in any event. In addition, Mellor J could see advantage in having a pool administrator as a party in a FRAND dispute, not least for disclosure, evidence and confidentiality reasons. To order the excision of Sisvel from the action at this stage was pointless and would not be in accordance with the overriding objective, Mellor J said. He acknowledged that this was possibly a bit of a fudge because it was unclear as to the entitlement of Sisvel to remain a claimant, but since this area of the law is still developing, he said it was more sensible to maintain the status quo and allow the judge at the FRAND trial to consider the implications of a pool licence and the position of a mere administrator.

Accordingly, Mellor J dismissed the Xiaomi defendants’ application. (Mitsubishi Electric Corporation v Oneplus Technology (Shenzhen) Co Ltd [2021] EWHC 1541 (Pat) (8 June 2021) — to read the judgment in full, click here).

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