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

• Published date: 21 June 2021
• Subject Matter: Intellectual Property, Patent
• Law Firm: Wiggin
• Author: Mr Michael Browne

Facts

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.

Decision

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...