By: Zhan Hao, Song Ying, Hannibal El Mohtar & Yang Yuhui (China Law Vision)
Standard-Essential Patents (“SEPs”) are patents which protect technology essential to compatibility with technical industry standards.
To avoid abuse by patent holders, SEPs are typically required to be licensed on Fair Reasonable and Non-Discriminatory (FRAND) licensing terms. However, what constitutes a FRAND rate is often unclear and can lead to protracted negotiations, hold-ups, and ultimately, litigation. FRAND disputes are notoriously complex and lie at the intersection of contract, patent, and antitrust law.
Chinese enterprises are increasingly familiar with FRAND disputes. The groundbreaking case was in 2013, when Huawei Technology Co., Ltd. (“Huawei”) litigated Huawei v Interdigital,the first FRAND dispute where a Chinese court publicly ruled on interpreting and enforcing FRAND commitments pledged by an SEP holder to a Standard Setting Organization (“SSO”). In the ensuing years, outbound Chinese tech champions like Huawei and ZTE Corporation (“ZTE”) also became important litigants in overseas disputes over FRAND-encumbered patents. Among the more prominent disputes, they were appellants in a landmark 2020 UK ruling, Unwired World/Conversant v Huawei/ZTE (“Conversant“).
Conversant is a noteworthy ruling where the UK Supreme Court (“UKSC“) interprets the policy of a foreign SSO. Namely, that of the European Technical Standards Institute (“ETSI“). In its decision, the UKSC allowed itself to rule on the language and drafting history of ETSI policy, and reached conclusions about the intent of that language. This ruling forced a hold-out licensee to accept a global patent portfolio, and was a blow to the use of protracted, jurisdiction-by-jurisdiction FRAND negotiations by SEP implementers…