An important ruling was issued in a FRAND-related dispute by the case management judge of Paris Court of first instance (Tribunal judiciaire de Paris) on 6 February 2020.
While an action had been initiated by Philips against TCL before the High Court of Justice of England and Wales re. infringement of essential patents related to 3G and 4G standards defined by the European Telecommunications Standards Institute (ETSI), Paris Court was held to have jurisdiction to determine whether Philips, an ETSI member, had breached ETSI's IPR Policy, by refusing to offer TCL, also an ETSI member, fair, reasonable and non-discriminatory (FRAND) licensing terms on said patents.
This decision possibly opens the door for France to become a major forum for FRAND licensing determination disputes arising between ETSI members and relating to ETSI's standards.
1. What was the dispute at hand?
In 2015, Philips, owner of a portfolio of patents declared as essential with respect to ETSI's 3G (UMTS) and 4G (LTE) standards, approached TCL, also a member of ETSI, to enter into a licensing partnership –to no avail.
Indeed, in October 2018, Philips brought an infringement action against TCL before the High Court of Justice of England and Wales –Philips asserting that TCL was infringing the UK parts of its essential patents.
Less than four months after being summoned, TCL brought the dispute before the Paris Court's chamber specialized in IP.
In this "French" action, TCL asserts that Philips had breached ETSI's IPR Policy by refusing to negotiate the terms of a FRAND license. In doing so, Philips asked French judges to determine globally the terms of said license.
Interestingly, TCL also sued ETSI, whose headquarters are located in Sophia-Antipolis – France and whose IPR Policy is subject to French law, and requested that the Paris Court order it to contribute ("concourir") to the grant by Philips of a FRAND license.
Philips and ETSI filed the following motions before the examination of the merits of TCL's claims:
Philips' motion: Philips mainly asserted that the Paris Court had no jurisdiction over the dispute at hand.
ETSI's motion: ETSI asked the case management judge to hold TCL's claims against ETSI non-admissible.
Philips's motion having been raised before ETSI's motion, it was analysed first by the case management judge and is the subject of the decision at hand.
2. What are the main takeaways of the decision?
The main question raised was whether the Paris Court was competent to rule on the merits of TCL's claims despite the infringement action pending before the High Court of Justice of England and Wales.
Philips asked French judges to cede jurisdiction to the High Court of Justice of England and Wales. To do so, Philips stressed the link between TCL's claims against Philips and the English action and, pursuant to Article 8.1 of UE Reg. 1215/2012, put emphasis on the lack of "close connection" between the claims raised by TCL against, on the one hand, Philips and, on the other hand, ETSI.
The Paris Court dismissed this claim and ruled that it had jurisdiction over the dispute at hand.
Specifically, the case management judge considered that the claims raised against Philips and ETSI were found to be based on the same legal and factual situation. Thus, said claims were deemed so closely connected that it was expedient to hear and determine them together to avoid the risk of irreconcilable judgements resulting from separate proceedings.
The case management judge also pointed out that the legal grounds of the English action initiated by Philips are tortious (infringement) and therefore different from the French action initiated by TCL, which is based on ETSI's IPR Policy and therefore contractual.
Interestingly, the case management judge emphasized that TCL's claims, either raised against Philips or ETSI, were "all expressly subject to French law as provided for in procedural rules set up by ETSI" –ETSI's IPR Policy being governed French law.
In other words, French law was found to be applicable to FRAND licensing determination disputes relating to ETSI's standards and, more importantly, the decision suggests that this result would have been reached without even bringing any action against ETSI.
3. What are the next steps?
ETSI's motion for non-admissibility will be assessed by the case management judge on 2 June 2020 and, considering the somewhat "artificial" nature of TCL's claims against ETSI, it is likely to lead to the situation where French laws are deemed applicable to the dispute without ETSI even being a defendant.
This scenario was made possible by the case management judge who refused to examine Philips' motion before ETSI's motion, contrary to ETSI's request.
Therefore, in doing so, Paris Court sends the message that it has jurisdiction over all FRAND licensing determination disputes arising between ETSI members and relating to ETSI standards. This would allow the Paris Court to become a major forum for FRAND- related disputes –a status that Parisian judges have carefully avoided so far.
In any event, this decision of 6 February 2020 is the very first procedural step of what promises to be a landmark dispute on FRAND licensing determination in France.
In addition to ETSI's non-admissibility motion and Philips's appeal against the decision at hand, it will be especially interesting to see how the Paris Court legally defines the nature of the commitments of ETSI members to grant irrevocable GRANT licenses and what reasoning it implements in order to determine globally (and not only for French patents or French sales) the terms of the license to be granted to TCL.
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