The past two weeks have brought several notable shifts in the standard essential patent (SEP) space. This past Monday, the European Commission prevailed in a World Trade Organization (WTO) action against China, when an arbitration panel issued an appellate judgment that held China's practice of issuing anti-suit injunctions (ASIs) in standard essential patent (SEP) cases violates the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement—a decision that could have broader implications for multi-jurisdictional disputes over fair, reasonable, and nondiscriminatory (FRAND) licensing. Meanwhile, another fight over FRAND injunctions has begun to escalate: Following recent UK judgments establishing that willing licensors must grant interim licenses, the Munich I Regional Court has issued guidance in response, warning that accused infringers seeking such relief in the UK would be subject to injunctions in Germany. The defendant in the underlying case has further upped the ante by initiating a dispute with the relevant standard-setting body, seeking to get the plaintiff's patents declared nonessential.
– The European Commission's WTO Victory Against China
The dispute between the European Commission and China comes amidst a broader jurisdictional battle that began when national courts began asserting the authority to set the terms of global FRAND licenses—starting with the UK Supreme Court in August 2020, in Unwired Planet v. Huawei; followed by China's Supreme People's Court (SPC) in August 2021, in Oppo v. Sharp. As the UK High Court has since observed, in Nokia v. Oppo, the resulting system allows parties to bring FRAND claims where they perceive the greatest chances of success, with licensors seeking to file in jurisdictions that may offer the highest royalties (what the court called a "race to the top") while implementers could pick venues where they expect lower rates (a "race to the bottom"). In disputes with competing FRAND cases, it is not unheard of for parties to request ASIs—which bar the other party from seeking or enforcing SEP injunctions in a foreign court—and for the party hit with an ASI request to seek an anti-anti-suit injunction (AASI) from the other court (sometimes even prompting anti-anti-anti-suit injunctions, and so on).
While Chinese courts do not consistently publish key decisions like in other jurisdictions, the SPC clarified the country's approach to SEP ASIs in an April 2021 report on what the court considered to be the top IP rulings from 2020 through a list of "typical" (exemplary) decisions, including one from Huawei v. Conversant that marked the first time that a Chinese court issued an ASI in an IP case. The SPC characterized that ruling—which led to a settlement that ended parallel litigation in other countries—as having "achieved good legal and social effects". Chinese courts have since continued to issue such orders in other cross-border SEP disputes. Notably, in September 2020, the Wuhan Intermediate People's Court imposed a global ASI in Xiaomi v. InterDigital, this time barring the patent owner from seeking or enforcing injunctions, or from seeking a FRAND determination, in any country.
The European Commission objected to China's relative lack of transparency on SEP ASI jurisprudence in July 2021, sending the country a request for information stating that out of four notable decisions that reportedly detailed courts' approach to ASIs—including the two aforementioned ASI rulings, plus Oppo v. Sharp and a subsequent ASI decision in Samsung v. Ericsson—just one had been made available in China's public caselaw database. As a result, the Commission sought the full text of the remaining three rulings, also asking China to clarify the precedential effect of certain cases being designated as "big" and "typical". The request additionally sought further details on the scope of Chinese ASIs (as well as the process courts must follow to issue them).
The Chinese government largely declined to provide this information in a one-page response sent in September 2021, explaining that "big" and "typical" rulings are "cases for reference and have no legal effect of general application" but asserting that otherwise, China is not obligated to provide the requested information under the TRIPS Agreement. China instead countered that the country stands ready to have bilateral discussions on these topics through the existing China-European Union IP Working Group.
The Commission reiterated its concerns over the delayed reporting of, and guidance on, SEP decisions in the WTO action mentioned above, which it initiated in February 2022. That action primarily targeted Chinese courts' issuance of ASIs, arguing that the practice violates certain TRIPS provisions by unduly restricting EU patent owners' ability to properly enforce their SEPs and thereby creating "barriers to legitimate trade", further objecting to the heavy fines imposed by Chinese courts for violations of their ASIs. Its complaint implicitly distinguished Chinese courts' use of ASIs from the same practice in other countries—such as the US and UK, where courts generally have some degree of independence—by noting that the overarching Chinese policy favoring ASIs has been endorsed by the Chinese government. The Commission asked the WTO to convene a panel to address its allegations in December 2022, which the WTO did the next month. The panel held a hearing in late October and early November 2023, with a series of written submissions followed by another hearing in March 2024.
As revealed in subsequent filings, the panel issued its final report to the parties on February 21, 2025, but the Commission asked that the report (previously scheduled for release on April 10) be withheld while it appealed the ruling. The Commission later revealed that the panel had rejected key parts of its case, stating that the report held that the TRIPS Agreement does not require China to "refrain from adopting or maintaining measures that undermine other WTO members' implementation of the agreement in their jurisdictions"—meaning, that TRIPS does not bar a WTO member from adopting measures that limit patent enforcement in other jurisdictions. However, per the Commission, the panel report also recognized that China had a policy of limiting IP rights, including through the SPC's guidelines as supported at the "political level" and as implemented by the judiciary; and that it also "found that China must be more transparent by transmitting to the EU and other WTO members information on intellectual property matters, including court judgements".
By joint agreement, the Commission's appeal took place through the Multi-Party Interim Appeal Arbitration Agreement (MPIA), which, as the Commission noted in its announcement of that appeal, is an "alternative arbitration system which allows appeals of panel reports in the absence of a fully-functioning Appellate Body". The WTO's appellate body, per Reuters, "was shuttered in 2019 after the United States repeatedly blocked judge appointments".
The appeal arbitrator's decision, issued on July 22, reversed the panel's decision as to the ASI practice's compliance with the TRIPS Agreement—holding that under Article 1.1, "to 'give effect' to the provisions of that Agreement in a WTO Member's territory is to do so without frustrating the functioning of the systems of protection and enforcement of IP rights implemented by other Members in their respective territories". The arbitrator also held that the ASI policy frustrates the rights of patent owners to enforce their patents, as covered by Article 28.1 of the TRIPS Agreement; and to obtain licenses for their patents, as covered by Article 28.2. However, the arbitrator upheld the panel's ruling that the ASI policy does not indirectly violate Article 44.1, which bars WTO members from interfering with the authority of courts in another member state to issue injunctions—agreeing with the panel that the ASI policy just bars SEP owners from seeking injunctions, and does not restrict courts' authority to grant them.
The arbitrator concluded that China must bring its practices into compliance with the decision, giving the country 90 days to do so.
Initial reactions to the appellate arbitration ruling ponder the impact of the decision beyond China. For example, Clifford Chance partner Miquel Montaña stated in a recent analysis for Kluwer Patent Blog that the decision "may prevent courts of other WTO member states (e.g., Germany, the UK, the USA, etc.) from ordering similar anti-suit injunctions". Chance also remarked that an imbalance could result given both this outcome and the recent decision on long-arm jurisdiction by the Court of Justice of the European Union (CJEU) in BSH v. Electrolux, which established that EU member state courts and the Unified Patent Court can hear infringement claims over non-EU patents.
However, further WTO actions could be required before other WTO member states are bound by a similar outcome, as suggested in part by a recent analysis by Professor Thomas F. Cotter of the University of Minnesota Law School. Cotter noted that WTO panel and appellate body decisions generally do not have precedential effect akin to that found in common law systems, and that beyond this limitation, the decision is an arbitration award and not an official appellate ruling.
For more on the European Commission's efforts against China, including a second WTO action filed in January 2025, see here.
– The UK's Interim License Decisions—and Munich Court's Pushback
Another recent SEP development concerns the interplay between FRAND litigation in the UK and Germany. In the UK, courts have set the terms of global FRAND licenses (as noted above) and have awarded conditional injunctions barring implementers from the UK market if they do not accept those terms (so-called FRAND injunctions). In contrast, German courts have taken a more limited view, thus far not wading into the global rate-setting fray and instead enforcing stringent standards for evaluating FRAND compliance by implementers—an approach that, in practice, creates strong incentives for defendants to settle.
Earlier this year, the UK Court of Appeal solidified an even more expansive approach to FRAND: In late February, the court held for the second time that a SEP implementer is entitled to an interim license prior to the court's determination of a final FRAND license, ruling that a willing SEP licensor—here, Ericsson—would grant such a license to defendant Lenovo and finding that the company had breached its obligation to negotiate in good faith by pursuing injunctive relief in other jurisdictions. The UK High Court then issued its first interim license declaration in late June, finding that a willing licensor in the position of patent owner ZTE would offer defendant Samsung an interim license. ZTE subsequently declined to offer an interim license, as a result of which—similar to the Ericsson v. Lenovo case—the court deemed the company to be an unwilling licensor.
That High Court decision prompted a response from the Munich I Regional Court, where litigation between the same parties is also pending. On July 14, Presiding Judge Oliver Schoen issued guidance (of which an English machine-translated version was filed by ZTE in related US litigation) that in part lays out the court's views on the propriety of the UK court's approach. Judge Schoen explained that he was detailing the court's position in part because he does not expect it to survive appeal as a result of the Munich Higher Regional Court's controversial new approach to evaluating FRAND negotiations, which elevates the importance of the security that the implementer must pay to demonstrate willingness as required under the CJEU's Huawei v. ZTE decision. While the appellate court has established that a court will only make a full FRAND determination for the patent owner's last offer if the implementer provides a security equal to the amount of that offer, that the court will otherwise decline to evaluate the FRANDness of that offer, and that this security is required for the implementer to be deemed "willing", the Munich I Regional Court disagrees—arguing instead that "the provision of a qualified security deposit is not a mandatory prerequisite for the patent user to prove his willingness to license".
Judge Schoen also provides his views on the other factors courts must consider under Huawei—in part, agreeing with the approach of other German courts that FRAND is a range, and that comparable licenses are the most appropriate basis for valuation; and noting what criteria are "decisive" for assessing willingness.
Yet of greatest relevance, and arguable significance, is Judge Schoen's analysis of the impact of foreign decisions. Judge Schoen explicitly takes issue with the UK High Court's June 25 decision in Samsung v. ZTE, countering that "there is no entitlement to the patent owner's consent to the conclusion of an interim license". The court grounds that notion in a broader rejection of the UK courts' approach to jurisdiction, in part appearing to dismiss the notion expressed by the UK High Court that conflicting decisions will result without a global mechanism for resolving FRAND disputes. Judge Schoen argues that no such risk results "if all courts respect national borders" because different treatment of certain facts between different countries is a reflection of "national sovereignty" that courts in other countries must accept.
A "plaintiff cannot unilaterally bind the defendant by bringing proceedings before a national court for the territory outside the country of the court seised", continues Judge Schoen—further warning that while a defendant may declare its willingness to be bound as to Germany, the court would have to review the "binding effect" of such a declaration if it were claimed to be "made under the influence of the specific procedural situation".
Judge Schoen also notably states that injunctive relief could result if a party seeks to enjoin German litigation: "If a party can demonstrate that there is a risk that proceedings will be brought abroad in order to disrupt the proceedings before German courts, action can be taken against this before the Regional Court of Munich I (established AASI case law of the Regional Court of Munich I)". Observing then that the SEP enforcement system practically allows enforcement actions to be brought in just a few countries, Judge Schoen underscores that "[i]t is therefore unacceptable for defendants to attempt to block the enforcement of injunctive relief by bringing proceedings before the courts of other countries".
Judge Schoen ultimately concludes that because the UK Samsung v. ZTE decision "expressly emphasizes the independence of the courts in other countries" it does not amount to an anti-suit injunction, as a result of which no AASI is needed here. That said, Judge Schoen cautions that subsequent requests for interim licenses could "create a risk of influence being exerted on national jurisdiction"—and could thus require the court to determine "whether judicial measures would be necessary".
– Samsung Turns to Standards Body After ZTE Refuses Interim License
As noted above, ZTE declined to offer Samsung an interim license as called for by the UK High Court, as a result of which the court found ZTE to be in breach of its good-faith obligations under clause 6.1 of the intellectual property rights (IPR) policy of the European Telecommunications Standards Institute (ETSI), the standard-setting organization (SSO) to which the relevant FRAND commitments were made—thus declaring it an unwilling licensor.
Samsung has now filed a dispute under a provision of the ETSI intellectual property rights (IPR) policy concerning "[n]on-availability of licenses", clause 8.2—asking the SSO to remove ZTE's patents from the applicable standards as provided under that clause.
IAM reports that this is just the second time an implementer has invoked clause 8.2—its first invocation occurring earlier this year by Lenovo. Since its dispute with Ericsson settled, thus ending the ETSI proceedings along with all litigation between the parties, IAM notes, the clause 8.2 mechanism is "untested".
For more on other recent FRAND developments, see RPX's report on the second quarter.
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