Fair, Reasonable and—Unlike the Whisky Wars—Not Over Yet

Last year was a difficult year for many. Russia’s invasion of Ukraine and the death of Britain’s longest-reigning monarch are among his memorable events of the year. But in those dark days, a little-known event shines like a small candle of hope. It’s the end of the whiskey wars.

For 50 years, Canada and Denmark have fought over ownership of Hans Island. The main weapon in this battle was strong drink and a sense of humor. Located between Greenland and Ellesmere Island, Hans Island is an uninhabited, barren island just over a kilometer long. In the 1980s, Canadian soldiers planted maple leaf flags and placed bottles of Canadian whiskey on the islands to initiate hostilities. The visiting Danish contingent drank whiskey, replacing it with a bottle of schnapps. The two countries took turns exchanging dangerous alcoholic beverages, and this year he agreed to split the island in half on June 10th.

As such, Canada and Denmark, which previously each bordered only one other country (the United States and Germany, respectively), now have a second border with each other. With that information, you can win some bets on Christmas.

It might feel like the standard essential patent (SEP) wars have been going on for about as long as the whiskey wars. While far from being resolved, 2022 will see some progress.

1) Convergence of car license level disputes

When two industries with different traditions come together, some friction is inevitable. The automotive industry operates a tightly controlled chain of supply, and OEM vehicle manufacturers have the purchasing power to push the responsibility of IP licensing onto their suppliers. However, in the telecommunications world, standards-related Intellectual Property Rights (IPR) licensing is the responsibility of the manufacturer of the end-user product. So if the auto industry adopts cellular technology, which licensing model will prevail, or will it find a middle ground, like Canada and Denmark?

It was quickly agreed that any license should cover the entire automotive supply chain, but questions remained. Is it enough for a Standard Essential Patent (SEP) licensor to make an offer to an OEM automaker, or should a SEP licensor be forced to offer a full license to an upstream component manufacturer? Many Avanci, a patent pool covering the portfolio of SEP holders in Avanci, provides licenses to OEM vehicle manufacturers. Nokia has made offers to OEM automakers and Tier 1 suppliers, but not to Tier 2 or other suppliers in the chain. Was this anti-competitive?

The battle was fought in US courts between auto supplier Continental and Avanci and Nokia. It was debated in German courts between Nokia and Daimler, as well as in the European Commission, when some automotive Tier 1 companies (including Continental) tried to file complaints against Nokia.

A lot of the heat was removed from the controversy when Daimler chose to license it from Avanci. His flood of other OEM automakers followed, and by summer 2022, nearly all of the major automakers had licensed his Avanci. The European Commission did not launch an investigation. This left Continental in a lone battle in the United States. Having lost the case at first instance and on appeal, in October 2022 it chose to cut its losses and not petition the U.S. Supreme Court.

So in 2022, at least for now, the SEP licensing level debate is over.

2) China and UK delve into jurisdiction

Last year, China’s Supreme Court Oppo v Sharp, Chinese courts can determine global royalty rates for a portfolio of SEPs without the consent of the SEP owners. Tried to challenge jurisdiction. Nokia sought an injunction on the basis that in the UK he claimed three standard-essential patents against Oppo and made a FRAND proposal. Oppo responded by initiating a rate-setting lawsuit in Chongqing and promising Nokia to enter into a license at the rate set by the Chinese court. Oppo has challenged the jurisdiction of the UK courts and asked to stay instead. At first instance, Hacon J dismissed the challenge. Oppo has appealed and the Court of Appeals has heard his appeal in July 2022.

Oppo argued on the appeal:

• An English court should deny jurisdiction on the grounds that the UK was not a convenient venue for disputes. may be tried in
• Alternatively, the UK courts should stay the case pending the outcome in Chongqing.

The Court of Appeals did not find that the dispute was purely related to the terms of the Global License. It characterized the UK action as a claim for infringement of a UK patent. The difference here is China’s new readiness to determine her FRAND rate in the world. This did not change the English court’s approach. Arnold LJ felt that there was no need for a patent trial if the UK case was really just a pricing case.

There was no need to consider whether Chongqing is an alternative forum, not only for FRAND but also for UK patents. Even if this were the case with rates, it would not be enough to prevent England from becoming a proper forum as well, as global FRAND rate decisions are not tied to any particular country.

A request to stay was also denied. Arnold LJ felt that latency and efficiency were issues his Oppo could control. If they wanted a cheaper and quicker resolution, they could have accepted arbitration or agreed that the English courts could go straight to FRAND’s decision.

3) End of ASI?

In 2020 and 2021, anti-litigation injunctions (ASI) have emerged as a tactic. If two parties have litigated in more than one court, an anti-litigation injunction is an order from Court A ordering the parties to terminate the proceedings in Court B. AASI is an order ordering the withdrawal of her ASI against the party who obtained her ASI from Court B.

In the UK, Philips has AASI for Oppo. Philips had a patent claim against his Oppo in the UK.Followed by Oppo v Sharp Following the Chinese Supreme Court ruling, Oppo released a press release suggesting that the ruling and the availability of the anti-suit injunction were a major win for implementers such as Oppo. Philips asked UK courts to preemptively grant his ASI before Oppo could force Philips to drop its UK patent litigation.

Oppo claimed that it had changed its mind. He told the judge that he has not sought anti-litigation relief in any court since, and that neither the company nor its affiliates intend to do so again. That is, they did not intend to seek anti-litigation-style relief from the courts to prevent parallel patent infringement lawsuits relating to FRAND. Meade J welcomed the statement, but said it was very carefully worded.

So Oppo has a history of asking for ASI, and in this case, the UK courts were ready to grant AASI preemptively, as they made no commitments against doing so.

It seems that any ASI can now be filled with AASI, and companies with a track record of actually asking for ASI will be granted AASI preemptively. This may be the last time ASI is used in the early stages of the procedure. What will unfold next is after China’s rate-setting judgment, which may be what we see in 2023.

4) UK gasps at FRAND

2022 will see two major FRAND incidents. Interdigital vs Lenovo The FRAND trial will be conducted in the UK in January and February by Mellor J. apple v optis The FRAND trial took place in the UK in June and preceded Marcus Smith J. This is the second time and his third time that a UK court has ruled on his FRAND rate of a cellular standard essential patent.

In both cases, FRAND’s determination included equivalent licensing analysis and top-down analysis. One of the interesting features of the Interdigital trial was its use of volume discounts as part of its licensing program. Courts may have views on how FRAND it is for large licensees to be offered at lower rates.of Optis vs Apple, The same question arose from the other side: Are Apple’s in-licenses infected with holdouts and artificially low as a result? It was spent looking at how much of that purchasing power was used to get the rate. We are waiting for the decision with interest.

Image Source: Deposit Photo
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Author: Belchonok