Context: Standard-essential patent (SEP) holders and implementers alike are in the process of adjusting their preferences among jurisdictions. Germany continues to be a key hotspot for injunctions and still has an “injunction gap” in some cases (May 24, 2024 ip fray article). Some implementers hope to gain leverage and bring down SEP royalty rates in the UK, though some may be asking for too much: Lenovo just failed to secure an unprecedented kind of preliminary injunction against Ericsson (May 23, 2024 ip fray article). Indian courts try to curb hold-out but without much of an actual business impact so far (April 5, 2024 ip fray article).
What’s new: Delaware-based Sun Patent Trust (About page) just announced multi-jurisdictional enforcement actions against China’s largest smartphone maker Xiaomi. Sun Patent Trust is asserting patents declared essential to the LTE-Advanced standard, an advanced 4G cellular telecommunications standard related to which Sun Patent Trust owns 167 patent families. The novel element of Sun Patent Trust’s cross-jurisdictional enforcement strategy is that it’s apparently the first-ever SEP holder to seek a global FRAND determination from the Tribunal judiciaire de Paris (TJP), arguing that France is the proper venue given that ETSI is based there (which is why the ETSI FRAND pledge is a matter of French law). So far, only some implementers, not least Xiaomi (in its dispute with Philips), have sought out the TJP as their preferred FRAND venue. Sun Patent Trust is also suing in India and may have brought or contemplate bringing infringement lawsuits in more venues.
Direct impact: Given that Xiaomi itself argued a few years ago that France was the forum conveniens for FRAND determinations, it is hard to imagine that Xiaomi could (or would even attempt to) dissuade a French court from exercising its jurisdiction in this case. France is also a major market for Xiaomi in Europe. Given that Sun Patent Trust is pursuing injunctive relief in India (and possibly elsewhere), it is not clear, however, whether the objective is to engage in multi-year FRAND litigation in France or to gain leverage beforehand.
Wider ramifications: Chances are that Sun Patent Trust would have preferred the UK for a global rate-setting case, but times have changed. Interestingly, and speaking in the abstract, what Sun Patent Trust is doing here shows a potential alternative to the proposed EU SEP Regulation. Most of those lobbying the EU institutions about SEP enforcement care primarily about cellular SEPs, and for those, France may be an interesting jurisdiction to resolve FRAND disputes in an efficient manner.
In its dispute with Philips, Xiaomi argued that under French law it was not merely entitled to a SEP license agreement on FRAND terms, but that there actually was one in place, just that it lacked the royalty rate to be put in by way of judicial determination. That case settled before the French court ruled on that question of contract law.
Sun Patent Trust asserts in its press release that Xiaomi has been using those patents “in nearly all 4G enabled devices it produced since late 2018” and that they first approached Xiaomi in 2019 about a license, but have now concluded that guidance from a court of law (or more than one court) would be needed to arrive at a license agreement on FRAND terms.
The press release mentions litigation “in other markets [than France], including India,” but doesn’t specifically name anyone other than India. As for India, the press release says this:
“In India, Sun Patent Trust is asking for an order restraining Xiaomi from further infringement of the relevant SEPs, besides seeking declarations that Xiaomi acted as an unwilling licensee, and that Sun Patent Trust complied with its FRAND obligations with respect to Xiaomi.”
It would not be a surprise if Xiaomi’s lawyers criticized the fact that Sun Patent Trust wants FRAND-related judicial decisions in France and India (with the Indian court effectively having to apply French law then).
In France, Hoyng Rokh Monegier is representing Sun Patent Trust, though in Germany that firm frequently represents defendants to SEP enforcement actions. In India, Sun Patent trust has chosen Anand & Anand.
Wiggin and Dana partner Joseph Casino, the Managing Trustee of Sun Patent Trust, is a well-known figure in the IP community, also for his volunteer contributions to the Licensing Executives Society. In March, the LES of the U.S. and Canada appointed him senior vice president of standards (announcement on firm’s website). The press release quotes him as stating that “this is only the second time [Sun Patent Trust] has had to resort to litigation since formation in 2015.”
Xiaomi generally has a reputation for being a willing licensee that concludes the vast majority of its license agreements without a need for litigation. It will be interesting to see how the courts, particularly the TJP, view the two parties’ licensing offers and overall conduct.
FRAND determinations by the French judiciary make a lot more sense than a “conciliation” process where a trademark office, in an opaque process and with unknown criteria, appoints patent valuation experts.