Lenovo Group Ltd (a company incorporated under the laws of Hong Kong, China) v Telefonaktiebolaget LM Ericsson (publ) (a company incorporated under the laws of the Kingdom of Sweden)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Richards |
| Judgment Date | 18 April 2024 |
| Neutral Citation | [2024] EWHC 846 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HP-2023-000036 |
[2024] EWHC 846 (Ch)
Mr Justice Richards
Case No: HP-2023-000036
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT
Rolls Building
Fetter Lane,
London, EC4A 1NL
Michael Bloch KC, James Segan KC, and Femi Adekoya (instructed by Kirkland & Ellis International LLP) for the Claimants
Sarah Abram KC and Josephine Davies KC (instructed by Taylor Wessing LLP and Pinsent Masons LLP) for the Defendants
Hearing date: 12 and 13 March 2024
Approved Judgment
This judgment was handed down remotely at 10.30am on 18 April 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives
This is my judgment on the following applications:
i) the Defendants' application of 5 December 2023 contesting jurisdiction as regards certain aspects of the Claimants' claims and applying to strike out part of those claims;
ii) the Claimants' application of 15 December 2023 for permission to amend their claim form and Particulars of Claim and to serve the claim as amended out of the jurisdiction;
iii) the Defendants' application, as an alternative to that set out in paragraph (i), that the claims be stayed on case management grounds; and
iv) the Claimants' application of 28 November 2023 for expedition of the trial of these proceedings.
A. BACKGROUND TO THE PROCEEDINGS
The applications that are before me can only be understood in the context of the background to proceedings between the parties, in England and Wales and elsewhere.
The parties and their businesses
The Claimants are members of the Lenovo group of companies. The Defendants are members of the Ericsson group of companies. I will tend to refer to the Claimants and the group of which they are members as “Lenovo” and the Defendants, and their group, as “Ericsson”. However, where more precision is necessary, I will refer to specific legal entities.
Both Lenovo and Ericsson own standard-essential patents (“SEPs”) which have been declared to various cellular standards promulgated by the European Telecommunications Standards Institute (“ETSI”). It follows that, pursuant to ETSI's policy on intellectual property rights (the “ETSI IPR”), both Lenovo and Ericsson have given undertakings (the “FRAND Commitment”) to offer licences of those SEPs to implementers on terms that are fair, reasonable and non-discriminatory (“FRAND”). As is now well understood, the FRAND Commitment creates rights and obligations under a contract governed by French law to which the English courts will give effect.
In addition, both Lenovo and Ericsson sell products that are compatible with technical standards set by ETSI and other standard-setting organisations (“SSOs”). Accordingly, each group's business seeks, to an extent, to exploit patented inventions of the other group.
D1 is a company incorporated in Sweden. It owns a number of patents that are registered in various jurisdictions including two UK patents (the “Challenged Patents”): EP (UK) 3,245,744 and EP (UK) 3,453,212. D1 has submitted a declaration to ETSI that the Challenged Patents are essential to various 5G standards.
D2 is a company incorporated in the United Kingdom. D2 does not itself hold any patents that are relevant to these proceedings. It has not itself submitted any declarations in relation to the Challenged Patents to ETSI. D2 describes itself in its Annual Report and Financial Statements for the year ended 31 December 2022 as “a major product and service provider to fixed and mobile telecommunications systems operators in the UK”.
C4 is the proprietor of EP (UK) 3,780,758 (the “Lenovo Patent”) which features in these proceedings. C2 has made a declaration to ETSI that the Lenovo Patent is essential to various 5G standards.
It is common ground that both C2 and D1 have given undertakings to ETSI under Clause 6.1 of the ETSI IPR in respect of the Lenovo Patent and the Challenged Patents respectively. Both have undertaken to offer FRAND licences of these SEPs to all members of a group of companies that wishes to implement them, conditional on the implementers offering a FRAND licence of their own ETSI FRAND-encumbered SEPs. It follows that, at least in principle, Lenovo and Ericsson have an obligation to offer each other's groups FRAND licences covering the Lenovo Patent and Challenged Patents respectively (a “cross-licence”).
Ongoing proceedings in other jurisdictions
Lenovo and Ericsson have been in negotiations on the terms of a global cross-licence for over a decade. Those negotiations have still not concluded satisfactorily and have been punctuated by litigation in various jurisdictions throughout the world. The following aspects of the proceedings in other jurisdictions are relevant to the applications before me.
The Eastern District of North Carolina
On 11 October 2023, D1 filed a complaint (the “EDNC Proceedings”) in the federal court for the Eastern District of North Carolina (the “EDNC”) against a number of Lenovo companies including C1, C2 and C4. The specifics of the EDNC Proceedings will be considered in more detail later in this judgment. It is sufficient at this point to note that D1 alleges that Lenovo is infringing on four of Ericsson's US patents and that Lenovo is in breach of contractual obligations under the ETSI IPR.
Significantly for these proceedings, Count 7 of D1's complaint asked (i) for a declaration that Ericsson's offer of a global cross-licence made to Lenovo on 11 October 2023 complied with its FRAND commitment under the ETSI IPR and (ii) if the EDNC considered that offer not to be FRAND, that the EDNC declare a FRAND rate for a global cross-licence of SEPs between the two groups. Whether this formulation of Count 7 (when considered together with Lenovo's counterclaim discussed below) will result in the EDNC adjudicating on the terms of a global FRAND cross-licence is a point on which the parties are far from agreed. D1 requested that its complaint be determined following a jury trial.
In December 2023, various Lenovo claimants made a counterclaim that largely mirrored D1's original complaint and included an allegation that Ericsson was infringing various Lenovo patents. Count 3 of that counterclaim sought a declaration from the EDNC setting FRAND royalty rates for a global patent cross-licence of SEPs between Ericsson and Lenovo.
Neither Ericsson nor Lenovo disputes the jurisdiction of the EDNC to determine the various complaints that have been raised in that court although Lenovo's position is that the English courts are a better forum. Ericsson's acceptance of the EDNC as an available forum is demonstrated by the fact that it chose to issue the EDNC Proceedings. Lenovo has demonstrated its own acceptance by issuing its counterclaim and also applying (unsuccessfully) to the EDNC for an anti-suit injunction restraining Ericsson from continuing with the proceedings in Brazil and Colombia discussed below.
Brazil and Colombia
In November 2023, Ericsson sought and obtained preliminary injunctions in Brazil restraining Lenovo from infringing certain of Ericsson's patents said to be essential to the 5G cellular standard. The effect of that injunction is that Lenovo is not able to sell freely its 5G products in Brazil without risking becoming liable to a penalty. Brazil was previously Lenovo's second largest market for the sale of smartphones.
Between 20 November 2023 and 1 December 2023, Ericsson filed some 30 lawsuits, including preliminary injunction applications, against Lenovo in the Colombian courts alleging infringement of its SEPs. The courts in Colombia have issued two preliminary injunctions that prohibit various members of the Lenovo group from selling 5G-capable smartphones in Colombia. Lenovo was previously one of the top smartphone suppliers in Colombia.
The US International Trade Commission
In October 2023, Ericsson commenced patent infringement proceedings against Lenovo in the US International Trade Commission (the “ITC”). In those proceedings, Ericsson seeks a “limited exclusion order” and a “cease and desist order” which would instruct the US Customs authorities to exclude various of Lenovo's products from the US.
In December 2023, Lenovo commenced its own patent infringement proceedings against Ericsson in the ITC seeking relief similar to that sought by Ericsson.
The English Proceedings
The Claimants issued Part 7 proceedings (the “English Proceedings”) against the Defendants on 13 October 2023. In its original Particulars of Claim (the “POC”) served on 15 October 2023, the Claimants sought the following relief, so far as material for present purposes:
i) A declaration that the Lenovo Patent is essential to the ETSI 5G standard and that D1 and D2 have infringed the Lenovo Patent (the “Lenovo SEP Infringement Claim”).
ii) Declarations that the Challenged Patents (i) are invalid (ii) are not essential to relevant ETSI standards and (iii) would not be infringed by certain actions. Relatedly, the Claimants seek an order for revocation of the Challenged Patents. I refer to this aspect of Lenovo's claim as the “Ericsson Patents Challenge”.
iii) Declarations (“FRAND Declarations”) as to the meaning and effect of various aspects of Ericsson's FRAND Commitment namely:
a) That Ericsson is in breach of its FRAND...
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