UK court fast-tracks FRAND determination of Panasonic’s 4G portfolio

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Case name and reference

Panasonic Holdings Corporation v Xiaomi Technology Limited and Ors [2023] EWHC 2871 (Pat)

Panasonic Holdings Corporation v Xiaomi Technology Limited and Ors [2023] EWHC 2872 (Pat)

Court

High Court of Justice

Business and Property Courts of England and Wales

Intellectual Property List (ChD)

Patents Court
Parties

Panasonic

Xiaomi

Oppo
Cause of actionInfringement

On 8 November 2023 Justice Meade granted implementer Xiaomi’s request to schedule a FRAND trial as early as October 2024. Until now, the general practice in UK FRAND proceedings has been that two or more technical trials on infringement and validity issues should take place before the FRAND trial, meaning that the FRAND trial can take place over two years after the start of proceedings. While the shift in the court’s approach to trial sequencing was foreshadowed in Nokia v Oppo in July 2023 (see “United Kingdom: SEPs and FRAND – litigation, policy and latest developments”), Justice Meade’s decision suggests not only that FRAND early or first could become the new normal but also that FRAND trials, at which the court has historically had to deal with complicated confidentiality issues in the disclosure of comparable licences and voluminous expert evidence, can (and perhaps should) be prepared and heard within a year.

Case background

On 31 July 2023 Panasonic brought an infringement action against various Xiaomi and Oppo companies, asserting infringement of four SEPs declared to be essential to 4G. The Japanese electronics company sought the usual relief in UK FRAND proceedings, which includes a FRAND determination. Xiaomi and Oppo filed defences seeking the revocation of Panasonic’s patents and contended that they are willing licensees and Panasonic is an unwilling licensor.  

A hearing took place on 3 and 8 November 2023 to determine the trial sequence and timing.

The parties’ positions at the hearing

Xiaomi sought an expedited FRAND trial in July 2024 or in the court term beginning in October 2024 (the Michaelmas term) with no technical trials.

Panasonic opposed expedition on the basis that the parties could not prepare for a FRAND trial by Xiaomi’s suggested dates and proposed February 2025 instead.

Oppo was content with either the 2024 Michaelmas term or February 2025 but opposed July 2024. In contrast to Xiaomi, Oppo wanted technical trials as Panasonic’s portfolio was yet to be tested in litigation. The parties agreed that two technical trials could take place after the FRAND trial.

Panasonic and Xiaomi were also prepared to enter into the licence determined by the UK court; Oppo was not.  

Xiaomi’s conduct receives praise from the court

The court commended Xiaomi’s acceptance that it needed a licence and would take one on the court’s FRAND terms without the trouble of numerous technical trials that use up court time and result in additional costs for the parties. Justice Meade described it as “what the Patents Court would ideally like to see”.

On the first day of the hearing, Xiaomi went further and said it was prepared to immediately enter into the licence determined at first instance, reserving its right to have the licence varied on appeal if appropriate. In the past, SEP owners and implementers have undertaken to enter into the licence as finally determined by the UK courts following any appeals. By the second day, both Panasonic and Xiaomi agreed to give reciprocal undertakings to enter into the court’s FRAND licence, which would also deal with the position that the licence might be adjusted on appeal. Xiaomi also agreed, subject to expedition being granted, that the issues of Panasonic’s past conduct and alleged breach of competition law did not need to be considered.

Injunction risk from parallel proceedings

Xiaomi’s main concern was the risk that Panasonic might obtain and enforce an injunction in its proceedings in Germany or before the UPC in advance of the UK court’s FRAND determination and that, in those circumstances, it might be forced either to agree to supra-FRAND rates or even to leave the market in other jurisdictions.  

On the hearing’s first day, it appeared that Panasonic was willing not to enforce injunctions obtained at the UPC or in Germany pending the UK FRAND trial. However, on the second day, Panasonic refused to give that undertaking, even if Xiaomi were bound to enter into the UK court-determined licence. Panasonic contended that it was up to the UPC and German courts to determine whether to grant and permit enforcement of any injunctive relief and that, if Xiaomi wanted to object, those courts were the fora in which to do so. Panasonic did not want to tie its hands on the question of enforcement of substantive relief for infringement of its foreign patent rights (including of a first-instance injunction as early as next summer) if the German or UPC courts concluded that it was entitled to it.

Panasonic criticised and FRAND trial expedited to Michaelmas term 2024

Justice Meade described Panasonic’s change in position as “a striking and…aggressive U-turn” that undermined the atmosphere of candour and trust between the parties and the court, which is generally required for case management of UK FRAND proceedings. He found that Panasonic’s explanation “lack[ed] coherence and credibility”.

The court expedited the FRAND trial to the Michaelmas term 2024 for two reasons. First, to reduce the injunction risk, which, the judge held, Xiaomi was rightly concerned about. Second, to allow the UK court-determined licence to be decided and entered into as soon as possible to bring to a close Panasonic’s litigation in other countries. The judge also recorded in his judgment – for the German and UPC judges’ benefit if faced with an application from Panasonic for the grant and enforcement of a first-instance injunction – that he was operating on the assumption that a FRAND licence between Panasonic and Xiaomi would definitely result from the UK FRAND trial. 

Justice Meade also made clear that, despite Panasonic’s objection, “a year is a long time to get a matter such as this ready”.

Main takeaway for future UK FRAND cases

English judges are aware of the amount of time and costs that FRAND proceedings in the United Kingdom involve and are conscious of managing cases so as to reduce both. In doing so, they are likely to look increasingly to parties to take realistic positions and to take a dim view of those that do not.

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