Reed Smith Client Alerts

The decision of February 6, 2020 by the case management judge of the Paris High Court (Tribunal Judiciaire) is of great importance in terms of both the legal qualification of the undertaking of the owner of patents essential to the implementation of standards to grant to anyone a fair, reasonable and non-discriminatory (FRAND) license, and the importance of Paris as a future venue for so-called FRAND disputes.

Authors: Marianne Schaffner Christophe Arfan

Article 6 of the IPR Policy of European Telecommunications Standards Institute (ETSI), the European standards organization for the telecommunications sector, stipulates: “When an ESSENTIAL IPR relating to a particular STANDARD or TECHNICAL SPECIFICATION is brought to the attention of ETSI, the Director-General of ETSI shall immediately request the owner to give within three months an irrevocable undertaking in writing that it is prepared to grant irrevocable licences on fair, reasonable and non-discriminatory (“FRAND”) terms and conditions under such IPR.”

The legal definition of  “FRAND undertaking” has been disputed for many years. The ETSI rules are governed by French law, but this question has never been referred to the French courts, while legal analysis of the meaning in the UK and Germany has reached divergent conclusions.

This case gives the Paris High Court the opportunity to qualify the meaning of the “FRAND undertaking.” And at this stage, the case management judge considers that this would amount to a stipulation pour autrui (third-party beneficiary clause) within the meaning of Article 1205 of the French Civil Code.

Background

The dispute concerns standard essential patents relating to the 3G/UMTS and 4G/LTE standards owned by Philips companies (“Philips”). These patents have been declared to ETSI.

In early 2015, Philips approached the TCL group companies (TCL) to invite them (“in accordance with its undertakings to ETSI”) to join its patent licensing program relating to these standards but no agreement was reached.

Details 

In 2018, Philips sued TCL for infringement of the UK part of its patents before the High Court of Justice of England and Wales, including claims seeking an injunction prohibiting the infringement and the recall of the allegedly infringing products.

In February 2019, TCL filed a lawsuit before the Paris High Court, seeking, inter alia, to enjoin Philips to grant a license on FRAND terms, which the court had jurisdiction to determine, and to enjoin ETSI to assist with the granting of the license, including through its exclusion from the standards, as provided for in ETSI’s rules.

In July 2019, Philips filed a motion before the case management judge for a lack of jurisdiction of the Paris court to hear the claims brought against Philips, based on Article 8.1 of Regulation (EU) No. 1215/2012said Brussels I bis,1 in favor of the UK High Court. Philips filed an auxiliary motion for lis pendens and related actions under Articles 29 and 30 of the Regulation.