Vestel Elektronik Sanayi Ve Ticaret A.S. & Anor v Access Advance LLC & Anor

Factual and Procedural Background

This appeal arises from an order of a High Court judge dated 16th December 2019, which set aside service of the claim form out of jurisdiction and declared that the court had no jurisdiction to hear the claim. The claimants appeal with leave partly from the judge and partly granted by the Court of Appeal. The claim concerns a dispute between two appellants, collectively referred to as Vestel, a group based in Turkey making televisions and selling them in the UK, and two respondents: a Dutch technology company (Philips) and a US-based company (Access Advance) which administers a patent pool.

The dispute centers on licensing of patents essential to the High Efficiency Video Coding (HEVC) standard (H.265), specifically concerning whether the licensing terms offered by Access Advance and Philips are Fair, Reasonable, and Non-Discriminatory (FRAND). Vestel contended that the offered royalty rate was excessive compared to another patent pool's rate. The original claim was brought as a competition law claim for abuse of dominance under EU and UK law, alleging failure to offer FRAND licenses and excessive royalty demands.

The jurisdictional challenge arose because the respondents were overseas companies. The court below ruled that the jurisdictional gateways relied upon by Vestel were not satisfied, and the claim was dismissed for lack of jurisdiction. Vestel sought to amend their pleadings and grounds of appeal, including dropping the abuse of dominance claim and seeking declarations regarding FRAND terms under the court's inherent jurisdiction.

Legal Issues Presented

1. Whether the court has jurisdiction to hear the claim under Article 7(2) of EU Regulation 1215/2012 (Brussels 1 Recast) and the relevant Civil Procedure Rules (CPR) jurisdictional gateways.
2. Whether claims for declarations concerning FRAND licensing terms can be characterized as claims in tort (patent infringement) to satisfy jurisdictional gateways.
3. Whether the claim relates "wholly or principally" to property within the jurisdiction under gateway 11 of CPR PD 6B.
4. The applicability and scope of the court's inherent jurisdiction to grant declarations in the absence of a pleaded legal right to a FRAND licence.
5. Whether amendments to pleadings raising new points of law should be permitted on appeal.
6. Whether grounds related to forum non conveniens and other jurisdictional gateways apply given the above issues.

Arguments of the Parties

Appellant's Arguments

• The claimants argued that the court has jurisdiction under Article 7(2) and CPR gateway 9 by characterizing the claim as a negative declaration in a tort claim for patent infringement.
• They contended that the claim falls within gateway 11 because it concerns UK patents, which constitute property within the jurisdiction, and the court's inherent jurisdiction should permit declarations even absent a pleaded legal right.
• They sought permission to amend pleadings to remove the abuse of dominance claim and rely on inherent jurisdiction and tort grounds for jurisdiction.
• They argued that the amendments raised pure points of law arising from existing facts and evidence and should be allowed.
• They referenced ITU rules requiring FRAND licensing commitments, suggesting a basis for declarations.

Respondents' Arguments

• The respondents contended that the claimants failed to establish jurisdiction under Article 7(2) and CPR gateways because there was no credible evidence of damage within the jurisdiction.
• They argued that Access Advance is not a patent owner, so claims of non-liability in tort against it are misplaced.
• They maintained that the claimants had no pleaded legal right to a FRAND licence, so the claim does not fall within gateway 11 or justify exercise of inherent jurisdiction.
• They opposed the amendments as raising a new case not advanced below and argued that allowing them would turn the appellate court into a court of first instance.
• They submitted that the claimants’ reliance on ITU rules was not supported by any pleaded enforceable legal right.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by reviewing the procedural history and the nature of the claims, noting the shift from an abuse of dominance claim to a claim solely for FRAND declarations. It emphasized that unlike prior cases such as Unwired Planet, this case lacks a patent infringement claim and a pleaded legal right to a FRAND licence.

On jurisdiction under Article 7(2) Brussels 1 Recast and CPR gateway 9, the court held that claims for declarations of non-liability in tort are within scope, but the FRAND declarations sought here do not constitute such claims. They are not claims for non-liability but requests for declarations about licensing terms without an underlying legal right asserted by the claimants.

The court further noted that Access Advance is not a patent owner, undermining the tort claim basis against it. The absence of a pleaded legal right to a FRAND licence means the claimants cannot satisfy gateway 11, which requires a claim relating to property within the jurisdiction. While UK patents qualify as property within the jurisdiction, the claimants’ current case is for the court’s inherent jurisdiction to grant declarations without a legal claim, which the court found has no reasonable prospect of success.

Regarding the amendments, the court allowed them, recognizing that new pure points of law arising from the same facts and evidence can be raised on appeal. However, this procedural concession did not assist the claimants substantively.

The court carefully analyzed relevant precedents, distinguishing the present case from those where enforceable contractual rights under standard-setting policies gave rise to jurisdiction. It stressed the necessity of an identifiable legal right or claim for the court to exercise jurisdiction and grant declaratory relief.

Holding and Implications

The court DISMISSED the appeal in its entirety.

The direct consequence is that the claimants’ attempt to bring claims for FRAND declarations without a pleaded legal right to a FRAND licence, and without an underlying patent infringement claim, cannot proceed in this jurisdiction. The court confirmed that jurisdictional gateways under Brussels 1 Recast and CPR require more than a request for declaratory relief absent an enforceable right. No new precedent was established beyond clarifying the limits of jurisdiction in the context of FRAND licensing claims and the requirement for a legal claim to support declaratory relief.