Vestel Elektronik Sanayi ve Ticaret A.S. (2) Vestel UK Limited v (1) Access Advance LLC (2) Koninklijke Philips N.V. [2021] EWCA Civ 440.
Vestel manufacturers televisions which are sold under various brands including Toshiba, Hitachi, Telefunken and Panasonic. Such televisions use High Efficiency Video Coding (HEVC) technology defined in a standard called H.265. A large number of patents have been declared essential to the H.265 standard (so called "standard essential patents" or SEPs). Access Advance is a company which administers the HEVC Advanced pool of patents for the H.265 standard. Philips is the owner of certain SEPs in the HEVC Advanced pool. Patents declared essential to the H.265 standard are required to be licensed on terms that are Fair, Reasonable and Non-Discriminatory (FRAND).
Vestel accepted that it needed a worldwide licence to the HEVC Advanced pool or a licence from Philips directly, but contended that the terms it had been offered by Access Advance were not FRAND.
Vestel originally brought a competition law claim in the English Courts against Access Advance and Philips for abuse of dominance under Article 102 Treaty on the Functioning of the European Union (TFEU) and section 18 of the Competition Act 1998. The argument being that Access Advance and Philips had abused their dominant positions by failing to offer Vestel a licence on FRAND terms. Part of the relief sought for the alleged abuse of dominance by Vestel was a declaration of the FRAND terms for the HEVC Advanced pool.
As Access Advance and Philips are both based outside of the UK, Vestel needed to demonstrate that the English Court had jurisdiction to hear its claim. The High Court held that the English Court had no jurisdiction in December 2019. Vestel was granted permission to appeal this decision to the Court of Appeal.
In early 2021, Vestel made what the Court of Appeal referred to as a "radical" change to its case on appeal. Vestel dropped its competition law claim that Access Advance and Philips had abused their dominant positions. Vestel instead sought to characterise its claim for a declaration of FRAND terms for HEVC Advanced pool as a claim for a declaration of non-liability for infringement of the UK standard essential patents in the pool.
The Court of Appeal held that there is no such thing as a free standing FRAND claim and Vestel had not identified any legal right to the declarations sought.
As noted by the Court of Appeal, the legal context for this dispute arises from a series of cases, which culminated in the judgment of the Supreme Court in Unwired Planet v Huawei [2020] UKSC 37. By that judgment, the existence of the English Court's jurisdiction to make FRAND declarations was confirmed. However, the FRAND declaration was granted as part of the remedy for infringement of UK patents on the basis that if an implementer of the relevant standard is not prepared to enter into a licence declared by the English Court to be FRAND, then the patent owner is entitled to an injunction. The reason this case is different is because it was an implementer (Vestel) who sought a FRAND declaration and there was no underlying claim for patent infringement on which to base the English Court's jurisdiction.
