China’s Supreme People’s Court Again Affirms Right to Set Global Licensing Rates for Standard Essential Patents

On September 4, 2023, China’s Supreme People Court’s (SPC) affirmed that Chinese courts have jurisdiction over global licensing rates for standard essential patents (SEPs) belonging to InterDigital. In case (2023) 最高法知民辖终282 号, the SPC upheld case (2022)粤73民初195号 where OPPO requested that the Guangzhou Intellectual Property Court rule that the determination of global fair, reasonable, and non-discriminatory (FRAND)  licensing terms for SEPs held by Inter Digital (IDT) are subject to Chinese jurisdiction. This follows similar rulings in OPPO vs. Sharp and OPPO vs. Nokia.

On January 13, 2022, the Guangzhou IP Court ruled for OPPO holding that: (1) The subject matter of the license involved several Chinese patents, and OPPO manufactures or otherwise implements the patents in China. Therefore, the courts of China, whether as the courts at the places where the patent right was granted, at the places where the patent is implemented, or at the places where the license was negotiated, have jurisdiction over this case according to law. (2) Dongguan City is the main place of research and development and production of OPPO, and is the main place of patent exploitation, and this Court has jurisdiction according to law. (3) The patent infringement lawsuit filed abroad is obviously different from the lawsuit in this case, and therefore this case does not constitute duplicative litigation. InterDigital appealed to China’s Supreme People’s Court, which rejected InterDigital’s appeal.

The Supreme People’s Court reasoned:

1. Regarding the jurisdiction over standard essential patent royalty disputes, the place where the patent right is granted, the place where the patent license is implemented, the place where the patent license contract is negotiated, and the place where the property can be seized or executed can constitute the geographical connection point for the jurisdiction of the dispute. In this case, OPPO is manufacturing the subject matter of the license in China. It can be reasonably foreseen that after the two parties reach a licensing agreement, the main place of performance of the license will also be in China. Therefore, China has an appropriate nexus with the SEPs in this case, whether it is the place where the patent right is granted, the place where the patent is implemented, or the place where the standard essential patent license is negotiated and where performance of the license is reasonably foreseeable. Therefore, the Chinese court has indisputable jurisdiction over this case.

2. Although InterDigital has filed patent infringement lawsuits against OPPO and its affiliated companies the United Kingdom and other countries, the evidence on file is insufficient to prove that both parties have reached an agreement on the global rate determined by the British court.

3. The two parties have negotiated on the global licensing conditions for the standard essential patents involved in the case, and both parties are willing to reach a global licensing agreement. Therefore, this case has the factual basis to determine the global licensing conditions for the standard essential patents involved. Moreover, OPPO is a Chinese enterprise, and China is its main implementation place and main place of business for implementing the standard essential patents involved in the case, and China is also the location where the licensee’s property can be seized or a judgement enforced. Therefore, the dispute over standard essential patent royalties in this case has a close nexus with China.