China has jurisdiction over SEP rates for foreign patent pools

In a landmark decision, China's Supreme People's Court (SPC) recently ruled that Chinese courts have jurisdiction over global SEP rate disputes involving foreign patent pools. This marks a significant development in the enforcement of fair licensing practices in intellectual property.

The ruling emerged from a high-profile case where China's electronics giant TCL Technology sued Access Advance (AA), a U.S. patent licensing management company operating the HEVC Advance patent pool. TCL accused AA of imposing unfairly high prices and misusing injunctions related to its standard-essential patents (SEPs). TCL sought a ruling to ensure AA's licensing rates complied with FRAND (Fair, Reasonable, and Non-Discriminatory) principles.

AA contested the jurisdiction and appealed to the Supreme People's Court. However, the court recently rejected AA's objections, confirming that Chinese courts have jurisdiction over the lawsuits. This decision aligns with previous rulings in cases involving OPPO, reinforcing Chinese courts’ jurisdiction over global patent disputes.

What makes this case particularly notable is that it addresses the antitrust and global licensing fee issues of a patent pool, a rare occurrence worldwide. The court's ruling signifies that if the global licensing rates of a patent pool are deemed unreasonable, Chinese courts can adjudicate those rates.

AA has encountered similar lawsuits regarding the HEVC Advance patent pool. Previously, Turkish consumer electronics manufacturer Vestel engaged in several years of legal battles across multiple countries with AA over licensing rates. One of these lawsuits was filed in the UK, where Vestel alleged that AA had abused its market dominance by imposing excessive SEP rates. Vestel argued that AA's rates were too high and not FRAND.

However, Vestel failed in this case as the judge ruled that UK courts lacked jurisdiction over the SEP licensing rate. Vestel's appeal was rejected, with the decision based on the small percentage of SEPs originating from the UK.