Thursday, September 16, 2021

China extends hand to EU over standard-essential patent enforcement, prefers dialog over escalation: judges from three jurisdictions spoke at today's Renmin University conference

China's response to the EU's request for information via the World Trade Organization (WTO) regarding standard-essential patent (SEP) enforcement was rather succinct. But that is only because China is confident of its compliance with the TRIPS Agreement--and should not be confused for an unwillingness to discuss SEP enforcement policies with a major trading partner.

In 2012, seven judges of the United States Court of Appeals for the Federal Circuit attended what the U.S. appeals court's website still describes as "an historic three-day conference to discuss the adjudication of intellectual property disputes." That event took place at Renmin University of China (RUC), as did the first International Symposium on Judicial Protection of Intellectual Property Rights--Transnational Dialogue and Normative Coordination a few years ago. Today, RUC hosted the "sequel" to that event, and I followed it via Zoom because it represented a splendid opportunity to listen to multiple patent-specialized judges from China, the UK, and Germany.

If the European Commission that if they missed any details in China's official answer, the EU might just ask for a recording of today's conference (approximately five hours).

The presentations by multiple Chinese judges as well as two German (Judge Klaus Bacher of the Federal Court of Justice and Judge Tobias Pichlmaier of the Munich I Regional Court) and two British judges (Justices Richard Meade and James Mellor, both of the England & Wales High Court of Justice) summarized and explained various landmark SEP rulings I've previously looked at, all the way up to the very recent jurisdictional decision in OPPO v. Sharp. No surprises there, obviously. Those presentations were all well-structured and informative. Judge Bacher didn't mention that his court expects implementers to take global portfolio licenses--maybe he omitted it because it was so obvious to him, but in this international context it bears reiterating. I think Justice Meade stole the other European judges the show in terms of content, structure, and presentation (despite not switching into full-screen mode): low-key but world-class.

Several Chinese judges (and academics) were very good. My favorite among them was Judge Zhonglin He, Deputy Chief of the Intellectual Property Court of the Supreme People's Court, who delivered the closing remarks. He made it perfectly clear that they're more than willing to talk to the EU and prefer cooperation over confrontation. In a very credible way, he stressed that the Chinese courts won't issue SEP rulings just for the sake of preserving and exercising jurisdiction. They're not maximalists but look at the specific circumstances of each case.

The differences between Chinese, British and German judicial approaches to SEP cases crystallized today:

  • The German approach is very inflexible. They order anti-antisuit injunctions without ever asking the question of whethera foreign court may actually have good reasons to declare itself the proper forum for the adjudication of a global dispute, while they (the German courts) simply exercise global jurisdiction by forcing defendants into global portfolio licenses under the threat of an injunction. What Judge Bacher said about the Huawei v. ZTE framework

    pronounced by the European Court of Justice in 2015 sounded like a step-by-step, sequential analysis, but has nothing to do with the judicial reality in Germany, which cuts corners by importing virtually everything into the first step (the sincerity of an implementer's willingness to take a license).
  • The British judges were very forthright about how things work in the UK. With respect to the availability of injunctions (not only but also in the SEP context), there is a framework that looks like eBay v. MercExchange, but normally an injunction issues (even in favor of non-practicing entities). Antisuit injunctions are available, but international comity is considered. Where the UK judiciary goes further in a procedural sense than its German counterparts is that British judges set global rates even if only the patentee asks them to do so--but in practice, what German courts do has the same effect, just that implementers will, on average, end up paying more as German courts only throw out facially absurd royalty demands.

  • China's approach is very case-specific, and what positively surprised me is that the Chinese judges who spoke at today's conference sounded as policy-focused as pragmatic. Their policy focus is to provide guidance to the parties to SEP disputes, enabling them to reach an agreement. European companies and officials always take note when a Chinese court determines that it is in the position to set a global rate or to hand down an antisuit injunction--but it's not like anybody with even a tenuous connection with China could just go there and have a global dispute adjudicated in China. The underlying rationale is actually very nuanced. It may seem counterintuitive, but the way those Chinese judges spoke today was actually closer to how U.S. judges discuss patent issues than what I typically hear from British and German judges.

Today's conference wasn't going to solve the problems at hand, which are forum-shopping by parties and forum-selling by some (European) judges. But I believe it made an important contribution. I saw that some of the European judges, above all Judge Pichlmaier, followed large parts of the symposium.

It would be great if someone--ideally a political body or renowned academic institution--could organize such a gathering of judges in Europe and invite Chinese judges and academics to speak. To an EU event I would also recommend to invite U.S. judges, such as Judge James L. Robart of the United States District Court for the Western District of Washington, a thought leader on FRAND since his landmark Microsoft v. Motorola case.

There is, however, only so much that judicial dialog can achieve. Ultimately, when the judges go home from such a conference, they have to apply their national laws, and structural differences are a barrier to harmonization. Policy makers should engage in similar discussion.

At the next event of this kind, the focus should be on potential solutions that would satisfactorily address the problem of extraterritorial overreach in the SEP enforcement context.

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