CA-2025-001926 - [2025] EWCA Civ 1383

Appeal grounds 1 and 2 and the respondents’ notice grounds: bad faith

Appeal grounds 1 and 2 and the respondents’ notice grounds are all inter-related and fall to be considered together. Although Samsung argued that the judge’s decision that ZTE had acted in bad faith involved an evaluative assessment which could only be interfered with on the limited grounds identified in Lifestyle Equities CV v Amazon UK Services Ltd [2024] UKSC 8, [2024] Bus LR 532 at [46]-[50] (Lord Briggs and Lord Kitchin) and Iconix Luxembourg Holdings SARL v Dream Pairs Europe Inc [2025] UKSC 25 at [94]-[95] (Lord Briggs and Lord Stephens), these grounds raise the issue of principle identified in paragraph 1 above.

It is important to emphasise before proceeding further that this case is to be distinguished from Panasonic v Xiaomi and Lenovo v Ericsson. As I have explained, in those cases this Court concluded that the SEP owners were acting in bad faith because they were attempting by means of claims for injunctive (or equivalent) relief in other jurisdictions to force the implementers to agree to terms more favourable to the SEP owners than a court would order. The judge acquitted ZTE of any such intention, and there is no challenge by Samsung to that aspect of his decision. The judge’s decision to grant the declarations sought by Samsung was based solely on his conclusion that ZTE were acting in bad faith by bringing claims for injunctive relief in other jurisdictions which were intended to try to force Samsung to agree to FRAND determination by the Chongqing Court rather than by the English courts. Neither Panasonic v Xiaomi and Lenovo v Ericsson involved the SEP owner seeking to force the implementer to accept the SEP owner’s preferred forum for FRAND determination.

Counsel for Samsung emphasised the submissions which he made and I accepted in Panasonic v Xiaomi at [79]-[80], and reiterated in Lenovo v Ericsson at [106]: first, the only role for an injunction in the FRAND regime is to enforce the SEP owner’s entitlement to financial compensation for the implementer’s exploitation of its SEPs; and secondly, the implementer is entitled to an uninterrupted licence from day one provided that it is willing to take a licence on FRAND terms. These submissions do not assist Samsung in the present case because the parties are agreed that there should be an interim licence, and the only dispute is as to which court should determine FRAND terms for the final cross-licence.

I agree with Samsung and the judge that the starting point here is that the English courts were first seised of the dispute as to what terms for the final cross-licence are FRAND. Although counsel for ZTE criticised Samsung for commencing the proceedings when and in the manner they did, the judge did not accept this criticism and there is no challenge by ZTE to that aspect of his decision.

Counsel for Samsung submitted that the Patents Court was a suitable forum for the determination of the dispute because (i) it is a neutral forum in the sense that neither of the parent companies is domiciled here and (ii) it is experienced in FRAND determination. I accept that submission, but it does not follow that other fora would not be equally suitable for the determination of the dispute. In that regard I would point out that the fact that a particular forum does not yet have experience in FRAND determination does not mean that it would not be perfectly competent to do so. For example, there can be no doubt that the Munich I Regional Court and the UPC would both be entirely competent (in every sense) to undertake FRAND determination as well as being neutral fora.

The judge rejected Samsung’s criticisms of the Chongqing Court, and there is no challenge by Samsung to that part of his decision. It follows that, subject to the question of neutrality, it is also a suitable forum for the determination of the dispute.

The judge made no finding that Chongqing was not a suitable forum because it is located in ZTE’s home state. Samsung contend by their respondents’ notice ground 1 that it is inappropriate for ZTE to insist upon determination by a court in their home state. In support of that contention Samsung rely upon (i) the general practice in the arbitration of international commercial disputes of appointing arbitrators of neutral nationality and (ii) the agreement by the parties that this would be appropriate in the present context (see paragraph 39 above). Samsung are careful to make it clear, however, that they do not suggest that the Chongqing Court is liable to be biased.

As counsel for ZTE submitted, Samsung’s contention is contrary to commonly-accepted principles of private international law. By virtue of Article 4 of European Parliament and Council Regulation 1215/2012/EU of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast)(the Brussels I Regulation), the normal rule of jurisdiction is that a defendant should be sued in the courts of the Member State in which it is domiciled. Other bases of jurisdiction are exceptions to that normal rule. Similarly, applying common law principles in both the service out and forum non conveniens contexts, the location of the parties is a factor favouring forum, not against it. It is true that ZTE is the claimant in the Chongqing Court, not the defendant. It is also true that, on this basis, the courts of South Korea would be an equally suitable forum. The point remains that there can be no objection of principle to a party’s desire to litigate in the courts of its home state. Furthermore, as the judge recognised at [108]-[109] (see paragraph 46 above), in the present case there are considerations of practicality which favour this, at least when viewed from ZTE’s perspective.

As Samsung emphasise, ZTE have not challenged the jurisdiction of the English courts. Furthermore, as the judge noted, although the interim licence terms proposed by ZTE in March would have required the dismissal or stay of all other proceedings pending the determination of the Chongqing Court, revised terms proposed by ZTE in April excepted these proceedings from that. It follows that the Patents Court will determine what terms are FRAND at the trial scheduled for 12 January 2026 whether the declarations made by the judge stand or not.

Samsung contend by their respondents’ notice ground 2 that ZTE’s proposed interim licence terms amount to a forum non conveniens challenge by the back door. As ZTE submit, however, this argument relies on a non sequitur. It is undisputed that the English courts have jurisdiction to determine Samsung’s claims, including their claim for a FRAND determination. It does not follow, however, that ZTE are obliged to commit, in advance of the English FRAND trial, to be bound by the FRAND terms set by the English courts in preference to the terms set by the Chongqing Court.

As ZTE emphasise, Samsung’s challenge to the jurisdiction of the Chongqing Court has failed. Hence the Chongqing Court is already engaged in FRAND determination.

This means that, as the judge rightly concluded, the proceedings brought by ZTE in Chongqing are unnecessary and duplicative. At best, they have led to a significant increase in costs for both parties for no good reason. Worse, this creates a real risk of inconsistent decisions. These are precisely the problems I identified in Nokia v OPPO at [16].

It is important to recognise, however, that, if ZTE had commenced proceedings in the Chongqing Court first, the boot would have been on the other foot. In those circumstances, any proceedings brought by Samsung in England would have been equally unnecessary and duplicative.

ZTE contend that, although the judge said that “first seised” was “a tie breaker in an appropriate case” rather than a “trump card” ([119] quoted in paragraph 48 above), in reality his reasoning depends on treating which court was first seised as determinative of the question of whether ZTE is acting in bad faith by attempting to force Samsung to agree to determination by the Chongqing Court. I agree with this, as I shall explain.

Against that background, I can now turn to the issue of principle. In my judgment, unless there is a legitimate and substantiated objection to the forum in question, it does not constitute bad faith for a SEP owner to seek to force an implementer to accept determination of FRAND terms by the SEP holder’s preferred court rather than the implementer’s preferred court.

If (and I emphasise if) there is a legitimate and substantiated objection to determination of FRAND terms by the forum in question, then there may (and I emphasise may) in an appropriate case be a remedy by way of an anti-suit injunction. In the present case, however, both parties have laudably refrained from seeking anti-suit injunctions: Samsung have not applied to the English courts for an injunction restraining ZTE from pursuing the proceedings in Chongqing, nor have ZTE applied to the Chongqing Court for an injunction restraining Samsung from pursuing the English proceedings. (ZTE’s application in respect of Samsung’s ETSI complaint stands in a completely different position.)

Whether or not anti-suit relief would be available if there were a legitimate and substantiated objection to determination of FRAND terms by the Chongqing Court, Samsung have not substantiated any legitimate objection to this. Indeed, as the judge noted, Samsung have not seriously attempted to do so.

If it is not illegitimate for the Chongqing Court to determine FRAND terms, I do not see how it can be bad faith for ZTE to use legal proceedings which it is not suggested are not otherwise properly open to ZTE to put pressure on Samsung to agree to that course. Such conduct is unattractive, and I should not be taken to endorse it, but that is not sufficient to constitute bad faith.

As I have explained in numerous judgments, a SEP portfolio will typically include patents which subsist in multiple jurisdictions. Patents are territorial, but the contractual defence provided by the FRAND obligation is global. It follows that the possibilities both of parallel SEP infringement proceedings and parallel FRAND determinations in multiple jurisdictions are inherent in the current system. The principled answer to this might be that the court first seised should determine what terms are FRAND, but that answer has a number of negative consequences. One of these is that it encourages forum shopping by pre-emptive commencement of proceedings. As the judge recognised, forum shopping is to some extent inevitable in this context, but it should be discouraged rather than encouraged. Even if the English courts consider that jurisdiction should be exercised by the court first seised, this cannot be said to be an answer that commands universal assent: as I pointed out in Nokia v OPPO, there are no internationally agreed jurisdictional rules applicable to FRAND disputes. If the principle of ceding jurisdiction to the court first seised was internationally accepted, the Chongqing Court would have declined jurisdiction as the court second seised. The fact that the English courts were first seised is therefore not a sufficient basis for a conclusion that ZTE have acted in bad faith. Given that ZTE were otherwise entitled to bring the infringement proceedings of which Samsung complain, there is nothing else to support the conclusion that ZTE have acted in bad faith.

I would add that another problem which this case illustrates is that, if jurisdiction is not ceded to the court first seised, the court first seised is not guaranteed to be the first to decide. As the parties agreed during the course of argument, the consequences of this will have to be worked out in due course.

Ground 3: unduly extensive relief

This ground was not developed by counsel for ZTE in oral argument, and it is unnecessary to say anything about it.