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This is an informal case summary prepared for the purposes of facilitating exchange during the 2024 WIPO IP Judges Forum.

Session 2: Standard Essential Patents

Supreme People’s Court of China [2021]: OPPO Guangdong Mobile Communications Co., Ltd. and OPPO Guangdong Mobile Communications Co., Ltd. Shenzhen Branch v Sharp Corporation and ScienBiziP Japan

Date of judgment: August 19, 2021

Issuing authority: The Supreme People’s Court of the People’s Republic of China

Level of the issuing authority: Final Instance

Type of procedure: Judicial (Civil)

Subject matter: Patents (Inventions)

Plaintiffs-Respondents: OPPO Guangdong Mobile Communications Co., Ltd.; OPPO Guangdong Mobile Communications Co., Ltd. Shenzhen Branch

Defendants-Appellants: Sharp Corporation; ScienBiziP Japan

Keywords: SEP, Jurisdiction, Terms of global license

Basic facts: The plaintiffs are OPPO Guangdong Mobile Communications Co., Ltd., a global intelligent terminal manufacturer and mobile internet service provider, and its subsidiary, Shenzhen Branch.  The plaintiffs are hereinafter collectively referred to as OPPO.

The defendants are Sharp Corporation, a well-known Japanese electrical and electronics company, and its wholly-owned subsidiary ScienBiziP Japan, which is responsible for all Sharp’s SEP license negotiations.  The defendants are hereinafter collectively referred to as Sharp.

Beginning in October 2018, the parties negotiated licenses of Sharp’s SEPs in the field of wireless communications, through emails and offline meetings in Shenzhen, China.  Failing to reach an agreement, OPPO filed a lawsuit in Shenzhen Intermediate People’s Court on March 25, 2020, asking the Court to establish that Sharp had violated its FRAND commitments and to determine the terms of a global license for Sharp’s portfolio of SEPs for 3G, 4G and WiFi.  Sharp filed an objection to the jurisdiction of Chinese courts over the terms of the global license of SEPs involved in this case.

The Shenzhen Intermediate People’s Court dismissed Sharp’s jurisdictional challenge.  Sharp then appealed to the Supreme People’s Court of China.

Held: On the question of whether a Chinese court has jurisdiction over the case, the Supreme People’s Court held that, having examined the various factors that may be taken into consideration in determining whether a dispute possesses proper connection with China, Chinese courts have jurisdiction over the case.

On the question of whether Chinese courts have jurisdiction to determine the terms of a global license for the SEPs involved in the case, the Supreme People’s Court held that, because of the parties’ demonstrated intent to negotiate a global license for the SEPs, as well as the close connection between the SEP license dispute and China, it is appropriate for a Chinese court to determine the global license terms.

Relevant holdings in relation to standard essential patents (particularly, jurisdiction and remedies, with special regard to injunctions and the role of the court in SEP disputes): The Supreme People’s Court held the following:

1. Whether the Chinese court has jurisdiction over this case

The essence of an SEP license dispute asks the court to determine the specific license terms, so as to urge both parties to conclude or enforce a license agreement.  Therefore, this kind of dispute is relatively more contractual in nature.

Considering the aforementioned characteristics of such disputes, and the fact that Sharp is a foreign enterprise without a domicile or a representative office in China, the following factors may be taken into consideration to determine whether the dispute has proper connection with China: the place where the patents involved were granted; the place where the patents are implemented; the place where the patent license agreement was signed or negotiated; the place where the patent license agreement is performed; and the place where the property available for seizure or enforcement is located, etc.  As long as one of the aforementioned places is within the territory of China, the case shall be deemed to have appropriate connection with China, and Chinese courts shall have jurisdiction over it.

In this case, the SEP portfolio involves a great number of Chinese patents; the manufacturing activities of OPPO to implement the involved SEPs occurred in China; and the parties had negotiated licenses for the involved SEPs in Shenzhen, China.  Therefore, Chinese courts have jurisdiction over this case, as China is where the patents were granted, the SEPs were implemented, and the licensing of the SEPs was negotiated.

2. Whether Chinese courts have jurisdiction to determine the terms of the global license for the SEPs involved in this case

Whether it is appropriate for Shenzhen Intermediate People’s Court to rule on the terms of the global license for the SEPs should be considered comprehensively based on the facts of the jurisdictional dispute and in combination with the particularity of SEP license disputes.

First, all the parties in this case had the intent to reach an agreement on the terms of a global license for the SEPs and had negotiated it.  The scope of the parties’ intention to negotiate constitutes the factual basis for the jurisdiction to determine the terms of the global license for the SEPs involved in this case.

Second, the SEP license dispute in this case is more closely connected with China.  Most of the SEPs involved in the license negotiations are Chinese patents; China is the main place of implementation, the main place of business and the main source of revenue of the implementer of the SEPs involved; China is the place where the license negotiations took place; and China is also the place where the property of the patent licensee is available for seizure or enforcement.  It would be more convenient not only to find out the facts of OPPO’s implementation of the SEPs involved, but also to enforce a court decision, if Shenzhen Intermediate Court was to rule on the terms of the global license for the SEPs involved in this case.

Finally, it should also be noted that if the parties can reach an agreement on the forum in which the terms of the SEPs’ global license are to be determined, that court certainly has jurisdiction.  However, agreement on forum is not the necessary condition for a court to have jurisdiction over the terms of the SEPs’ global license.  Where the parties demonstrate willingness on global licensing and the case is more closely connected with Chinese courts, it is appropriate for a Chinese court to determine the terms of the global license for the SEPs involved.

Relevant legislation: Article 265 of the Civil Procedure Law of the People’s Republic of China (revised in 2017).