On 28 March 2018 the Beijing High People’s Court upheld a decision made by the Beijing Intellectual Property Court in March 2017 that Sony Mobile Communications (China) had infringed a standard-essential patent (SEP) owned by Xi’an Iwncomm, a technology firm based in China. Importantly, the Beijing High People’s Court upheld the lower Court’s decision to grant an injunction and to award damages of RMB 9.1 million (approximately £1 million) in favour of Iwncomm.
Iwncomm filed the case at the lower Court in 2015, claiming that Sony had infringed its SEP that was included in the Wired Authentication and Privacy Infrastructure (WAPI) standard, a Chinese national standard for wireless connections, in 35 models of WAPI-compliant mobile phones manufactured and sold by Sony. In order to comply with the WAPI standard, phones have to use Iwncomm’s SEP at issue. Since Sony had not licensed the SEP from Iwncomm, the lower Court ruled that Sony had infringed Iwncomm’s SEP and issued the first SEP injunction in China.
On appeal, the Beijing High People’s Court found that Sony used Iwncomm’s SEP during the research and development stages of the 35 models, but not during the production and post-production testing stages. Nonetheless, the Court concluded that, for a mobile phone manufacturer, the use of an SEP in any stage of the manufacturing process (without due licensing) would constitute a patent infringement.
he Beijing High People’s Court further pointed out that SEP infringement cases should be handled differently from regular patent infringement cases, since SEP holders are obliged to license their SEPs on fair, reasonable and non-discriminatory (FRAND) terms. In particular, the judge noted that when an SEP is part of a national technical standard and the standard is widely used in China, the SEP has a ‘lock-in’ effect and is of public interest. Noting that Iwncomm complied with its obligation in negotiating with Sony for six years on FRAND terms regarding the licensing of the SEP at issue, and that Sony was “at obvious fault” for “intentionally delaying” the negotiation process, the Beijing High People’s Court affirmed the lower Court’s decision in issuing an injunction and awarding RMB 9.1 million of damages to Iwncomm, which was triple the licensing fees involved.
This decision comes two months after the Shenzhen Intermediate People’s Court Intellectual Property Court’s decision in Huawei v. Samsung, which marked the first time a Chinese court issued an injunction in relation to international SEPs.