Supreme People's Court of China Asserts Jurisdiction over Global SEP Licensing Disputes: A Glimpse into OPPO vs. Nokia Ruling

On September 7, 2022, China's Supreme People's Court's Intellectual Property Court (SPC) issued the final jurisdictional ruling on the global licensing dispute between OPPO and Nokia. This reaffirms the jurisdiction of Chinese courts over global licensing fee disputes involving Standards Essential Patents (SEPs).

SEPs refer to patents that are indispensable for adhering to a standard in industries like telecommunications, mobile phones, and global navigation systems. As per the Fair, Reasonable, and Non-Discriminatory (FRAND) principle, any SEP holder is obliged to grant patent licenses fairly and without discrimination to ensure standard compliance.

The ruling on the OPPO-Nokia dispute marks the first instance of China's top judicial authority articulating its stance in a 5G-related SEP dispute. As per the China Institute of Information and Communication Organization, by 2022's end, over 84,900 SEPs for 5G technology were declared worldwide. Nokia and OPPO rank 6th (6.82%) and 9th (4.19%), respectively, in terms of global SEP ownership, with Huawei, Qualcomm, and Samsung leading the pack.

Nokia appealed to the SPC when the Chongqing First Intermediate People's Court affirmed its jurisdiction over the OPPO-Nokia dispute regarding Nokia's SEPs global license rates. The SPC upheld the initial ruling based on three-step criteria.

First, the SPC asserted Chinese courts' jurisdiction, stating that as the contract negotiation and SEP granting took place in China, and since the contractual obligations were to be fulfilled there, China was inherently connected to the dispute.

Second, the SPC determined Chongqing Court's jurisdiction, citing the SEP holder's obligation to enter into FRAND-compliant license agreements. Given that the OPPO-Nokia dispute arose post contract, it was deemed a contractual dispute. As OPPO conducts its operations, sales, and product usage predominantly in Chongqing City, the city was deemed the main place of contract performance, thus affirming Chongqing Court's jurisdiction.

Finally, the SPC ruled that Chongqing Court was competent to decide the global licensing conditions of the SEPs in question. Notably, a significant proportion of the SEPs involved were owned by Nokia's Chinese entities. With China being a major source of the projected revenue and OPPO's primary operating location, adjudicating the case in China offered geographical advantages for assessing the SEPs' implementation progress and potential enforcement convenience.

China's recent years have seen an increasing interest in formulating practices and rules for SEP disputes. With this ruling, it gears up to handle an increasing number of global SEP infringement and fee disputes. This aims to bolster China’s judicial sovereignty over global SEP disputes, aligning with the country’s 5G industrial strategy.