Is the new world order of the English Supreme Court sustainable?

Kat friend Dr. Roya Ghafele offers some interesting observations on the landmark decision in Unwired Planet vs Huawei and Conversant vs Huawei and ZTE regarding the issue of forum non conveniens.

As reported by IPKat, the Supreme Courts of England and Wales issued a landmark decision in the case of Unwired Planet vs Huawei and Conversant vs Huawei and ZTE. The cases address how to deal with international portfolios of standard essential patents and how to order the commercial relations between multinational technology companies. Apart from shedding further clarity on FRAND, a topic which deserves in and by itself further analysis, the Supreme Court offered its take on the ‘forum non conveniens’ doctrine.

In particular, the Court confirmed that the U.K. is the appropriate forum for setting a FRAND rate. The Court justified its decision by arguing that the Chinese courts had not made a relevant claim and that, in the Court’s view, a global FRAND rate is a market practice. This is an interesting take, particularly as the defendants to the Conversant case did not consent to having England and Wales rule over the case. The fact that the parties had only a minor commercial stake in the U.K. and also had only minor exposure to the British patent system was equally dismissed by the Court.

In this brief commentary, I look at these arguments from a historical perspective and explain why in my view the Supreme Court’s take on the forum non conveniens doctrine offers an unsatisfactory governance structure for global technology. My arguments are not rooted in law, but stem from an international relations perspective.

A Historical Take on the Forum Non Conveniens Doctrine

The forum non conveniens doctrine is rooted in Scottish law. It argues that there can be at least two fora. As such, it gives the court discretionary power to decline existing jurisdiction. Under this doctrine, the plaintiff has the burden of proof and needs to prove that her forum is the convenient one.

In Sim v. Robinow (1892 Sess. Cas. 665 (Scot. 1st Div.), Lord Kinnear laid the foundation for Scotland's application of the forum non conveniens doctrine: The plea [for staying proceedings on the ground of forum non conveniens] can never be sustained unless the court is satisfied that there is some other tribunal, having competent jurisdiction, in which the case may be tried more suitably for the interests of all the parties and for the ends of justice.

Scottish law created the doctrine to balance undue hardship arising out of arrestment ad fundandam jurisdiction, which existed when Scotland attached and seized foreign assets in order to force foreigners into Scottish courts. The forum non conveniens doctrine traveled from Scotland to England and, as a consequence of the English expansion, then to America. The application of the doctrine is, for example, documented in the early 19th century U.S. case law (see for example Gardner v. Thomas, 14 Johns. 134 (N.Y. Sup. Ct. 1817).

In an article from the 1990’s, Alexander Reus stated that the doctrine lends itself to counter imperialism: ‘No longer are courts eager to export the "superior" English judicial system by conducting trials with foreign parties.' To the contrary, English courts began to guard against forum shopping by foreign parties by following the U.S. example. The courts explained their change of attitude as a departure from ‘judicial chauvinism’ to ‘judicial comity.’ Whether the UK Supreme Court’s decision will change this course of action remains to be seen. I wonder how many companies in developing countries would seek recourse to local courts and ask that their country be the convenient forum for a patent dispute.

The UK Supreme Court rightly recognizes the inherent tensions that prevail between the increasing internationalization of economic activity and a patent law that is inherently national in character. It is, however, not the first to acknowledge that such tensions are difficult to manage. The borderless world poses challenges that the existing legal architecture is yet to come to grips with.

The TRIPS Agreement of the World Trade Organization strived to find a multilateral solution for the international IP community. In doing so, the WTO was heavily criticised by the anti-globalization movement. I myself recall an emergency evacuation from WTO’s building in Geneva because WTO staff feared the ramifications of protesters. (This was at the time of the Chinese accession to the WTO. My passport was kept for a full week in the WTO building and I could not fly home.)

One may criticise the TRIPS agreement for many things, but at the very least, it is an agreement that is widely known and that offers a multilateral framework. The Supreme Court decision is, however, far less understood beyond expert circles and I doubt that the general public will be able to grasp its full meaning. This lack of awareness should be of concern.

The inherent dilemma the English courts face is that they have no international mandate. This is problematic in many respects. For one, it is not up to one single country to set a global governance structure for FRAND rates. History offers many examples that hegemonic aspirations do not last forever. Even the UK was not able to keep its colonies. Against this background, I am doubtful that the newly designed British concept of an order for standard essential patents will last for long. I await with interest the reactions of other major forces in the international standard essential patent space.

Picture by Bjarki S and is made available under the Creative Commons CC0 1.0 Universal Public Domain Dedication.