Gervais on Territoriality and Global FRAND Rate-Setting

Daniel Gervais, one of the world’s leading experts on the TRIPS Agreement, has published a very interesting article titled The Principle of Territoriality in International Intellectual Property Law and Its Implications for Global FRAND Rate-Setting, GRUR Int. (advance access pdf available here).  Here is the abstract:

The principle of territoriality under which intellectual property (IP) rights exist and are enforced only within national borders sits uneasily alongside the global nature of standard-essential patent (SEP) licensing disputes. In recent years, courts in Brazil, China, Colombia, Germany, India, the United Kingdom, and now the Unified Patent Court have asserted authority, directly or indirectly, to determine worldwide fair, reasonable, and non-discriminatory (FRAND) licensing terms, often without both parties’ consent. These practices, ranging from injunction-driven leverage to comprehensive judicial rate-setting, raise difficult questions about jurisdiction, comity, competition norms, and the coherence of international IP law.

 

This article provides a systematic and comparative analysis of the principle of territoriality in international IP law and its tension with non-consensual global FRAND determinations. It traces the origins and enduring role of territoriality in treaties such as the Paris Convention and TRIPS Agreement, examines its implications for jurisdiction and choice of law, and explains why territoriality remains a cornerstone of global IP governance. It then turns to the distinctive case of SEPs, highlighting the role of standard-setting organizations and the unique licensing challenges they generate. Against this backdrop, the article maps national approaches across key jurisdictions, identifying functional categories (adjudicators, regulators, and leverage providers) and analyzing how their practices interact in transnational disputes.

 

Drawing on recent case law, WTO findings, and comparative treatment of other IP rights, the article argues that non-consensual global FRAND rate-setting undermines the territorial foundation of international IP law and risks destabilizing global markets. At the same time, it acknowledges arguments for efficiency and uniformity, and considers how these objectives might be pursued within a framework that respects sovereignty and due process. The article concludes by proposing both short-term and longer-term solutions, ranging from national court strategies and WTO enforcement to a possible role for WIPO, the US Congress, and the EU, designed to reconcile innovation incentives, market access, and the legitimacy of international dispute resolution.

I may have more comments to follow, but two things leap out to me upon first reading.  One is Professor Gervais’ argument that even the granting of purely domestic injunctions in FRAND cases, as in Germany, effectively albeit indirectly erodes the territoriality principle by “plac[ing] enormous pressure on the implementer to capitulate to the SEP holder’s terms” (p.13).  It might seem to follow from his analysis, then, that to uphold the territoriality principle nations would have to temper their enthusiasm for granting injunctions in at least some cases.  This may be right, though it also may seem a bit paradoxical that upholding the territorial principle under international law, as Professor Gervais understands it, would require nations to temper the use of a remedy (injunctions with domestic effect only, as a legal if not practical matter) that domestic law otherwise would permit in a given case.  (Again, that may be right—the principle seems logically appealing—but I wonder what the limiting principle would be?)  The other thing that caught my attention was Professor Gervais’ embrace of the view that, absent consent by both parties, only domestic courts can adjudicate questions of infringement and validity under domestic patent law.  This is, as previously noted here, the issue at the heart of the pending BMW v. Onesta dispute, in view of the CJEU’s 2025 decision in BSH v. Electrolux (which seems to me to point, whether rightly or not, in the opposite direction).   (Note that the Federal Circuit has temporarily stayed Judge Albright's antisuit injunction from last week, and we are still awaiting Judge Albright's written decision in that case.)

"Remedies in Intellectual Property Law" Is Now Out

Here is a link to Elgar's webpage for the book.  The ebook is available now (and the table of contents and first chapter available without purchase), and it looks like the hardcover will be out on Tuesday.  I am grateful to the people at Elgar for their hard work in getting the book out this month, and I will be interested to hear what readers think.

 

In other news, this morning the Federal Circuit released a 59-page nonprecedential (!) opinion in Sunoco v. Powder Springs Logistics dealing with, among other things, damages; I'll probably have something to say about it next week.  And the BMW v. Onesta saga continues, with an emergency motion now pending before the Federal Circuit to stay Judge Albright's oral ruling from earlier this week (see discussion here).  Stay tuned.

Judge Albright Enjoins Onesta from Proceeding in Munich with Claims for the Infringement of U.S. Patents

In December, I noted that, at BMW’s request, Judge Albright (W.D. Tex.) had entered a TRO prohibiting Onesta from litigating claims for the infringement of two U.S. patents in the Munich I Regional Court.  ip fray is now reporting that the judge yesterday converted the TRO into a preliminary injunction, that is, an antisuit injunction forbidding Onesta from proceeding with litigation over the U.S. patents in Munich.  I’ve checked both Pacer and Lex Machina, which show that Onesta has already filed a notice of appeal to the Federal Circuit; but there is no written opinion (yet) from the judge, though I would expect some sort of written opinion might follow.

As I noted in December, the order comes after Onesta asserted claims against BMW for the infringement of both German and U.S. patents in Munich—something that the CJEU’s February 2025 decision in BSH v. Electrolux appears, on my reading, to permit it to do in a case like this, in which the defendant is domiciled in an EU member state, subject to the caveat that any decision concerning patent validity would apply only inter partes (in other words, the validity ruling would not be binding in other litigation between Onesta and another party).  BMW contested this reading in its initial motion papers, which were available from Law 360 (and on Pacer and Lex Machina).  Dennis Crouch has an excellent writeup on the issue of whether courts may adjudicate claims for the infringement of foreign patents, which notes among other things the Federal Circuit’s 2007 opinion in Voda v. Cordis (denying supplemental jurisdiction to adjudicate such claims, over a dissent from Judge Newman).  The ip fray post mentions expert declarations in the BMW case have been filed by three people I know, admire, and have worked with, namely Professors Peter Picht (in support of Onesta), Margo Bagley (in support of BMW), and Matthias Leistner (also in support of BMW).  Their declarations, attached to the motion papers, are available here, here, and here.  (I have not yet read through all of them carefully myself.)

For my February 2025 writeup on BSH, see here.  Also note that, in my December post, I flagged as a possible issue (to which I do not claim to know the answer) whether the German court, if it were to adjudicate claims for the infringement of U.S. patents, would apply German or U.S. law to the question of remedies, especially permanent injunctive relief.  That would be a huge issue here, where under U.S. law an injunction in a  case like this would be difficult to obtain.

OxFirst Webinars Tuesday and Wednesday

In connection with its 12^th IP and Competition Forum in Oxford, U.K., OxFirst will be presenting live webinars tomorrow (Jan. 13) and Wednesday (Jan. 14) featuring eight patent judges—Richard Arnold, Kemal Bengi-Akyürek, Fabian Hoffmann, Richard Meade, Oliver Schoen, Katalin Tözsér, Stefan Wilhelm, and Jiyoung Yi—including FRAND, antisuit injunctions, and interim licenses.  (Readers who follow global FRAND disputes will surely recognize some of these names!) Registration is free, and more information is available here.  

UPC Court of Appeal Reverses Moral Prejudice Damages Award

The case is Bhagat Textile Engineers v. Oerlikon Textile GmbH & Co. KG, decided by Panel 1b of the UPC Court of Appeal on December 9, 2025.  In one respect at least it resembles the Federal Circuit decision I blogged about earlier this week, in requiring non-speculative evidence of alleged reputational harm.

Plaintiff Oerlikon owns EP 2145848 for a “false twist texturing machine.”  In July 2023, Oerlikon initiated an action for infringement in the Milan Local Division of the UPC.  That court found Bhagat liable based upon its “promotion and offer to the public of a structuring/textiling machine exhibited at the ITMA trade fair in June 2023 in Milan” (para. 6).  It also entered an injunction and awarded “provisional damages in the amount of €15,000 as a result of reputational  damage to Oerlikon’s image” and “ordered Bhagat to bear 80% of the proceedings costs” (id.) 

On appeal, the court notes that, consistent with IPRED article 13, UPCA article 68 “distinguishes between situations in which the infringer knew or had reasonable grounds to know that he or she was engaging in a patent infringing activity (Art. 68(1) to (3) UPCA) and situations where the infringer did not knowingly, or with reasonable grounds to know, engage in the infringing activity (Art. 68(4) UPCA)” (para. 18).  For the first situation, the court shall award “damages appropriate to the harm actually suffered,” taking into account “all appropriate aspects,such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the injured party by the infringement (Art. 68(3)(a) UPCA) or, alternatively, may decide to set the damages as a lump sum under certain conditions (Art. 68(3)(b) UPCA)” (paras. 19-20).  On the other hand, “[w]here the infringer did not knowingly, or with reasonable grounds to know, engage in the infringing activity, the Court may order the recovery of profits or the payment of compensation (Art. 68(4) UPCA)” (para. 21).  Here, there was no “evidence of negative economic consequences such as lost profits . . . or unfair profits made by Bhagat,” but the parties disagree regarding damages for moral prejudice (para. 22).  First, Bhagat argues that it did not know or have reasonable grounds to know that the product it exhibited at the trade fair was infringing, but the court disagrees:

Bhagat . . . presents itself as an international leading manufacturer of texturing and winding machines (see a press release in the magazine Textile Insights dated 13 July 2023, cited in Oerlikon Exhibit # 20) and is a direct competitor of Oerlikon in the field of textile and winding machines. It actively participated in the ITMA trade fair, which Bhagat does not deny is the most important textile machines trade fair globally, and exhibited a sizable textile machine (the attacked embodiment).

 

It follows that, being an active stakeholder in the industry, Bhagat was at least reasonably expected to monitor the patent landscape before exhibiting its product on the market and should have had reasonable grounds to know about the existence of the Patent and the infringing nature of the attacked embodiment. Failure to do so was at least negligent . . . (paras. 24-25).

Nevertheless, there was no evidence of reputational harm resulting in moral prejudice.  Oerlikon’s evidence consisted merely of “general statements” made by Bhagat about its success at promoting its products at the trade fair; and that further evidence submitted by Oerlikon for the first time on appeal concerning the accused product exhibited at the fair, even if admissible, did not change this result.

On costs, the court affirmed that Bhagat was liable for 80% of Oerlikon's recoverable costs, and Oerlikon 20% of Bhagat's, in accordance with UPCA article 69.  Oerlikon did not cause Bhagat to suffer any unnecessary costs by not first sending a warning letter, given the urgency and the short time frame of the fair.  The specific amount of costs to be recovered, however, will be determined in view of the value of the proceedings, which the court lowered from €750,000 to €250,000 (meaning that recoverable costs cannot exceed €38,000).  

Federal Circuit Reverses Injunction, Reverses and Remands on Willfulness

I resume blogging this week with a post about the Federal Circuit’s December 17 precedential decision in Wonderland Switzerland AG v. Evenflo Co., majority opinion by Chief Judge Moore joined by Judge Prost, with a separate opinion by Judge Reyna concurring in part and dissenting in part.  (Still to come are my promised posts on Acer, Inc. et al. v. Nokia Technologies Oy, [2025] WHC 3331 (Pat.) (Eng.) and related developments in the UPC, as well as the UPC COA’s damages decision in Bhagat Textile Engineers v. Oerlikon Textile GmbH & Co KG.  Meanwhile, I am heading to the Association of American Law School’s Annual Meeting in New Orleans tomorrow, and will be speaking there on Thursday on the remedy of destruction, which was the subject of a paper I coauthored with Professor Chung-Lun Shen in 2024; and I eagerly await publication of my book Remedies in IP Law, which should be out within the next week.)  

In Wonderland, the plaintiff filed suit for the infringement of two patents (ʼ043 and ʼ951) relating to child car seats.  The jury found that the accused products (referred to as the 3-in-1 and 4-in-1 seats) infringed; the Federal Circuit, in portions of the opinion I will omit here, reverses the finding that the 4-in-1 seats infringed ʼ043, but otherwise affirms on liability.  The court nevertheless concludes that the district court abused its discretion in granting a permanent injunction as to both patents.  As for ʼ951, the court concludes that the district court abused its discretion “because Wonderland expressly declined to request [injunctive] relief” (p.13).  Moreover, this was not harmless error, because “the injunction could affect Evenflo’s release of other products, which may not necessarily infringe the ʼ043 patent”—and because it was an abuse of discretion to enjoin the infringement of ʼ951 (p.13).  With regard to ʼ951, the district court erred in relying “solely on speculative and conclusory evidence that Wonderland suffered, and would continue to suffer, irreparable harm or injury that could not be compensated with monetary damages” (p.14).  More specifically:

. . .  the district court did not point to any non-speculative or non-conclusory evidence establishing Wonderland’s business partner, Graco Children’s Products Inc. (Graco), lost sales or market share of car seat products to Evenflo as opposed to the large number of other competitors in the market. . . . for non-car seat products, the district court improperly relied on speculative and conclusory testimony from Wonderland’s managing director, Renee Wang, that a lost car seat sale “naturally leads” to the loss of market share across other products. . . . This testimony was concededly based on “no[thing] more than [the notion that] the parents will buy other products under the same brand name.” . . . Without providing any evidence of such consumer behavior, Ms. Wang merely speculated that after buying a car seat, a parent “may” also choose to buy other products under the same brand. . . . Such speculative testimony is not sufficient to establish irreparable harm. . . .

 

With respect to reputational loss, the district court cited no record evidence to support its findings that “[t]he similarity between Graco’s products and Evenflo’s Accused Products has caused Graco’s products to lose some of their ‘distinctiveness and market allure’ and has also harmed Graco’s reputation as an innovator in the marketplace.” . . . Nor did the district court cite any evidence to support its finding that such reputational factors “cause Wonderland irreparable harm because of Graco and Wonderland’s close working relationship and exclusive supplier arrangement.” . . . Similarly, the district court failed to identify any evidence from the trial record supporting its assertions that “an average customer . . . [would] assume that Graco’s products do not contain unique or innovative technologies,” that such reputational harm would flow to Wonderland, or that Wonderland would suffer reputational harm because it “may be seen as failing to enforce its intellectual property rights.” . . (pp. 14-15).

The preceding analysis would seem to demonstrate the importance of eBay’s allocation to the plaintiff of the burden of proof on the eBay factors, in contrast with practice in other common-law countries where it would be the defendant’s burden to come forward with evidence showing why the court should deny permanent injunctive relief.

On the issue of willfulness, the district court invoked Federal Rule of Evidence 403 to exclude an email chain, in which “Evenflo’s affiliated corporation, Goodbbay Child Products Co., Ltd. . . . notified Evenlo employee that one of the accused products might fall with the scope of claim 1 of the ʼ043 patent and asked how to ‘avoided the claims of the patent’” (p.16), on the ground that the probative value of this evidence was substantially outweighed by the danger of unfair prejudice and confusion.  The majority concludes that this too was an abuse of discretion because portions of the email chain were highly probative of willfulness, and “not merely cumulative in view of Evenflo’s stipulation to awareness of the ʼ043 patent” (p.19).  Moreover, the majority concludes that the district court could have managed the risks of unfair prejudice and confusion by limiting instructions or redaction; the text of the email did not raise any privilege or hearsay concerns; and the error was not harmless.  So this issue is remanded for a new trial.  Judge Reyna dissents on this issue only, in view of the substantial deference normally accorded to Rule 403 rulings; in his view, the trial judge’s decision was neither irrational nor arbitrary.

EWHC: Acer, ASUS, and Hisense Are Entitled to Declarations of Interim Licenses

Mr. Justice Mellor's decision in Acer, Inc. et al. v. Nokia Technologies Oy is here.

 

I have grading to complete, after which I will be taking a few days off around Christmas.  Consequently, I hope to have something to say about this complex SEP decision--and about the UPC Court of Appeal's recent decision on damages in Bhagat Textile Engineers v. Oerlikon Textile GmbH & Co KG, and the Federal Circuit's decision yesterday on injunctive relief and willfulness in Wonderland Switzerland  AG v. Evenflo Co.--sometime after January 1.  This has proven to be a busy month!  Anyway, happy holidays to my readers--see you in 2026.