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UK Supreme Court confirms that global licence of SEPs is FRAND

Date: 30 September 2020

 

This was a combined decision on appeals from separate decisions from the Patents Court:

  • Unwired Planet v Huawei
  • Conversant v Huawei & ZTE

 

In Unwired Planet v Huawei, the UK patents court granted an injunction against Huawei under a portfolio of standards-essential patents (SEPs) relating to the 2G, 3G and 4G mobile communications standards. The injunction was stayed pending appeal and would be lifted if Huawei agreed to take a licence under fair, reasonable and non-discriminatory (FRAND) terms determined by the court, which included a licence of Unwired Planet’s global patent portfolio, not just the UK patents. Similar issues were raised in the Conversant case, although this case gave rise to additional grounds of appeal.

 

See our article here for more on the case between Unwired Planet and Huawei: The FRAND Zone: Huawei Loses its Appeal 

 

More on the case between Conversant and Huawei can be read here: Telecommunications Standard Patent for found invalid in FRAND dispute

 

The issues before the Supreme Court were:

 

  1. Should an injunction be granted under an SEP unless the defendant agrees to a global licence, and can the court determine the terms of such a licence?
  2. Is the English court the appropriate forum for such a determination?
  3. What does the non-discriminatory requirement of FRAND mean?
  4. Under what circumstances should an injunction under an SEP be refused as a breach of EU competition law?
  5. In general, under what circumstances should an English court grant an injunction rather than damages?

 

The Supreme Court’s decision on each of these issues is summarised below:

 

1. English courts have no power to determine infringement and validity of national patents of other countries. However, the ETSI IPR policy under which the relevant standards were set gives the court the jurisdiction to determine the terms of a FRAND licence. Licences under SEPs are normally global, because of the cost and complexity of negotiating separate licences for each country, so a FRAND licence is normally a global licence. 

 

The IPR policy does not prevent an SEP holder from seeking an injunction in a national court; injunctions are necessary as an incentive for an implementer to agree to a licence on FRAND terms.

 

2. The owner of a portfolio of SEPs is entitled to decide in which jurisdictions to enforce the patents. In the Conversant case, the only other possible jurisdiction for the dispute was China, but the parallel Chinese proceedings sought only to determine the terms of a FRAND licence for China, and not a global FRAND licence; hence the Chinese courts did not have jurisdiction.

 

3. Non-discrimination is a general rather than ‘hard-edged’ requirement. It does not mean that the SEP owner must offer the same, most favourable terms to all licensees; that approach was considered but rejected when the ETSI policy was drafted.

 

4. Unwired Planet had complied with the conditions for set down in the CJEU’s decision in Huawei v ZTE, under which an injunction under an SEP would not be in breach of competition law. Unwired Planet had given sufficient notice before commencing proceedings and had provided key terms of a licence shortly after commencing proceedings, but Huawei had never made an unqualified offer to accept a licence on FRAND terms.

 

5. In most patent cases, judges have exercised their discretion to grant an injunction rather than an award of damages. In the case of an SEP, the potential licensee should be presented with a simple choice of either accepting a FRAND licence or stop infringing the SEP. If there were no risk of an injunction, there would be no incentive for implementers to agree voluntarily to a licence.

 

Comment

 

The Supreme Court’s decision has confirmed the ability of the English courts to determine a global FRAND rate, but does this mean that the English courts will become the forum of choice for settling SEP disputes? Or conversely, will implementers stay out of the UK market to avoid being sued in the English courts and thereby forced into a global FRAND licence?

 

There is nothing in the Supreme Court’s decision to suggest that the English courts should have exclusive jurisdiction on the determination of a FRAND licence, and in other future cases similar issues may come before other national courts, which may also decide the terms of a global FRAND licence. This situation has arisen because the ETSI IPR policy did not dictate a forum for settling the terms of FRAND licenses, instead leaving this to be determined by national courts, as the English courts have done in this case.

 

If you have questions or comments on the issues raised above, please Contact Us 

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