Speedread - Standard Essential Patents - Unwired Planet V Huawei

The Court of Appeal has given judgment in a case relating to licensing of Standard Essential Patents. The judgment finds that a worldwide licence can be compliant with FRAND terms and a patentee does not need to offer a per-country licence.

In Unwired Planet v Huawei (discussed here) the High Court approved terms for a licence covering patents declared as essential to ETSI as being compliant with FRAND rules.

Unwired Planet had offered a worldwide patent licence, but Huawei declined, offering to take a licence covering the UK only. At first-instance the judge found that a worldwide licence can be a FRAND licence, and that a patentee does not need to offer country-by-country licences to meet their FRAND commitments. The Court went on to define terms of that licence, including appropriate royalty rates.

Huawei appealed this decision, and the Court of Appeal has now dismissed that appeal. The Court of Appeal agreed with all conclusions of the High Court’s decision. The High Court had stated that only one set of licence terms can be FRAND, but the Court of Appeal disagreed saying that a range of terms may be considered FRAND in each situation. However, this does not change the conclusions reached.

The outcome of the High Court case is thus confirmed - the English Courts will grant a UK injunction if a patentee has offered, and a defendant has not accepted, a worldwide licence including terms which the Court considers FRAND. This makes the English Courts rather patentee-friendly and gives patentees the power to use UK patents to lever a global licence for their portfolio.

Key points of the decision are:

  • The English Court can issue a UK injunction against refusal of a defendant to sign a worldwide patent licence, even if the patentee refuses to offer a UK-only licence.

  • The English Court has jurisdiction to set terms of a global FRAND licence (in as far as a defendant’s refusal to accept those terms for a global licence would lead to a UK injunction) when the analysis supports the conclusion that the FRAND terms would be worldwide.

  • A worldwide, multi-mode, licence meets a patentee’s FRAND commitments.

  • Insisting on a worldwide licence does not breach European competition law due to tying or other issues.

  • Non-discrimination is not absolute; different terms can apply between different parties and at different times.

  • The published licence is FRAND.

  • FRAND royalties for the UP portfolio in major markets are in the range of 0.032% to 0.064% for handsets and 0.016% - 0.064% for infrastructure. This would give a total royalty burden of 3.1% for 3G infrastructure and 8.8% for multi-mode handsets.

  • FRAND royalties can vary significantly between countries - the judgment provides a 50% discount for products sold in China and emerging countries.

  • The anti-trust defence that it was a breach of EU law which prohibits a dominant position even to bring these infringement proceedings failed.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.