26. August 2020
The Supreme Court handed down its long-awaited judgment in Unwired Planet v Huawei and Conversant v Huawei and ZTE today. In a unanimous judgment of the panel, the Supreme Court has dismissed both appeals and held that the English courts do have jurisdiction to determine the FRAND terms of a global licence to standard essential patents (SEPs). The Supreme Court also offered guidance on the meaning of the "non-discriminatory" element of the FRAND obligation in the ETSI IPR Policy.
The judgment covers five issues:
As a result of the contractual arrangements in the ETSI IPR Policy, the courts of England and Wales have jurisdiction to grant an injunction restraining infringement of a UK SEP unless the implementer enters into a global licence of a multinational patent portfolio. The English courts also have jurisdiction to determine the FRAND rates under such a licence based on commercial practice in the real world. This approach seeks to balance the interests of the patentee and the implementer and does not prevent an implementer challenging the validity and infringement of patents in the national courts that have granted the patent rights.
England is the proper forum for determination of the terms of a global FRAND licence in the case of Conversant v Huawei and ZTE. China is not the proper forum because the Chinese courts have not yet made a finding that they have a jurisdiction to determine the terms of a global FRAND licence without the consent of the parties.
Regarding the meaning of the "non-discriminatory" element of the FRAND obligation of the ETSI IPR Policy, the court interprets the ETSI IPR Policy as requiring a SEP owner to offer a single royalty price list to all market participants based on the market value of the portfolio in question without adjustment for the individual characteristics of the licensees. FRAND is a single composite obligation. However, the ETSI IPR Policy does not require a SEP owner to grant licences on terms equivalent to the most favourable licence terms to all similarly situated licenses.
Unwired Planet is not in breach of Article 102 TFEU having not made a FRAND offer before commencing proceedings, although bringing an action without any notice or prior consultation would have been. The obligation to do so, which is set out in the CJEU's decision in Huawei v ZTE, will depend on the facts of the particular case. In this case, Unwired Planet has shown itself willing to offer a licence on whatever terms the court decided were FRAND.
An award of damages would not be an adequate substitute for an injunction. There is no basis on which the Supreme Court can substitute damages for an injunction granted by the lower courts in the Unwired Planet v Huawei case, and in any event the ETSI IPR Policy prevents a SEP owner from demanding exorbitant royalties under the threat of an injunction.
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