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FRAND – yet another decision handed down

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Home Perspectives FRAND – yet another decision handed down
FRAND issues are at the heart of the most significant patent cases in Europe (in the UK, Germany and France – please see our previous alert on reedsmith.com). After the Nokia vs Daimler decision last week by the Mannheim Court, and decision handed down in Sisvel v. Haier earlier in May by the German Supreme Court, the UK Supreme Court has issued its much awaited decision in Unwired Planet v. Huawei.

On Wednesday 26 August 2020, the UK Supreme Court handed down a judgement confirming that English courts have the power to set global licensing rates for multinational patent portfolios under European telecom standards. This ruling places the UK on the map, alongside both France and Germany, as an attractive destination for litigation.

In short, the decision means that a judge in the UK can grant an injunction against a company that infringes on a standard essential patent (SEP) if the alleged infringer does not agree to global licence rates for the patent portfolio on the "fair, reasonable and non-discriminatory" terms set by the court. However, the injunction will be UK-wide in application. 

The case began back in 2017, when the court decided that two Unwired patents were valid and essential to the standards. The judges concluded that Huawei had to agree to worldwide licensing terms set by the court – or be blocked from selling the infringing products in the UK.

The first appeal (the Unwired appeal) concerned an action brought by Unwired against Huawei for infringement of five UK patents which Unwired claimed to be SEPs. The SEPs in question formed part of a worldwide patent portfolio, which Unwired acquired from Ericsson. Unwired’s business involves licensing patents to companies that make and sell telecommunications equipment. Ericsson had previously licensed the relevant SEPs to Huawei, but the licence expired in 2012.

In 2015 and 2016, three trials were held in which two of the SEPs were found to be both valid and essential. Two other SEPs were found to be invalid. Huawei has also been found to be infringing one or more of Unwired’s SEPs in Germany, and its challenge of two of Unwired’s patents in China has not succeeded.

The UK Supreme Court has unanimously dismissed both appeals. The judgment gives English courts the jurisdiction to determine the terms of a global licence of a multi-national patent portfolio. The UK Supreme Court has firmly established the UK’s position as an attractive location for patentees with global SEP portfolios, especially for those who are looking to establish their licensing programmes. This judgment has highlighted that the UK courts are willing to set the terms of a FRAND licence and award an injunction if that licence is not taken.