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17 March 2023PatentsMuireann Bolger

High Court hands down $138.7m FRAND judgment

Ruling follows Supreme Court’s position in Unwired Planet | UK only one of two jurisdictions worldwide where courts will set FRAND rates | Unified Patent Court has potential to follow the UK's lead.

In the most eagerly awaited licensing judgment since  Unwired Planet, Lenovo has been ordered to pay  InterDigital $138.7 million in royalty fees for its 3G, 4G and 5G standard-essential patents (SEPs).

The  England and Wales High Court handed down the decision yesterday, on March 16.

Following a comparable patent licence analysis, Justice James Mellor determined that the tech company should pay the patentee InterDigital the royalty. This represents about 40% of the amount  originally claimed by InterDigital.

Josh Schmidt, chief legal officer at InterDigital, said that while the company was pleased with the decision, it also planned to appeal.

“We welcome the court’s decision as the first major SEP FRAND judgment that recognises that a licensee should pay in full for the past infringement of standard essential patents and we agree with the court that this could be a powerful way of guarding against patent holdout in the future.

“However, we plan to appeal, as we believe that certain aspects of the decision do not accurately reflect our licensing programme.”

John Mulgrew, vice president, deputy general counsel and chief IP officer at Lenovo, also welcomed the decision. He described it as a major win for the technology industry as underscoring both the importance of fair, reasonable, and non-discriminatory (FRAND) terms for patent licensing and the requirement of transparency by patent holders engaged in licensing practices.

“We are grateful for the court’s careful and objective analysis of the cellular patent licensing history between InterDigital and others, supporting its determination that InterDigital’s global cellular royalty rate should be $0.175 per unit," he said.

“With this judgment, the court has confirmed that Lenovo is, and always has been, a willing licensee—even in the face of InterDigital’s supra-FRAND offers and behaviour as an unwilling licensor.

“In the meantime, we are pleased that this judgment reinforces FRAND’s critical role in facilitating transparent and equitable licensing practices for standardised technologies—enabling the proliferation of affordable innovation to customers around the world.”

Pinsent Masons IP partner  Mark Marfé explained that the decision confirms the approach taken by the Supreme Court in  Unwired Planet v Huawei Technologies (2020).

In that case, the  Supreme Court decided that a UK-based court does have the power to grant an injunction to prevent the infringement of a SEP, and determine the royalty rates and terms of a global FRAND licence.

It also, added Marfé, provides further guidance about how the parties negotiating these SEP licences should conduct themselves.

Most importantly, the decision reinforces the UK court’s willingness to grant a global FRAND licence, making it one of the only two jurisdictions, alongside China, prepared to do so.

The decision comes as no other European country to date has set a global FRAND rate. However, “all eyes will be on the  Unified Patent Court, which is set to open its doors” in June, Marfé noted.

“It will be interesting to see whether it will look to UK jurisprudence, which may be persuasive [if they consider] following a similar approach,” he said.

The ruling comes ahead of another FRAND ruling that is due to be handed down in  Optis v Apple, with Marfé predicting that the court in this case “will also follow Unwired Planet”.

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More on this story

Patents
20 March 2023   InterDigital saw its claimed rate cut in a case that showed licensees can legitimately change their minds over terms, explains Mark Marfé of Pinsent Masons.
Patents
6 April 2023   The decision revealed plenty about how FRAND disputes may play out while cementing the UK as an alternative European venue, says Tess Waldron of Powell Gilbert.
Patents
29 July 2021   InterDigital has won the first round of a telecommunications standard-essential patent (SEP) dispute with Lenovo, after the English High Court ruled today, July 29, that InterDigital’s patent was valid and infringed.