“FRAND – Unwired Planet v. Huawei”

• 1. English courts have jurisdiction and may properly exercise a power, without both parties’ agreement, to grant an injunction to restrain the infringement of a UK patent that is a SEP unless the implementer of the patented invention enters into a global licence of a multi-national patent portfolio and to determine the royalty rates and other terms of such a licence.

  • a. Questions as to the validity and infringement of a national patent fall to be determined by the courts of the state which has granted the patent. However, the contractual arrangements ETSI (the European Telecommunications Standards Institute) has created under its IPR Policy give the English courts jurisdiction to determine the terms of a license of a portfolio of patents which includes foreign patents. To determine the terms of a licence the court looks to the industry practice of taking a license of a portfolio of patents and construes ETSI’s IPR Policy as promoting that behaviour. If an implementer is concerned about the validity and infringement of particularly significant patents in a portfolio, it could seek to reserve the right to challenge those patents and to require that the royalties payable under the licence should be reduced if the challenge is successful.

  • b. The possibility that a national court might grant an injunction is a necessary part of the balance which the IPR Policy seeks to strike, because it incentivises implementers to negotiate and accept FRAND terms for the use of the SEP owner’s portfolio.

• 2. The suitable forum (or “forum conveniens”) doctrine requires the English court to decide whether it or a suggested foreign court with jurisdiction would be the more suitable forum for determining the dispute between the parties. The latter requires at least that the suggested foreign court has the jurisdiction needed to determine the terms of a global FRAND licence.

• 3. FRAND licensing terms must be non-discriminatory. Also, ETSI’s IPR Policy requires SEP owners to make licenses available “on fair, reasonable and non-discriminatory … terms and conditions”. This is a single, composite obligation, not three distinct obligations that the licence terms should be fair, and separately, reasonable, and separately, non-discriminatory. The “non-discriminatory” part indicates that, to qualify as FRAND, a single royalty price list should be available to all market participants. This must be based on the market value of the patent portfolio, without adjustment for the characteristics of individual licensees. However, there is no requirement for SEP owners to grant licences on terms equivalent to the most favourable licence terms to all similarly situated licensees.

• 4. Article 102 TFEU as interpreted by the CJEU in Huawei v. ZTE (Case C-170/13), requires SEP owners to notify or consult the alleged infringer before bringing an action for a prohibitory injunction. However, the nature of the notice or consultation required depends on the circumstances of the case. There is no mandatory requirement to follow the protocol set out in Huawei v ZTE. The “notice or prior consultation” requirement conveys the message that there must be communication to alert the alleged infringer to the claim that there is an infringement but does not prescribe precisely the form that the communication should take. It may be sufficient that the SEP owner shows to be willing to grant a licence on whatever terms the court decides to be FRAND.

• 5. The remedies of the SEP owner are not necessarily limited to the award of damages, based on the royalties which would reasonably be agreed for a licence of the infringed UK patents but may also extend to the award of an injunction to stop the continuing infringement. There is no risk that the SEP owner could use the threat of an injunction as a means of charging exorbitant fees, since it cannot enforce its rights unless it has offered to license its SEPs on terms which the court is satisfied are FRAND. Moreover, an award of damages would not be an adequate substitute for an injunction.