Back in 2017, Justice Birss delivered a landmark decision concerning standardessential patents (SEPs) in the Patents Court of England and Wales, effectively setting the terms of a worldwide licence between the claimant, Unwired Planet and the defendant, Huawei. At the end of 2018, the case returned to the Court of Appeal for round two.
In the telecommunications industry, patentees are required to grant licences on Fair, Reasonable And NonDiscriminatory (FRAND) terms in return for involvement in the standard-setting process. However, the determination of which licences are and aren't FRAND has proved to be a thorny issue.
The decision in Unwired Planet v Huawei in 2017 established that there is only one FRAND licence, and the FRAND licence may be global. Justice Birss further ruled that English courts have the jurisdiction to set the terms of a global FRAND licence. As Huawei refused a global FRAND licence, Unwired Planet was entitled to an injunction.
Huawei duly appealed to the Court of Appeal, which considered three issues:
Did the FRAND licence need to be global?
The Court of Appeal maintained that a FRAND rate may be global depending on the circumstances. In this case, a global licence, rather than a UK licence, is FRAND. However, the Patents Court erred in finding there is only one set of FRAND terms. An SEP owner meets their obligation by offering any set of terms which is considered to be FRAND.
Should Huawei be given the same royalty rate that Unwired Planet had agreed with Samsung?
The Court of Appeal maintained that FRAND does not require "hard-edged"
non-discrimination. If an SEP owner charges one licensee a rate that is less than a FRAND rate, the SEP owner is not necessarily required to offer the lower rate to other licensees to meet their FRAND obligation.
Was Unwired Planet entitled to an injunction given that it did not give notice or offer a FRAND licence?
Huawei argued that Unwired Planet abused its dominant position, as the steps for negotiation outlined in a transitional case Huawei v ZTE [2015] Bus LR 1261 were not followed. The Court of Appeal found that the steps outlined in Huawei v ZTE are a safe harbour, rather than a mandatory requirement. In this case, Unwired Planet did not abuse its position and therefore was entitled to an injunction.
The saga is not over yet, however, as Huawei has recently been given permission to make a further appeal to the Supreme Court.
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