Global FRAND licence

Supreme Court hears landmark FRAND cases

The Supreme Court in the UK is in the midst of a four-day hearing. Mobile phone manufacturers Huawei is appealing two Court of Appeal judgments on FRAND, handed down in October 2018 and January 2019 respectively. The second case involves ZTE as joint appellant. Regardless of the final decision, the impact on SEP holders across Europe will be acute.

21 October 2019 by Amy Sandys

UK Supreme Court ©VictorMoussa/AdobeStock

The outcome of Unwired Planet vs. Huawei, and Conversant vs. Huawei and ZTE, are two of the most hotly-anticipated from any patents court in recent years. From today, all eyes are on London to determine the future of FRAND litigation in Europe.

Unwired Planet vs. Huawei

The case between Unwired Planet and Huawei began in 2014, following Unwired Planet’s acquisition of six patents from Ericsson. In 2018, a Court of Appeal ruling upheld a landmark High Court judgment made by Colin Birss. The Court of Appeal upheld Birss’ assertion that a global FRAND licence is a fair and reasonable measure, and that a global FRAND licence could prevent hold-out. Furthermore, subjecting an implementer to an injunction is justified, if the implementer does not accept a global licence as FRAND.

Huawei appealed on the grounds that the licence did not qualify as FRAND due to its global scope (case ID: UKSC 2018/0214). Secondly, Huawei argued that it was offered a higher global royalty rate than Samsung. Therefore, the required non-discriminatory criteria was not met, it argued.

Finally, the Court of Appeal ruled that the CJEU protocol in Huawei v ZTE (2015) was not a set of mandatory conditions for patentees to follow. As such, the court dismissed Huawei’s claim that Unwired Planet used its position as an SEP holder to gain a time advantage.

The European Commission is taking a closer look at whether SEP holders are abusing their dominant position in the market to file for injunctions. Since the 2015 decision, patent courts in Europe have struggled to interpret the CJEU ruling. Finding a way to measure FRAND licence fees has also proven tough.

No case in China

Although different cases, the two are inextricably linked. The outcome of the Unwired Planet vs Huawei case will determine if England is deemed an appropriate forum for the claims against Conversant.

Huawei and ZTE claim that Chinese, not English, courts should hear FRAND claims by non-practising entity Conversant. Both parties had also offered Conversant global FRAND determinations in China. However, the late Henry Carr rejected these suggestions at the High Court. The reasoning was that the case concerns UK patents and is thus untenable on Chinese terms, despite the appellants advocating for a separate UK infringement judgment. The Court of Appeal upheld the decision being appealed this week (case ID: UKSC 2019/0041; case ID: UKSC 2019/0042).

In July, an SEP held by Conversant was found infringed but invalid for added matter by the High Court. The judgment was part of a technical trial in the ongoing Conversant vs. Huawei and ZTE FRAND case. In considering the claims of infringement, presiding judge Richard Arnold found EP 1 797 659 essential to standard Uplink DRX. However, the court also found the Conversant patent invalid on the grounds of added matter.

If the Supreme Court upholds this week’s judgments, experts believe they could strengthen London’s position as SEP owner-friendly. Previously, patent lawyers noted that UK patent courts tended to be more sympathetic to defendants.

As a result many SEP holders, especially NPEs, were filing suits at German patent courts. Clients considered the courts in Germany faster and cheaper than in London. Regardless, the outcome is significant for all involved.

Multiple parties involved

Unwired Planet vs Huawei

For Unwired Planet
8 New Square Chambers (London): Adrian Speck, Isabel Jamal, Thomas Jones
Brick Court Chambers (London): Sarah Ford
EIP (London): Gary Moss (lead), Andy Sharples, Tom Brazier, Angela Jack, Catherine Howell, Jack Dickerson, Owen Waugh
Osborne Clarke (London): Arty Rajendra

For Huawei
8 New Square (London): Daniel Alexander, Andrew Lykiardopoulos
Brick Court (London): Mark Howard
One Essex Court (London): Henry Forbes Smith
Blackstone Chambers (London): James Segan
Powell Gilbert (London): Simon Ayrton (lead), Peter Damerell, Zoe Butler, Tess Waldron
In-house (Shenzhen): Emil Zhang (head of cross-border litigation)

Huawei and ZTE vs. Conversant

For Conversant
8 New Square (London): Adrian Speck, Isabel Jamal, Thomas Jones
Brick Court (London): Colin West
EIP (London): Gary Moss (lead), Andy Sharples, Tom Brazier, Angela Jack, Catherine Howell, Owen Waugh
In-house (US): Scott Burt (chief intellectual property officer, general counsel)

For Huawei
8 New Square (London): Daniel Alexander, Andrew Lykiardopoulos
Brick Court (London): Mark Howard
One Essex Court (London): Henry Forbes Smith
Blackstone Chambers (London): James Segan
Allen & Overy (London): Neville Cordell (lead), Mark Heaney, Oscar Robinson

Blackstone Chambers (London): Michael Bloch
Bristows (London): Myles Jelf, Sophie Lawrance, Andrew Bowler; senior associate: Luke Maunder; associate: Selina Badiani

Supreme Court of the United Kingdom
Robert Reed (presiding judge, deputy president of the Supreme Court) , Patrick Hodge, Jill Black, Michael Briggs, Philip Sales