UK Court of Appeal begins five-day hearing in InterDigital vs Lenovo

The UK Court of Appeal judges Richard Arnold, Colin Birss and Christopher Nugee have just opened the proceedings in InterDigital vs. Lenovo. Six lawyers are in attendance for InterDigital, nine for Lenovo. Eleven observers are in the gallery.

The judges will hear appeals from both parties concerning the ruling handed down by High Court judge James Mellor in March 2023. The hearing is expected to last until at least Thursday, possibly until Friday.

All three judges have extensive patent litigation experience. In 2017, Colin Birss became the first judge ever to set a global FRAND rate in the battle between Unwired Planet and Huawei. In August 2020 the Court of Appeal and UK Supreme Court largely upheld the Unwired Planet ruling, cementing the UK patent courts’ reputation around the world for FRAND cases.

Birss has since moved from the High Court to the Court of Appeal.

Battle for favour

The appeal in InterDigital vs. Lenovo is one of the highest stakes SEP and FRAND cases of recent years.  Experts worldwide followed judge James Mellor’s ruling closely. Many were curious as to whether the next generation of judges would maintain the SEP-holder-friendly case law established by Colin Birss in Unwired Planet vs. Huawei.

However, James Mellor’s judgment favoured the implementer. His decision on FRAND-rate setting saw the court order Lenovo to pay a FRAND rate of $138.7 million. The judgment also declared both parties’ previous offers as non-FRAND. Later in 2023, Mellor released two further decisions in which he declared Lenovo the “overall winner” of the FRAND trial.

Ultimately, there were several reasons for this. Mellor found a per unit rate of $0.175 much closer to Lenovo’s proposal of $0.16, and a “long way” from InterDigital’s contention of a blended rate of $0.53. In addition, the court found the payable lump sum “substantially lower” than InterDigital’s offer of $337 million. Furthermore, the judges found Lenovo the winner regarding comparables, and Lenovo successful on the “top down” and “conduct” aspects of the case.

Neither InterDigital nor Lenovo were satisfied with the judgment, and subsequently lodged appeals.

InterDigital goes first

Judges Arnold, Birss and Nugee will now review this far-reaching FRAND ruling. The Court of Appeal is combining both appeals (case IDs: CA-2023-001492 for InterDigital and CA-2023-001489 for Lenovo) and will hear them together over the next four to five days. The court is livestreaming the hearing on YouTube.

InterDigital’s legal team will go first. As in the first instance, this includes barristers Adrian Speck, Mark Chacksfield and Tom Jones from 8 New Square, and a team from Gowling WLG around Alexandra Brodie, including partner Michael Carter and associate Olivia Nimmo. Additionally, InterDigital’s vice president and head of litigation Steve Akerley was involved in the first-instance case and is also playing a role in the appeal.

Following this, Lenovo will present its case over the next two days. Lenovo’s barristers Daniel Alexander from 8 New Square and James Segan from Blackstone Chambers will first respond to the arguments from opponent InterDigital’s appeal, and will then present Lenovo’s own appeal.

Kirkland & Ellis instructed Alexander and Segan. As in the first instance, the team consists of partner Daniel Lim, Nicola Dagg and Oscar Robinson, as well as associate Ashley Grant. Taylor Ludlam, executive director global litigation at Lenovo, is coordinating the dispute on the in-house side.

On Thursday, InterDigital’s barristers will present their arguments against Lenovo’s appeal. The judges have also reserved Friday for the hearing.

Second FRAND trial

A central issue in the hearing will be whether Lenovo needs to pay the FRAND rate set by the court for the entire period or whether it is entitled to a discount, meaning it must only pay for a short period. High Court judge James Mellor’s March 2023 ruling relates to a licence offer from InterDigital for the cellular patent portfolio until the end of 2023.

While Mellor’s ruling only has retroactive effect, Lenovo has initiated a second FRAND trial in the battle. Lenovo has asked the UK High Court to set a global licence rate for InterDigital’s entire portfolio, which includes implementation patents as well as SEPs. The court is thus to calculate the FRAND rate from 2024 onwards.

Recently, InterDigital challenged the jurisdiction of the UK High Court, but the court dismissed the challenge at the end of April (case ID: HP-2023-000031).

InterDigital wins in Germany

In early May, InterDigital achieved a spectacular victory with an injunction against Lenovo from Munich Regional Court. The court ruled Lenovo may no longer sell mobile devices in Germany that infringe InterDigital’s European patent EP 2 127 420 B1. The court also classified Lenovo as an unwilling licensee, despite the Chinese company having submitted a licence offer.

The first-instance ruling constitutes a remarkable win for InterDigital, given this is the only lawsuit the company has filed against Lenovo in Germany. InterDigital meanwhile enforced the judgment. Currently, Lenovo no longer sells tablets, smartphones and PCs with 4G and 5G capability via its website in Germany.