The High Court has issued only the second-ever determination of a FRAND licence in the UK Courts, in a dispute between InterDigital and Lenovo concerning the former’s global Standard Essential Patent (“SEP”) portfolio. The decision is one of only a handful in the world to reach a final determination in a FRAND dispute and reinforces the world-leading role of the English courts in this field.
Mr Justice Mellor, in a significant and substantial judgment, examined and clarified the key principles applicable in global FRAND disputes as well as procedural issues which arise in such litigation.
The Court determined, among other things, the following key points:
(1) The Court set a FRAND rate under InterDigital’s portfolio of 17.5 cents per device (¶813), which was 65% lower than the rate being sought by InterDigital (¶23).
(2) The Court did so based upon a comparable licence analysis, rejecting the 20 licences relied upon by InterDigital as comparables and relying principally upon one of the seven licences relied upon by Lenovo (¶¶793-814).
(3) The Court rejected the utility of the top-down analysis put forward by InterDigital (¶¶815-885).
(4) The Court held that “by consistently seeking supra-FRAND rates, InterDigital did not act as a willing licensor” (¶928), whereas “for the most part, Lenovo did conduct themselves as a willing licensee” (¶¶931-932).
(5) The Court emphasised the need for transparency in this market: “the SEP universe would be able to converge on and agree FRAND terms very much more quickly if the basics of each SEP licence were made public (by ‘basics’ I mean the number of units covered, the royalty rates or total sum paid/payable and which standards are involved). In other words, the market for mobile telephony SEP licences would work very much more smoothly with transparency of what terms had been agreed in the past” (¶200) and this “has implications for how the SEP licensor should conduct itself as a willing licensor” (¶202).
(6) The Court decided that FRAND required Lenovo to pay royalties on sales from 2007 onwards (¶¶424-433, 450-451, 515-527, 532-537, 548, 554-555, 559-561).
James Segan KC and Ravi Mehta acted for Lenovo, instructed by Nicola Dagg and Daniel Lim from Kirkland & Ellis International LLP in these proceedings.
The full judgment can be found here.