The verdict of the UK Supreme Court in the Unwired Planet v Huawei (2020)[1] litigation case is one of the most influential UK intellectual property decisions in recent years. The case pertained to the licensing of standard-essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms and the extent of UK courts’ powers in respect thereof.
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SEPs are patents essential for protecting the intellectual property rights over industry standards (such as, 4G/5G telecom protocols), the owners of which commit to licensing them under FRAND obligations through standard-setting organizations like the European Telecommunications Standards Institute (ETSI).
Unwired Planet International (UPI), a licensor of patents acquired largely from Ericsson, held a large portfolio of SEPs on mobile communications technologies. In 2014, Unwired Planet offered Huawei a worldwide license for its SEPs on terms that it deemed were FRAND. However, Huawei declined and sought a license limited to UK SEPs on substantially lower royalties.
Unwired Planet International (UPI) then filed a lawsuit in the Patents Court, Chancery Division of the High Court of Justice in England &Wales, alleging that Huawei had infringed its patented technology and was using it without a license.
At first instance, the Court in its 2017 verdict[2] addressed several FRAND, competition law, and injunctive relief issues. It concluded that Huawei had infringed at least two validly held patents. Given the global nature of both Huawei’s business and UPI’s patent portfolio, a ‘UK-only license’ was impractical. He reasoned that a country-by-country approach would be not only inefficient, but also inconsistent with prevalent industry practice.
Because Huawei had refused the licensing terms of UPI, the court granted an injunction restraining the former from infringing the SEPs unless it entered into a license on the court-determined FRAND terms.
The judge further set a worldwide royalty rate that he deemed FRAND.
In its appeal[3], Huawei contended that the UK court lacked jurisdiction to compel global licensing in a local patent infringement suit, and, that the non-discrimination element in FRAND meant Huawei should receive the same terms offered to other licensees like Samsung.
The court dismissed the appeal. It pronounced that UK courts are empowered to determine global FRAND terms and the non-discrimination obligation did not require identical terms for all licensees; it is just that the overall terms must be fair.
It was further adjudged that UK courts can grant injunctions restraining infringement of UK SEPs, unless a global FRAND license is taken. Huawei’s suggestion that it would be inequitable to grant an injunction which would effectively compel a global license was also negated.
The court rejected Huawei’s competition law defence too. However, it was clarified that there is not necessarily only one “single” set of FRAND terms, thereby recognising that multiple license structures could be compatible with FRAND obligations.
Huawei then appealed to the UK Supreme Court, which upheld the appellate court’s judgment. This was a significant affirmation of the jurisdiction of English courts and their role in global FRAND disputes. The court confirmed that granting an injunction against an infringer is a fair remedy if a court-determined FRAND license terms encouraging settlement is refused.
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The court also emphasized emphasizing that ‘non-discriminatory’ limb of FRAND is not a rigid rule. It should be read as part of the composite FRAND obligation, not as a freestanding requirement to mirror rates offered to other implementers.
In respect of the competition law challenge, it was observed that UPI had offered to grant a license on FRAND terms; whereas Huawei was willing to accept a license on its own terms. Therefore, it was held that Unwired Planet was not abusing its dominant position.
On the whole, Unwired Planet v Huawei is a landmark UK intellectual property (IP) ruling, which has shaped the worldwide landscape for SEP enforcement and FRAND licensing, giving national courts a vital role in determining global licensing frameworks
In essence, the judgment established that UK courts can act as "ringmasters" in global SEP licensing, setting the stage for how essential patents for technologies like 5G are licensed worldwide. The decision also provided greater certainty for SEP owners seeking fair global royalties. It also puts pressure on implementers to negotiate fairly or risk injunctive remedies being awarded in the UK.
At Blaze Ventures, we have elaborate processes and qualified professionals for strategically advising inventors and enterprises on the licensing of standard-essential patents (SEPs) on FRAND terms.
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[1] [2020]UKSC 37
[2] [2017]EWHC 711 (Pat)
[3] [2018]EWCA Civ 2344
