A battle over appropriate licensing methods for patents deemed essential for a particular industry’s technical standards could be heading to the Supreme Court after the Court of Appeal today upheld a lower court’s ruling.
Companies that own SEPs are required to license those patents at a fair, reasonable and non-discriminatory rate, known as FRAND. In Unwired Planet v Huawei, the Court of Appeal accepted the High Court’s determination that an owner of a standard-essential patent (SEP) for mobile phones can meet its obligations to making rights available fairly by offering a worldwide licence. Lord Justice Kitchin’s ruling added that if that offer is refused, an alleged infringer may be subject to an injunction.
The dispute centred on patents owned by technology company Unwired Planet which are claimed to be essential to the telecommunications industry. Unwired Planet made licensing offers to companies including Chinese phone maker Huawei but the offers were rejected for allegedly not meeting FRAND standards.
Both the High Court in April last year and the Court of Appeal today confirmed that an owner of a global SEP portfolio can meet FRAND obligations by offering a worldwide licence.
Yohan Liyanage, partner at Linklaters, said the significance of today's judgment would go far beyond the dispute in question.
‘All players in the telecoms sector license patents that are required to operate according to telecoms standards (such as 2G, 3G and 4G), and the judgment impacts not only the terms of future licences, but also the way that parties negotiate licences and make offers to each other,’ he said. He added that Huawei would probably be required to pay annual licence fees in the tens of millions of pounds in order to avoid a UK sales injunction.
Huawei has indicated its intention to appeal.
Gary Moss, head of litigation at IP boutique firm EIP, which represented Unwired Planet, said: ‘The court’s judgment confirms several important points of principle as to the appropriate scope and value of SEP licences. This provides global patent holders and licensees with a more efficient framework to help resolve SEP licensing issues.’
Unwired Planet also targeted Samsung and Google but both companies have since settled the claims.
Liyanage also warned that the ruling will also impact 5G, the next generation in telecommunications technology, the standards for which are being developed.