U.K. Supreme Court Permits SEP Holders To Require Worldwide FRAND Licenses

• Published date: 02 September 2020
• Subject Matter: Intellectual Property, Media, Telecoms, IT, Entertainment, Mobile & Cable Communications, Patent
• Law Firm: Ropes & Gray LLP
• Author: Mr Kevin Post, Steven Pepe and Samuel Brenner

On August 26, 2020, the U.K. Supreme Court'the U.K.'s highest court'issued its highly anticipated decision in Unwired Planet International v. Huawei involving the "Fair, Reasonable, and Non-Discriminatory" ("FRAND") licensing of standard essential patents ("SEPs") in the telecommunications space. The decision in several consolidated cases rejected all appeals from Huawei and ZTE and affirmed the decisions from the London High Court (Justice Birss) and Court of Appeals. The Court concluded that owners of patents essential to ETSI's telecommunications standards (including 2G, 3G, and 4G (LTE)) can demand that an implementer practicing a U.K. SEP take a license on FRAND terms to all of the patent owner's worldwide telecommunications SEPs, and can obtain an injunction should the implementer refuse. This decision has significant implications for FRAND licensing, assertion of SEPs, and antitrust issues both in the telecommunications context and more broadly.

Background

The U.K. Supreme Court's decision was based on the consolidated appeal of multiple cases involving the assertion and licensing of SEPs on FRAND terms. In 2013, Unwired Planet (which is now owned by PanOptis), a company in the business of licensing patents, acquired from Ericsson a worldwide portfolio of patents, including many SEPs for the 2G, 3G, and 4G (LTE) standards. Unwired Planet then asserted a subset of that portfolio against Huawei and other entities. As relevant to this appeal, in response, Huawei argued that the asserted patents were invalid and not infringed, and that Unwired Planet had failed to offer a license on FRAND terms.

After a technical trial found Huawei to have infringed valid U.K. patents, Justice Birss of the English High Court determined that Huawei could be forced to take a FRAND license for not only the patents in suit, but to all Unwired Planet's worldwide SEPs. Justice Birss set the terms of the license, and enjoined Huawei from practicing Unwired's patents (and thus selling products that comply with the 2G, 3G, and 4G (LTE) telecommunications standards) unless it agreed to those licensing terms. Huawei appealed to the Court of Appeal, which affirmed Justice Birss' opinion in most respects. Huawei then appealed to the U.K. Supreme Court.

U.K. Supreme Court Decision

The U.K. Supreme Court determined that there were five issues raised on appeal:

1. Whether a court in the U.K. has jurisdiction and may properly exercise a power without the agreement of both parties (a) to...