Summary
 
The UKSC has unanimously endorsed the approach taken by the lower courts in both the Unwired Planet and Conversant cases, cementing the UK’s position at the forefront of global licensing for standard essential patents (SEPs).
 
The full judgment can be accessed here and the UKSC’s press summary here.
 
Background
 
In April 2017, the High Court handed down its first instance FRAND judgment in Unwired Planet v Huawei.  In his seminal judgment, Mr Justice Birss held that the FRAND licence between the parties was global, and that Unwired Planet would, therefore, be entitled to an injunction under any valid and infringed UK SEP unless Huawei entered into a worldwide licence to all of the SEPs in the Unwired Planet portfolio.  He also decided that: (i) the FRAND rate set by the court was inherently non-discriminatory (notwithstanding that more favourable terms had been agreed with other parties); and (ii) Unwired Planet had complied with the obligations set out by the CJEU in Huawei v ZTE (Case C-170/13) by undertaking unconditionally to offer the FRAND licence set by the court.  These findings were all upheld by the Court of Appeal in October 2018.
 
Subsequently, in Conversant, Huawei and ZTE challenged the jurisdiction of the UK court to determine FRAND terms for Conversant’s global SEP portfolio on the basis that: (i) Conversant’s claim was, in substance, a claim for infringement of foreign patents, the validity of which was disputed; and (ii) in any event, the UK was not the forum conveniens to resolve a global SEP dispute between the parties. (The relief sought by Unwired Planet in its claim was an injunction “save insofar as the Defendants are entitled to and take a licence to the [five asserted SEPs] on FRAND terms”, in relation to which no questions of jurisdiction arose). This challenge failed at first instance, the late Mr Justice Henry Carr finding that the claim was for the infringement of four UK SEPs and that the UK court was, accordingly, the correct forum.  By the time the Conversant proceedings reached the Court of Appeal, the Unwired Planet appeal had already been heard and so only the forum conveniens point was dealt with (and the first instance decision upheld).
 
Judgment
 
In its unanimous judgment, the Supreme Court has wholeheartedly endorsed the approach taken by the lower courts in both Unwired Planet and Conversant, holding:

1. The English courts have jurisdiction to settle a global licence on FRAND terms for a multinational SEP portfolio, and to grant an injunction restraining the infringement of a UK SEP unless the defendant in question enters into such licence.

2. The English courts are the appropriate forum for the resolution of the Conversant case.  Even if Huawei and ZTE were right that Conversant’s claim was, in substance, a dispute as to the terms of a global FRAND licence, their forum conveniens challenge would fail as they had not established the existence of an alternative forum.  If necessary, however, the Supreme Court would have preferred the characterisation of the case advanced by Conversant – that the dispute was as to the validity and infringement of UK patents with FRAND issues arising by way of a contractual defence to an injunction.

3. FRAND is a single, unitary obligation without a free-standing or “hard-edged” non-discrimination aspect.  A fair market price (and, indeed, a royalty price list) should be available to all.  

4. Huawei v ZTE was interpreted correctly by the lower courts.  The CJEU did not set out a series of mandatory requirements that must be followed in all cases but instead outlined a “standard of behaviour against which both parties’ behaviour can be measured to decide in all the circumstances if an abuse has taken place”. 

5. The grant of an injunction against an infringing implementer that declines to take a global FRAND licence is both appropriate and proportionate.  Where a FRAND licence has been settled and offered, there can be no question of an injunction being used to leverage non-FRAND terms.  Further, damages would not compensate adequately a SEP owner, who would be obliged to litigate its portfolio patent by patent and country by country.

 
Powell Gilbert LLP acted for Huawei in the Unwired Planet proceedings.
 
Please do not hesitate to contact us if you would like to discuss these matters further.

Simon Ayrton
T: 020 3040 8010 / email: simon.ayrton@powellgilbert.com

Zoë Butler
T: 020 3040 8070 / email: zoe.butler@powellgilbert.com
 
Peter Damerell
T: 020 3040 8157 / email: peter.damerell@powellgilbert.com
 
Tess Waldron
T: 020 3040 8041 / email: tess.waldron@powellgilbert.com