On 5 April 2017, the English High Court handed down a landmark decision on the interplay between EU competition law and the meaning of fair, reasonable and non-discriminatory (FRAND) licensing in the context of global mobile telephone patents. The decision is the first outside of Germany to consider the application of the decision of the European Court of Justice in Huawei v ZTE.
Unwired Planet acquired a portfolio of standard essential patents from Ericsson in 2013 and, after unsuccessful attempts to license those patents consensually, commenced patent infringement proceedings against Huawei, Samsung and Google in March 2014. In addition to challenging validity and infringement of the patents, each of Huawei, Samsung and Google commenced counterclaims against Unwired Planet alleging that Unwired Planet’s conduct was not FRAND and was in breach of EU competition law. The claims against Google were settled in May 2015 and the claims against Samsung were settled shortly before trial in July 2016. The claims against Huawei went to trial over 7 weeks in November and December 2016.
Unwired Planet sought an order that the offers it made to Huawei during the course of the litigation were FRAND and in the event that Huawei refused to accept a FRAND offer, then it was appropriate for the Court to grant an injunction restraining Huawei from offering infringing products for sale in the UK. By the time the matter reached trial, Huawei’s position was that (i) it was not FRAND for Unwired Planet to require Huawei to enter into a global license (ii) the rates Unwired Planet was seeking were not FRAND (iii) by commencing litigation without making a FRAND offer, Unwired Planet was in breach of the principals set out in Huawei v. ZTE and (iv) that Unwired Planet had abused its dominant position contrary to Article 102 TFEU. In any case, Huawei alleged that Unwired Planet should not be entitled to an injunction against Huawei.
In a judgment that will be a welcome one for those licensing patents relevant to global standards, Mr Justice Birss found that it was FRAND for a patent holder to insist on a global license (and conversely it was not FRAND for a prospective licensee to insist on licensing on a country-by-country basis) where the patent portfolio being licensed was global. Whilst he determined that none of the offers made by either party were FRAND, he then went on to determine the FRAND rate for Unwired Planet’s portfolio. All of Huawei’s competition law counterclaims were dismissed (including its argument that Unwired Planet were in breach of the Huawei v. ZTE principals for not having made an offer to Huawei prior to commencing proceedings). Given that Huawei had refused to enter into a license on terms that the Court had determined to be FRAND, and Unwired Planet was not in breach of competition law, he considered that it was appropriate to grant a final injunction against Huawei to restrain infringement of Unwired Planet’s patents in the UK. The final injunction will be considered at a further hearing in May.