UK Supreme Court Upholds Jurisdiction to Set Global FRAND Licence Terms

Uk Supreme Court overturns Court of Appeal decisions on FRAND in ZTE and Huawei cases

In its long-awaited Unwired Planet/Conversant decision, the UK Supreme Court has held that the UK courts have jurisdiction to require an implementer to either sign up to a global FRAND license, on terms set by the UK courts, or face a UK injunction. The landmark joint appeals of Unwired Planet v Huawei and Conversant v Huawei and ZTE were heard over 9 months ago in the Supreme Court, and the international tech community has been eagerly awaiting the decision ever since. The judgment was widely expected in Q1 of this year but, possibly as a sign of how seriously the UK’s highest court has been taking this case, it has taken until August 26, 2020 for the decision to be handed down.

Huawei/ZTE were appealing decisions of the Court of Appeal which had held that:

  • it was open to the UK court to decide the terms of a FRAND licence, including that a global licence was a FRAND licence;
  • if a global license was FRAND then a SEP holder did not have to offer a national license; and
  • if the implementer refused to accept this global licence then the court would issue an injunction in the UK, known as a “FRAND injunction”.

The Supreme Court has now unanimously dismissed all of the appeals made against the lower courts’ decision.

These joint appeals have drawn a huge amount of international attention as the Court of Appeal’s decision had the potential to change the global SEP/FRAND landscape significantly, by giving the UK courts jurisdiction to set global FRAND license terms regardless of how important the UK is as a market to the parties concerned. Some other jurisdictions had viewed the decision of the Court of Appeal as an unreasonable encroachment on national sovereignty, in effect causing the UK to become the global ‘policeman’ of the FRAND world. This was particularly the case given that less than 1% of Huawei’s global sales were made in the UK.

Despite these concerns, the Supreme Court has upheld the decision of the Court of Appeal. Holding that “It is the contractual arrangement which ETSI has created in its IPR [intellectual property rights] Policy which gives the court jurisdiction to determine a FRAND licence and which lies at the heart of these appeals” the Supreme Court affirmed the right of the UK courts to injunct an implementer who refuses to take a global FRAND licence, no matter how little of their operation is in the UK. For such implementers, the choice is stark: take the global licence set by the UK courts, or abandon the UK as a market. For established technology players for whom the UK is an important market, this is unlikely to be a feasible option.

The consequences of this decision remain to be seen and it is likely that we will see cases over the next few years which test the extent of this ruling, including cases with parallel proceedings in many jurisdictions across the globe. As such SEP/FRAND disputes continue to be played out in courts internationally it remains to be seen how many courts will move towards a UK-like system of unilateral decision making and how many will seek to restrict their decisions to national borders. The clashes between the two are likely to keep the SEP community busy for several years to come.

Michael Burdon, Simmons & Simmons (London)

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