Optis Cellular Technology LLC & Ors v Apple Retail UK Ltd & Ors

Failure to satisfy the conditions identified by the CJEU for the safe harbour available to an SEP proprietor does not automatically establish an abuse of a dominant position under Article 102 TFEU. The court must assess the circumstances as a whole.

In particular, an SEP proprietor’s failure to make a specific FRAND offer is not, by itself, a mandatory condition whose absence makes infringement proceedings abusive. Notice or prior consultation with the alleged infringer is mandatory. At an interlocutory stage, however, the court should not set aside service or strike out proceedings unless there is no serious issue to be tried and no reasonable prospect of the claimant defeating the alleged Article 102 defence.

The claimants, proprietors of a portfolio of standard essential patents, brought infringement proceedings against three Apple companies. They acknowledged their FRAND obligations to ETSI and sought, among other relief, a determination of FRAND terms and a qualified injunction.

The defendants applied to stay or set aside the proceedings. Apple Inc. sought to set aside permission to serve it out of the jurisdiction. The other defendants relied additionally on an alleged failure to give them separate notice or conduct prior consultation. The applications principally concerned whether the claimants’ licensing conduct constituted an abuse of dominance under Article 102 TFEU.

1. The court dismissed all three applications. The defendants had not shown that the Article 102 arguments were unanswerable or that there was no serious issue to be tried.

2. Following Huawei Technologies Co Ltd v ZTE Corp (Case C170/13; [2016] RPC 4), and the interpretation adopted in Unwired Planet International Ltd v Huawei Technologies Co Ltd ([2018] EWCA 2344), notice or prior consultation before bringing an injunction action is a mandatory requirement. By contrast, willingness to take a FRAND licence and presentation of a specific written FRAND offer are behavioural criteria providing a safe harbour; they are not mandatory conditions whose breach automatically constitutes abuse.

3. Failure to enter the safe harbour leaves the question of abuse to be determined on all the facts. The court must not assume that a proprietor has abused its dominant position merely because its offer may ultimately be found not to be FRAND.

4. The English procedure for SEP claims was materially relevant. As illustrated by Unwired Planet International Ltd v Huawei Technologies Co Ltd ([2017] EWHC 2988 (Pat)), the court may determine infringement first, determine FRAND terms thereafter, and ordinarily defer an injunction until the implementer has had an opportunity to take a licence on those terms. That procedure meant that it could not be concluded at this stage that the commencement of proceedings, even with a potentially unfair offer, necessarily amounted to abuse.

5. There was also a reasonable prospect that negotiations with Apple Inc., conducted on the understanding that they covered the relevant Apple companies, could satisfy the notice and prior-consultation requirement for the other defendants. That factual issue was unsuitable for final determination on the applications.

6. The time for seeking permission to appeal was extended to 21 days after judgment of the Supreme Court in the then-pending Unwired Planet and Conversant appeals. No general stay of the proceedings was granted or encouraged.

The judgment was a first-instance decision. Permission to serve Apple Inc. out of the jurisdiction had previously been granted by Deputy Master Kaye on 7 March 2019.