Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another

An English court enforcing a valid and infringed UK standard-essential patent may determine the FRAND terms of a global portfolio licence and make avoidance of an injunction conditional upon the implementer accepting that licence. This enforces the ETSI contractual undertaking. It does not determine the validity or infringement of foreign patents.

FRAND is a unitary obligation. Non-discrimination requires terms reflecting the portfolio’s fair market value and generally available to similarly situated licensees, rather than automatic matching of the most favourable previous licence.

A dominant SEP owner must give notice or prior consultation before seeking an injunction. The remaining licensing steps provide a safe harbour rather than inflexible mandatory conditions. Where a valid patent is infringed and a FRAND licence remains available, damages may be inadequate because they encourage continued holding out.

These conjoined appeals concerned telecommunications patents declared essential to ETSI standards. Unwired Planet and Conversant owned multinational portfolios and had undertaken to license their standard-essential patents on fair, reasonable and non-discriminatory terms. Huawei and ZTE challenged the English courts’ ability to determine the terms of global portfolio licences while enforcing UK patents.

In Unwired Planet v Huawei, Birss J determined a global FRAND licence and granted an injunction which would cease if Huawei entered that licence: [2017] EWHC 711 (Pat), reissued as [2017] EWHC 2988 (Pat). The Court of Appeal dismissed Huawei’s appeal: [2018] EWCA Civ 2344.

In Conversant v Huawei and ZTE, Henry Carr J rejected jurisdictional and forum challenges: [2018] EWHC 808 (Pat). The Court of Appeal dismissed the ensuing appeals: [2019] EWCA Civ 38.

The Supreme Court considered jurisdiction over global FRAND terms, forum non conveniens, non-discrimination, compliance with Huawei v ZTE, and whether damages should replace a prohibitory injunction.

1. Disposition. The court dismissed all three appeals.

2. Jurisdiction and global licensing. The ETSI IPR Policy creates an enforceable contractual undertaking which balances protection against patent hold-up with fair reward for SEP owners. An English court adjudicating infringement of a valid UK SEP may determine whether a global portfolio licence is FRAND and settle its disputed terms. It may make avoidance of a UK injunction conditional upon acceptance of that licence. The court thereby enforces the contractual undertaking and does not adjudicate the validity or infringement of foreign patents. Industry practice supports worldwide licensing because patent-by-patent and country-by-country litigation is impracticable. A FRAND process may preserve reasonable foreign challenges and provide for consequential royalty adjustments. Patent assertion entities acquire the assignor’s rights but remain subject to the same obligation to negotiate fairly and reasonably.

3. Forum non conveniens. A challenger must identify an available alternative forum which has jurisdiction to determine the dispute. The evidence did not establish that the Chinese courts could determine a global FRAND licence without the parties’ consent, and Conversant had reasonably withheld consent. China was therefore not an available alternative forum. A temporary case-management stay for related foreign proceedings is possible only in rare or compelling circumstances. No such circumstances justified further delay.

4. Non-discrimination. Clause 6.1 of the ETSI IPR Policy imposes one composite FRAND obligation, not separate fair, reasonable and non-discriminatory duties. The non-discrimination component requires licence terms reflecting the fair market value of the portfolio and generally available to similarly situated licensees. It does not impose a “hard-edged” most-favourable-licence obligation requiring every later licensee to receive the lowest rate previously negotiated. Unwired therefore did not have to match the exceptional Samsung rate.

5. Competition law. The court explained Huawei v ZTE, EU:C:2015:477. A SEP owner in a dominant position infringes article 102 by seeking a prohibitory injunction without notice or prior consultation. The form of that communication depends on the circumstances. The remaining steps identified by the CJEU provide a safe harbour, rather than inflexible conditions whose slightest breach necessarily establishes abuse. Unwired gave sufficient notice, remained willing to accept whatever terms the court determined were FRAND, and had not abused a dominant position.

6. Injunction. Damages in lieu are discretionary but were not an adequate substitute. Restricting SEP owners to damages would encourage implementers to continue infringing until successfully sued patent by patent and country by country. Once a UK SEP is valid and infringed and a FRAND licence is available, an injunction gives the implementer a legitimate choice between accepting the licence and leaving the affected market. The FRAND safeguard prevents use of the injunction to obtain exorbitant royalties.

1. United Kingdom Supreme Court: Dismissed the appeals in Unwired Planet v Huawei and Conversant v Huawei and ZTE: [2020] UKSC 37 .

2. Court of Appeal — Unwired Planet: Dismissed Huawei’s appeal from the determination of global FRAND terms and the conditional injunction: [2018] EWCA Civ 2344 .

3. Court of Appeal — Conversant: Dismissed Huawei’s and ZTE’s appeals against rejection of their jurisdictional and forum challenges: [2019] EWCA Civ 38 .

4. High Court — Unwired Planet: Birss J determined a global FRAND licence in [2017] EWHC 711 (Pat) , reissued as [2017] EWHC 2988 (Pat) , and granted a conditional injunction in [2017] EWHC 1304 (Pat) .

5. High Court — Conversant: Henry Carr J dismissed the jurisdictional challenges and permitted service out of the jurisdiction: [2018] EWHC 808 (Pat) .