Optis Cellular Technology LLC & Ors. v Apple Retail U.K. Limited & Ors.

Once an implementer has been found to infringe a valid standard-essential patent, it cannot avoid an injunction under a FRAND undertaking unless it commits to take a licence on the terms ultimately determined by the court to be FRAND. Merely seeking the option to accept or reject those terms is insufficient.

Failure to make that commitment does not permanently forfeit the right to a FRAND licence. The appropriate relief is a FRAND injunction, which permits the implementer subsequently to accept the court-determined licence. A past abuse of dominance does not require an injunction to be withheld where its effects have ceased and financial remedies adequately address the abuse.

Optis alleged that Apple had infringed patents declared essential to telecommunications standards and subject to an undertaking under clause 6.1 of the ETSI IPR Policy to license on fair, reasonable and non-discriminatory terms. After EP744 was found valid, essential and infringed, Apple declined to commit unconditionally to take the licence which the court would determine to be FRAND.

Following Trial F, Meade J held in [2021] EWHC 2564 (Pat) that Apple should be restrained unless it undertook to enter into the court-determined licence, but that Apple had not permanently lost its right to rely on the FRAND undertaking. Apple gave the required undertaking, and an injunction was refused.

Apple appealed against the construction of clause 6.1, the treatment of its competition-law case and the grant of relief not specifically pleaded. Optis cross-appealed, principally contending that Apple had permanently forfeited the benefit of the undertaking.

1. Both the appeal and cross-appeal were dismissed unanimously. Arnold LJ gave the judgment, with which Asplin and Elisabeth Laing LJJ agreed.

2. Clause 6.1 must be interpreted to prevent both hold up by a standard-essential patent owner and hold out by an implementer. An implementer found to infringe a valid SEP cannot obtain immunity from an injunction merely by seeking the option of accepting or rejecting terms later determined to be FRAND. Seeking a FRAND licence entails agreeing to take a licence on objectively FRAND terms. The beneficiary cannot take the benefit of the stipulation pour autrui without accepting its corresponding burden.

3. An implementer need not know the licence terms before committing. The required commitment is not a blank cheque because the court will determine objectively FRAND terms. If the implementer will not commit, it should be restrained from continuing the infringement. Otherwise the delay would promote hold out and cause a substantive loss of rights in an ageing patent.

4. The implementer's refusal does not permanently extinguish its right to invoke the undertaking. The undertaking is irrevocable, and the ETSI policy seeks continuing access to standardised technology on FRAND terms. An implementer may therefore change its mind. The suitable remedy is a FRAND injunction which ceases to operate when the implementer commits to the court-determined licence.

5. Assuming that the patent owner had abused a dominant position contrary to Article 102 of the Treaty on the Functioning of the European Union, withholding the injunction was not justified. The alleged abuse concerned past negotiations and had no continuing effect once the owner accepted its duty to grant the court-determined licence. Damages and other financial remedies could compensate and deter the abuse, whereas withholding the injunction would leave the owner inadequately protected and encourage hold out.

6. The judge could grant the more limited FRAND injunction although that precise form of relief had not been pleaded for Trial F. Section 37(2) of the Senior Courts Act 1981 permits an injunction on just terms, and CPR rule 16.2(5) permits any remedy to which the claimant is entitled. A court may grant a narrower injunction than the unqualified injunction sought. The possibility was also within the parties' contemplation, so there was no procedural unfairness.

1. Court of Appeal (Civil Division): In [2022] EWCA Civ 1411, dismissed Apple's appeal and Optis' cross-appeal. It upheld the requirement that Apple commit to the finally determined FRAND licence to avoid injunctive relief, while retaining the ability subsequently to invoke the ETSI undertaking.

2. High Court, Patents Court: Meade J held in [2021] EWHC 2564 (Pat) that an injunction should issue unless Apple undertook to take the licence determined to be FRAND, but rejected Optis' contention that Apple had permanently forfeited its entitlement to such a licence. Apple gave the undertaking, and the judge refused an injunction.