Lenovo Group Limited & Ors v Ericsson Limited & Anor

A court considering a final, rather than revisitable, interim-stage declaration must have a high degree of assurance that the declaration is correct in fact and law and that it serves a useful purpose. A declaration concerning a proposed short-term FRAND licence will not be justified merely because it may influence foreign proceedings. The court must assess the licence terms, the parties’ negotiating conduct, the likely utility of the declaration and comity. An implementer’s undertaking to accept an English FRAND determination is relevant but is not conclusive, particularly where the SEP holder has given no equivalent undertaking. Where the evidence leaves a realistic possibility that the SEP holder’s conduct is consistent with good faith and the proposed licence is not shown to be FRAND, the declaration should be refused.

Lenovo and Ericsson owned FRAND-encumbered cellular standard-essential patents and were unable to agree a cross-licence. Injunction and related proceedings were underway in several jurisdictions, while English proceedings and proceedings in the Eastern District of North Carolina might determine the terms of a global FRAND cross-licence.

Lenovo sought a declaration that willing parties would enter into a proposed short-term, one-way licence of Ericsson’s patents pending a court-determined cross-licence. Lenovo had undertaken to accept the English court’s FRAND determination. Ericsson had given no equivalent undertaking and disputed that its conduct breached its contractual and French-law good-faith obligations. The central questions were whether the proposed declaration was correct, whether Ericsson was required to offer the short-term licence, and whether the declaration would serve a useful purpose consistently with comity.

1. Declaration refused. The court was not satisfied to a high degree of assurance that the proposed declaration was correct in fact or law, or that it would have real utility. Comity also weighed against granting it.
2. The application was not for an interim declaration under Civil Procedure Rules 1998, CPR 25.1(1)(b), because the declaration would not be revisited at trial. Nevertheless, it was an interim-stage application determined on written evidence. The appropriate standard was a high degree of assurance, rather than the summary-judgment or good-arguable-case standards. The approach in British Airline Pilots’ Association v British Airways Cityflyer Limited was therefore inapplicable to this type of declaration, while Panasonic Holdings Corporation v Xiaomi Technology UK Limited and others provided the relevant guidance.
3. The FRAND Commitment required negotiation in good faith towards a FRAND licence and operated as a contractual derogation from the ordinary right to seek an injunction. It did not remove the SEP holder’s ability to seek an injunction where the implementer would not accept or honour FRAND terms. The English courts could determine a global FRAND cross-licence, but ordinarily could enforce that determination only through granting or withholding injunctions.
4. Lenovo’s undertaking to accept the English court’s determination was a factor to be weighed, not a new ground zero which automatically made later injunction applications inconsistent with the FRAND Commitment. Its significance was reduced because Ericsson had given no equivalent undertaking and it was not certain that the English court’s determination would produce a licence accepted by both parties.
5. The proposed short-term licence was materially different from an ordinary FRAND licence because its true-up mechanism meant that the payment might have to be repaid and its terms adjusted after the final determination. There was no sufficient expert or comparable evidence establishing that its terms, including the lump sum, were FRAND. The court declined to split the difference because Ericsson had proposed no competing terms.
6. Ericsson’s conduct gave rise to an arguable good-faith case, but not to the required high degree of assurance. The evidence indicated that Ericsson’s October 2023 offer was within the FRAND range, whereas Lenovo had not established that its later offers were FRAND. The declaration’s principal practical effect would have been to influence foreign proceedings, and its independent utility was slender.