Lenovo Group Limited & Ors v Telefonaktiebolaget LM Ericsson & Anor

A standard-essential patent owner must perform its obligation to license on fair, reasonable and non-discriminatory terms in good faith. Where an implementer has undertaken to accept the terms determined by an independent court, including royalties from first implementation and realistic interest, it is no longer holding out. The owner cannot then pursue exclusionary remedies merely to coerce acceptance of more favourable terms or avoid the risk of an adverse FRAND determination.

A willing licensor would grant an adjustable interim licence pending the final determination. Its terms may take a pragmatic approach designed to hold the ring. A declaration to that effect serves a useful purpose where there is a realistic prospect that it will cause the owner to reconsider. It does not offend comity because foreign courts and tribunals remain free to assess the parties’ conduct and determine the relief before them.

Both sides owned portfolios of patents declared essential to telecommunications standards and required reciprocity under the ETSI intellectual property policy. Any FRAND agreement would therefore be a global cross-licence. Lenovo accepted that it would be the net payer and undertook to enter immediately into the cross-licence determined by the Patents Court to be FRAND, subject to adjustment following any appeal.

Ericsson continued proceedings seeking injunctions or equivalent exclusionary relief in the United States, Brazil and Colombia. Richards J refused Lenovo’s application for a declaration that a willing licensor would grant an interim cross-licence: [2024] EWHC 2941 (Pat). Lenovo appealed.

The central questions were whether Ericsson’s conduct breached its obligation to negotiate in good faith, whether an interim licence could be set without determining final FRAND terms, whether the declaration would serve a useful purpose, and whether it would offend international comity.

1. Appeal allowed. Ericsson breached its obligation of good faith under clause 6.1 of the ETSI intellectual property policy. Lenovo’s enforceable undertaking guaranteed payment of whatever net amount the English courts determined to be FRAND from first implementation, together with realistic interest. Even if Lenovo had previously held out, it was no longer doing so. Ericsson’s continued pursuit of exclusionary relief was intended to coerce Lenovo into accepting Ericsson’s offer or to avoid the risk that an independent court would determine less advantageous terms. The contractual derogation from the ordinary right to an injunction and the obligation of good faith constrained the exercise of Ericsson’s strict legal rights for that purpose: paras 105–131.
2. A willing licensor in Ericsson’s position would enter into an interim cross-licence. Such a licence holds the ring pending the final FRAND determination. It does not require the court to decide the full range of issues arising at the final trial, and its terms may be set on a more pragmatic basis because payments remain adjustable. The non-discrimination limb of FRAND concerns discrimination between similarly situated implementers, not even-handedness between licensor and licensee. The appropriate royalty was the midpoint between the parties’ figures for the period ending 31 December 2025, adjustable in accordance with the final determination: paras 132–138 and 156–157.
3. The declaration would serve a useful purpose. It would require Ericsson to reconsider its position, and there was a realistic prospect that Ericsson would change course. If it did, the declaration would preserve the utility of the English proceedings and avoid burdensome parallel litigation: paras 139–144.
4. The declaration was consistent with comity. It neither instructed foreign courts and tribunals nor interfered with their jurisdiction. If Ericsson granted the interim licence, foreign litigation would be reduced. If it did not, each foreign decision-maker would remain free to assess the conduct and relief before it. Although the United States proceedings were first commenced, the English court was properly seised, and issues concerning the existing licence placed the legal centre of gravity in England. Ericsson’s preference was for exclusionary power rather than a FRAND determination by any court: paras 145–155.
5. Ericsson’s respondents’ notice on French law failed. Under section 4(2) of the Civil Evidence Act 1972, the party disputing a citable prior finding of foreign law bears the burden of proving the contrary. Serving no more persuasive contrary expert evidence did not discharge that burden. The notice was timely under rule 33.7(3)(a) of the Civil Procedure Rules 1998: paras 79–90.

1. Court of Appeal (Civil Division): The appeal was allowed unanimously. The court held that Ericsson breached its good-faith obligation and declared that a willing licensor would enter into an adjustable interim cross-licence: [2025] EWCA Civ 182.
2. High Court, Patents Court: Richards J dismissed Lenovo’s application for the declaration, principally because he was not satisfied that Ericsson was seeking supra-FRAND terms, that the proposed short-term terms were FRAND, or that the declaration had sufficient utility consistently with comity: [2024] EWHC 2941 (Pat).