TP-Link Systems Inc & Anor v Huawei Technologies Co Ltd

For an interim RAND licence, the court’s task is to hold the ring pending the final determination, rather than conduct a mini-trial of the ultimate royalty. The midpoint between the parties’ latest properly arguable positions is a fair, simple and robust default. The court should remain flexible where an offer is arbitrary, artificial, wholly unsupported or obviously wrong.

An interim award should ordinarily cover the period to the expected final RAND determination, include compensatory interest on past sales, and be paid to the patentee rather than placed in escrow. Limitation periods do not ordinarily restrict the period for which RAND royalties are assessed.

Huawei applied for a declaration that its adjustable interim licence offer was RAND or, alternatively, for determination of the interim RAND terms. The application arose within TP-Link’s claim for a final global RAND licence for Huawei’s Wi-Fi 6 and earlier-generation standard-essential patent portfolio.

The parties agreed that an interim licence should be granted and that the court should determine its amount. They disputed the valuation methodology, the start and end dates, interest, and whether the payment should be held in escrow.

1. The midpoint between the parties’ latest properly arguable positions was adopted as the appropriate interim methodology. The interim exercise is materially different from determining final RAND terms. It is a limited process intended to hold the ring and should avoid a mini-trial.
2. The midpoint is not mandatory. Another methodology may be appropriate where a position is arbitrary, artificial, completely unsupported or obviously wrong. Neither party’s principal valuation approach met that threshold. TP-Link’s complex Unpacking Analysis was unsuitable because it lacked expert input and would require detailed assessment.
3. The interim licence should run from the start of sales in 2008 to the likely date of the final RAND determination, April 2027. Limitation periods did not ordinarily restrict the RAND assessment. An accepted industry practice of releasing past sales might be relevant, but TP-Link’s bare assertion did not justify it. Interest was included at US Prime + 1%.
4. The interim payment should be made to Huawei rather than placed in escrow. The agreed US$12 million non-refundable amount was retained, subject to liberty to apply for a pro rata increase if newly disclosed white-label sales proved significant. The precise amount, repayment mechanism, disclosure, confidentiality and costs were left for subsequent hearings.

First-instance decision. No prior judgment in the same proceedings was stated.