In the eagerly awaited 5 April 2017 decision of Unwired Planet International Ltd v Huawei Technologies Co. Ltd & Anor  EWHC 711 (Pat) Birss J gave the first UK court determination of FRAND terms as well as the first UK judicial consideration of the Huawei v ZTE decision of the CJEU.
A copy of the full judgment is here. Birss J noted that it was very long, though only somewhat over half the total number of words in the written closing submissions. As the conclusions he had reached were distributed throughout the judgment, he summarised them at paragraph 806 (conclusions of law) and paragraph 807 (conclusions of fact).
Amongst the headline points in the judgment are the following:
- The FRAND obligation is enforceable in the English courts; the English court will set FRAND rates; if the patentee refuses to enter into a licence which a court has determined to be FRAND then, a court will normally refuse to grant relief for patent infringement; conversely, if an implementer refuses to accept a FRAND licence, the normal relief for patent infringement should normally follow (paragraphs 143, 166, 167 and 169);
- The court rejected the concept that FRAND is a range, holding there is only a single set of FRAND terms for a given set of circumstances and only one FRAND rate; this eliminates the problem, that would exist if FRAND were a range, as to whether relief should be granted in the situation when the patentee and implementer have both made offers within such a range (paragraphs 147 to 161);
- The concept of FRAND also characterises the process by which a licence is negotiated; an implementer who wishes to take advantage of the patentee’s FRAND obligation must themselves negotiate in a FRAND manner;
- Offers of rates in negotiation that are higher or lower than the FRAND rate (i.e. as subsequently determined by the court) are legitimate provided they do not disrupt or prejudice the negotiation;
Principles derived from the CJEU’s decision in Huawei v ZTE
Birss J summarised at paragraph 744 the following principles derived from the CJEU decision in Huawei v ZTE:
- The CJEU decision in Huawei v ZTE sets out a scheme which both the patentee and the implementer can be expected to follow in the context of a dispute about a patent declared essential to a standard and subject to a FRAND undertaking.
- Bringing a claim for infringement which includes a claim for an injunction without prior notice of any kind will necessarily be an abuse of a dominant position.
- Bringing a claim for infringement which includes a claim for an injunction even with sufficient notice is capable of being an abuse of dominant position. However the CJEU judgment does not hold that if circumstances diverge from the scheme set out in any way then a patentee will necessarily abuse their dominant position by starting such a claim.
- The scheme sets out a standard of behaviour against which both parties’ behaviour can be measured to decide in all the circumstances if an abuse has taken place.
- If the patentee does abuse its dominant position, the proper remedy is likely to be the refusal of an injunction even though a patent has been found to be valid and infringed and the implementer has no licence.
- The legal circumstances of this case differ from the circumstances assumed in Huawei v ZTE in a crucial respect. FRAND is justiciable and the FRAND undertaking can be effectively enforced at the suit of the defendant irrespective of Article 102 TFEU.
Conclusions on the facts of the case
The following points are of note amongst the conclusions on the facts of the case summarised at paragraph 807:
- As the holder of SEPs, Unwired Planet is in a dominant position (but it should be noted the judge indicated that the position might have been different if a proper economic analysis had been done);
- Unwired Planet did not abuse their dominant position by issuing the proceedings for an injunction prematurely, by maintaining a claim for an injunction in the proceedings, by seeking to insist on a worldwide licence, by attempting to impose unfair prices or by bundling SEPs and non-SEPs;
- Since Unwired Planet had established that Huawei had infringed 2 valid patents, and since Huawei had not been prepared to take a licence on the terms the court found to be FRAND, and since Unwired Planet were not in breach of competition law, a final injunction should be granted; and
- The final injunction was to be considered at a hearing a few weeks later once Unwired Planet had drawn up a full set of the terms of the worldwide licence incorporating the decisions made in the court’s judgment.