In this important ruling, the Court of Appeal (CoA) in a unified decision dismissed the appeal on all three grounds and upheld almost all of the reasoning at first instance. In dismissing the appeal the CoA made the following points.
A global license is capable of being FRAND - The CoA held that the judge "was entitled to find that in all the circumstances only a global licence would be FRAND," and further noted that "there may be circumstances in which...only a global licence or at least a multi-territorial licence would be FRAND." The CoA rejected the point raised by Huawei that Mr. Justice Birss had improperly adjudicated the validity and infringement of foreign standard essential patents (SEPs) in setting a FRAND rate on global terms. The CoA's view was that he had determined global FRAND terms that Unwired Planet was required to offer to Huawei by its supranational undertaking to the European Telecommunications Standards Institute (ETSI); rejecting such terms could only result in national-level relief.
There is not only one set of terms capable of being FRAND The CoA held that Mr. Justice Birss had fallen into error in determining that only one set of FRAND terms existed. According to the CoA, it was "unreal to suggest that two parties, acting fairly and reasonably, will necessarily arrive at precisely the same set of licence terms as two other parties, also acting fairly and reasonably and faced with the same set of circumstances." The CoA's position was that if two sets of terms were determined by a court or tribunal to be FRAND, then the SEP owner satisfied its obligations to ETSI by offering either set. But, the CoA did not think that such error made a difference to whether it would uphold the decision. There is no "hard edged" non-discrimination - The CoA agreed that the discrimination prong of FRAND is not "hard-edged," stating that "[i]t is difficult to identify any underlying purpose which would support the hard-edged discrimination rule," which would be "akin to the insertion of the rejected 'most favoured licensee' clause"; the hard-edged approach "gives unwarranted primacy to that limb, in that a licence granted at a lower rate, no matter how low, will always trump the benchmark fair and reasonable rate." The CoA's view was that the ETSI FRAND undertaking "should be construed in a way which strikes a proper balance between a fair return to the SEP owner and universal access to the technology without threat of injunction." However, it noted that an SEP owner may still breach competition law if it offers a low rate only to certain implementers and if there is evidence of an adverse effect of that on competition.
The Huawei v. ZTE process is not mandatory - The CoA agreed that the steps set out in Huawei are not a mandatory scheme (though one step is mandatory) with which failure to comply results in an automatic breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU). Rather, the Court of Justice of the European Union (CJEU) scheme is a safe harbor, stepping outside of which may be an abuse. The CoA's view was that Huawei does impose an absolute requirement on the SEP owner "to notify the alleged infringer before commencing proceedings, and that the nature and content of that notice must depend on all the circumstances. Its purpose is to notify the alleged infringer of the rights said to be infringed and that it is prepared to licence the infringer on FRAND terms."