On 24 April 2015, the High Court handed down judgment on an interim application by Huawei requesting the court make a summary ruling that two worldwide portfolio licence proposals made by Unwired Planet are not FRAND (fair, reasonable and non-discriminatory). In refusing the application, Mr Justice Birss considered that he could not make a summary ruling without considering the full factual background and competition law issues.
The dispute relates to patents transferred to Unwired Planet by Ericsson. Before the transfer, Ericsson had participated in the standard setting process in Europe involving the European Telecommunications Standards Institute (“ETSI”). Ericsson declared its standard essential patents (“SEPs”) to ETSI as essential under the ETSI Intellectual Property Rights (“IPR”) Policy and gave a FRAND undertaking (i.e. that it was willing to grant third parties a licence on fair, reasonable and non-discriminatory terms). On 10 March 2014 Unwired Planet brought proceedings for patent infringement in the UK contending that the products sold by Huawei and others which are compliant with the standards infringe its SEPs.
The defendants’ position is that none of the patents in suit are valid or infringed. This includes (where relevant) a denial that any given SEP is in fact essential to the relevant standard. The defendants have all stated expressly that they are willing licensees. They are prepared to take a licence under any Unwired Planet patent which has been found to be valid and infringed. The case has been divided into five technical trials to decide on validity and infringement of the asserted patents, and a 10 week non-technical trial to decide FRAND and competition law issues.
The decision outlines the two worldwide licence proposals put forward by Unwired Planet in April 2014 and July 2014. The April proposal concerned a worldwide licence for all of Unwired Planet’s patents (SEPs and non-SEPs) while the July proposal concerned SEPs only. Huawei raised a number of arguments as to why the licence terms were not FRAND:
- Unwired Planet is obliged to offer single patent licences if requested;
- Unwired Planet is obliged to offer a licence under all SEPs essential to a particular standard (i.e. not bundle together 2G/3G/4G standards into one licence);
- Unwired Planet is required, if requested, to offer a licence under SEPs relating to a particular territory (i.e. not worldwide); and
- SEPs and non-SEPs should not be bundled together.
It was also argued that in transferring patents to Unwired Planet, there was a failure to ensure the transfer of an enforceable FRAND obligation. Furthermore splitting Ericsson’s SEP portfolio into two parts (Ericsson retains some SEPs itself and transferred some to Unwired Planet) may be in breach of competition law in that unfairly high royalties will be earned.
Birss J considered this issue was not suitable for summary determination. He referred to his two ZTE judgments in making his decision:
- the case management conference from 2013 (Vringo v ZTE  EWHC 1591 (Pat)), where he decided that ZTE is entitled to test the validity and infringement of a patent before taking a licence; and
- the January 2015 hearing (Vringo v ZTE  EWHC 214 (Pat)), where he indicated that even if a global licence offer on a portfolio of patents is FRAND, it does not necessarily mean that a defendant is forced to take a global portfolio licence in order to stave off a national injunction on one patent.
Birss J said he remains of the same view as expressed in those judgments. However, to determine on the facts whether a patentee must offer an individual licence for an individual SEP, the court needs to consider competition law, the contractual scope of the ETSI obligation, and whether, taking all the circumstances into account, it is fair to grant or refuse an injunction. The judge could not do that without evidence. Whether the court will grant an injunction will partially depend on what licence terms are before the court. It is also relevant to take into account what was requested by Huawei. For example, if Huawei asked for a worldwide licence, it could not be a breach of the ETSI obligation for Unwired Planet to only offer a worldwide licence.
The judge indicated that he was very doubtful either of Unwired Planet’s proposals would be sufficient to determine the question of whether Unwired Planet can obtain an injunction on any one of the five patents in issue. The issue is likely to turn on patent specific licence terms advanced by each party. The judge therefore directed that the parties should put before the court the offers each of them consider to be FRAND before the FRAND hearing.
Unwired Planet International Ltd v Huawei Technologies Co Ltd and others  EWHC 1029 (Pat)