Enforcement of RAND Obligations in SEP Licensing: Insights from Alcatel Lucent SAS v Amazon Digital UK Ltd & Ors

Introduction

The case of Alcatel Lucent SAS v Amazon Digital UK Ltd & Ors ([2025] EWCA Civ 43) addresses pivotal issues concerning the enforcement of Reasonable and Non-Discriminatory (RAND) obligations in the context of Standard-Essential Patents (SEPs). This appellate decision emanates from the England and Wales Court of Appeal (Civil Division) and primarily involves Amazon's challenge against a High Court order that denied permission to amend their Defense and Counterclaim. The crux of Amazon's appeal lies in securing an interim license from Nokia for the Nokia Video Portfolio, encompassing both SEPs and non-essential patents (NEPs), thereby mitigating the risk of business disruption due to ongoing litigation.

Summary of the Judgment

The Court of Appeal permitted Amazon to amend their Particulars of Counterclaim to pursue a declaration and specific performance regarding an interim license for the Nokia Video Portfolio. This decision partially reversed the High Court's earlier refusal, acknowledging that Amazon's claim had a real prospect of success, especially in light of precedents such as Panasonic Holdings Corp v Xiaomi Technology UK Ltd [2024] EWCA Civ 1143. The appellate court rejected Nokia's contention that Amazon's amendments were procedurally inapposite, emphasizing that the core issues regarding RAND obligations remained substantively addressable regardless of procedural nuances. Additionally, the court recognized the urgency of resolving RAND disputes to prevent ongoing and escalating litigation across multiple jurisdictions.

Analysis

Precedents Cited

The judgment heavily referenced the landmark case of Panasonic Holdings Corp v Xiaomi Technology UK Ltd [2024] EWCA Civ 1143, which set a precedent by declaring that a willing licensor must enter into an interim license pending the determination of FRAND terms. This case underscored the judicial expectation that SEP holders engage in good faith negotiations without resorting to litigation as leverage. Additionally, the court drew upon InterDigital Technology Corp v Lenovo Group Ltd [2024] EWCA Civ 743 and Lenovo Group Ltd v Telefonaktiebolaget LM Ericsson [2024] EWHC 2941 (Pat), which further elucidated the scope and determination of FRAND terms, particularly in relation to interim licensing.

Legal Reasoning

The court's legal reasoning centered on the interpretation and enforcement of RAND obligations under Swiss law, as stipulated in Nokia's declarations related to the ITU-T H.264/AVC and H.265/HEVC standards. Amazon argued that Nokia's aggressive litigation tactics contravened their RAND commitments by denying an interim license that would allow Amazon to continue operations without the threat of injunctions. The High Court had previously denied Amazon permission to amend their Defense and Counterclaim, asserting that an interim license was not mandated under Swiss law. However, the Court of Appeal diverged, recognizing that while the substantive terms of Romania licensing under RAND obligations must be negotiated in good faith, the court retains jurisdiction to facilitate interim measures to uphold fair licensing practices. The appellate court found merit in Amazon's argument that an interim license serves a critical function in preventing business disruption while the final RAND terms are adjudicated.

Impact

This judgment has profound implications for future SEP licensing disputes, particularly in reinforcing the judicial willingness to enforce RAND obligations proactively. By permitting interim licenses, courts can provide immediate relief to implementers, ensuring that business operations are not unduly hampered by prolonged litigation. Moreover, this decision strengthens the enforceability of RAND commitments under Swiss law within the English legal framework, potentially harmonizing international SEP licensing standards. Companies holding SEPs may be compelled to adopt more transparent and cooperative licensing practices to avoid the risks associated with interim licensing orders and the accompanying legal costs.

Complex Concepts Simplified

RAND and FRAND Obligations

RAND stands for "Reasonable and Non-Discriminatory," while FRAND adds "Fair" to the acronym. Both terms refer to the commitment by SEP holders to license their patents on terms that are fair, reasonable, and non-discriminatory to all potential licensees. The distinction between RAND and FRAND primarily hinges on the governing law—RAND under Swiss law and FRAND under French law—but the underlying principles are substantially similar.

Standard-Essential Patents (SEPs)

SEPs are patents essential to a standard, meaning that without their use, it is impossible to comply with the standard. These patents are critical in industries like telecommunications, where interoperability and widespread adoption of standards are vital.

Interim License

An interim license is a temporary licensing agreement that allows one party to use standard-essential technologies while the final terms of a full license are being negotiated or adjudicated. This prevents immediate business disruptions due to licensing disputes.

Conclusion

The appellate decision in Alcatel Lucent SAS v Amazon Digital UK Ltd & Ors marks a significant development in the enforcement of RAND obligations within the SEP licensing landscape. By allowing Amazon to amend their Defense and Counterclaim to pursue an interim license, the Court of Appeal has underscored the judiciary's role in facilitating fair licensing practices and preventing undue business interruptions. This ruling not only reinforces the principles established in Panasonic v Xiaomi but also sets a clear precedent for future cases involving the negotiation and enforcement of RAND terms. Companies must now navigate the delicate balance between protecting their intellectual property rights and adhering to their RAND commitments to foster innovation and fair competition.