Introduction

This commentary examines the decision rendered in the case of Tesla Inc & Anor v IDAC Holdings Inc & Ors ([2025] EWCA Civ 193) by the England and Wales Court of Appeal (Civil Division). This landmark judgment addresses complex issues regarding the jurisdiction of English courts over disputes concerning standard-essential patents (SEPs) and the determination of fair, reasonable, and non-discriminatory (“FRAND”) licensing terms in the context of the Avanci 5G Platform. The dispute arises in the light of Tesla’s challenge to the flat-rate royalty of US$32 per vehicle applied by the licensing platform Avanci, which aggregates SEPs declared essential to the 5G standard. The parties include multinational technology companies and patent pool administrators, with the underlying commercial conflict rooted in the contractual obligations under the ETSI Intellectual Property Rights Policy.

At its heart, the case pits Tesla’s claim that the FRAND rate being charged is exorbitant against the counter-arguments presented by Avanci and InterDigital regarding the nature of their roles and obligations vis-à-vis FRAND commitments. In addition to the dispute over the substantive licensing rate, key jurisdictional questions – such as whether the English courts have authority to determine licensing terms for global SEP portfolios whose coverage extends to foreign patents – are also explored.

Summary of the Judgment

The judgment navigates multiple layers of argument by the parties and addresses several key issues:

• Jurisdiction and Service: The Court analyzed Tesla’s service of the claim form, including serving documents on parties outside the jurisdiction under specific CPR gateways. The Court concluded that service on IDPH and permission to serve on Avanci, InterDigital, and even IDH under certain gateways was valid, although several jurisdictional challenges were raised.
• FRAND Obligation and Enforcement: The court examined the enforceability of FRAND obligations arising from the ETSI Intellectual Property Rights Policy, noting that SEP owners give a contractual undertaking to grant licences on FRAND terms. However, it was clarified that Avanci – acting as a licensing agent – does not itself bear the FRAND obligation.
• Representative Action: Tesla sought to bring claims against InterDigital in a representative capacity on behalf of all members of the Avanci 5G Platform. The lower court’s decision to decline a representation order, due to concerns regarding the inclusion of parties located outside the jurisdiction and potential conflicts of interest, was a major point of controversy on appeal.
• Gateway Analysis and Appropriate Forum: The Court rigorously evaluated Tesla’s arguments regarding why the dispute falls under gateway (11) (relating principally to UK property) rather than being more suited for U.S. forums, such as the Delaware Court of Chancery. Expert evidence and precedents were considered, with the Court ultimately rejecting Tesla’s contention that a global FRAND declaration could be imposed on Avanci or that U.S. jurisdiction is proper.
• Outcome on FRAND Licensing Claims: In the final analysis, while there were real issues raised on service, the representative capacity of InterDigital, and the burden of proof regarding the commercial reality of a “one-stop” platform licence, the court held that Tesla’s claim for a declaration that the royalty rate is non-FRAND did not have a sufficient contractual or legal basis. The absence of any legal obligation on Avanci and SEP owners to offer discounted collective licenses ultimately led to the dismissal of Tesla’s appeal on the Avanci 5G Platform claim.

In summary, the Court allowed portions of Tesla’s appeal regarding proper service but dismissed the substantive claim for a global FRAND licence, emphasizing that there is no binding contractual obligation compelling SEP owners – via Avanci – to license on a pooled basis at terms that differ from individual, bilateral FRAND negotiations.

Analysis

Precedents and Legal Foundations

The judgment relies heavily on an established jurisprudence regarding:

• FRAND Commitments: Prior decisions such as Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd, Nokia v OPPO, and Vestel v Access underscore that SEPs declared under the ETSI Intellectual Property Rights Policy create enforceable contractual obligations. The Court emphasized that these commitments, governed by French law, are intended to avoid “hold up” and “hold out” in standard-essential patent licensing.
• Declaratory Jurisdiction: The Court revisited principles from cases like Messier-Dowty Ltd v Sabena Ltd and Financial Services Authority v Rourke, clarifying that the High Court’s inherent jurisdiction to grant declaratory relief (even in cases with no direct cause of action) is discretionary and should be exercised only when there is a clearly defined legal standard. The analysis reaffirmed that a FRAND claim must be anchored by identifiable legal rights or obligations.
• Appropriate Forum and Gateway Analysis: The judgment adopts the methodology from Spiliada and subsequent cases to determine the “forum conveniens.” Precedents, especially in Nokia v OPPO and Optis-related decisions, were used to illustrate that even when global commercial interests and foreign patents are at issue, the English courts can legitimately adjudicate when the subject matter “relates wholly or principally” to UK property. However, in the present case, the court found that the Delaware Court of Chancery was a more appropriate forum for certain FRAND claims involving foreign patents.

Legal Reasoning and Jurisdictional Boundaries

The Court’s decision involved a detailed examination of several core legal questions:

• Service Out of Jurisdiction: Tesla’s reliance on CPR rule 63.14(2) for serving the claim form on IDPH and others was sustained where the claim “relates to” a registered patent right. The Court held that even if the Licensing Claims are contractual in nature, they remain sufficiently connected to UK SEPs to fall under the rule.
• FRAND Licensing and the Avanci Platform: A central issue was whether the collective licensing arrangement offered by Avanci constituted an enforceable collective FRAND commitment. The Court determined that under the ETSI IPR Policy, each SEP owner’s undertaking is bilateral in nature, and Avanci’s role is only as an agent. Therefore, Tesla’s claim to a “global pool” licence discounted on a bulk basis falls outside the contractual obligations.
• Representative Claims: The Court addressed the controversial issue of whether Tesla could bring a representative claim against InterDigital to enforce the FRAND commitments of all Avanci 5G Platform members. Citing CPR rule 19.8 and the principles from Lloyd v Google, the Court critiqued the lower court’s proposal for a representation order. It found that forcing non-joined parties (many of whom are located outside the jurisdiction) into litigation would be procedurally and substantively unfair. This reasoning highlights the delicate balance between comprehensive relief and the rights of absent class members.
• Appropriate Forum Considerations: The analysis of whether the English courts were the “clearly or distinctly appropriate forum” was pivotal. The Court juxtaposed the commercial realities—such as the global nature of the SEP portfolio and the role of US law in Avanci’s agreements—with the longstanding principle that patents are territorial rights. Ultimately, the Court concluded that while some issues might be appropriately determined in England, the specific claim for a collective FRAND licence is better suited for a forum with jurisdiction over foreign patents (i.e. the Delaware Court of Chancery) – an alternative view that ultimately undercut Tesla’s appeal.

Impact on Future FRAND Disputes

This judgment sets an important precedent in several respects:

• Clarification of Scope: It clarifies that even though global standard-essential patents may be involved in a pooled licensing arrangement, the FRAND obligations remain strictly bilateral. SEP owners continue to negotiate individually, and a collective or “platform” licence is not automatically implied.
• Jurisdictional Limits: The decision reinforces that English jurisdiction over FRAND disputes is bound by the contractual undertakings made under the ETSI IPR Policy. This means that unless there is a clear contractual right to enforce a pooled licence, the English courts will be reluctant to set global licensing terms.
• Procedural Fairness and Representation: The assessment of representative claims in complex patent disputes has broader implications. It demonstrates the Court’s caution in compelling one defendant to represent the interests of many absent parties, thereby influencing future class actions and representative proceedings in the intellectual property sphere.

Complex Concepts Simplified

Given the inherent complexity of SEP litigation and FRAND licensing, several key legal concepts warrant clarification:

• FRAND Obligations: Under the ETSI IPR Policy, when a patent is declared essential to a standard, the patent owner undertakes to license the patent on fair, reasonable, and non-discriminatory terms. This contractual promise is designed to ensure that implementers (like Tesla) can access the technology without the risk of exorbitant licensing fees or anticompetitive practices.
• Declaratory Relief vs. Enforcement: Declaratory relief allows a party to seek a court’s determination about legal rights or obligations without necessarily obtaining an immediate monetary remedy. In FRAND disputes, the applicant may seek a declaration of what constitutes FRAND terms. However, absent a legal obligation (such as one imposed directly by the patent owner), such a declaration has little enforceable effect.
• Gateway Analysis: This is a procedural test used to determine whether a claim falls within the court’s jurisdiction based on the connection of the subject matter to national property rights. Even though the SEP portfolio is global, the test focuses on the portion of the patent designated in the UK.
• Representative Claims: A representative claim is one in which a party seeks to litigate on behalf of a group of persons sharing the same interest. In this context, Tesla wished to enforce FRAND obligations on behalf of all SEP owners participating in the Avanci 5G Platform. The Court’s concern was that not all such owners are in a position to be forced into a single litigation process, especially when many are outside the jurisdiction.

Conclusion

The Court of Appeal’s decision in Tesla Inc & Anor v IDAC Holdings Inc & Ors ([2025] EWCA Civ 193) reinforces the principle that while English courts possess the inherent jurisdiction to determine FRAND licensing disputes over UK-designated SEPs, their authority does not extend to imposing a collective or pooled licence where the underlying contractual obligations remain strictly bilateral.

Key takeaways include:

• The ETSI IPR Policy creates enforceable FRAND obligations between individual SEP owners and implementers, not an automatic collective licensing right via intermediaries such as Avanci.
• Jurisdictional analysis requires that claims “relate to” UK property rights, even within a global framework, and that parties seeking service out of the jurisdiction satisfy strict procedural criteria.
• Representative claims must be managed with caution, ensuring that procedural fairness is maintained across a diverse group of parties, many of whom may be located outside the jurisdiction.
• Ultimately, Tesla’s appeal for a declaration on the FRAND terms of the Avanci 5G Platform licence was dismissed because the contractual architecture does not impose a collective licensing obligation, and the remedy sought is not supported by a clear legal standard.

This judgment therefore stands as a significant contribution to the evolving jurisprudence on global SEP licensing disputes, setting boundaries for how and where FRAND terms may be adjudicated in a complex, international landscape.