RAND Compliance and the Impermissibility of Forcing Arbitration/Stays for Third-Party SEP Cross-Licence Disputes

1. Introduction

Acer Incorporated & Anor v Nokia Technologies OY concerns the interface between (i) a standard-essential patent (“SEP”) holder’s obligation to license on RAND terms, (ii) the English court’s case-management power to stay proceedings in favour of arbitration, and (iii) the permissible scope of “package” licensing terms embedded in a proposed licence.

The respondents (Acer and its UK entity; and separately ASUSTeK and ASUS Global) are implementers seeking licences to Nokia’s Nokia SEP Codec Portfolio. Nokia, as appellant, had succeeded in the Court of Appeal’s “main judgment” in obtaining a stay on the basis that it had made Adjustable Licence Offers that were capable of acceptance and (disregarding one controversial clause) were on RAND terms, with the final RAND terms to be set by an arbitral tribunal.

This consequential judgment resolves the key issue left open in the main judgment: whether the controversial clause (the “disputed term”) could remain as a condition of the stay and/or form part of a RAND offer. The disputed term would (in substance) expand the arbitration beyond Nokia’s codec SEP portfolio to include a determination of the terms of a (F)RAND cross-licence over other patents (including other SEPs) owned/controlled/managed by the implementers’ group, and would require related litigation to be stayed/withdrawn/abandoned pending arbitration.

2. Summary of the Judgment

  • The Court held it was procedurally open for the implementers to seek a condition on the Court’s stay order requiring Nokia to excise the disputed term, even though the point could not be used to uphold the first-instance refusal of a stay.
  • The Court summarily determined that the disputed term is not RAND.
  • The case-management stay should therefore be conditioned on removal of that term, aligning the arbitration with the codec-portfolio RAND dispute rather than forcing arbitration (and litigation standstill) over additional portfolios/standards.
  • Nokia’s request for declarations that its offers were RAND and that it had complied with its RAND obligations was refused as procedurally inappropriate in the context of a stay application rather than a summary judgment application.
  • The Court preferred embedding agreed “paragraph 92” conditions (from the main judgment) in the court order (as conditions of the stay), not in the licence text, while clarifying that arbitrators retain normal case-management powers.
  • Permission to appeal to the Supreme Court was refused (the stated contingency did not arise, and in any event the grounds advanced were not dependent on it).

3. Analysis

3.1 Precedents Cited

(a) [2026] EWCA Civ 564, “the main judgment”

This judgment is expressly parasitic on [2026] EWCA Civ 564, “the main judgment”, which did two foundational things:

  1. It treated Nokia’s (disputed-term-free) Adjustable Licence Offers as capable of acceptance and (summarily) as RAND, with the arbitral tribunal to set final RAND terms.
  2. It accepted (at least in principle) that the English court may grant a case management stay where a workable arbitration route exists, and that an implementer refusing a compliant RAND offer risks being treated as an unwilling licensee, undermining the basis for invoking the court’s declaratory jurisdiction to set RAND terms.

In the present decision, the Court relied heavily on the main judgment’s reasoning—especially the proposition (referenced here as being found at paragraphs 85–88 of the main judgment) that, in the RAND/FRAND setting, a SEP owner has a legitimate choice of forum (arbitration or court) for determination of RAND terms. That principle becomes pivotal when the attempted “package” term would deprive the implementer (as SEP-holder for its own SEPs) of its own corresponding choice.

(b) [2025] EHWC 3331 (Pat) (Mr Justice Mellor)

The appeal arises from the first-instance management of these connected SEP licensing proceedings. Although this consequential judgment does not rehearse the first-instance reasoning, it is important as procedural context: Nokia had sought a stay rather than summary judgment. That procedural choice later constrained Nokia’s ability to obtain declarations on RAND compliance as part of the appellate disposal.

3.2 Legal Reasoning

(a) Procedural gateway: condition of the stay vs argument to uphold the judge

The Court drew a sharp distinction between:

  • using the disputed term as a substantive answer to Nokia’s appeal against refusal of a stay (not permitted due to procedural posture and timing), and
  • using it to shape the terms on which the appellate court grants its own stay (permitted, and fair because Nokia had an opportunity to address the merits in writing).

This is a significant appellate practice point: consequential orders can be used to ensure that the relief granted matches the legal basis on which it was justified, particularly where a term would otherwise create foreseeable collateral disputes.

(b) Core holding: the disputed term is not RAND

The Court’s reasoning proceeds in layered steps:

  1. Identify the relevant RAND obligation: the implementers seek a licence to Nokia’s codec SEP portfolio, and Nokia’s RAND obligation attaches to that portfolio.
  2. Accept arguendo a limited “cross-licence conditionality”: the Court was prepared to accept that it is at least arguable that Nokia could satisfy its RAND obligation via an offer conditional on the implementer’s willingness to enter a RAND cross-licence of the implementer’s own SEPs in the same general standards context (the Court specifically referenced implementer SEPs declared essential to ITU-T standards).
  3. Reject compelled arbitration over the implementer’s SEPs: even if cross-licensing might be part of a RAND bargain, Nokia cannot insist that, if terms of that cross-licence are disputed, the implementer must submit that separate dispute to arbitration. The Court treated the “choice of mechanism” (arbitration or litigation) as lying with the owner of the SEPs whose licensing terms are being set—meaning, for the implementer’s SEPs, the implementer chooses, not Nokia. This conclusion was said to “follow from” Nokia’s own argument accepted in the main judgment.
  4. Reject even more strongly the attempted expansion beyond the relevant standards/policy framework: the Court held it not arguable that Nokia’s RAND obligation for its codec SEP portfolio can be made conditional on arbitration of a cross-licence dispute about SEPs in a different area of technology, declared essential to different standards, governed by a different SDO intellectual property rights policy and a different governing law.

Put shortly: RAND for one SEP portfolio cannot be leveraged to force arbitration and litigation standstill for other portfolios/standards with distinct policy and legal regimes.

(c) Case-management rationale: aligning arbitration with the litigation record and avoiding satellite disputes

The Court also accepted pragmatic case-management reasons supporting removal of the disputed term:

  • it keeps the arbitration “picking up” from the English proceedings (echoing the design purpose of the conditions referenced in paragraph 92 of the main judgment), and
  • it reduces the risk of satellite litigation about whether the implementers are complying with overbroad stay/withdrawal obligations.

(d) Declaratory relief refused: mismatch between a stay application and summary judgment

Nokia sought declarations that the Adjustable Licence Offers are RAND and that Nokia has complied with its RAND obligations. The Court refused, holding that Nokia had sought a case management stay, not summary judgment, and (as discussed in the main judgment at paragraphs 57–60) declaratory relief was inappropriate in that procedural posture. The decision reinforces that litigants cannot readily convert an interlocutory management application into a vehicle for final merits declarations unless the application is framed and supported as such.

3.3 Impact

(a) Limits on “portfolio leverage” via arbitration clauses

SEP holders drafting arbitration-based licensing offers should expect close scrutiny of any terms that:

  • expand the dispute beyond the SEP portfolio actually subject to the asserted RAND obligation,
  • require arbitration of cross-licence disputes for the implementer’s distinct SEP holdings, or
  • impose litigation standstill/withdrawal obligations for other patents/standards as the price of receiving a RAND licence.

This judgment indicates that such terms are vulnerable to being declared not RAND, at least where they seek to compel arbitration and suppress litigation concerning other standards and other SDO policy frameworks.

(b) Court’s willingness to make summary RAND evaluations in a management context

The Court’s statement that it is “equally able summarily to determine whether the disputed term is RAND” (having summarily determined the offer was RAND in the main judgment) may encourage:

  • more focused challenges to discrete licence terms at the stay stage, and
  • greater use of conditional stays to police the boundary between a legitimate arbitration pathway and overreaching contractual machinery.

(c) Forum-choice symmetry

A practical doctrinal consequence is a symmetry principle: if a SEP owner can choose arbitration or court for its SEPs, it cannot, via its own RAND offer, deprive the counterparty of a corresponding choice for the counterparty’s SEPs by forcing arbitration of cross-licence terms.

(d) Procedural discipline: choose the right application

Parties seeking declarations of RAND compliance should plead and pursue routes (e.g., summary judgment) that procedurally justify final declaratory relief, rather than expecting such declarations to be appended to a stay application as a consequential matter.

4. Complex Concepts Simplified

SEP (Standard-Essential Patent)
A patent that must be used to comply with a technical standard (e.g., a codec standard). Implementers cannot make standard-compliant products without using it.
RAND / FRAND
“Reasonable and Non-Discriminatory” (and sometimes “Fair”). It is a commitment typically made to a standards body that the SEP owner will license on specified equitable terms rather than blocking access.
Implementer
A company that makes products complying with the standard (and therefore needs SEP licences).
Cross-licence
A licence exchanged both ways: each side licenses its patents to the other, often used where both have relevant patent portfolios.
Arbitration vs Court determination
Two different dispute-resolution mechanisms. This judgment emphasizes that one party’s RAND offer should not dictate the mechanism for determining the other party’s separate SEP licensing terms.
Case management stay
A pause ordered by the court to allow another process (here, arbitration) to proceed first, aimed at efficiency and avoiding duplicated proceedings.
Satellite litigation
Additional side-disputes about compliance with procedural or contractual terms, distracting from the main issues.

5. Conclusion

The Court of Appeal’s consequential ruling sharpens the boundary of what counts as RAND in arbitration-driven SEP licensing offers. While a SEP holder may propose arbitration to settle RAND terms for its own SEP portfolio, it cannot use that posture to compel arbitration and suppress litigation over the implementer’s separate patent portfolios—especially across different standards, SDO policies, and governing laws. The decision also underscores procedural discipline: requests for definitive declarations must be pursued through an appropriate merits route, not appended to stay relief. Overall, the judgment is likely to influence how SEP holders draft arbitration clauses and how English courts condition stays to prevent overreach and avoid collateral disputes.