Unwired Planet International Ltd v Huawei Technologies Co. Ltd & Ors

Factual and Procedural Background

Plaintiff is a licensing business holding a portfolio of telecommunications patents, many acquired from Company A, with several declared essential to telecommunications standards (2G, 3G, 4G), referred to as Standard Essential Patents (SEPs). Defendants comprise companies within three major telecommunications equipment businesses: Company B, Company C, and Company D, selling mobile devices and, in some cases, infrastructure equipment.

On 10th March 2014, Plaintiff initiated patent infringement proceedings in this jurisdiction, alleging that defendants' standard-compliant products infringe five SEPs acquired from Company A, as well as one non-SEP patent developed internally by Plaintiff. Plaintiff claims that despite negotiations for FRAND (Fair, Reasonable, and Non-Discriminatory) licensing terms, no agreement has been reached.

Plaintiff made two licensing proposals in 2014 (April and July proposals) offering worldwide licenses under its patents with specified royalty rates differing by product type and standard. Defendants deny validity and infringement of the patents, dispute the essentiality of SEPs, and assert willingness to take licenses on any patent found valid and infringed.

Defendants raise competition law and FRAND-related defenses, including arguments that the transfer of patents from Company A to Plaintiff was flawed and breached competition law, that Plaintiff lacks title to sue, and that Plaintiff's licensing terms are not FRAND, alleging abuse of dominance under Article 102 TFEU. Company A and affiliated entities were joined as additional parties.

The case was complex and managed by a single judge with multiple technical trials scheduled for different patents and a non-technical trial addressing competition law and FRAND issues. This hearing concerned the non-technical trial and addressed two interrelated applications: Plaintiff's application to amend its claim to include a declaration that its licensing proposals are FRAND, and Company B's application to strike out parts of Plaintiff's case regarding the FRAND status of those proposals and for summary judgment on related issues.

Legal Issues Presented

1. Whether Plaintiff's April and July 2014 licensing proposals comply with Plaintiff's FRAND obligations under the ETSI IPR Policy and related contractual undertakings.
2. Whether the court can decide as a matter of summary judgment that Plaintiff's licensing proposals are not FRAND.
3. Whether Plaintiff must offer single patent licenses, licenses limited to particular standards, or licenses limited to particular territories under its FRAND obligations.
4. The legal effect and enforceability of the FRAND obligation, including its application to successors in title and its relationship with competition law and injunctions.
5. The appropriateness of granting Plaintiff's amendment to seek a declaration that its licensing proposals are FRAND.
6. The scope and limits of the court's jurisdiction in issuing declarations regarding FRAND licensing terms.

Arguments of the Parties

Company B's Arguments

• The April and July 2014 licensing proposals are not compliant with Plaintiff's FRAND obligations and this can be decided summarily.
• Plaintiff is contractually obliged to offer single patent licenses, licenses covering all SEPs essential to a particular standard, and licenses limited to particular territories.
• The proposals improperly bundle non-SEPs with SEPs and bundle all telecommunications standards and territories together, including countries where Plaintiff holds no relevant patent rights.
• The proposals lack sufficient detail on patents included, essentiality, territorial scope, patent term, royalty calculation, and justification for FRAND status.
• The April proposal's demand for attorney fees, costs, and interest is aggressive and non-compliant with FRAND obligations.
• The proposals are not offers capable of acceptance but mere invitations to negotiate.
• Plaintiff's request for a declaration that its proposals are FRAND should be refused as the court can decide now that they are not FRAND.

Plaintiff's Arguments

• The construction of the ETSI IPR Policy and the FRAND obligation is complex and intertwined with competition law, thus not suitable for summary determination.
• Portfolio licenses are standard industry practice and not inherently contrary to competition law; the FRAND obligation does not require offering single patent licenses.
• Both the April and July proposals should be considered together, with the July proposal addressing concerns about bundling non-SEPs.
• Factual disputes exist regarding the proposals' compliance with FRAND, including territorial scope and standard coverage, precluding summary judgment.
• The request for a declaration that the proposals are FRAND is appropriate and necessary to publicly vindicate Plaintiff's position.
• The court should consider the wider factual and legal context, including competition law, before ruling on the FRAND status of the proposals.
• Negotiations are ongoing and the proposals provide sufficient terms to start meaningful discussions.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the contractual and competition law context of Plaintiff's FRAND obligations under the ETSI IPR Policy. It acknowledged that the policy requires declaration of essential patents and a commitment to grant licenses on FRAND terms, binding successors in title. The court noted the absence of authoritative decisions on the legal status of the ETSI FRAND obligation and relied on academic commentary supporting enforceability by third parties.

The court emphasized the complexity of the issues, including the relationship between FRAND obligations, competition law, and the discretionary grant of injunctions. It recognized that licensing proposals must be assessed in context, including whether they are capable of acceptance and whether they bundle SEPs with non-SEPs or cover multiple standards and territories.

On Company B's summary judgment and strike out application, the court found that factual disputes and the need to consider competition law context precluded summary disposal. It held that the question of whether Plaintiff must offer single patent licenses or licenses limited by standard or territory cannot be decided without trial.

The court acknowledged that the April proposal's bundling of SEPs and non-SEPs is likely non-compliant with FRAND obligations but noted the existence of the July proposal addressing this issue. It also rejected the argument that the proposals' lack of detailed information or demands for costs and interest precluded them from being FRAND offers, recognizing that negotiations must start somewhere.

Regarding Plaintiff's application to amend to include a declaration that its proposals are FRAND, the court allowed the amendment but imposed conditions requiring the parties to exchange specific licensing terms for the patents in suit, facilitating clearer issues for the non-technical trial and future injunction considerations.

The court stressed the importance of orderly case management, encouraging ongoing commercial negotiations under without prejudice privilege but requiring concrete proposals to be placed before the court to clarify the issues.

Holding and Implications

DISMISSED Company B's application for summary judgment and strike out of Plaintiff's claims that its April and July licensing proposals are FRAND.

ALLOWED Plaintiff's application to amend its prayer for relief to include a declaration that its licensing proposals are FRAND, subject to conditions requiring exchange of specific licensing terms between the parties.

The court's decision maintains the status quo pending trial and preserves the complex factual and legal issues for full adjudication. It does not set new precedent on the construction of FRAND obligations but clarifies procedural steps to manage the dispute effectively, emphasizing the intertwined nature of contract, competition law, and equitable considerations in SEP licensing disputes.