English court entitled to fix royalty rate for Chinese patents on Chinese phones in China

23 September, 2020

If an infringer of a single UK patent wishes to avoid an injunction to prevent use of the offending technology, can the English court require the infringer to take a licence over the global portfolio of tens of thousands of other patents belonging to the same patent owner?  In the case of Unwired Planet International Ltd v. Huawei Technologies Co Ltd and another [2020], Birss J at first instance, as part of determining a worldwide licence, fixed the royalties payable by Chinese manufacturers of mobile phone handsets to be passed on to Chinese consumers buying phones in China.

In the telecoms field, when a standard such as GSM or 5G emerges, it is based on technological advances, most of which are patented. Patents essential to the standard are known as standards essential patents (SEPs).  Developers which believe their patents might be SEPs may declare the patents to the European Telecoms Standards Institute and ETSI rules require the patent owner to give an irrevocable undertaking to allow implementers to use the patented technology on fair, reasonable and non-discriminatory (FRAND) terms.

The Supreme Court held that the ETSI rules were a contractual framework applicable to both parties which “expressly or by implication provide for the possibility of FRAND worldwide licences when a SEP owner has a sufficiently large and geographically diverse portfolio”.  In that way, the Court found that there was no issue of jurisdiction as the English court was plainly competent to rule on the validity of UK patents and therefore on the contractual defence relied on by the implementers. Effectively therefore the ETSI rules were treated as containing, for the purposes of determining the terms of a global licence, a submission to the jurisdiction of any court seised of infringement of proceedings in respect of a single patent. For the future, affected implementers are either going to have to engage fully with and, if necessary, to litigate the proposed terms of any proposed global licence or to consider no longer selling their products in the UK.

Hugh Mercer QC was instructed by Wilmer Hale LLP acting for Apple Inc, who intervened in support of Huawei.