Summary

The High Court has granted a final injunction against patent infringement unless and until the defendant entered into a "fair, reasonable and non-discriminatory" (FRAND) licence.

Background

Participating members of the European Telecommunications Standards Institute (ETSI) set standards for mobile telephony. ETSI requires members to reveal any relevant intellectual property rights (IPRs), such as patents and patent applications, as early as possible during discussions about adopting a standard. Members must also inform ETSI of "essential" IPRs which they own, known as standard essential patents (SEPs), and to agree to license these rights to users of the standard on FRAND terms.

Facts

U sued H for patent infringement. The court held that H had infringed two of U's SEPs.

U offered licence terms but these were rejected by H, and H's own offers were not FRAND, as it had refused to countenance a worldwide licence.

The court settled the FRAND rate, and decided to deal with the issue of the injunction at a later hearing.

Following the decision, U and H agreed terms of a licence (the Settled Licence). The Settled Licence was a global licence and reflected the decisions made in the earlier judgment.

U argued that a final injunction should be granted, but stayed on terms pending appeal. H argued that circumstances were now materially different from those during trial and at the time of the earlier judgment. H offered two undertakings to the court: to enter into the Settled Licence if there was no appeal or if the appeal went against them, and in the meantime to act as if the Settled Licence was in force, including paying royalties.

Decision

The court granted a FRAND injunction, which would be discharged if H entered into the Settled Licence, stayed pending appeal. It also granted a declaration that the Settled Licence, attached to the judgment, represented the FRAND terms in these circumstances between these parties, and gave leave to appeal certain issues.

The agreed expiry date of the UK licence before the expiry of the licenced SEPs made sense. One of the problems with FRAND and SEPs was that relevant circumstances change. Old patents expire, new ones, which might be essential to old standards, are granted, and standards change. Agreeing what the rate should be for many years into the future is difficult. If patents courts are to support orderly FRAND licensing of SEPs, then a workable approach must be developed which allows for these changing circumstances.

The correct approach is that a FRAND injunction should be in normal form to restrain infringement of the relevant patent(s), but ought to include a proviso that it would cease to have effect if the defendant entered into a FRAND licence. If, as here, the FRAND licence was for a limited time, shorter than the lifetime of the relevant patents, then the injunction should also provide that either party can return to court in future to address the position at the end of the term of the FRAND licence, or if the FRAND licence ceased to have effect for any other reason. Normally in English law when the court granted final relief a party was not entitled to come back to court even if circumstances changed, but these unusual terms arose from dealing with patents the subject of a FRAND undertaking.

The grant or refusal of an injunction was an exercise of the court's discretion. While that discretion was circumscribed in various ways, when the holder of an IPR had established infringement and a threat and intention to infringe in future, an injunction would normally be granted.

It was not unusual in IPR cases for the defendant, having defended the claim vigorously but unsuccessfully, to offer undertakings not to infringe in order to avoid being subject to an injunction. The practical effect of an injunction and undertaking was the same, and in practice undertakings could be easier to enforce, but rights holders still usually insist on an injunction. An offer of undertakings after judgment is usually regarded as too late. In general the courts will order the injunction and refuse to accept belated undertakings.

If, from the outset, H had given an unqualified undertaking to enter into whatever licence the court including an appellate court had decided was FRAND, then an injunction at this stage would not have been appropriate. Throughout the proceedings H maintained that it would not accept a worldwide licence as a FRAND licence. By refusing to offer an unqualified undertaking before trial and before judgment, H forced U to come to court and establish its rights. The right thing to do was grant a FRAND injunction, stayed on terms pending appeal.

Comment

The interplay between FRAND undertakings and the grant of injunctive relief has been widely debated. Here, the court took a pragmatic approach, with an injunction granted only unless and until H agrees to the licence terms which the court has approved as meeting the FRAND requirement. The fact that the licence is due to expire before the expiry of the licenced SEPs allows consideration of any new circumstances at that time, rather than the patentee having an injunction which could be enforced immediately.

Case: Unwired Planet International Ltd v Huawei Technologies Co Ltd & Another [2017] EWHC 1304 (Pat).

First published in the August 2017 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.

Authors