Optis V Apple – An unwilling Licensee?

The English approach is more commercially minded. But determining a FRAND amount is expensive and slow. It has also been widely misunderstood as the English Court imposing a global royalty rate on the parties, and this has led to jurisdiction disputes which exacerbate the delay and expense. The European approach of simply deciding whether or not to grant a final injunction may be less commercial, but it has the merit of being fast and cheap, jurisdictionally uncontroversial, and poses enough of a risk that parties will come to the negotiating table.

The approaches may become more aligned following Meade J’s decision in the latest in the series of trials in Optis Cellular Technology LLC and Ors (“Optis”) v Apple Retail UK Limited and Ors (“Apple”). This trial dealt with Optis’ claim that Apple is an ‘unwilling licensee’, and has lost the right to claim a FRAND licence. If so, Optis said, the court should proceed straight to issue an injunction without going through a trial to determine what a FRAND rate would be.

Optis was largely, but not completely, successful in this argument.

Background

Optis owns former Ericsson patents that are essential to cellular standards. It is engaged in a multi-jurisdictional battle to persuade the iPhone manufacturer to take a licence. In the English proceedings, Optis claims that Apple's devices, by implementing the UMTS and LTE cellular standards, infringe eight of Optis's SEPs. In the first two technical trials Birss J and Meade J agreed, respectively holding that Apple infringed two of Optis’ standards-essential patents, and confirming their validity. In a third trial Apple argued that Optis could not enforce these patents because Ericsson had declared them too late. Meade J comprehensively dismissed this argument (see report here).

After being found to infringe, Apple gave Optis a conditional undertaking that it would enter into a Court-determined licence unless:

• it was decided that Apple could enforce Optis’ ETSI undertaking after the FRAND trial without having given a prior commitment to enter into a licence; or
• it was decided that Apple could not enforce Optis’ ETSI undertaking at all (i.e. it ought to be injuncted now), regardless of whether Apple gave the Contingent Undertaking at any point.

All of these steps were further conditioned on all appeals being exhausted. Meade J described the terms as being rather convoluted, but he summarised them as “Apple undertakes to take the licence at the rate determined by the Court, unless its undertaking is found to be unnecessary, or too late”.

The stage was set for a FRAND trial to take place to determine a FRAND rate to the Optis…