UK Court of Appeal Holds Offer of Global License Consistent With FRAND Obligation: Affirms Decision of Lower Court in Unwired Planet v. Huawei

Sullivan & Cromwell LLP - October 25, 2018

In a highly anticipated decision, the UK Court of Appeal affirmed the April 2017 lower court decision in Unwired Planet v. Huawei, holding that: (1) under the circumstances of the case, the patent owner could, consistent with its FRAND obligation, insist on only a global license; (2) the “non-discrimination” prong of the FRAND obligation requires only general non-discrimination, i.e., that all potential licensees must be offered a benchmark royalty rate that reflects the fair and reasonable value of the portfolio, and does not require that all similarly situated licensees be offered the same rate; and (3) the negotiating steps set out by the Court of Justice of the European Union in Huawei v. ZTE for a standard essential patent owner to be eligible to seek an injunction are not mandatory but merely provide a safe harbor, and thus a patent owner’s failure to comply with those steps did not necessarily violate competition law. The Court of Appeal, however, expressly rejected the lower court’s holding that, for any given set of circumstances, only one set of terms qualifies as FRAND. Instead, the Court emphasized that “a number of sets of terms may all be fair and reasonable in a given set of circumstances.”