FRAND in the UK (May 2018 edition): Unwired Planet appeal; Apple v Qualcomm

This week has seen the English Court of Appeal hear Huawei’s appeal of the FRAND and remedies judgments issued last year by the High Court in the Unwired Planet litigation (see our reports here and here, and a more detailed analysis here).

Huawei’s appeal spans three main arguments:
 
  • The High Court should not have determined FRAND terms, including rates, for territories other than the UK: it was mistaken in holding that there can only be one set of FRAND terms in any given set of circumstances and erred in finding that this meant that the only FRAND licence was global.  
  • The Judge was mistaken to decide that the non-discrimination (ND) limb of FRAND allows a standard essential patent (SEP) holder to charge similarly situated licensees substantially different royalty rates for the same SEPs.
  • The Court should have found that Huawei had a defence to Unwired Planet’s injunction claim under Article 102 TFEU, and by application of the CJEU’s ruling in Huawei v ZTE: the Court was wrong to hold that the steps laid down by the CJEU in Huawei v ZTE were discretionary factors rather than mandatory conditions.
 
As well as seeking to rebut these points, and uphold the first instance decision, Unwired Planet is disputing:
 
  • The first instance finding that Unwired Planet held a dominant position (despite an acknowledged 100% market share in the market for the licensing of SEPs owned by Unwired, and the admitted indispensability of the infringed SEPs).
  • The decision that its unusually worded injunction claim was in fact a claim for a prohibitory injunction in the sense contemplated by the ruling of the Court of Justice in Huawei v ZTE.  (Unwired had claimed an injunction “save insofar as the Defendants … are entitled to and take a licence to the Declared Essential Patents on FRAND terms (in accordance with the Claimant’s undertakings and the ETSI IPR Policy) and insofar as the Claimant is and remains required to grant such a licence”.)
 
Meanwhile, the English court has this week adjudicated on the summary judgment claim in Apple v. Qualcomm.  (See here for our summary of the original scope of the case; Apple supplemented its claims against Qualcomm shortly before the March hearing to add a follow-on case based on the European Commission abuse decision – as to which, see here.)
 
Unlike in the recent Conversant v. Huawei & ZTE decisions, which confirmed that the English court had jurisdiction to hear a global FRAND claim at the remedies stage of a patent infringement action (although also granted permission to appeal that decision), in Apple v. Qualcomm, the High Court declined to allow Apple to bring its case alleging breach of Qualcomm’s FRAND undertaking.  The difficulty stems primarily from the attempt to use the UK Qualcomm subsidiary – which does not own relevant patents, and did not give FRAND undertakings – as an anchor defendant for a claim based on FRAND declarations given by its ultimate parent company, Qualcomm Inc.  The Judge, Morgan J, held that the reference in clause 6.1 of the ETSI IPR Policy to “the owner” of SEPs did not mean that affiliates of the owner should be required to comply with the ETSI FRAND undertaking.  Such an obligation would apply only if such affiliates themselves also owned IP to which the undertaking directly applied (e.g. other patents within the same family).  The Judge did not consider his ruling to be in any way inconsistent with Birss J’s ruling in Unwired Planet.  He therefore granted Qualcomm ‘reverse summary judgment’ against Apple’s claim, preventing Apple from continuing to advance this case (subject to the outcome of any permitted appeal).  
 
Apple had also brought a number of related claims, including for patent revocation/non-infringement and exhaustion.  These have been allowed to proceed (but arguably do not address the central dispute between the parties).  However, other issues relating to Qualcomm’s licensing practices were held not to meet the jurisdictional gateways, and not to be sufficiently closely related to the patent claims.  Apple’s competition law damages case, including a claim that Qualcomm charged “supra-FRAND royalties” also hangs in the balance – while the Judge was not concerned about similar US proceedings, he has expressed concerns about whether loss was actually suffered by the claimants in the jurisdiction, and has permitted Qualcomm to adduce evidence on this point, to which Apple may respond.
 
The judgment of Morgan J shows that the English court is alive to the need to allow only appropriate cases to proceed, but also contains valuable guidance on how future claimants can improve their chances of passing through the relevant jurisdictional gateways. 
 
We will report in due course on the outcome of the Unwired Planet appeal – judgment is expected before the Court’s August break.