Standard Essential Patents: News roundup

Our latest news roundup covers FRAND-rate setting and SEP policy updates.

OPTIS AND APPLE 

  • The UK High Court has determined a global FRAND rate to Apple for SEPs in Optis’ patent portfolio, amounting to $5.13m per year.
  • Smith J considered “that 5 years’ annual rate is the appropriate price for Apple to pay for that length of licence” (paragraph [498]). A release for past infringements (six times $5.13m, calculated by reference to the number of years from when Optis first asserted themselves, plus interest) was also determined.
  • Smith J gave basis for jurisdiction of the English courts to determine the terms of a global FRAND licence as follows (paragraph [24]):
    • “The ability to do so arises out of a combination of the jurisdiction (exclusive to the granting state) of determining the validity and infringement of a national patent and the contractual promise to offer a FRAND licence.”
    • “The FRAND undertaking does not limit the court to imposing terms only in relation to patents which are established as valid and infringed. Granted, the SEP Owner must show infringement (and so validity) as well as essentiality in relation to a UK SEP in order to trigger the jurisdiction, but once the jurisdiction has been triggered, the freedom to impose terms regarding the licensing of entirely untested and worldwide intellectual property rights exists.”
  • The decision also covered conduct in license negotiations and methodologies (Apple’s lump sum approach vs Optis’ ad valorem approach) for calculating FRAND.
  • Elsewhere in the wider SEPs dispute between these companies, Apple recently lost its appeal (see also the judgement here) on non-infringement and non-essentiality of two of Optis’ 4G patents (valid as amended): EP(UK) 2187549, entitled “Radio communication device and response signal diffusion method”; and EP(UK) 2690810, entitled “Radio communication device and response signal spreading method”.

INTERDIGITAL AND LENOVO

  • Following the FRAND-rate setting decision of the UK High Court in March 2023 between these parties, according to which Lenovo must pay $138.7m to InterDigital for a licence to the latter’s SEPs portfolio, judgements on costs and confidentiality have now been released.
  • The judgment on costs awarded interest on the lump sum of $138.7m, this being considered appropriate by Mellor J for several reasons “not least that the application of the rate of $0.175 to the sales made by Lenovo in, say, 2011, indicates that Lenovo should have paid and InterDigital should have received the relevant royalties in that year (or shortly after), and should be compensated now for the delay in receipt of those sums.” (paragraph [29]).
  • Mellor J nonetheless considered Lenovo the overall winner due to reasons including (paragraph [60]):
    • “First, I agree with Birss J. (as he then was) that the FRAND rate determination in this type of case is properly to be characterised as a tariff setting exercise.”
    • “The per unit rate I found of $0.175 is very close to Lenovo’s contention of $0.16 and a long way from InterDigital’s contention,”
  • Looking ahead, InterDigital has been granted permission to appeal on certain points of principle in Mellor J’s FRAND judgement, and Lenovo has been granted permission to cross-appeal.
  • The judgement on confidentiality “recognise[d] that significant costs have been incurred on confidentiality issues in these FRAND proceedings” (paragraph [51]), also:
    • “[T]he principal balance I have attempted to strike in my approach to redaction is between the continued protection of commercially sensitive information (in particular the rates and conditions in current or recently expired licences) and ensuring that the public version of my FRAND Judgment sets out the important parts of my reasoning (which may require some details of licences key to the reasoning and/or of historic licences to be made public).” (paragraph [52])
  • Mellor J also “hoped that the costs of this type of final confidentiality hearing can be considerably reduced in the future, on the basis that the Court can be expected to adopt a similar line to that set out in Unwired Planet and in my judgments in these proceedings.” (paragraph [52]).

CONCERN OVER THE EUROPEAN COMMISSION'S PROPOSAL FOR A NEW REGULATION ON SEPs

  • The European Commission recently published a proposal for a new regulation on SEPs. Our detailed analysis of this and its potential repercussions on SEP owners and implementers will be published shortly.
  • In the meantime, we note that the proposal has not been received favourably by SEP owners with Ericsson and IP Europe expressing concerns over the proposal and also a leading UPC Court of Appeal judge voicing a concern over access to justice.

SEPs AND INNOVATION - UPDATE ON THE UK GOVERNMENT'S CALL FOR VIEWS 

To find out more about Standard Essential Patents and how IP can help you create commercial value from your innovations, feel free to contact any of our electronics and computing team.

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