Unwired Planet: One Small SEP For Man, One Giant Leap For FRAND-Kind

Author:Mr Dafydd Bevan and John De Rohan-Truba
Profession:Marks & Clerk

A number of recent cases have bolstered the UK Court's expertise on licensing of Standard Essential Patents ("SEPs"), confirming its status as the venue of choice when seeking to resolve disputes over fair, reasonable and non-discriminatory ("FRAND") terms and related issues. With the recent Court of Appeal decision in Unwired Planet v Huawei, the UK Court's approach is becoming helpfully predictable for parties to FRAND disputes. Now is therefore a good time to take stock on what SEP holders and users should know about FRAND licences in the UK.

The UK Court will determine FRAND terms, including royalty rates, for a global licence which covers both UK and non-UK SEPs (not limiting itself to terms relevant to UK SEPs). This approach has received criticism from those who view it as the UK Court extending its jurisdiction impermissibly widely by interfering with issues relating to foreign property (in particular, foreign SEP validity which must be dealt with by the court in the SEP's jurisdiction). However, the UK Court considers this issue to be separate from the subject of its decision: determination of FRAND licence terms. Determination of these licence terms is based on the scope and effect of the undertaking given when an SEP holder declares its patent as essential to the standard. The UK Court is happy to make this determination on a global basis, to help prevent SEP users from employing delay tactics in FRAND licence negotiations (a likely outcome where SEP holders are faced with the prohibitive costs of starting multiple proceedings in different jurisdiction to secure global FRAND terms by way of various country-specific decisions). The Court has also noted that various mechanisms can be built into FRAND terms (including different territorial royalty rates dependent on numbers of SEPs in a territory, and annual adjustments to account for change in the SEP landscape) to ensure that a global licence remains fair to users. This capability is good news for SEP holders who wish to settle FRAND terms in one set of proceedings. It is less welcome to SEP users, who now have the burden of showing whether particular SEPs should not attract royalties (through separate patent revocation proceedings in the SEPs' jurisdictions). A discontented user should, however, be wary of any attempt to try to circumvent the UK Court's authority on this issue via relief sought in subsequent foreign proceedings - previous cases have demonstrated that...

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