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FRAND and STEP: Latest Judgment from the Court of Appeal

October 22, 2018

The Court of Appeal has given judgment on the appeal brought
by Huawei against judgments which resolved a number of issues surrounding FRAND
licences – see Unwired Planet International Ltd & Anor v Huawei
Technologies Co Ltd & Anor [2018] EWCA Civ
2344.

The Court of Appeal judgment is lengthy (291 paragraphs)
and, although the overall conclusion is to dismiss the appeals and support the judgment of
Birss J, it is probably required reading for all concerned with standard essential
patents (SEPs). (Essentially SEPs impose an obligation upon the
owner of a patent which protects a technology which its owner has declared to
be essential to the implementation of one or more of the telecommunications
standards such as 2G-GSM, 3G-UMTS and 4G-LTE to provide a licence on
certain terms.)

Unwired Planet International contended that five
SEPs had been infringed and were essential, and that Huawei, having refused to
take a FRAND licence, should be restrained by injunction from further
infringement. Huawei responded that the SEPs were neither essential nor valid.
It also raised defences and counterclaims based on breaches of competition law,
aspects of which were founded upon the contention that Unwired Planet
International and its associated companies had not made an offer to license
these patents on FRAND terms.

The Court of Appeal was concerned with the findings of Birss
J that:

  • willing and reasonable parties would agree on a global
    licence, and such a licence was the FRAND licence for a portfolio such as that
    held by UP and for an implementer like Huawei – Unwired Planet was therefore
    entitled to insist on it. It followed that the UK licence offered by Huawei was
    not FRAND
  • the rates sought by Unwired Planet were too high and it was
    appropriate for the court to set the appropriate global FRAND rates between the
    parties
  • Unwired Planet was in a dominant position in the relevant
    market but had not abused that dominant position by pursuing the proceedings in
    the way that it did.

Although this is a lengthy judgment, yet to be pored over in
every detail, it is hard to detect any points where the Court of Appeal has
done more than endorse Birss J’s findings.