The UK High Court, in its much-anticipated decision in InterDigital Technology Corporation & Ors v Lenovo Group Limited & Ors, has ordered Lenovo to pay $138.7 million in royalty fees for its standard-essential patents (SEPs) for mobile phone technology. This confirms the Supreme Court's approach in Unwired Planet v Huawei Technologies (2020) and cements the UK's position as one of only two jurisdictions (China being the other) to determine the terms (and royalty rates) of a global licence on FRAND (Fair, Reasonable and Non-Discriminatory) terms.
What was decided?
The dispute concerned the terms on which Lenovo should take a licence to InterDigital’s portfolio of patents which had been declared essential in relation to 3G, 4G and 5G standards. The proceedings had been managed into six trials; five technical trials (of which four have now taken place) and the current FRAND trial.
In the FRAND trial, the judge (His Honour Mr Justice Mellor) had to decide two main issues:
1. Whether InterDigital's licence offer of 2020 was FRAND and, if it wasn't, what terms would be FRAND; and
2. What remedy was appropriate (effectively whether Lenovo's conduct amounted to that of an "unwilling licensee" such that Interdigital was entitled to an injunction in respect of the asserted patents, so far as they were held valid and essential).
These were decided as follows:
1. Having considered comparable licences, Lenovo must pay to InterDigital a lump sum of $138.7m, for a FRAND licence down to 31.12.2023. This was based on a rate of $0.175 per cellular unit.
2. Neither parties' previous offers were FRAND or fell within the "FRAND range". However the court found that for the most part, Lenovo conducted themselves as a willing licensee. An injunction was not granted, but ultimately Lenovo will demonstrate whether they are a willing licensee or not when they elect whether to cease infringement of the SEP found to be valid, infringed and essential or take a licence.
What is the impact?
Both parties have welcomed the decision, with Lenovo pointing to the court's finding it was a willing licensee, and InterDigital supporting its finding as "the first major SEP FRAND judgment that recognises that a licensee should pay in full for the past infringement of standard essential patents". The latter does, however, plan to appeal "certain aspects of the decision" as not accurately reflecting its licensing program.
The wider significance of this decision, however, may be that it reinforces the UK court's willingness, alongside China, to grant global FRAND licences. Whether the Unified Patent Court will also be so willing, when it opens in June, remains to be seen.
Based on the outcome from my comparables analysis, I find that neither InterDigital’s 5G Extended Offer nor Lenovo’s Lump Sum Offer were FRAND or within the FRAND range.