What a seven days it's been in FRAND-land…first Panasonic settled its disputes with both OPPO and Xiaomi; then a new dispute between Lenovo and ZTE became public knowledge, and now InterDigital have settled with OPPO, bringing to an end three years of litigation; and breathe…
It's the first of these pieces of news which I want to discuss, as the Court of Appeal decision in Panasonic v Xiaomi was almost certainly the major factor behind settlement being reached.
In short, the Court of Appeal held that where parties have agreed that the UK court should determine the fair, reasonable and non-discriminatory (FRAND) terms for a global licence for the relevant standard essential patents (SEPs), a patentee should not be seeking injunctions against the same party in other jurisdictions. For “patentee”, here read Panasonic; for “other jurisdictions”, read the German courts and the UPC.
Panasonic had originally issued proceedings in the UK Patents Court, in July 2023, seeking declarations that four patents were essential to the 3G/4G standards and that Panasonic's offered licence terms were FRAND. At the case management stage, the parties had undertaken to abide by the court's FRAND determination and had also agreed to proceed straight to the FRAND trial rather than having technical trials first.
In November 2023 Panasonic had appeared to agree not to enforce any injunctions it obtained in parallel proceedings in the UPC and Germany; it then changed its position and refused to give such an undertaking, resulting in an expedited trial being ordered and Xiaomi seeking declarations that: (i) Panasonic would enter into an interim licence agreement pending trial; and (ii) by continuing the actions in Germany and at the UPC, Panasonic were breaching their obligations as a SEP holder to act in good faith. Why, reasoned Xiaomi, would Panasonic agree to abide by the UK court's global FRAND determination and then continue to seek relief elsewhere if not to try and push up the licence fee?
The High Court having dismissed Xiaomi's application, all three appeal judges agreed that the German and UPC actions were superfluous, in light of the undertaking to abide by the UK court's FRAND decision. The majority agreed with Xiaomi that an interim licence should be granted, with Phillips LJ disagreeing and finding that an anti-suit injunction would have been a more appropriate remedy. The reasoning for this was, in part, whilst Panasonic had undertaken to grant a final licence on FRAND terms, it had not undertaken to do so on an interim basis (a position with which I agree).
It is not surprising that a judgment in which Panasonic's conduct was described on three separate occasions as indefensible has led to settlement. Of wider interest for both patentees and implementers is how UK proceedings can indirectly affect (perhaps even influence) proceedings further afield, most notably the UPC.
In my judgment Panasonic's conduct is indefensible. As discussed above, FRAND is a process and not merely an end-point.