Global FRAND licensing: the UK Supreme Court Judgment in Unwired Planet v Huawei and Conversant v Huawei and ZTE

Abstract

In markets for global telecommunications products, including mobile phones, standards enable the necessary infrastructure equipment and devices produced by different manufacturers to work with one another and for those products to be available for use internationally by consumers who travel with their phones. The European Telecommunications Standards Institute (ETSI) is responsible for developing and publishing telecommunications standards in Europe.1 such as 2G (GSM), 3G (UMTS) and 4G (LTE). The underlying technology which is incorporated into these standards is generally protected by SEPs; it is not possible to make, sell, use or operate devices which comply with the standard without infringing those patents. The ETSI IPR Policy (the ‘Policy’) requires SEP holders to grant licences to use their technology on fair, reasonable and non-discriminatory (FRAND) terms so as to ensure that access to the use of the standard is not blocked. Against that background, the Judgment identifies two attributes of patent law that are relevant to the development of a global telecommunications market: first, that the prima facie entitlement of a SEP holder to obtain an injunction within a national jurisdiction has the potential to disrupt a global market for equipment using that technology; and, secondly, that the national nature of patent rights, which means that the SEP holder must commence proceedings in individual national courts to enforce its patent rights, makes it very difficult, if not wholly impracticable, for a SEP holder to protect an invention which is used in equipment manufactured in another country, sold in many countries and used by consumers globally. The Supreme Court explains that the first attribute may give SEP holders excessive power to disrupt an otherwise global market potentially resulting in excessive royalties while the second attribute may enable those implementing the standard (implementers) to avoid paying SEP holders a proper price for the use of their inventions internationally. The need to balance these ‘alternative evils’ lies at the core of the Judgment.