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Inside IP: Patents Court grants first 'FRAND injunction'
 Briefing 
Author
David Rose, Nina O'Sullivan & Natasha Pearman
Date
12 June 2017

Inside IP: Patents Court grants first 'FRAND injunction'

Following his landmark decision in Unwired Planet v Huawei in April 2017 (discussed in our recent edition of Inside IP), Birss J has now issued his remedies judgment granting a new form of injunction: a 'FRAND injunction'. This will include a proviso that it will cease to have effect if Huawei enters into the Settled FRAND licence (interestingly, the Settled Licence is appended to the judgment and sets out the terms reflecting his decision on FRAND). However, Birss J has stayed the injunction pending any appeal by Huawei and has granted it permission to appeal on a number of fundamental issues in the case, including the approach to FRAND, and the Court's interpretation of the CJEU's Huawei v ZTE decision and the impact on injunctive relief.

A 'FRAND injunction'

In his first judgment, Birss J indicated that, as Huawei had infringed valid patents and was not prepared to take a licence on terms he had found to be FRAND, a final injunction should be granted. Huawei remained unwilling to take a licence on these terms, pending appeal, and argued that the Court should be satisfied with undertakings pending appeal to the effect that it would enter into a settled licence post appeal and would pay royalties (and otherwise comply with the Settled licence) in the meantime. A particular issue was that the Settled Licence will expire in 2020, whereas the relevant patent does not expire until 2028. Huawei pointed out that any injunction would still be in place on expiry of the Settled Licence and this would unfairly distort the parties' respective positions in any renegotiation that would have to take place at that time.

Birss J said that the correct approach was to grant a new form of injunction: a 'FRAND injunction'. This would be in normal form to restrain infringement of the relevant patent(s) but would include a proviso that it will cease to have effect if the Defendant enters into the Settled FRAND Licence. Where the FRAND licence is for a shorter period than the lifetime of the relevant patents, the injunction will be subject to an express liberty for either party to come back to court to address the position at the end of the licence (or if it ceases to have effect for any other reason). Further, the injunction in this case should be stayed pending appeal, on terms to secure appropriate payments from Huawei in the meantime.

Whilst Birss J did not accept the undertakings offered by Huawei, it was particularly relevant that Huawei had only offered them at a late stage of the dispute, after many years of litigation, and following the judgment being handed down. If Huawei had given an unqualified undertaking to enter into whatever licence the Court (including on appeal) had decided was FRAND, then Birss J indicated that an injunction at this stage would not have been appropriate.    

Permission to appeal

Assuming Huawei takes steps to appeal the decision, Birss J has opened up the prospect of a wide-ranging review of many of the significant issues considered in his judgment, as he has granted Huawei permission to appeal on the following:

1.  The issue of whether it was legitimate to set FRAND terms on a global basis or whether the Court should have held that the UK licence was FRAND, and that the Court should not determine FRAND terms with rates for territories other than the UK.   

This was a fundamental issue in the dispute as Huawei's position was that it would not take a global licence and that it should not be subjected to an injunction excluding it from the UK market unless it took a global licence. 

2.  The issue of hard-edged non-discrimination and whether the judgment was right to require a distortion of competition. 

3.  The Court's interpretation of the CJEU's decision in Huawei v ZTE, and injunctive relief and abuse of dominance. 

Birss J has also given Unwired Planet permission to appeal on its argument that the judgment should have taken into account the blended global nature of the benchmark rate.

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