A landmark ruling by the UK’s Supreme Court, involving a case between Chinese communications group Huawei and Unwired Planet, a major US patent licensing group, promises to turn the law on intellectual property rights upside down.
The case (along with a similar one between Huawei and Conversant Wireless being tried in parallel) has been rumbling through the UK legal system for almost six years, first in the High Court, then the Court of Appeal and finally the Supreme Court .
It focused on patents held by Unwired Planet on every iteration of cellular technology from 2G to 4G, all of which were used by Huawei in their products. It claimed that Huawei infringed six of its patents (that were originally owned by Ericsson) for all these generations of mobile communications technology, five of which had been ruled as Standard Essential Patents (SEP) by the European Telecommunications Standards Institute (ETSI).
In fact, it was not just the patents themselves that were in dispute, but the underlying principles by which patent licenses are awarded. And so, going forward, the ruling is likely to have a major impact on IP covering 5G as well.
With this week’s judgement in favor of Unwired Planet and Conversant, SEP holders can insist that ‘implementers’ — in this case, Huawei — take out global licenses covering all of their IP portfolios.
If they fail to do this, they will likely face injunctions that would restrict their ability to access the UK market.
It also means holders of SEPs have to agree to license their technology to third parties on ‘Fair, Reasonable and Non-Discriminatory (FRAND) terms’. Indeed much of the argument focused on the UK courts’ application and interpretation of FRAND.
ETSI patents policy requires that companies using certified SEPs license them to implementers on such FRAND terms. Huawei argued that any license entered to settle the UK litigation should only cover UK patents.
But the 2017 ruling in the High Court upheld that a FRAND licence between large multinationals is, necessarily a worldwide license. This has now been upheld by the Supreme Court.
Indeed the judge involved in the High Court case, Mr. Justice Colin Birss, suggested that two large multinational organizations licensing SEPs on a country-by-country to be “madness”.
“The big take-away from the Supreme Court ruling, and a very important one that now sets a precedent, is that we now have a mechanism for patent owners to get a fair return on their intellectual investments,” Andrew Sharples, a partner at EIP told EE Times. EIP was the specialist law firm acting on behalf of Unwired Planet.
“The judgement also confirms that ‘non-practicing entities’ and the big corporations must be treated the same way. Most of the time, the bigger companies — the ‘implementers’ — have been inclined to drag out litigation,” Sharples added. He suggested the ruling achieves the correct balance between access to technology and a fair return for patent holders.
Davids versus Goliaths
Another big win is the non-discriminatory aspect of ruling, suggested Sharples. A major plank of Huawei’s case was that Unwired had previously granted favorable license terms to some other companies for the same IP, and that this constituted a breach of its FRAND commitments.
But the court rejected the idea that the ‘most favorable license’ should become a binding FRAND-compliant licence for all companies wishing to use that particular patent.
Sharples also stressed that while the ruling and injunction are only valid for the UK, “it certainly sets a precedent that other jurisdictions are quite likely to follow in the future.” Huawei had previously argued that a UK court decision should not be valid internationally.
Such an approach , he notes, is usual, notably in the high-technology sectors such as mobile communications. Indeed it is also quite normal in many cases for other interested parties to be allowed to give their input into such proceedings, notably at the Appeal stage, and Sharples told EE Times in this instance, Apple intervened and supported Huawei’s viewpoint, while, Qualcomm and Ericsson favored Unwired Planet’s position .
Had the ruling gone the other way, licenses would have had to be granted on a country-by-country basis. And since, in many instances, patent holders tend to be smaller, innovation-focused firms, while implementers are, on the whole, the global technology giants, such a ruling, according to the legal experts on behalf of the claimants, would have “protected Goliaths against Davids”.
And, as the Supreme Court observed, otherwise “implementers who were infringing the patents would have an incentive to continue infringing.”
Gary Moss, head of legal affairs at EIP, noted in a statement that when the company started on this ‘epic’ journey, back in 2013, “little did we think we would end up in the highest court in the land with the eyes of the global IP and telecoms world upon us.
“We and our clients have faced significant pressures along the way, including opponents with significant resources who have thrown everything at us in an attempt to deflect our clients from securing the relief to which they were entitled. Many in the industry thought that what we were attempting was crazy and hopeless.”
So the immediate impact of the ruling is that Huawei will need to enter a licensing deal with Unwired Planet which the UK Patents Court previously ruled was fair and reasonable. If it does not, it could face an injunction that would create even more problems for its business activities in the UK.
It is early days to realize the medium to longer term implications of the ruling. Yes, it has the potential to make the UK a global hub for patent litigation, a bonus for lawyers.
The other side of the coin is that consumers could yet become disenfranchised, if the big technology companies, wary of FRAND licensing litigation, decide not to offer their latest wares in a particular market.
Yet this seems unlikely in view of the relatively low sums of IP licensing money involved in a high price smartphone or tablet.
The post UK Supreme Court Patent Ruling is Another Blow for Huawei appeared first on EETimes.