Introduction

The case Unwired Planet International Ltd v. Huawei Technologies (UK) Co Ltd [2020] UKSC 37 is a landmark ruling in patent licensing and fair, reasonable, and non-discriminatory (FRAND) obligations. The UK Supreme Court confirmed that UK courts have jurisdiction to determine global FRAND terms for standard-essential patents (SEPs). The decision has significant implications for patent holders, implementers, and the enforcement of intellectual property rights in the telecommunications sector.

Background: Standard-Essential Patents (SEPs) and FRAND Compliance

The patents at issue were Standard-Essential Patents (SEPs) related to mobile communication technologies, particularly 4G LTE, 3G, and GSM standards. SEPs are patents that are essential to industry standards, meaning that any company producing standard-compliant devices (such as smartphones) must use these patented technologies.

To qualify as an SEP, a patent must:

• Be essential to implementing an industry standard, meaning that there is no viable alternative technology that would allow compliance with the standard without infringing the patent.
• Be declared as essential to a standard-setting organization (SSO), such as the European Telecommunications Standards Institute (ETSI), which governs telecom standards.

Once a patent is recognized as an SEP, the patent holder must commit to licensing it on Fair, Reasonable, and Non-Discriminatory (FRAND) terms, ensuring that:

• Fair: The licensing terms must not impose excessive fees or create an unfair competitive advantage.
• Reasonable: The fees must reflect the patent’s value within the standard and avoid exploitative pricing.
• Non-Discriminatory: The terms must be applied consistently to all licensees, preventing selective or unfair treatment.

Positions of the Parties and the Legal Dispute

• Unwired Planet, as the patent holder, sought to enforce its SEPs by offering a global FRAND license and requesting an injunction in the UK against Huawei’s continued use of its patented technologies if Huawei refused the license.
• Huawei, as the implementer, challenged this approach. It argued that:
  • UK courts should not impose global FRAND terms and should only consider UK patents.
  • A UK-only license should suffice.
  • It had offered to take a FRAND license limited to the UK, and that seeking an injunction for not accepting a global license was unlawful and discriminatory.
  • Unwired Planet’s licensing strategy was not FRAND-compliant, especially because it allegedly offered better terms to other licensees.

The dispute required the court to determine whether a global license could be imposed, whether Huawei’s position was that of a willing licensee, and whether injunctive relief was appropriate.

Legal Issues

The case primarily addressed three key legal questions:

1. Can UK courts set global FRAND terms for a patent portfolio?
2. Is it lawful to issue an injunction against a company that refuses to accept FRAND terms?
3. Did Unwired Planet act in a manner that was discriminatory or non-FRAND?

UK Supreme Court Decision and Legal Principles Applied

The Supreme Court upheld the rulings of the lower courts and confirmed that:

• UK courts have jurisdiction to determine global FRAND terms when SEPs are litigated in the UK.
• Patent holders can seek injunctions against implementers who refuse to accept court-determined FRAND terms.
• Unwired Planet did not breach FRAND obligations by offering global licensing terms instead of country-specific licenses.

1. Global Licensing and Jurisdiction

• The court recognized that SEPs are typically licensed on a global scale, rather than country-by-country, due to the international nature of the telecom industry.
• It ruled that requiring patent holders to litigate in every individual jurisdiction would be inefficient and impractical.
• UK courts can determine global FRAND terms when one party (such as Huawei) challenges a patent in the UK.

2. Injunctions for SEP Infringement

The Supreme Court ruled that injunctions can be granted to enforce FRAND terms if an implementer refuses to accept a license, based on the following rationale:

• Patent holders have an exclusive right to prevent unlicensed use of their SEPs under UK patent law. An injunction is the standard remedy for infringement.
• The ETSI FRAND framework does not eliminate the right to an injunction but instead governs the licensing process to prevent abusive practices.
• If an implementer refuses to accept a court-determined FRAND license, they are not a ‘willing licensee’, and an injunction serves as a lawful means of preventing further unauthorized use.
• The ruling aligns with international approaches to SEP enforcement, where injunctions are used as a last resort when good-faith negotiations fail.

Thus, Huawei was required to either accept the UK court’s FRAND terms or face an injunction prohibiting the sale of infringing products in the UK.

3. Compliance with FRAND Principles

• The court found that Unwired Planet’s licensing offer was non-discriminatory, as it applied similar licensing structures across multiple companies.
• The ruling confirmed that FRAND terms do not require identical licensing agreements for all companies—they only need to be commercially reasonable.

Implications for Patent Licensing and SEP Disputes

• Patent Holders Gain More Enforcement Power: SEP owners can use UK courts to establish global licensing terms, reducing the burden of litigating in multiple jurisdictions.
• Implementers Must Accept FRAND Terms or Risk Injunctions: Companies like Huawei can no longer refuse to license patents without the risk of losing market access.
• Strengthening of UK Courts as a Forum for Global SEP Disputes: The UK has positioned itself as a key jurisdiction for SEP litigation, attracting more cases in the future.

Conclusion

The Unwired Planet v. Huawei case is a defining moment for FRAND licensing and SEP enforcement. The UK Supreme Court’s ruling affirms that UK courts can set global FRAND terms and issue injunctions against non-compliant implementers. The court’s reasoning reinforces that injunctions remain a legitimate remedy when an implementer refuses to accept court-determined FRAND terms, ensuring that SEP owners can protect their intellectual property rights effectively. This decision has broad implications for telecommunications, intellectual property law, and international patent licensing, shaping future negotiations between SEP owners and technology companies worldwide.

Case: Unwired Planted v Huawei [2020] UKSC 37 (Unwired Planet International Ltd and another (Respondents) v Huawei Technologies (UK) Co Ltd and another (Appellants))