What is a fair patent licence fee & is it $138.7 million?
The High Court has published an important and detailed judgment in a patent case concerning fair, reasonable and non-discriminatory (FRAND) licensing rates. This ruling, in a case between InterDigital and Lenovo, is only the second time that the courts have made a FRAND determination, following the Unwired Planet case several years ago, which went to the UK Supreme Court.
In this case, Mr Justice Mellor ordered Lenovo to pay InterDigital a lump sum of $138.7 million for a global FRAND license covering its sales of 3G, 4G and 5G cellular devices from 2007 to 31 December 2023.
The published judgment is heavily redacted as it refers to confidential terms in licence agreements involving various other companies (Interdigital Technology Corporation & Ors v Lenovo Group Ltd (FRAND Judgment - Public Version). A further judgment with fewer redactions may be published following a further hearing in early April 2023.
This extensive litigation has involved five technical trials on patent validity/infringement and a FRAND trial, which took place over 17 days last year. The FRAND judgment runs to nearly 1,000 paragraphs.
Both parties had made licensing offers during extensive negotiations. But Mellor J determined that neither InterDigital’s offer (which amounted to $337 million) nor Lenovo’s counter offer (which comprised a lump sum of $80 million +/-15% for all sales in the 6-year term to the end of 2023 with a full release for all past sales for no additional consideration) were FRAND or within the FRAND range.
Instead, he made a determination of what a willing licensor and willing licensee would agree based on analysis of comparable licences, drawing on one particular licence that was most relevant.
The judge also had to decide issues such as whether the same rate should apply to past and future sales, whether there was a limitation period and whether volume discounts amounted to discrimination.
Mellor J indicated that Lenovo would be subject to a FRAND injunction if it did not accept the licence terms. After having reviewed the draft judgment, however, Lenovo indicated it was prepared to take a licence on the terms set out. However, InterDigital said it would appeal aspects of the judgment.
The judgment reaffirms the UK courts’ willingness to take decisions regarding worldwide royalty rates in global licensing disputes. However, it also indicates that claimants may not always get everything they want from judgments. A decision in another FRAND dispute, between Optis and Apple, is expected later this year and may shed more light on this question.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - email@example.com