Unwired Planet wins patent licensing case against Huawei

Mobile technology patent holders Unwired Planet and Conversant Wireless have secured a landmark victory at the UK’s Supreme Court in two separate cases that define the licensing of patented technology essential to past, present and future mobile technology standards, and will have significant repercussions for the licensing of intellectual property in the telecoms sector.

The two cases, Unwired Planet vs Huawei and Conversant Wireless vs Huawei and ZTE, date back to 2013 and centre on the licensing of standard essential patents (SEPs). These exist to ensure fair competition and mean that patent holders can’t withhold the technology they develop where it is considered essential to an industry, and holders of SEPs must agree to license their technology to third parties on fair, reasonable and non-discriminatory (Frand) terms.

The point of this is to benefit consumers, maintain fair prices and guarantee ease of access to the end product, which in this case means 3G, 4G and 5G mobile services, and others yet to be developed.

The Supreme Court’s ruling, which upholds previous decisions, enables SEP holders such as Unwired Planet and Conversant to insist that implementers such as Huawei and ZTE take out global licences covering the entirety of their portfolios.

If they fail to do so, they will, in future, risk being subject to injunctions restricting their ability to access the UK market. Significantly, the ruling also means that UK courts now have the power to arbitrate such matters on a de facto global scale.

“We are pleased with the UK Supreme Court’s decision, which fully affirms the rulings of the UK appellate court and Mr Justice Birss,” said an Unwired Planet spokesperson. “Unwired Planet and its other PanOptis related companies believe that global licensing is the most efficient and effective solution for both licensors and licensees. We look forward to continue working with other manufacturers to offer licences to our patents under this global Frand framework and conclude negotiations in a timely manner.”

Conversant Wireless CEO Boris Teksler added: “We are obviously extremely pleased at the decision of the UK Supreme Court on a topic fundamental to how intellectual property is licensed in the telecoms sector. The decision reflects the court’s deep understanding of the issues that affect our sector and encourages us to drive this industry forward.”

Had the decision gone the other way, it would have implied that licences had to be granted on a country-by-country basis. Since, in many cases, the innovators and patent holders are smaller firms and the implementers are global tech giants, such a judgment would have “protected Goliaths against Davids”, according to legal experts, because such arrangements would be totally impractical for smaller companies.

This would have opened the door to firms such as Huawei being able to bypass SEP holders in certain jurisdictions, and this would potentially inhibit innovation. But now, implementers can no longer insist SEP holders prove their patents in every jurisdiction in the world.

The most immediate impact of the judgment will be to force Huawei to enter into a licence with Unwired Planet – which the UK Patent Court has already decided is fair and reasonable. Should it fail to do so, it is likely to be served with an injunction that will make its activities in the UK even more restricted than they already are.

Gary Moss, head of EIP Legal, who represented Unwired Planet and Conversant, said: “This has been an epic journey. It started in 2013, when we were first approached by Unwired Planet to assist them in their enforcement strategy in Europe. Following our initial success, we were asked by Conversant in 2017 to assist them with their enforcement programme. When we started on this journey, little did we think that we would end up in the highest court in the land with the eyes of the global IP and telecoms worlds 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. But we and our clients have held firm. Along the way, we have gone through 12 major trials and appeals and innumerable interim court hearings. We always believed in our clients’ case and, seven years later, we are delighted to have our belief endorsed by the Supreme Court.”

Arty Rajendra, UK head of IP disputes at Osborne Clarke and a co-counsel for Unwired Planet, said: “We are thrilled for Unwired Planet. The Supreme Court judgment endorses Unwired Planet’s consistent position that a global licence is Frand and ensures it receives fair royalties for its SEP portfolio without having to litigate all over the world.

“Implementers complain that this is a high price for access to the UK market, but because the UK court is determining terms of a global Frand licence, implementers can also legally manufacture and sell their products on a worldwide basis without fear of infringing the SEP owner’s multinational patent right.

“Unwired Planet’s contractual obligation to license its SEPs on Frand terms was raised by Huawei as a defence to a UK injunction, and the UK court has jurisdiction to rule on its meaning and effect. The UK court has taken a fair and pragmatic approach to its jurisdiction and the exercise of its powers, which gives effect to the commercial and legal realities of this case, and the external and internal context of the ETSI policy. It also means the UK is, quite rightly, the hot spot for SEP and Frand litigation.”

Rajendra added that implementers such as Huawei and SEP holders such as Unwired Planet should both be pleased that the English courts were willing and able to determine global Frand terms to enable implementers to sell their technology on a global basis.

She said she expected more SEP owners to come forward to enforce their standard-essential patent rights under English law, and to see more clarity for both sides on appropriate licensing rates.

Huawei had not commented on the ruling at the time of publication.