Thursday, December 15, 2022 10:51:51 AM
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Lenovo Makes $80M Play To Resolve InterDigital IP Dispute
By Joanne Faulkner · Listen to article
Law360, London (January 14, 2022, 1:46 PM GMT) -- Lenovo offered to pay InterDigital a lump payment of $80 million on Friday to end a long-running battle over fair and reasonable licensing terms for mobile phone standard patents, arguing that it was comparable with deals struck by other major manufacturers.
The Chinese tech company has offered to make a lump payment of $80 million to InterDigital as it seeks to end a long-running battle over mobile phone standard patents. (AP Photo/Ahn Young-joon)
China's Lenovo said during the early stages of a High Court trial in London to settle terms for global licenses for 3G, 4G and 5G standard patents owned by InterDigital that it had always been willing to pay for a license. But the company said it wanted similar terms to those that had been offered to its rivals including Apple, Samsung and Huawei.
InterDigital, a U.S. company, has been holding out for a "discriminatory premium" compared with the rates paid by other manufacturers — "to the tune of hundreds of millions of dollars and to which it is not entitled," Lenovo said in court documents.
The large amounts of money demanded by InterDigital are also at odds with the value of its patent portfolio, Daniel Alexander QC, counsel for Lenovo told the court on Friday.
InterDigital is trying to justify an "inflated rate" for its patents that increases the royalty burden for Lenovo and potentially the whole industry, Alexander said.
The U.S. company, meanwhile, did not put an exact figure on the amount it is seeking, arguing that a number of payment terms had to be considered by the court.
The 16-day trial is set to establish a fair, reasonable and non-discriminatory licensing rate, known as FRAND, for InterDigital's technology. The research and development company is also asking the court to make provisions for it to recover past damages for years of patent infringement by Lenovo.
Lenovo says that InterDigital's offers so far do not conform with FRAND principles. The Chinese company will urge the English courts to adopt the same approach as courts in China and the U.S. that give dominant weight to comparable agreements with other manufacturers when deciding what standard essential patent owners can charge.
This is the second FRAND license case to reach trial in the U.K. It follows in the wake of the Supreme Court's landmark decision in a case known as Unwired that England's courts have the authority to set global rates for use of standard-essential patents.
When it decides what rate to set, the court will have to resolve a dispute over whether it is appropriate to include in the FRAND terms a mechanism that takes into account the results of the international parallel proceedings.
Adrian Speck QC, counsel for InterDigital, focused during the hearing on Thursday on what he described as an "unwillingness" by Lenovo to resolve licensing talks that have been going on since 2009.
Speck accused Lenovo of opting to continue expensive litigation rather than trying to reach a fair royalty rate for InterDigital's portfolio and to delay handing over patent fees. Lenovo has been "thumbing its nose" at efforts to persuade it to take the license it lawfully needs to make and sell mobile products worldwide, Speck continued.
The only terms upon which Lenovo would do a deal "is if it was more economically advantageous than what it would cost to string out litigation," the lawyer added.
Lenovo is also ignoring the fact that the license the English court is being asked to consider is a worldwide license for every device sold by the company, Speck said. Any national determination for U.S. and Chinese patents do not have a worldwide scope.
InterDigital is arguing that it should be able to block sales of Lenovo's devices if it refuses to accept the court-determined licensing terms.
According to InterDigital, the Chinese manufacturer is trying to avoid the Supreme Court's 2020 decision. FRAND is not a "hard-edged principle of non-discrimination" — it does not require a patent owner to always offer the most advantageous terms it has ever offered, the company said in court documents.
Five InterDigital portfolio patents are also the subject of ongoing, parallel technical trials at the High Court.
In the second judgment handed down earlier this month, a judge found that one of InterDigital's standard-essential patents for 3G wireless technology is invalid because it lacks novelty. The patent covers the way in which data blocks of specified sizes are transmitted by mobile phones, according to the judgment.
This contrasts with the first technical decision from July in which InterDigital emerged on top. The High Court ruled in that instance that the Chinese tech giant had infringed a valid standard-essential patent for 4G wireless technology.
InterDigital is represented by Adrian Speck QC, Mark Chacksfield QC, Isabel Jamal, Thomas Jones and Edmund Eustace of 8 New Square, instructed by Alex Brodie and Matt Hervey of Gowling WLG.
Lenovo and Motorola are represented by Daniel Alexander QC and William Duncan of 8 New Square and James Segan QC and Ravi Mehta of Blackstone Chambers, instructed by Daniel Lim of Kirkland & Ellis International LLP.
The case is InterDigital Technology Corporation and others v Lenovo Group Limited and others, case number HP-2019-000032, in the Business and Property Courts, Intellectual Property List, Chancery Division of the High Court of Justice of England and Wales.
–Additional reporting by Bonnie Eslinger. Editing by Ed Harris.
"Intellectuals solve problems; geniuses prevent them." - Albert Einstein
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