Lenovo Named 'Overall Winner' In FRAND Costs Ruling
By Alex Baldwin · Listen to article
Law360, London (June 27, 2023, 9:26 PM BST) -- Chinese technology giant Lenovo has walked away the "overall winner" in a London court judgment on costs in its long-running dispute with wireless and video technology company InterDigital over fair, reasonable and nondiscriminatory licensing rates for wireless patents.
Although the High Court ordered Lenovo Group Ltd. Tuesday to pay an additional 4% interest on top of $138 million sum to license InterDigital Technology Corp.'s standard-essential patents and held that Lenovo "lost" on "foreign law" matters in the proceedings, there was "no doubt" that Lenovo came out on top in the trial and that InterDigital should bear the rest of the costs in the licensing proceedings, Judge James Mellor ruled.
As Lenovo had alleged it should not have to pay interest, Judge Mellor ordered the company to pay InterDigital's legal costs related to the "interest issues. But, the judge added, "The fact that Lenovo will be 'writing the cheque' and a sizeable cheque at that cannot, in my view, convert InterDigital into the winner of the FRAND trial."
InterDigital's suit against Lenovo accused the Chinese company of infringing five of its telecommunication patents, arguing Lenovo used InterDigital's patented technology in its products without a proper license.
The English courts first ruled that three of the five patents were valid and essential, then moved on to determining whether terms of the licensing agreement offered by InterDigital and Lenovo were fair, reasonable and nondiscriminatory, or FRAND.
InterDigital proposed an offer that would see Lenovo pay about $337 million for a six-year license, whereas Lenovo said it should pay $80 million for the same term, with a 15% leeway to account for sales of its devices.
But Judge Mellor ruled in March that neither InterDigital nor Lenovo's offers were FRAND, and said the court should set the rate, ordering Lenovo to pay a lump sum of $138.7 million, which included past sales of its products.
However, Judge Mellor did not determine in the March ruling whether Lenovo should pay interest on its sales.
InterDigital contended that Lenovo should pay at least a 4% interest rate for its sales, a figure that it says Lenovo had previously agreed to in a draft license agreement. It also floated a higher 5-10% interest rate based on expert evidence.
Lenovo argued the court did not have a jurisdiction to award interest in this "contractual" claim. It added that granting interest payments would encourage licensors to "hold out" from setting FRAND terms to secure interest payments down the line.
In Tuesday's judgment, Judge Mellor held that the 4% rate previously agreed upon by the parties was suitable and found no justification to set a higher rate.
The judge also gave InterDigital permission to appeal two points of his FRAND judgment concerning whether he should have taken into account the "subjective" view on the value of the patent license, and whether interest should be awarded in the sum "derived from the comparables analysis."
InterDigital's Chief Legal Officer Josh Schmidt welcomed the court's "careful consideration," decision to award interest and granting permission to appeal these aspects of the ruling.
The court also gave Lenovo the go-ahead to appeal the court's decision on whether limitation periods "have a role to play in the relationship between willing licensor and willing licensee."
John Mulgrew, Lenovo's vice president, deputy general counsel and chief intellectual property officer, also cheered the decision, calling the case a "broader, landmark victory for the technology industry and the customers we serve."
InterDigital was represented by Adrian Speck KC, Mark Chacksfield KC and Edmund Eustace of 8 New Square, instructed by Gowling WLG.
Lenovo was represented by Daniel Alexander KC of 8 New Square and James Segan KC of Blackstone Chambers, instructed by Kirkland & Ellis International LLP.
The case is InterDigital Technology Corp. and others v. Lenovo Group Ltd. and others, case number HP-2019-000032, in the High Court of Justice of England and Wales.
