InterDigital To Challenge Lenovo's Landmark FRAND Win By Alex Baldwin Law360, London
(September 21, 2023, 6:47 PM BST) -- An appeals court will hear the entirety of wireless and video technology company InterDigital's appeal in a high-profile spat with Chinese giant Lenovo over fair, reasonable and nondiscriminatory licensing rates for InterDigital's patents.
Judge Richard Arnold said in a newly public Tuesday order that the Court of Appeal will reconsider all contested grounds of the landmark ruling that held Lenovo should fork over a $184.9 million lump sum to InterDigital, after High Court Judge James Mellor granted a far more limited appeal back in June.
According to the brief order, each of InterDigital's four grounds of appeal had a real prospect of success, contrary to Judge Mellor's initial decision that refused all four of InterDigital's grounds.
InterDigital sued Lenovo alleging that the company was using its patented technology without a license.
Three of the five patents levied by InterDigital were considered valid and essential by the High Court, which then moved to determine whether terms to license those patents floated by both InterDigital and Lenovo were fair, reasonable and nondiscriminatory, or FRAND.
Lenovo asked to pay $80 million for a six-year license for the patents, with a 15% leeway, whereas InterDigital argued that it should pay around $337 million.
Judge Mellor ruled in June that Lenovo should pay a lump sum of $138.7 million to InterDigital, which factored in past sales of its products — noting that there was "no doubt" that Lenovo had prevailed in this trial and was the "overall winner."
InterDigital sought permission to appeal on four grounds. The primary ground concerned the specific licensing rate determined by Judge Mellor, arguing that it was not FRAND for the court to allow the effects of certain discounts to "depress" the rates of the license.
Judge Mellor agreed in a follow-up judgment that there were "some points of principal" but that they were "wrapped up" in a bid to get the Court of Appeal to accept an argument which he had rejected at "several different levels."
The High Court also dismissed InterDigital's remaining appeals, which focused on certain "economic adjustments" made to the licensing rate, the court's rejection of InterDigital's "top down cross-check" model for determining rates, and the finding that InterDigital was an "unwilling licensor."
However, Judge Mellor allowed InterDigital to appeal against the "points of principal" in which he determined the FRAND judgment, noting that it was possible to "take them in a slightly different order."
He also gave Lenovo the go-ahead to cross-appeal whether limitation periods play a role in the relationship of "willing" licensors and licensees.
The judgment also determined that Lenovo must pay an additional $46.2 million, upping the lump sum the Chinese company owes to $184.9 million.
But now, the Court of Appeal has ruled that InterDigital's primary ground of appeal concerning the specific licensing rate had a real chance of success, and that it was "unsatisfactory" to limit the appeal in the way Judge Mellor had.
Judge Arnold also granted permission to appeal on the remaining three grounds, noting that Judge Mellor had refused these grounds because he had considered that they were "contingent" upon the primary ground of appeal succeeding.
Representatives for InterDigital and Lenovo did not immediately respond to requests for comment Thursday.
In the High Court proceedings, 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 and Ravi Mehta of Blackstone Chambers, instructed by Kirkland & Ellis International LLP.
The case is InterDigital Technology Corporation v. Lenovo Group Ltd., case number CA-2023-001492, in the Court of Appeal of England and Wales.
