Here's a December 12th article by Adam Houldsworth from IAM titled:
Ericsson and InterDigital disputes should be resolved by the UK courts, Lenovo’s IP chief argues
Though often previously seen as a boon for SEP owners, the English courts’ willingness to make global FRAND rate determinations appears to be increasingly popular with implementers.
In fact, Lenovo’s Chief Intellectual Property Officer John Mulgrew has revealed in an exclusive interview with IAM that his company has asked the High Court in London to settle ongoing worldwide licensing disputes with Ericsson and InterDigital. This is because of the way the English courts consider comparable licences and the way their decisions about injunctions are tailored specifically to SEP disputes, he explained.
“I do think the UK is an interesting place for litigation right now, because it is a court that is attempting to implement a worldwide rate-setting process that I believe is looking at trying to get a fair result,” Mulgrew commented. “I believe the UK court is a court which takes into account what is a fair licence by looking at what competitor companies pay and making a decision [based on that].”
Ericsson, as IAM has reported, has lately launched 5G SEP infringement suits against Lenovo in the US, at the District Court for the Eastern District of North Carolina, and in Brazil. Brazilian litigation offers distinctive advantages to SEP owners seeking to “disincentivise hold-out”, Ericsson’s head of patent assertion Robert Earle told IAM recently, because the nature of pleading in the country puts judges in a position to consider and grant injunctions at an early stage.
Lenovo has also been sued recently by InterDigital, which has asserted patents relating to the AV1 and VP9 video codec standards at the US District Court for the Eastern District of North Carolina and at the US International Trade Commission.
Lenovo seeks UK global rate determinations
Neither patent owner has asked the High Court of England and Wales to intervene in these disputes, but Lenovo has countered by making defensive or free-standing applications to the London court, asking it to set worldwide FRAND rates for the patentees’ portfolios.
In the case of Ericsson, Lenovo has sought a global FRAND determination for the company’s 5G portfolio. In the InterDigital dispute, the situation is slightly more complicated: Lenovo has asked the court for a global determination for InterDigital’s entire patent portfolio, including its VP9 and AV1 patents as well as its cellular SEPs.
The English High Court has already determined the global price Lenovo must pay for InterDigital’s cellular portfolio in a high-profile decision handed down in March of this year. But that ruling, which resulted from InterDigital’s request for a global rate determination, only covers a period up until 31 December 2023. That judgment has since been appealed by InterDigital, with a hearing set for June 2024.
In the meantime, however, Lenovo has filed its own defensive FRAND suit concerning a licence to cellular SEPs from 2024 onwards, as well as patents for other technology standards.
The right of implementers to file defensive FRAND actions in London was upheld by the High Court earlier this year in Kigen v Thales – a dispute in which GSM implementer Kigen has sought a worldwide rate determination against patentee Thales. The IP owner argued unsuccessfully that the court lacked jurisdiction to set a global rate until it had found at least one asserted SEP to be valid and infringed.
However, the right of the English courts to make a global determination in these circumstances has not yet been tested at the appellate level. And IAM understands that Lenovo’s free-standing FRAND request is being challenged in the InterDigital suit. It may also be contested in the Ericsson spat.
The first InterDigital v Lenovo global FRAND determination
Lenovo’s experiences in its first global rate-setting process with InterDigital have made it more comfortable with the English courts’ approach, Mulgrew explained. “The first time you go through it, it is a bit intimidating to say I have committed to taking a licence and that I am putting this into [the court’s] hands,” he explains. “But we have done that now, more than once. I see the outcome [of the first decision] and I think it is fair and reasonable. I don’t think Lenovo got a better deal than other licensees of InterDigital. Personally, I think we got a fair deal, similar to what other people pay. We didn’t get a huge windfall. We got fair.”
The March 2023 ruling, handed down by Mr Justice Mellor, found that Lenovo should pay $138.7 million for InterDigital’s cellular portfolio – far closer to the Chinese company’s offer of $80 million than to the plaintiff’s demand of $337 million (the mean average being $208.5 million). Mellor J’s per-unit rate of $0.175 was only slightly above Lenovo’s suggested $0.16 rate and in stark contrast to the plaintiff’s proposed figure of $0.498 per unit.
Also favourable to Lenovo, Mellor J dismissed the patentee’s proposed top-down cross-checks, rejected its InterDigital’s volume discount approach for larger implementers such as Apple and Samsung, and lamented the lack of information about previous, comparable licences made available to Lenovo prior to litigation.
Mulgrew places great emphasis on the problems he believes are caused by a lack of transparency regarding existing licences. “What sometimes happens in licensing negotiations is that there is sometimes an asymmetric amount of information. That’s the problem right now with SEP licensing,” he commented. “It is very difficult to reach an outcome unless there is an effort to create parity in information, or at least have some information flow.”
The English courts’ focus on setting a global rate in accordance with existing licences is a significant advantage, Mulgrew stated. “It is noteworthy that the licensors, who often will claim that licensees are not willing to take licences,” he stated, “are really trying to go to other jurisdictions where there is not the ability to have this transparency and the ability to have the rate determined based on fairness.”
Licensors seeking injunctions without scrutiny of comparable licences
Many licensors favour jurisdictions where they can seek injunctions without scrutiny of what they have agreed with other licensees, Mulgrew suggests. “That is a concern for me, because a good IP system is balanced and fair.”
He argued that Ericsson’s recent assertion against Lenovo falls into this category. “There are different types of licensors, and Ericsson’s assertions are in the category of licensor that seeks an injunction and then will talk about a deal later,” Mulgrew commented.
“If a licensor is truly being fair in their licensing practices, then a UK proceeding is amazing because it is a worldwide rate that gets set.” It is an efficient and reasonable way of settling a global FRAND dispute, he contended. “I think that Ericsson is still playing the game of ‘we will get an injunction and then talk about money afterwards’.”
Though he disagrees with the approach taken towards injunctions in some other jurisdictions, Mulgrew told IAM that he accepts the English High Court’s framework for issuing injunctions. The court will impose a FRAND injunction on an implementer if they fail to commit unconditionally to accepting the eventual outcome of its global licensing fee determination. A unwilling licensee may become willing at any time and have an injunction lifted, the High Court has held, if it undertakes to accept the global rate set by the English courts.
The UK’s approach is likely to attract more implementers to file suit in the future, Mulgrew believes. “[The UK process] is relatively unknown and unproven, but I think that is changing. We have seen and experienced that ourselves,” he explained. “You will see us look at this jurisdiction and this process much more readily now that we have experienced it. Ten years from now, I don’t think it will be that remarkable [for an implementer to seek a global FRAND decision from the English High Court].”
Asked by IAM if Lenovo might file requests for global rate determinations by the courts in China – the company’s home country and the only other jurisdiction where a worldwide FRAND judgment is currently available – Mulgrew answered: “I am not sure whether going to another court to ask for the same determination would necessarily expand our point. We are willing to take a licence. We want a fair process. If there is a place where that process can be fair, we will consider it. Both jurisdictions are attempting to have a fair determination of what a licence rate should be. I commend them both for doing that.”
Proposed EU regulation would be good for SEP licensing
Despite its differences with the English approach, the framework set out in the EU’s proposed SEP licensing regulation would be better than the status quo, Mulgrew stated.
“Certainty is something we value highly. An additional process that provides certainty would be welcomed by Lenovo,” he said. “It is very different [to the English approach], and there are other ways to get to what is a fair price to pay for innovation being created by companies around the world,” Mulgrew continued.
“I am very supportive of this proposal because I do think it is a way to avoid having protracted global litigation based on asymmetry of information,” he said. “If there is a mechanism for licensing with transparency and to verify non-discriminatory licensing [then that is a good thing].”
Asked if the compulsory but non-binding FRAND determination being proposed in the EU might in fact increase the amount of time required to resolve SEP licensing disputes, Mulgrew stated that he would rather the EU create a system in which the FRAND rate determination was binding. “That would be simpler,” he concluded.
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