A FRAND approach to a FRAND injunction
Following the earlier decision on liability in Unwired Planet v Huawei (see our blog post here) the High Court has now ruled on the remedies in the case.
In granting various forms of relief, Birss J has created the "FRAND injunction"; a final injunction which would be discharged as and when a FRAND licence was entered into by the parties. The injunction was, however, stayed pending appeal.
By way of reminder, members of the European Telecommunications Standards Institute ("ETSI") set "standards" for various technologies. If a patent is found to cover a standard, it becomes known as a "standard essential patent" and the owner must agree to licence that patent to a user on fair, reasonable and non-discriminatory ("FRAND") terms.
In his decision on liability, Birss J held that Huawei had infringed two of Unwired Planet's standard essential patents. This decision also included an interesting discussion of abuse of dominant position, which Huawei unsuccessfully ran as a defence.
At the time of the first decision, no FRAND licence had been agreed ("the Licence") as Huawei had not engaged in negotiation of any terms. In light of this, Birss J commented that an injunction should be granted, but this matter would be dealt with at a later date.
Patents Court decision
At the hearing on relief, Unwired Planet argued that a final injunction preventing Huawei's infringement should be granted, but stayed pending appeal. Huawei's position was that circumstances had materially changed since the liability judgment, as it had now offered two undertakings to the court. Firstly, that it would enter into the Licence if there was no appeal (or the appeal decision went against them), and secondly that Huawei would act as if the Licence was in force in the meantime, including any royalty payable to Unwired Planet.
The court held that the offered undertakings by Huawei were too late and unnecessarily complicated, and an injunction would be appropriate. However, this would be stayed pending any appeal on terms that provided for appropriate payment by Huawei to Unwired Planet in the interim. In his judgment, Birss J succinctly summarised this new form of FRAND injunction:
“A FRAND injunction should be in normal form to restrain infringement of the relevant patent(s) but ought to include a proviso that it will cease to have effect if the defendant enters into that FRAND licence."
It did not matter that the Licence was due to expire before the relevant patents; the parties would need to revisit this issue at that time if needed. Whilst the court highlighted the need to start negotiation of a renewal prior to expiry of the Licence, Birss J appreciated that circumstances could change and at the time the Licence would expire the terms may need to be updated in order to remain FRAND.
In addition to the FRAND injunction, the court made various declarations as to the status of previous licence offers by the parties being FRAND (or not). An order for costs and permission to appeal were also granted.
This is a welcome practical approach by the court, in an area of law which is often complex, legally and commercially. The judgment itself annexes the Licence, which will be interesting to review as an example FRAND licence for third parties in similar positions.