The document discusses a UK court case, Unwired Planet v Huawei, regarding FRAND (Fair, Reasonable and Non-Discriminatory) licensing of standard essential patents (SEPs). It covers key issues addressed in the case such as: 1) the nature and enforceability of FRAND commitments, 2) determining a benchmark FRAND rate, 3) whether the FRAND license scope should be national or worldwide, and 4) injunction relief. The court found that a worldwide license is consistent with FRAND and competition law.

1. Patent Fair, Reasonable and nonPatent Fair, Reasonable and non--DiscriminatoryDiscriminatory
(FRAND) Licensing(FRAND) Licensing
Comments on UK Judgment in Unwired Planet vComments on UK Judgment in Unwired Planet v HuaweiHuawei casecase
[Case No. HP[Case No. HP--20142014--00005]00005]
Researcher:Researcher: HuameiHuamei QIUQIU
Instructor:Instructor: Prof. Dr. Alexander J. WURZERProf. Dr. Alexander J. WURZER
Institute:Institute: CEIPI of University of StrasbourgCEIPI of University of Strasbourg

2.  Unwired Planet (“U.P.”) purchased part of Ericsson’s patentsUnwired Planet (“U.P.”) purchased part of Ericsson’s patents
in April 2014. These patents are standard essential patentsin April 2014. These patents are standard essential patents
(SEPs) of one of ETSI’s telecommunication standards.(SEPs) of one of ETSI’s telecommunication standards.
 HuaweiHuawei was a licensee of those patents from 2009 to 2012.was a licensee of those patents from 2009 to 2012.
TheThe HuaweiHuawei--Ericsson license expired at the end of 2012. NoEricsson license expired at the end of 2012. No
new license was signed thereafter.new license was signed thereafter.new license was signed thereafter.new license was signed thereafter.
 U.P. started to contactU.P. started to contact HuaweiHuawei since June 2013 for eithersince June 2013 for either
purchase or licensing of the patents it was going to acquirepurchase or licensing of the patents it was going to acquire
from Ericsson.from Ericsson.
 Huawei’sHuawei’s responses were uncooperative. At the same time,responses were uncooperative. At the same time,
U.P. was facing more and more severe financial distress. U.P.U.P. was facing more and more severe financial distress. U.P.
suedsued HuaweiHuawei in UK and Germany on 10 March 2014.in UK and Germany on 10 March 2014.

3.  11. Nature and enforceability of the FRAND. Nature and enforceability of the FRAND
undertakingundertaking
 2. The benchmark FRAND rate2. The benchmark FRAND rate
3. What license scope is FRAND3. What license scope is FRAND –– national ornational or 3. What license scope is FRAND3. What license scope is FRAND –– national ornational or
worldwide?worldwide?
 4. Injunction Relief4. Injunction Relief

4.  44--Tire structure of the FRAND licensing ecosystemTire structure of the FRAND licensing ecosystem
Courts / Competition Authorities
Standards Setting Organizations (“SSOs”)
 Governing lawsGoverning laws
 Contract lawContract law
 Patent lawPatent law
 Competition lawCompetition law
Standards Essential Patents Holders (“SEPs holders”)
Implementers

5. SEPs holders
Implementers
SSOs

6. Relationships Nature Governing laws
1 SEPs holder v SSO membership-service Contract law
2 SEPs holder + SSO An agrmt for the Contract law
v Implementers benefit of 3rd parties
3 SEPs holder v
Implementers
(a) Generally Contract law + Pt law
(b) hold-up Competition law

7. 2.1 Benchmark rate reflects the true value for the2.1 Benchmark rate reflects the true value for the
portfolio under licenseportfolio under license
2.2 It is a FRAND rate not FRAND range.2.2 It is a FRAND rate not FRAND range.
2.3 Hard2.3 Hard--edged nonedged non--discrimination concept is nondiscrimination concept is non--2.3 Hard2.3 Hard--edged nonedged non--discrimination concept is nondiscrimination concept is non--
acceptable.acceptable.
2.4 What economic consequences of the announcement2.4 What economic consequences of the announcement
of the benchmark rate will be brought to U.P.?of the benchmark rate will be brought to U.P.?

8. ◦◦ Intrinsic value of the SEPs. (objectified value)Intrinsic value of the SEPs. (objectified value)
◦◦ Other assessment methods:Other assessment methods: GeorgiaGeorgia--PacificPacific
methodology, average rate of comparable licenses.methodology, average rate of comparable licenses.
◦◦ Calculating methods:Calculating methods:◦◦ Calculating methods:Calculating methods:
 “Top“Top--down” approach [T*S(e)*R(down” approach [T*S(e)*R(u.pu.p.) / T*S(.) / T*S(u.pu.p.)].)]
 (T: total value of the standard. S(e): Ericsson’s value(T: total value of the standard. S(e): Ericsson’s value
in the standard. R(in the standard. R(u.pu.p.): U.P.’s share in Ericsson’s.): U.P.’s share in Ericsson’s
SEPs portfolio. S (SEPs portfolio. S (u.pu.p.): U.P.’s share in the standard..): U.P.’s share in the standard.
 Comparable license approachComparable license approach

9. ◦◦ ““[F]or a given set of circumstances there will only be[F]or a given set of circumstances there will only be
one set of FRAND terms and only one FRAND rate.one set of FRAND terms and only one FRAND rate. ””
parapara 164164
◦◦ But a range of FRAND rates are allowed.But a range of FRAND rates are allowed.◦◦ But a range of FRAND rates are allowed.But a range of FRAND rates are allowed.

10. ◦◦ The nonThe non--discrimination limb of FRAND licensingdiscrimination limb of FRAND licensing
shares the same meaningshares the same meaning in thein the competition law.competition law.
◦◦ The hardThe hard--edged nonedged non--discrimination argumentdiscrimination argument
includes consideration of the position of particularincludes consideration of the position of particular
licensees. In this case ,licensees. In this case , HuaweiHuawei argued that Unwiredargued that Unwiredlicensees. In this case ,licensees. In this case , HuaweiHuawei argued that Unwiredargued that Unwired
Planet should charge the same rate as it offered toPlanet should charge the same rate as it offered to
Samsung in 2006. This argument was dismissed.Samsung in 2006. This argument was dismissed.
◦◦ SEPs holders are allowed to charge rates much lowerSEPs holders are allowed to charge rates much lower
than the FRAND rate under certain circumstances,than the FRAND rate under certain circumstances,
such as financial distress.such as financial distress.

11. ◦◦ Does the benchmark rate announced by the courtDoes the benchmark rate announced by the court
form a upper boundary of pricing for U.P.’s SEPs?form a upper boundary of pricing for U.P.’s SEPs?

12.  Worldwide licensing is common practice but Huawei
asked for a UK license only.
 Mr. Justice Birss’s reasoning:
◦ (a) Worldwide license has efficiency benefits.
◦ (b) The worldwide license is for all the SEPs but the
royalties are for the relevant SEPs only.

13. ◦ (c) Patent rights are inherently exclusive. Worldwide
license is a form of tying but it is not likely to
foreclose competition.
◦ (d) When an implementer refuses to take a worldwide
license it will not be exposed of additional injunctionlicense it will not be exposed of additional injunction
risks. “Whatever the FRAND terms are, the remedy
operates in the same way.” Para 562
Conclusion: worldwide license is not contrary to the
competition law. Worldwide license in the U.P. v
Huawei case is FRAND.

14.  4.1 Considerations for grant of injunction4.1 Considerations for grant of injunction
 4.2 EUCJ and European Commission’s criteria for4.2 EUCJ and European Commission’s criteria for
grant of injunctiongrant of injunction
4.3 Is grant of injunction the best solution in this4.3 Is grant of injunction the best solution in this 4.3 Is grant of injunction the best solution in this4.3 Is grant of injunction the best solution in this
case?case?

15.  Willingness behind the behaviors of the patentees andWillingness behind the behaviors of the patentees and
implementersimplementers
 Unfair excessive pricingUnfair excessive pricing Unfair excessive pricingUnfair excessive pricing
 bundling / tying in SEPs and nonbundling / tying in SEPs and non--SEPsSEPs

16.  EUCJ’s injunction examination scheme provided in theEUCJ’s injunction examination scheme provided in the
judgmentjudgment HuaweiHuawei v ZTEv ZTE [C[C--170/13]170/13]
 European Commission’s criteria for grant of injunctionEuropean Commission’s criteria for grant of injunction

17.  One of the purposes to create standardization is toOne of the purposes to create standardization is to
promote public interests.promote public interests.
 Courts and competition authorities all over the worldCourts and competition authorities all over the world
incline to refuse injunction requests so far as theincline to refuse injunction requests so far as theincline to refuse injunction requests so far as theincline to refuse injunction requests so far as the
patentees’ interests will not be damaged.patentees’ interests will not be damaged.
 U.P. andU.P. and HuaweiHuawei both have strong motivations toboth have strong motivations to
license the SEPs.license the SEPs.

18. Thank you!Thank you!