On 16 March 2023, Mr Justice Mellor handed down the latest FRAND judgment: InterDigital v Lenovo [2023] EWHC 539 (Pat).
The case concerned a dispute between InterDigital and Lenovo as to the terms on which Lenovo should take a licence to InterDigital’s portfolio of patents which had been declared essential to the European Telecommunications Standard Institute (ETSI) Standards. The wider proceedings involved five technical trials and a single FRAND trial to which the judgment relates. The purpose of the FRAND trial was to identify what licence terms are Fair, Reasonable And Non-Discriminatory.
Mellor J explained that there were essentially two issues to be determined at trial. First, whether InterDigital’s “5G Extended Offer” was FRAND and if not, what terms were FRAND for such a licence. Second, the appropriate remedy and whether InterDigital was entitled to an injunction in respect of the asserted patents held to be valid and essential. In relation to the second issue, it was necessary to assess whether Lenovo acted as a “willing licensee”.
Like other landmark FRAND judgments, the judgment is substantial and stands at 225 pages including detailed analysis of various offers made between the parties and proposed royalty rates. However, the main conclusions of the judgment can be found at paragraphs 944-947 which set out that: (a) Lenovo must pay InterDigital $138.7m for a FRAND licence; (b) neither InterDigital’s “5G Extended Offer” nor “Lenovo’s Lump Sum Offer” (another offer considered in the case) were FRAND; and (c) InterDigitial’s case on Lenovo’s conduct was largely rejected and Lenovo will be put to their election (on whether to pay the licence fee or be subject to an injunction). It is suggested that failure to pay the licence fee (determined to be FRAND) would indicate an unwilling licensee.
In relation to the size of the licence fee, whist initially it might appear that a ruling that Lenovo should pay $138.7m would be unwelcome news, John Mulgrew (VP and deputy general counsel) in a statement issued by Lenovo is quoted as saying that he considered the judgment to be a “major win”. Indeed, it is worth noting that InterDigital had been seeking a licence fee of $337m.
Further, it is notable that “Lenovo’s Lump Sum Offer” amounted to a licence fee of $80m (±15%). It follows that Mellor J’s determination of what was FRAND was between the two sums proposed by the parties (although much closer to Lenovo’s offer). It is suggested that the parties could, and arguably should, have been able to arrive at the sum decided by the Court without the need for legal proceedings. Indeed, at paragraph 53 of the judgment, Mellor J notes that there was “very little, if any, exploration of the middle ground”.
Mellor J also provided some postscript points on case management of FRAND trials at paragraphs 948 to 956. Of particular note was the point that the parties must continue to keep trial estimates under review and ensure they are realistic. Mellor J felt that the estimated 15 days for trial was inadequate given the volume for material and complexity of the issues. Mellor J twice mentioned that the four days for pre-reading was “woefully inadequate” and whilst it is possible for parties to trim their cross-examination and submissions to fit into an estimate, leaving the Court with a mass of complex material to read is not appropriate. It is important to keep this point in mind for both FRAND and non-FRAND trials; if as a dispute develops there is an increase in complexity and/or volume of materials then it is important to keep time estimates under review and realistic.
