Short-term FRAND licences - useful or not?

At the end of February, the Court of Appeal rendered a second judgment (Lenovo v Ericsson [2025] EWCA 182) holding that a licensor of standard essential patents would be deemed unwilling if it failed to enter into a ‘short-term licence’, pending determination of the terms of a (final) FRAND licence by the English Court. A key consideration in making that determination was that the continued litigation in other jurisdictions (including the seeking of injunctive relief) was liable to result in the licensor (Ericsson, in this case) extracting supra-FRAND royalties. 

The jurisdiction for the Court to make declarations depends upon (among other things) the utility of the declaration. Arnold LJ, giving the leading judgment, considered that the declaration would serve a useful purpose in “forcing Ericsson to reconsider its position”. While recognising that it could not “force Ericsson to change its mind… there would be a realistic prospect that they will do so”. 

Ericsson has indeed not been forced into any change of position. While Ericsson did no doubt carefully consider the implications of being deemed an unwilling licensee in both the UK and other jurisdictions, according to press reports it has now informed the Court that it will not enter into the short-term licence. 

Had it done so, it would have in effect supported the Court's inference that the declaration served a useful purpose. 

Ericsson will no doubt have wider considerations in mind than the dispute immediately before it. Although a race to Court is expressly deprecated in the judgment, the interim licence regime is liable to bring forward the point at which parties seek to refer matters to a court. For all that the English Court offers an in-depth FRAND analysis (with hopefully more clarity coming soon, following judgment on the recent appeal in Optis v Apple), not every licensor will welcome the idea of having the English Court as the ultimate backstop for FRAND determinations in all cases, particularly given the lack of attention given to pre-litigation negotiations (Lenovo for example has benefitted for many years from not having had to pay for a licence from Ericsson, unlike most of its competitors). 

Given the novelty of the interim licence regime, and the real questions over utility of the declarations being issued by the Court, it seems likely that the UK Supreme Court will need to grapple with FRAND licensing issues once again.