Pressure points – attempts to ask the UK courts to regularise the negotiation period in FRAND Disputes

In the seminal Unwired Planet case the courts of the UK demonstrated that they were willing to and had jurisdiction to declare global FRAND licence terms thus providing a final resolution of the key commercial feature of FRAND disputes. Now the UK courts have been increasingly engaged to regulate the period between the start of litigation and the resolution or agreement of FRAND licence terms, particularly in the context of multi-jurisdictional litigation. 

Attempts to regularise the FRAND negotiation environment

Two main forms of relief for the period of negotiations have so far been considered by the English court in FRAND cases. SEP holders have made applications for interim injunctions whilst implementers have sought declarations as to ‘interim’ or short-term licences.

An interim injunction is calculated to exclude the implementer from the UK market. In the UK, these are available subject to meeting the American Cyanamid¹ criteria. If granted, they would provide a strong incentive for the implementer to settle prior to the FRAND trial providing that its UK market position was significant.

SEP holders have so far failed to obtain interim injunctions in UK FRAND proceedings. The stumbling block continues to be the requirement to demonstrate loss which would not be adequately compensated by damages following the main trial. Additionally, the Court appears suspicious of attempts by parties to gain a commercial advantage by seeking an interim injunction when what is really desired by the SEP holder is a commitment by the implementer to take a FRAND licence. This was the case in Lenovo v Ericsson² where Lenovo sought an interim injunction with express qualifications relating to a commitment by Ericsson to enter a UK determined licence.

Importantly, the current approach of the UK court, further to the decision in Optis v Apple³, is that an implementer is only required to undertake to take a licence on FRAND terms following a finding that an SEP is valid and infringed. If it does not make such a commitment, it may be subject to an immediate injunction. Before such a finding, the Court does not recognise any general “right” of the SEP holder to obtain such a commitment from the implementer.

It is unclear whether a scenario could arise that would satisfy the American Cyanamid irreparable harm criteria, particularly since the UK court can and will resolve the commercial dispute as to the FRAND terms for the SEP portfolio at issue as part of any claim to a FRAND injunction. As demonstrated by Arnold LJ’s judgment in Lenovo v Ericsson the court is not limited to considering only the damages resultant from the infringement of a particular UK patent when examining the question of irreparable harm. However, there does need to be some nexus between this infringement and the damage. In particular, the court must be satisfied that the grant of the interim injunction will act to mitigate or prevent the damage complained of. Reflecting on jurisprudence from the pharmaceutical sector, it is conceivable that such harm could be evidenced if the continuing infringement of the implementer was dramatically diminishing the market position of an SEP holder in an irreparable way.

So called “interim” or short-term licence applications may be seen to represent the “other side of the coin”. Declarations of the terms of such licences have been sought by implementers who are keen to avoid exposure to injunctive relief in other jurisdictions.

It is crucial to appreciate that interim licence applications made so far have not sought orders compelling an SEP holder to grant a licence to its SEP portfolio. Rather the jurisprudence in the UK is that the consequence of the SEP holder failing to offer a licence on FRAND terms is that it will not be entitled to an injunction. Instead therefore the applications have sought declarations to the effect that “a reasonable licensor, acting in accordance with FRAND principles, would grant an interim licence”. The corollary of this is intended to be that, should the declaration be granted and the SEP holder fails to offer the court determined interim licence, it will have been declared to be in breach of its FRAND commitment. Importantly, for the court to grant a declaration the purpose of the declaration cannot be solely to influence courts in other jurisdictions.

In the Court of Appeal’s decision in Panasonic v Xiaomi⁴ the English court established, for the first time, the authority of the court to grant declarations relating to an interim licence. In that case both Panasonic and Xiaomi had committed to enter whatever licence was ultimately determined to be FRAND by the UK court. It was in those circumstances that the UK court declared that a willing licensor would offer a licence to cover all past use and the period up to the determination of the FRAND licence terms. The subsequent decision in Lenovo v Ericsson⁵, which (as in Panasonic) overturned the first instance judgment, demonstrates that the English court will also do so when only one party has committed to enter a UK court determined FRAND licence. In that case, Ericsson, who was sued by Lenovo in the UK, wants the FRAND terms to be evaluated in the US.

As the jurisprudence evolves, it therefore appears that declarations relating to interim licences will be widely available when injunctions are sought or obtained in other jurisdictions. However, this should not be seen as favouring the position of implementers over SEP holders. The interim licence regime provides opportunities for both implementers who wish to protect against injunction risks, and for SEP holders too, who may want the potentially large “down payment” against a licence that can be obtained.

Such future developments are of course unknown, however what is clear is that subject to any appeal to the Supreme Court (and Ericsson sought permission to appeal to the Supreme Court) the English court will continue to consider the difficult FRAND issues that arise. In doing so, the court will build on the principles established so far; we explain these in the following section.

Principles established so far

Interim injunctions 

Loss of opportunity for a FRAND licence is not irreparable harm

The first interim injunction application was IPCom v Xiaomi⁶ where IPCom sought an injunction to stop Xiaomi’s alleged hold-out behaviour and force it into accepting a FRAND licence. The dispute related to IPCom’s ‘268 patent, the validity and essentiality of which had been established by the court in previous litigation. At the time of the injunction application, the ‘268 patent had only three months left before expiry.

IPCom argued before HHJ Hacon that Xiaomi was engaging in “hold-out” behaviour with the knowledge that an injunction on the ‘268 patent would not be possible after its expiry. IPCom referred to the judgment of Carr J in TQ Delta v ZyXEL⁷ where the judge considered that hold-out behaviour, ahead of expiry of a patent, effectively created a compulsory licence which was wrong in principle.

The judge disagreed that there was a parallel between IPCom’s situation and that of TQDelta. This was since, in TQDelta, ZyXEL had already been found at trial to infringe a valid patent. With no trial judgment to rely on, IPCom had to meet the American Cyanamid criteria, most importantly by showing that damages would not be an adequate remedy in the future. IPCom argued that, if no interim injunction was granted, it would lose the opportunity to seek a global licence settled by the UK court. However, in HHJ Hacon’s view IPCom had “no absolute right to force Xiaomi to enter into a licence” and, as such, “the opportunity which IPCom says it will lose if there is no interim injunction does not exist”.

Injunction sought must act to mitigate the damage complained of

The subsequent case of Lenovo v Ericsson⁸, reaffirmed the applicability of American Cyanamid and highlighted that the court will not look favourably on an application which may be characterised as “anti-suit relief by the back door”. The background facts are important to this decision as well as the interim licence discussed below. The parties are in a multi-jurisdictional conflict over the global licensing of their respective SEP portfolios. Ericsson had already obtained injunctions against Lenovo in Brazil and Colombia and, in response, Lenovo sought interim relief from the UK. Lenovo sought this on “unusual terms” as Bacon J described it since Ericsson could avoid the injunction by agreeing to enter: a global FRAND cross-licence, an interim cross-licence, or another agreed mutual regime. Each alternative was aimed at nullifying the injunctions Ericsson had obtained. Lenovo argued that the relief was justified since it had been put at “an illegitimate and unconscionable disadvantage in its licence negotiations with Ericsson by the terms of the Brazilian and Colombian interim injunctions.” However, Bacon J suggested an anti-suit injunction may have been the appropriate remedy.

Again, the American Cyanamid question of irreparable harm was key, this time complicated by the fact that Lenovo cited harm suffered in Brazil and Colombia. Bacon J dismissed the application and on appeal Lenovo argued that Bacon J had not taken into account the damage caused to Lenovo if it was “forced by the coercive pressure of Ericsson’s actions to abandon [its] claim and to accept a cross-licence on supra-FRAND terms”. Arnold LJ agreed that the judge had not explicitly addressed this, but in his view “the possibility that Lenovo might decide to accept the rates demanded by Ericsson rather than pursue this claim to trial does not establish that Lenovo will not be adequately compensated by royalties/damages if the injunction sought is not granted”.

Lenovo also argued that Bacon J erred in treating American Cyanamid as a fetter to the court’s discretion. They argued that Bacon J had only looked at loss “caused by the infringement of the claimant’s right of which vindication is sought in the underlying claim”. In this case, that was loss caused by infringement of Lenovo’s UK patent. Lenovo argued that other losses could and should be taken into account including those which were connected to the injunctions Ericsson had obtained in Brazil and Colombia. The connection was that the loss to Lenovo was created by “Ericsson’s unconscionable conduct within the FRAND regime”. Arnold LJ disagreed. In his view, Bacon J had considered this but had refused Lenovo’s application on the basis that the losses were not caused by the allegedly infringing acts that the injunction would restrain. Bacon J highlighted a disconnect between the relief sought and the harm alleged, as Lenovo’s aim was to use the injunction to leverage Ericsson in negotiations rather than to address specific harm.

Interim or short-term licences

“High degree of assurance” standard

The first interim licence application was Lenovo v InterDigital⁹ where Lenovo sought a declaration only that its proposed interim licence terms were FRAND. Nevertheless, Richards J decided that, since the declaration Lenovo sought was likely to be “determinative of a particular matter”, a “high degree of assurance that the applicant is entitled to the declaration sought” was required. The “high degree of assurance” standard is a common feature to the other cases considered below. 

Obligation to offer interim licence is broad

In Panasonic v Xiaomi¹⁰ the Court of Appeal granted an application for a declaration of the ‘interim’ licence terms a willing licensor would offer. This was the first interim licence declaration granted and, at the time, appeared to be a fact-specific decision: in response to Panasonic’s claim for infringement and a FRAND injunction in the UK, Xiaomi committed to take a UK court-determined FRAND licence which was reciprocated in the form of mutual undertakings from Panasonic to offer the UK court-determined FRAND licence and from Xiaomi to enter that licence. Citing the injunction risk it faced in proceedings in Germany and the UPC, Xiaomi made an application to expedite the FRAND trial so as to have it heard before parallel proceedings in Germany and the UPC. The trial was expedited but an injunction risk from the parallel proceedings remained and so Xiaomi asked the court for a declaration that a willing licensor in the position of Panasonic would agree to enter into, and would enter into, an interim licence of Panasonic 3G and 4G SEPs pending the determination by the English court of what terms for a final licence of Panasonic’s portfolio are FRAND.

Leech J, at first instance, declined to grant the declarations but, by split decision, this was overturned by the Court of Appeal. Arnold LJ’s judgment begins by emphasising that “the implementer is entitled to a licence from the first day it implements the standard provided that it is willing to take a licence on FRAND terms”. Arnold LJ continued that: “If the ETSI IPR Policy were subject to English law, Xiaomi might be able to rely upon the equitable maxim that “equity looks upon things agreed to be done as actually performed”. He then asked whether it was consistent with FRAND “for Panasonic to try to force Xiaomi to agree to terms more favourable to Panasonic than the English courts would order by pursuing proceedings elsewhere with all the attendant cost and expense for both parties”. He decided it was not and was therefore prepared to grant the declarations Xiaomi sought.

Although it appeared that the key factor in this case was the certainty that the parties would enter into a global FRAND licence of Panasonic’s portfolio determined by the English court in the relatively near future, subsequent decisions from the Court of Appeal have demonstrated that a broader view will be taken. In contrast to Panasonic, in Lenovo v Ericsson¹¹ Ericsson had not undertaken to take the FRAND licence determined by the UK court. In fact it had not invoked the jurisdiction of the UK at all. Arnold LJ noted at the outset of his judgment that “the essential question on the appeal is whether Panasonic v Xiaomi was a decision confined to the specific facts of that case, as Ericsson contend, or whether the underlying reasoning is applicable more widely”.

However, despite the differences, the Court of Appeal returned to the key issue raised in Panasonic with Arnold LJ asking “what is the point of Ericsson pursuing the Brazilian, Colombian and US proceedings, and attempting to exclude Lenovo’s products from those commercially important markets, with all the massive attendant effort and expense for both parties?” and concluding that “just as in Panasonic v Xiaomi, there can only be one answer to that question: Ericsson wish to coerce Lenovo into accepting terms more favourable to Ericsson than the English courts will determine to be FRAND”. On the basis of this conclusion, Ericsson’s conduct was held to be a breach of its good faith obligation under clause 6.1 of the ETSI IPR policy. Once Lenovo had undertaken to enter into the FRAND licence set by the English Court, Ericsson’s “coercion” was no longer justified

In Alcatel Lucent SAS v Amazon Digital UK Ltd¹², the Court of Appeal considered similar issues albeit this related to Amazon’s application to amend its Defence and Counterclaim to include a pleading for a declaration that a willing licensor in the position of Alcatel would agree to enter into an interim licence (and not the application for the declaration itself). In that case, Alcatel contended that there were distinguishing factors from Panasonic which were pertinent to the final outcome. In particular, (as was the case for Ericsson), Nokia did not commence proceedings in the UK Court seeking the determination of (F)RAND¹³ terms; nor had they not undertaken to the Patents Court to enter into a licence of their SEPs on the terms determined by the UK Court to be (F)RAND. Additionally, Nokia was seeking to enforce NEPs¹⁴ against Amazon. Similarly, to Ericsson, this did not dissuade Arnold LJ had an arguable case for its interim licence declarations and therefore should be allowed to amend its Defence and Counterclaim.

Sufficient benefit to declaration must be shown

The applicant must show a useful purpose to the grant of the declarations sought and this purpose must relate to the UK. Richards J decided in Lenovo v InterDigital that, if the declaration’s sole purpose was to influence the Munich court, then it should not be made¹⁵. Lenovo argued that its declaration had a purpose in the UK: it would license them, and remove injunction risks. However, the Judge found that it would only declare that the proposed terms were FRAND, not compel InterDigital to accept them. And, as there was no UK injunction threat to Lenovo the “benefits” Lenovo put forward were illusory.

The declarations sought in Panasonic v Xiaomi were different to those in Lenovo v InterDigital, described above, since they included a declaration that a willing licensor would enter into the interim licence and that, if it did not do so, it would be “in breach of its FRAND Commitment” and “an unwilling licensor”, whereas Lenovo had only sought a declaration that the terms of its proposed Interim Licence are FRAND. Nevertheless, the order sought would not have compelled Panasonic to enter into the interim licence and so, Panasonic argued, as it had no intention to enter into the interim licence, there could be no utility in making the declarations. Notwithstanding this, Arnold LJ found that it was enough that the declarations may make Panasonic “reconsider its position”. In Alcatel Arnold LJ noted that, following judgment in Panasonic “the parties did agree to enter into an interim licence on the terms indicated by the Court … [t]hus the Court’s declaration did serve a useful purpose”.

In the first instance hearing of Lenovo v Ericsson¹⁶, Richards J thought the declarations were unlikely to make Ericsson reconsider its refusal to accept a short-term licence. This was in view of the fact that Ericsson had already secured injunctions in parallel proceedings and had evidence that, it said, supported the position that its current offer was FRAND. Arnold LJ was untroubled by this, coming to the same view he expressed in Panasonic that it was enough of a useful purpose if the declarations forced “Ericsson to reconsider its position”. Arnold LJ added that it “would not force Ericsson to change their mind, but in my judgment there is a realistic prospect that they will do so”. Notably, as of the date of this article, Ericsson has not changed its mind and has not entered into an interim licence.

Methods of assessing terms of a short-term licence

In Lenovo v InterDigital, the high court previously set the terms of a FRAND licence for InterDigital’s SEPs in an earlier decision and so Lenovo’s argument that its proposed interim terms were FRAND was simple: if that earlier licence was FRAND, then the same licence coming into effect one day later must also be FRAND. The Judge, however, noted that Lenovo was not in fact proposing the same licence, particularly since the new licence included a running royalty instead of a lumpsum. InterDigital pointed out that the money payable under such a licence was subject to changes in Lenovo’s business and the judge agreed that he could “not have a high degree of assurance that this is a FRAND rate”.

However, in Panasonic v Xiaomi Arnold LJ decided that it was open to the Court of Appeal to make a ruling on the terms of an interim licence without determining the terms of the final licence. On the basis that it was probable, even if not certain, that the terms determined to be FRAND for the final licence will be somewhere between the terms offered by Xiaomi and those demanded by Panasonic , he concluded that an appropriate interim licence should be on Panasonic’s terms but that the fee “should be midway between (i) the sum offered by Xiaomi … and (ii) the proportion of the sum demanded by Panasonic…”. This would be subject to a ‘true-up’ mechanism after the FRAND trial. The same approach was held to be “equally applicable” in Ericsson.

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^{1 [1975] UKHL
2 [2024] EWHC 1267 (Pat) and [2024] EWCA Civ 1100
3 [2021] 2564 (Pat) and [2022] EWCA Civ 1411
4 [2024] EWCA Civ 1143
5 [2025] EWCA Civ 182
6 [2019] EWHC 3074 (Pat)
7 [2019] EWHC 745 (Pat)
8 [2024] EWHC 1267 (Pat) and [2024] EWCA Civ 11009 [2024] EWHC 596 (Ch)
10 [2024] EWHC 1733 (Pat) and [2024] EWCA Civ 1143
11 [2025] EWCA Civ 182
12 [2025] EWCA Civ 43
13 The standards regime which Alcatel was concerned with refers to “RAND” licences.
14 i.e. patents which were not standards essential.
15 Following Teva v Novartis [2022] EWCA Civ 1617
16 [2024] EWHC 2941 (Pat)}