STOP PRESS: UK Court of Appeal Overturns and Re-Decides FRAND Royalty in Optis v Apple proceedings ([2025] EWCA Civ 552)

In a major judgment addressing the valuation of standard-essential patent (SEP) licences, the Court of Appeal has overturned the first-instance decision and significantly increased the global FRAND (fair, reasonable and non-discriminatory) rate for Optis’s telecommunications patent portfolio in a long-running dispute between the parties.

The key points from the decision are as follows:

• Return to Comparables-Based Assessment: The trial judge’s replacement methodology involving averaging lump sums across a set of (mostly Apple) licences was held to be legally and methodologically flawed. The Court reinstated a comparables-based valuation method, consistent with Unwired Planet v Huawei and InterDigital v Lenovo. It confirmed that both ad valorem and dollar-per-unit (DPU) royalties can be FRAND, depending on context.
• Court of Appeal Determines the FRAND Rate to be $0.15 per unit: The Court of Appeal concluded that it was in a position to determine the FRAND rate and declined to remit the matter. It determined that the FRAND royalty rate for the Optis portfolio is $0.15 per Apple unit, relying on unpacked DPU values derived from a selection of what it deemed the most reliable comparables: the Optis-Google licence, and the licences between Apple and each of Ericsson, InterDigital, Nokia and Sisvel. The resulting $0.15 figure lay between the higher rate implied by the Google licence and the rates suggested by the others, striking a balance between avoiding under-compensation and avoiding excessive royalty burdens. As a cross-check, the Court noted that this rate implied a total royalty stack of around 6.3% of Apple’s ASP at the relevant time ($625) and 8.4% of Google’s ASP ($470).
• $502 Million Lump Sum: The Court applied the $0.15 DPU to all of Apple’s past sales and projected future sales from 2021–2027. A 10% discount was applied to projected future sales, resulting in a total lump sum royalty of $502 million (excluding interest), covering both past infringement and the forward-looking licence. This is approximately 10x the first instance lump sum amount ($56.43M).
• EDTX Judgment Considered: The Court accepted that Optis’s earlier $300m damages award from the Eastern District of Texas in respect of five of its US patents should not result in double recovery, but considered it difficult to adjust its valuation in light of the methodologies adopted by the parties. The least-worst solution in the circumstances was for the US judgment (if upheld) to be treated as a floor for the royalties payable under the UK court determined licence (i.e. in this scenario Optis retains the US award and Apple pays the balance of the total amount determined to be FRAND).
• Non-Financial Terms and Anti-Suit Clause Revised: The Court also held that certain non-financial licence terms imposed by the first instance judge were procedurally unfair - particularly a clause requiring Optis to withdraw or abandon all foreign proceedings. The Court restored a more neutral licence form, with final terms to be determined following written submissions if not agreed between the parties.

This judgment reinforces the centrality of comparables in FRAND valuations, provides clarity around the treatment of foreign proceedings in global SEP litigation, and reaffirms the UK’s leading role in determining SEP licensing terms.

Our full analysis is coming soon, so stay tuned!