A New Perspective on FRAND Royalties: Unwired Planet v. Huawei

Abstract

In Unwired Planet v. Huawei, Mister Justice Colin Birss of the UK High Court of Justice (Patents) has issued a detailed and illuminating opinion regarding the assessment of royalties on standards-essential patents (SEPs) that are subject to FRAND (fair, reasonable and non-discriminatory) licensing commitments. Among the important and potentially controversial rulings in the case are: (1) there is but a single FRAND royalty rate applicable to any given set of SEPs and circumstances, (2) neither a breach of contract nor a competition claim for abuse of dominance will succeed unless a SEP holder’s offer is significantly above the true FRAND rate, (3) FRAND licenses for global market players are necessarily global licenses and should not be limited to a single jurisdiction, and (4) the “non-discrimination” (ND) prong of the FRAND commitment does not imply a “hard-edged” test in which a licensee may challenge the FRAND license that it has been granted on the basis that another similarly situated licensee has been granted a lower rate, so long as the difference does not distort competition between the two licensees.

Keywords: FRAND, standards, standards-essential patent, SEP, Huawei, Unwired Planet, PAE, NPE, competition law, abuse of dominant position, Nondiscrimination, reasonable royalty

JEL Classification: K00, K12, K21, L41, L96, O34