Ericsson puts comity first in UK Supreme Court appeal of LJ Arnold’s interim license decision in Lenovo’s favor

Context: Last month, the England & Wales Court of Appeal (EWCA) held that, in Ericsson’s place, a willing licensor of standard-essential patents would have to grant Lenovo an interim license that would put an immediate end to all enforcement actions (February 28, 2025 ip fray article). The decision was based on fundamental misconceptions regarding the world of business, such as with respect to whether potentially refundable interim payments are of any value to the recipient. In a filing with the United States International Trade Commission (USITC, or just ITC), Ericsson quickly announced its intent to appeal the decision to the UK Supreme Court (UKSC) (March 7, 2025 ip fray article), which in a first step requires petitioning the UKSC to take the case as the EWCA did not grant leave to appeal further.

What’s new: Ericsson has filed the equivalent of a U.S. cert petition with the UKSC, stressing the appealed decision’s “far-reaching ramifications for the worldwide FRAND regime” and prioritizing the concept of comity (the concept of respecting, rather than encroaching on, foreign jurisdictions). The second ground of appeal relates to the proper test for FRAND compliance (Ericsson says the EWCA could not have arrived at a conclusion of bad faith unless Ericsson’s royalty demand was outside the FRAND range). Ericsson’s third point is that the “useful purpose” standard applied by the EWCA was low and, therefore, meaningless. Finally, Ericsson says there is no obligation to enter into an interim license under the ETSI IPR Policy.

Direct impact: This it not an appeal of right, so Ericsson depends on whether the UKSC agrees that this matter is of sufficient importance to warrant review by the highest court in the land. Such petitions don’t succeed often, but what makes this one fundamentally more promising than the average petition is the international dimension of the issue. The UKSC may not want to let the English courts continue to embarrass their jurisdiction through outrageous overreach. Also, as the petition notes, Ericsson v. Lenovo is already the third interim-license matter in which LJ Arnold overrule the High Court of Justice for England & Wales (EWHC).

Wider ramifications: Ericsson’s petition mentions the European Commission’s (EC) World Trade Organization (WTO) complaint over Chinese FRAND rate-setting decisions (January 20, 2025 ip fray article). The petition does not explicitly say so, but the UKSC is obviously sophisticated enough to understand that its country, too, could find itself on the receiving end of such a complaint unless the top UK court corrects the EWCA’s departure from comity. ip fray already mentioned that possibility just on the basis of the decision to expedited Lenovo’s interim-license appeal (January 26, 2025 ip fray article).

Here’s Ericsson’s petition to appeal:

25-03-28 Ericsson petition to appeal Lenovo interim license decision Download

On the priority subject of comity, Ericsson argues (in other words) that no matter how one looks at it, the only way one can arrive at an interim-license declaration is that one considers UK FRAND proceedings inherently superior over those in other jurisdictions, which in this dispute primarily means a U.S. district court and the ITC:

Ericsson sued in the U.S. before Lenovo did in the UK.
Ericsson made the commitment to the United States District Court for the Eastern District of North Carolina (Lenovo’s U.S. home court) to enter into a license agreement with Lenovo on the terms set by that court, even waiving its right to an appeal.
The argument that the FRAND-related U.S. decisions (including the ITC’s decision on whether or not to enter a limited exclusion order) could differ from whatever the English courts will determine cuts both ways. The same could be said about the UK decision potentially deviating from the U.S. outcome.
It’s equally asymmetrical to deem it bad faith for Ericsson to have sued outside the UK. One could also argue that Lenovo is undermining the U.S. proceedings through its UK FRAND action.

Ericsson’s petition recalls the UKSC’s own case law: Unwired Planet v. Huawei. In that decision, the pursuit of injunctive relief by a SEP holder was deemed legitimate. But in his recent decisions on interim licenses, LJ Arnold described it as acting in bad faith.

The petition also takes aim at LJ Arnold’s premise that Ericsson declined to extend an interim license because it wanted to extra supra-FRAND royalties from Lenovo. The only neutral opinion in that dispute so far came from the ITC’s Office of Unfair Import Investigations (OUII), and it was that Ericsson’s offers were comfortably within the FRAND range.

The petition does not focus on one of LJ Arnold’s most fundamental misconceptions: he doesn’t understand that payments received by a SEP holder under an interim license are actually useless. They can’t be recognized as revenue, they can’t be invested (other than maybe month-by-month term deposits), the money can’t be spent.

Maybe Lord Justice Arnold would understand the uselessness of payments under an interim license agreement if his own salary, for the next few years, was paid out on the same basis:

He would get the money, but he’d be told he might have to repay it. Theoretically he might even have to repay every single cent. At least there would be a significant risk of having to lose a substantial part if things go wrong. And he wouldn’t even know beforehand how long it takes. It could be just another month; it could be a few years. That’s the uncertainty facing Ericsson in the dispute with Lenovo, given that a settlement can happen anytime (and anything could happen, such as because of Lenovo winning an injunction somewhere, that would force Ericsson to settle immediately), but it could also take years of litigation before there is a final resolution.
Florian Mueller
(Founder & Publisher of ip fray)

On the subject of whether an interim-license declaration by a UK court serves a useful purposes, Ericsson criticizes that the EWCA opinion sets an extremely low bar by saying that there was a “realistic prospect” of Ericsson changing its mind and granting such a license. On that basis, pretty much any declaratory judgment could be justified as anything a court says could impact the positions of a given party.

Despite the 10-page limit, Ericsson’s petition drives various points home that could get the UKSC interested. Another point worth highlighting is that the way Lenovo made use of the EWCA decision contradicts the whole claim that the interim-license declaration was not about influencing foreign courts. The petition notes that Lenovo ran to the ITC, courts in Brazil and Colombia and the Unified Patent Court with the EWCA decision, suggesting that the UK decision on an interim license had a direct bearing on litigations in other jurisdictions.

Lenovo will now try to dissuade the UKSC from hearing the case. If the UKSC understands that the EWCA’s case law on interim licenses is inconducive to the international reputation of the UK as a patent jurisdiction, and that this could even have international trade implications for the country, then there’s a realistic chance of Ericsson’s petition being granted.

Earlier today, it became known that Nokia and Amazon settled (March 31, 2025 ip fray article). In that dispute, Amazon was even seeking a UK court ruling that would have forced Nokia to grant an interim license. At the moment, Ericsson v. Lenovo is by far and away the best vehicle for obtaining clarification from the top UK court. The next dispute where the issue may come up is Samsung v. ZTE.