Context: The wisdom of the European Commission’s (EC) decision to start a second dispute with China at the World Trade Organization (WTO) is debatable (January 20, 2025 ip fray article). But the UK may soon be a proper target of such a complaint due to what is happening in Lenovo’s appeal of the denial (by the High Court of Justice for England & Wales (EWHC)) of an interim license from Ericsson (November 19, 2024 ip fray article).
What’s new: In an order dated January 8, 2025 and recently submitted to the United States International Trade Commission (USITC, or just ITC), the England & Wales Court of Appeal (EWCA) has scheduled an “urgent” Lenovo v. Ericsson appellate hearing for February 18, 2025. The order by Lord Justice Richard Arnold states the following reason: “Given that this is a rapidly developing area of law, Lenovo’s grounds are sufficiently arguable to have real prospects of success.”
Direct impact: The fact that the appeal was granted does not come as a surprise, and without “real prospects of success” Lenovo’s petition would have failed. It is indisputable that this is a “rapidly developing area of law.” However, the fact that Lenovo’s appeal was expedited despite the fact that the Latin American injunctions at issue were already granted in 2023 (and there is currently no enforcement in Brazil) suggests that LJ Arnold is somewhat sympathetic, or least exceedingly receptive, to Lenovo’s appellate arguments.
Wider ramifications: In Unwired Planet v. Huawei, the UK Supreme Court (UKSC) affirmed decisions by the lower courts according to which there was UK jurisdiction over global FRAND (fair, reasonable and non-discriminatory) licensing terms in connection with an injunction over a standard-essential patent (SEP) enforceable in the UK. Shortly thereafter, Chinese courts started to set global rates as well. What happened thereafter led to antisuit injunctions (ASIs) and anti-antisuit injunctions (AASIs) all the way up to AAAASIs, and to the EU’s WTO complaints mentioned in the Context section above. Should Lenovo secure an interim license from Ericsson despite Ericsson not having agreed to the UK as a FRAND jurisdiction in that dispute, it could have serious ramifications in other jurisdictions and give rise to another EU trade complaint.
In the Panasonic-Xiaomi dispute, there were special circumstances that warranted an interim license (October 3, 2024 ip fray article). Both parties had agreed that their dispute over what is FRAND should be resolved by the UK judiciary. After Panasonic backtracked, the question was not whether that about-face was acceptable. It was only whether the proper response should be an ASI or an interim license. Panasonic much preferred the latter as a the pursuit of an ASI could have resulted in a holding by German courts (and possibly the UPC) that it was an unwilling licensee. With a 2-1 vote, the appeals court declared that Xiaomi was entitled to an interim license, and Panasonic caved.
Ericsson-Lenovo is a different dispute. Ericsson never wanted to get a UK FRAND determination. The EWHC denied Lenovo an interim license, but the decision could have been much clearer about how far removed from the Panasonic-Xiaomi fact pattern this case as.
Should the EWCA side with Lenovo, this will raise three questions (two for courts in other jurisdictions, and one for the EC):
- Courts in other jurisdictions (here, Brazil and Colombia as well as U.S. courts and the USITC, a trade agency with quasijudicial authority) could simply decline to recognize an interim license concluded at the order of a UK court with respect to non-UK intellectual property rights.
- Should the UK judiciary sanction (or threaten sanctions against) Ericsson for telling courts in other jurisdictions that they should ignore the interim license, or for pursuing the equivalent of an AASI against such interference, non-UK courts will have to think about how they can use whatever is in their power to stop Lenovo.
- In the scenario discussed in the previous paragraph, the EC may have to bring a WTO complaint against the UK. If anyone can just go to the UK and seek an interim license from a SEP holder, the UK will be in flagrant violation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Extraterritorial SEP rulings (no matter where in the world they are made) are presently causing enormous friction. The EU’s own courts expect implementers to take global portfolio license agreements lest they be shut out of certain markets. A focus solely on China is not going to lead to a balanced and workable solution. In a world characterized by geopolitical divide, it is doubtful that China would refrain from setting global FRAND rates if other jurisdictions also impose, in connection with infringement disputes over generally, global licenses on parties.
The only workable solution, and possibly the only alternative to endless escalation, may be that the world’s major patent jurisdictions (though it’s a non-issue in the U.S.) agree to leave each other’s patents alone. So far, SEP holders considered it beneficial that they could choose among multiple fora that would grant them global licenses. For some, the choice of the UK did not work out. But now the UK is positioning itself as the jurisdiction in which any implementer can force a SEP holder into a global license agreement. What goes around comes around. SEP holders may also realize now that the downside of potentially having to enforce in more jurisdictions is less of a problem than courts imposing global FRAND rates at the request of implementers.
In all other patent categories than SEPs, patent enforcement also works. Non-standard-essential information and communications technology patents; chemical patents; pharmaceutical patents; mechanical patents; and so forth. In fact, the UPC now provides a one-stop solution for up to 18 countries and counting. And the UK would still be an important jurisdiction, especially as long as it puts out reasonable and well-reasoned decisions that the rest of the world can read and learn from.
Why does country-by-country enforcement work in other patent categories? Simply because no defendant will realistically want to be sued in jurisdiction after jurisdiction and lose case after case. Theoretically, a party may prevail in three jurisdictions and lose in the fourth. And that does happen from time to time. But most of the time, the persuasive impact of the first few decisions is enough that a defendant trying to hold out elsewhere is highly likely to just drive up litigation costs.
The current situation is not yet unsustainable, but it is slowly but surely getting there, and should Lenovo win its UK appeal, then that point will definitely have been reached.