Context: Our preview of today’s England & Wales Court of Appeal (EWCA) hearing of Lenovo’s pursuit of an interim license to Ericsson’s standard-essential patents (SEPs) (February 16, 2025 ip fray article) described the key question as whether “imperialism or sanity” would prevail.
What’s new: Lord Justice Newey, Lord Justice Arnold and Lady Justice Falk heard Lenovo’s appeal and Ericsson’s opposition today. The preliminary injunctions that already came down more than a year ago in Latin America were mentioned, but there was more of a focus on proceedings in the United States International Trade Commission (USITC, or just ITC) and the United States District Court for the Eastern District of North Carolina.
Direct impact: Ericsson’s conduct was definitely not criticized by the judges the way they looked at Panasonic in its dispute Xiaomi (October 3, 2024 ip fray article). This is not a dispute in which both parties at some point agreed that their FRAND license terms should be set by the UK judiciary. But what remains to be seen is whether the judges will ultimately recognize and respect — with international comity in mind — that other countries are within their rights to determine how the patents they grant are enforced, and what products may enter their territories.
Wider ramifications: The judges will have to think very hard about this for many reasons, one of which is that President Donald Trump considers it one of the most fundamental rights of any country to control its borders. Otherwise, in President Trump’s view, one doesn’t have a country. If some UK judges believe they have the authority to prevent the USITC from determining what products can enter the United States market, they may find out that it’s not for them to make that decision.
In 1814, British soldiers burned down almost the entire U.S. capital, including the White House. Later that century, even the Confederate Army, the losing party to the Civil War, could have defeated the British handily. And in the century that followed, America became the UK’s most important ally.
The Executive Office of the President (EOP) includes the United States Trade Representative (USTR), whose agency employs approximately 200 trade lawyers and other professionals. Typically, U.S. presidents delegate their veto powers over the ITC to the USTR. That means the power stays in the White House, institutionally speaking. They have never delegated and will never delegate it to the Royal Courts of Justice.
The question is just to what extent that fact is respected on the other side of the Pond.
There was a positive sign. The judges were not receptive to the notion that Lenovo was the new Xiaomi and Ericsson the new Panasonic. The two patterns are highly distinguishable. But the court did not come close to ruling out that the outcome might be the same as the result of an expansive application of some of the same principles.
Later, another discussion was about whether the USITC applies the same FRAND standard to its limited exclusion orders (LEOs, “U.S. import bans”) as German courts to do to injunctions: “not obviously non-FRAND” being all that a SEP holder’s offer must be in order to have access to injunctive relief.
Does that even matter? It shouldn’t. Even if the ITC simply rolled the dice when deciding on an import ban, it is a U.S. government agency. Ericsson’s counsel made the argument that executive action (in this case, a potential U.S. import ban) should be particularly protected from interference by courts in other jurisdictions.
It’s not even true that the ITC’s SEP case law can be equated to that of German courts. The Office of Unfair Import Investigations (OUII, or “the ITC Staff”) found Ericsson in full compliance with its FRAND licensing obligation (September 18, 2024 ip fray article), not merely on behavioral grounds but also because even if one accepted some of Lenovo’s key arguments, the royalty demand was within a FRAND range. FRAND is a range. Obviously, it is a point when UK and other courts have to set a rate. You can pay a specific price, but you can’t pay a range. But the German approach is that the SEP holder has a problem only if its royalty demand is far above a plausible FRAND range.
It can’t even be generalized how the ITC adjudicates FRAND. We will probably know more in a few days, but so far no trade judge has taken a final position on Lenovo’s FRAND defense. In a case in which Ericsson prevailed on the merits of four out of four patents-in-suit, the determination on remedy is due by the end of this week (December 31, 2024 ip fray article). The OUII opinion is not binding, but in the Ericsson-Lenovo dispute it does represent an independent third-party analysis that counsels against interim licenses, which in a case like this are the same as an antisuit injunction.
Ericsson has licensees like Apple and Samsung with a strong presence in the U.S. market. If the ITC decides that an Ericsson complaint was meritorious, it has the authority and even the statutory obligation, after a formal complaint such as in this case, to direct Customs and Border Protection (CBP) to seize infringing products instead of letting them enter the U.S. market.
Lenovo seeks an interim license because it wants to use that license for a defense against any infringement claims anywhere on this planet. But what justification would exist in this particular case? As the court recognized today, it is not Xiaomi-Panasonic. The appeals court could not justify the extraordinary remedy that is an interim license with anything other than its firm belief that the rest of the world does not have the UK judiciary’s wisdom when it comes to FRAND.
Latin American countries stop infringements quickly by means of preliminary injunctions. The USITC blocks U.S. imports when certain requirements are fuffilled. But they all make a monumental mistake if you ask the EWCA: they don’t seek leave from LJ Arnold. They just do their job under the laws of their countries. How disrespectful.
Like antisuit injunctions, interim licenses don’t bind another court or a government agency. But the USITC loses jurisdiction when there’s no more complaint, even if that complaint goes away only as the result of foreign judicial imperialism. At this point, the ITC proceedings are even very far along, but there was no indication today that the EWCA cares. The net effect is that without British judicial imperialism, the ITC may (unless it decides otherwise for its own reasons) bar various Lenovo products from entry into the U.S. market, but owing to an interim license, infringing products might enter the U.S. market. That net effect comes down to a violation of the country’s borders.
Ericsson’s counsel noted that what LJ Arnold described as the state of affairs under French law (the relevant jurisdiction for the ETSI FRAND pledge) was actually just an English court’s application of French law. That’s true, but at least LJ Arnold thinks that UK judges can do a better job at applying French law than French judges. You don’t have to agree…
It could be that Lenovo’s appeal will fail. There were situations in which the judges appeared rather sympathetic to Lenovo, but the EWCA may nevertheless decline Lenovo’s invitation to extend its interim license (and de facto antisuit) case law. Should Lenovo get an interim license as a weapon against earlier-filed U.S. cases (ITC and district court), some other jurisdictions may not be prepared to take it anymore. They shouldn’t, and don’t have to, accept it (February 4, 2025 ip fray article).