Interim license imperialism: Lord Justice Arnold becomes a threat to UK relations with the United States, Europe, other countries and regions

To be clear, LJ Arnold is generally a great patent judge. And up to a certain point, which is unfortunately way behind now, he was an important voice of reason given the issues surrounding SEP enforcement.

But when it comes to interim licenses and his current ideas for how global SEP disputes should be resolved, he is more than misguided. It even appears that he is completely out of control. He does not have a “boss” who can order him to act differently or fire him. But the victims of his increasingly aggressive, arrogant and overall unacceptable behavior are not going to accept this forever. And they are not defenseless. If all else fails, lawmakers will simply have to override outrageous judicial decisions.

I stand by my criticism of the dual standards applied by the European Commission in its WTO complaints over Chinese SEP jurisprudence, given that its own courts require implementers to take global licenses. But China merely responded to judicial overreach in the UK and the EU.

What is happening in the UK now clearly does undermine intellectual property rights and constitutes a flagrant and reckless violation of the Treaty on the Trade-related Aspects of Intellectual Property Rights. The EU, but also the U.S. Administration must take action against the UK if this overreach does not stop.

I call on the ITC and on the affected courts of law to impose sanctions on Amazon and Lenovo for their outrageous conduct, and as a means of showing the UK judiciary that its imperialism is not going to end well.

Florian Mueller
(Founder & Publisher of ip fray)

In the Panasonic-Xiaomi dispute, there were special circumstances (October 3, 2024 ip fray article). Xiaomi sought a declaration that it was entitled to an interim license on the basis that both parties had agreed to have their SEP dispute resolved in the UK, with Panasonic having walked back on a promise to cease its pursuit of injunctions in other jurisdictions.

But it was a close call, a 2-1 decision. All three EWCA judges condemned Panasonic’s conduct, but the question was what the appropriate remedy should be: a traditional antisuit injunction, or an interim license?

Notably, the court did not formally order Panasonic to grant that license, but it did, presumably because there had been a thinly veiled threat of sanctions.

LJ Arnold’s very recent decisions in the Lenovo v. Ericsson and Alcatel-Lucent (Nokia) v. Amazon appeals (the former just being a permission to appeal and a decision to expedite the appeal, the latter being a formal judgment supported by two other judges, LJ Newey and LJ Snowden) show that other jurisdictions must strike back at the Empire. The time for serious pushback has come, and Amazon and Lenovo should face sanctions for their efforts to undermine the rule of law in other parts of the world.

LJ Arnold is not the President of the United States

Just in case this wasn’t perfectly clear, neither is LJ Arnold the President of the United States nor has President Trump delegated his veto powers over ITC import bans to LJ Arnold or the EWCA. The notion that the UK can totally unreasonably derail proceedings in a U.S. trade agency is beyond absurd. If that is what some people in the UK think they can do, they risk friction with a trading partner and political ally that is far too powerful.

Should the USITC determine that limited exclusion orders (U.S. import bans) are warranted against Lenovo and/or Amazon, there are only two ways in which that decision can be overturned, none of which involves the UK. One is for the United States Trade Representative (USTR), to whom U.S. presidents typically delegate this particular power, to veto the ban on public interest grounds. The other is for the United States Court of Appeals for the Federal Circuit to lift the ban by overruling the ITC.

In a case where both parties agree that the UK is where their global dispute should be resolved, then an interim license is warranted even if the patentee walks back on a commitment. Otherwise, the UK judiciary has to live with the fact that the enforcement of patents in other jurisdictions may lead to global settlements prior to a UK FRAND determination.

The Nokia-Amazon situation

Para. 64 of the EWCA judgment suggests that Amazon has as much of a right to seek an interim license from Nokia (even a forcible one) as Xiaomi had to seek a declaration of an entitlement to an interim license from Panasonic:

“In my judgment Amazon have a real prospect of successfully arguing that none of these factual differences is material, and thus that Panasonic v Xiaomi is legally indistinguishable.”

Should any UK court hold that any SEP dispute is now “legally indistinguishable” from Panasonic v. Xiaomi, then there should be WTO complaints by the U.S., EU and others against the UK. The U.S. may actually have more forceful options.

So what are the factual differences that did not persuade LJ Arnold and the other members of the panel to view the Nokia-Amazon dispute as fundamentally different from the Xiaomi-Panasonic one?

i) Unlike Panasonic, Nokia did not commence proceedings in the Patents Court seeking the determination of (F)RAND terms. Indeed, Nokia did not commence proceedings in this jurisdiction to enforce any SEPs at all.

ii) Unlike Panasonic, Nokia have not undertaken to the Patents Court to enter into a licence of their SEPs on the terms determined by the Patents Court to be (F)RAND.

iii) Unlike Panasonic, Nokia seek to enforce NEPs [non-SEPs] against Amazon.

If the above facts don’t matter, then, for instance, someone who gets sued by a patentee over one SEP and ten non-SEPs, anywhere in the world, could run to a UK court and seek an interim license covering all of those patents. Yes, even the non-SEPs, simply by arguing that all of those patents are typically licensed together, which is another area in which UK case law has gone off the deep end (May 5, 2024 ip fray article).

Procedurally, this is what happened:

• Neither Nokia nor its Alcatel-Lucent subsidiary sued Amazon in the UK over SEPs.
• Alcatel-Lucent merely brought a non-SEP complaint in October 2023.
• In its answer to the complaint, Amazon tried to make that non-SEP enforcement a SEP issue, arguing that Nokia generally licenses its video-related non-SEPs together with its SEPs, that it has previously licensed them all to Amazon, and that it made Amazon an offer covering SEPs and non-SEPs. But the fundamental issue here is that non-SEPs are not subject to a FRAND licensing commitment. Even if a party may elect to license them all together, or even if it consistently elects to do so, it does not mean that there is an enforceable entitlement to a non-SEP license.
• Amazon asked for a UK FRAND determination (again, despite no SEP actually having been asserted against them in the UK), on an expedited basis.
• In July 2024, Amazon started to seek an interim license. That was before Xiaomi’s October 2024 appellate win over Panasonic.
• Mr Justice Zacaroli of the EWHC did not agree with Amazon that it was entitled to an interim license, given that Nokia’s FRAND pledge to the International Telecommunication Union (ITU) does not say so. He also voiced concern over the need for two FRAND determinations: one for the purposes of an interim license and one for the final license. But in the decision to deny Amazon leave for an appeal, he clarified that “case management difficulties” were not formally part of his reasoning.
• Amazon appealed nonetheless — as the EWCA can then accept to hear such an appeal even if the lower court denied leave — and in December 2024, not long before the appellate hearing, changed its stance on what the terms of the interim license should be. Originally, Amazon designed terms that it deemed FRAND and which also included non-SEPs as well as its streaming services (not just its video devices). Now, presumably due to increasing pressure in the U.S. (with ITC import bans looming large; see this January 30, 2025 ip fray article) and Germany (where Nokia is already enforcing a SEP injunction), Amazon sought to narrow the dispute, recognizing that any overpayments under the interim license could always be refunded later, and therefore Amazon would now be prepared to take an interim license on the basis of Nokia’s most recent (May 2024) offer.

Poor reasoning, bad ideas, and lots of hubris

There are parts of the EWCA judgment that are favorable to Amazon, but reasonably so. For example, the judgment insinuates that Amazon engaged in gamesmanship by first seeking an interim license on its own preferred terms, only to change mind shortly prior to the appellate hearing and suddenly accept an offer by Nokia that was already pretty old at the time, so they could have deemed it an acceptable basis for an interim license long before. The judgment explains very well that this merely narrows the dispute, and that a new decision by the EWHC would still lead to a denial and an appeal, so one might as well deal with it now.

But there are also parts that trigger facepalms. For example, here’s para. 37:

Counsel for Nokia spent more time in his oral submissions arguing that the appeal was procedurally inapposite than he did engaging with the merits of the appeal, which may betoken a recognition that he was on weak ground so far as latter issue was concerned.

The job of a judge is not to form an opinion based on priorities set by counsel, but to faithfully apply the law to the facts. There can be any number of reasons, even (though probably not here) weak counsel, for those priorities.

The last sentence of para. 55 is also intellectually bankrupt:

Although Nokia dispute that Amazon are entitled to a licence which extends to any NEPs, the judge dismissed both the Strike Out Application and the Jurisdiction Application, and Nokia have not appealed against the dismissal of those applications.

The fact that Nokia decided not to deal with the non-SEP issue is, again, a matter of prioritization. It does not prove anything, much less does it change the law. If at this procedural stage Nokia wants to raise that issue, the appeals court should make a reasoned decision. But it did not. Toward the very end, the judgment says that Amazon may also amend its defenses and counterclaims with respect to a non-SEP license as one can never know what will happen in the further proceedings.

Another illogicality is found at the end of para. 2, which discusses what happened in the Xiaomi-Panasonic dispute:

It is pertinent to add that, after this Court gave its judgment in that case, the parties did agree to enter into an interim licence on the terms indicated by the Court. Thus the Court’s declaration did serve a useful purpose.

No, it is not pertinent at all. It makes no sense. The appeals court indicated at the hearing that Panasonic could be sanctioned in the event of non-compliance. By that measure, any court ordering a party to do anything can argue that its decisions served a useful purpose only because the party did not want to be sanctioned. Panasonic absolutely did not grant that interim license of its own volition. Otherwise it would simply have saved the costs of dealing with the appeal.

The judges at that Panasonic-Xiaomi hearing also said something that was symptomatic of what is wrong with their global SEP dispute resolution ambitions. They talked about the potential problem of a licensee not taking a global license, and then heaped praise on themselves by saying that they (the UK courts) solved the problem through the Unwired Planet v. Huawei decision. That was demonstrably wrong: when that decision come down in 2020, German courts had already been requiring implementers for years to take global portfolio licenses at the threat of an injunction. It was not a UK invention or a UK first.

If UK judges simply focused on making correct and reasonable decisions, a lot of problems could be solved. But when they aspire to make their courts the center of the world, bad decisions and poor reasonings are inevitable. And in this context now, it is time for serious backlash. Someone has to show them that this will not be tolerated.

LJ Arnold also fundamentally misunderstands what standard-setting organizations are about

The problem with LJ Arnold’s attitude that SEP disputes are just about money, so the UK should simply be the world’s rate-setting forum, is deep-rooted and long-standing.

In an October 2022 Optis v. Apple judgment, LJ Arnold wrote the following about the state of affairs of SEP dispute resolution:

These appeals illustrate yet again the dysfunctional state of the current system for determining SEP/FRAND disputes. Apple’s behaviour in declining to commit to take a Court-Determined Licence once they had been found to infringe EP744, and their pursuit of their appeal, could well be argued to constitute a form of hold out (whether Apple have in fact been guilty of hold out is an issue for Trial E); while Optis’ contention that an unqualified injunction should be granted would open the door to hold up. Each side has adopted its position in an attempt to game the system in its favour. The only way to put a stop to such behaviour is for SDOs like ETSI to make legally-enforceable arbitration of such disputes part of their IPR policies. [emphasis added]

That last sentence shows LJ Arnold never conducted any serious research into what standards development organizations (SDOs) like the Europan Telecommunications Standards Institute (ETSI) are about.

Contrary to what he may think, they are not quasi-regulators. They are not the next best thing to the UK’s Ofcom or Ofgem that can set prices in regulated markets.

The IPR policies adopted by organizations like ETSI

• require a consensus among their members, which means the lowest common denominator;
• will fail if they go too far, as major innovators will then decline to contribute or they will do so only on the basis of negative letters of assurance (which is what happened when the Institute of Electrical and Electronics Engineers (IEEE) adopted restrictive rules in connection with its standards, particularly WiFi, and from which the IEEE has since backtracked); and
• are due to the fact that a FRAND commitment is needed to alleviate competition watchdogs’ concerns over the exclusionary nature of standard-setting and the fact that you usually find competitors at the standard-setting table. For example, short of a FRAND commitment it would be possible for three out of four players in a given market so gang up on the fourth by setting a standard from which the fourth is excluded, enforcing their patents if the fourth implemented it anyway.

It is undoubtedly a laudable goal that LJ Arnold and other UK judges want to combat holdup by SEP holders. But that must be limited to the UK. Encroaching on other jurisdictions up to the point of interfering with proceedings in U.S. government agencies is a bad idea, and set to backfire sooner or later.

It would be best if all jurisdictions could limit their decisions to the patents that are registered and enforceable in a given jurisdiction. That includes the license agreements that one side or the other will be required to enter into. Without a doubt, the usual commercial practice is a global portfolio license (and yes, that typically includes non-SEPs as well). But there is a difference between an enforceable right and a voluntary agreement.

UK SEP jurisprudence has become irrational. They should think about how to fix that problem. But that may take long, or it may never happen. Other jurisdictions will have to defend themselves by making it clear to litigants that leveraging the UK courts is not going to be profitable.