Context: We expressed strong doubts last week that Ericsson would grant Lenovo an interim license to its patents after a UK appellate ruling of a merely declaratory nature as opposed to a specific-performance injunction (March 7, 2025 ip fray article). Meanwhile, Mr Justice Richard Meade of the High Court of Justice for England & Wales (EWHC) was working on a preliminary ruling in order to resolve certain questions ahead of the parties’ FRAND trial that will start in April. One key question to be addressed beforehand was the interpretation of an old (2011) cross-license agreement between Motorola Mobility, which was acquired by Lenovo three years later, and Ericsson. The United States International Trade Commission’s (USITC, or just ITC) Administrative Law Judge (ALJ) Cameron Elliot rejected Lenovo’s license-based defense last year (December 1, 2024 ip fray article). That holding was neither affirmed nor overturned by the Commission, the political appointees at the top of the U.S. trade agency, when that case (where no infringement was identified) was terminated.
What’s new: Today two things happened in the UK part of this dispute. Lenovo announced, and Ericsson confirmed, that no interim license was put in place by yesterday’s deadline, which automatically resulted in a holding by the England & Wales Court of Appeal (EWCA) that Ericsson is deemed an “unwilling licensor” under a decision Ericsson will appeal. Separately, Mr Justice Meade handed down his decision on certain issues he preferred to adjudicate ahead of the parties’ FRAND (fair, reasonable and non-discriminatory licensing) trial. On key questions of interpretation he agrees with ALJ Elliot, and he also found that the 2011 Motorola license (a contract under English law) did not bar Ericsson from bringing infringement actions around the globe.
Direct impact: For now, the categorization as an unwilling licensor, regardless of the outcome of the appeal, has no practical consequences as no court has obligated Ericsson to extent an interim license. As for the scope of the old cross-license, there are hundreds of products at issue and today’s pretrial ruling does not go over that list. It is yet to be determined based on specific facts which of Lenovo’s past and current products fall under the old license agreement, but given the similarities in the approaches of Mr Justice Meade and ALJ Elliot, Lenovo’s benefit from the old license could be very limited.
Wider ramifications: The UK is not the center of gravity of this dispute, thought here have recently been some court orders coming out of that jurisdiction. Ericsson already obtained some favorable decisions in Brazil and Colombia more than a year ago (December 24, 2023 ip fray article). In a USITC case where Ericsson has prevailed on the technical merits of all four patents-in-suit, ALJ MaryJoan McNamara will issue her recommendation on remedies on April 4, 2025 (February 21, 2025 ip fray article) and in that context also address Lenovo’s license-based defense.
In an ITC filing made yesterday, Lenovo already stated its anticipation of Ericsson declining to extend an interim license. The EWCA’s position that this makes Ericsson an unwilling licensor is not binding on courts or government agencies (like the ITC) outside the UK.
Unlike Lenovo, Ericsson does not appear to have published its position on its website, but provided a statement by email:
“The Court of Appeals decision is advisory, and we respectfully disagree with the basis for it.
“In the first lawsuit filed in this global dispute, in the Eastern District of North Carolina (home jurisdiction of Lenovo’s US headquarters), Ericsson committed to abide by the Court’s determination of whether Ericsson’s offer was FRAND and, if not, to the Court adjusting the rate as necessary to ensure FRAND compliance. Further, Ericsson agreed to forego any appeal of the EDNC judgement to expedite conclusion of the dispute.
“Additionally, prior to institution of any ITC cases and prior to requesting any injunctions in South America, Ericsson offered a neutral arbitration to Lenovo in October 2023 to resolve the global dispute in a timely manner. This offer was ignored by Lenovo.
“Ericsson will appeal the Court of Appeal decision to the UK Supreme Court.”
Lenovo published today’s EWHC decision (on the old license agreement) on its website (PDF).
For those who are into (or at least somewhat interested in) contract interpretation, its actually a textbook example. In particular, and beyond discussing general principles of interpretation, it shows how a court may sometimes adopt or reject a one party’s position, sometimes reject both, and also reach a point where further factual determinations (here, as to whether particular products are or are not covered by the 2011 license) must be made at a later stage. It’s an example of the possibilities and the limitations of contract interpretation. Mr Justice Meade explains everything very clearly.
The maximum effect that this pretrial decision could have had would have been a holding that an “implied term” precluded Ericsson from bringing any of its patent enforcement actions (over any patents with a pre-2016 priority date) to a UK decision on the scope of the 2011 contract. Ericsson did not do that, and Mr Justice Meade has now held that Ericsson indeed didn’t have to.
That was not the only “get-out-of-jail free card” the 2011 license could have been if the court had agreed with Lenovo. There could also have been a very broad interpretation under which any Ericsson patents with a pre-2016 priority date would have been licensed with respect to pretty much any Motorola, if not even Lenovo (parent company), devices. Mr Justice Meade rejected the proposed interpretations that would have had that effect.
The most basic question here (“basic” in every sense of the word: in terms of “fundamental” as well as “simple”) is whether a contractucal provision covering commercially reasonable updates or extensions (CRUEs) could relate to only products or also to an abstract field. Like ALJ Elliot in his final initial determination (December 1, 2024 ip fray article), Mr Justice Meade concluded that you can update a product, but not a field.
Today’s decision discusses the history of that license agreement. The 2011 one just resulted from Motorola Mobility being spun off (it got acquired by Google and was later sold to Lenovo). It appears that it was the first asymmetrical agreement between the two parties in the sense that Ericsson was primarily a licensor, while earlier agreements were concluded at a time when both were selling high volumes of mobile phones.
One of the asymmetries that Mr Justice Meade took note of is that in the event of an acquisition of either party by a third party, there were some clear restrictions only with respect to the extent to which an acquirer of Motorola Mobility could benefit from the license agreement.
By and large, Mr Justice Meade rejected Lenovo’s arguments. He criticized both parties for having presented testimony on fundamental questions (such as whether an injunction hurts) on which he has no need to be enlightened by a witness. But he also declined to adopt Ericsson’s proposals for certain criteria to apply to what constitutes a CRUE or a product that is sufficiently different not to be licensed.
It’s clear, for instance, that Mr Justice Meade is not going to buy the notion that any flip phone named RAZR is a CRUE of a 2004 RAZR phone that had a keyboard and was generally rather different from today’s Android-based touchscreen phones.
Whether 5G phones can be considered updates and extensions of 4G phones is yet to be determined on a product-by-product basis. The 2011 agreement specifically added 4G to the scope of the deal. Ericsson will want to dissuade Mr Justice Meade from 5G phones still being covered by that old license agreement, but will have to present some technical as to what (other than the baseband chip) is different in a 5G phone from a 4G phone.
The London-based court has to look at far more products than the ITC. In the ITC, damages for past infringement are not available. It’s all about U.S. import bans. Therefore, ALJ Elliot only had to look at certain products Lenovo is presently selling. In the UK, it’s also about back-royalties for a potentially very long period, so even if Lenovo can’t persuade Mr Justice Meade to consider any of its current products to be covered by the 2011 license, every product that will be deemed licensed is another on which Ericsson can’t collect royalties. And the older the products are, the higher the interest on royalties that would have been due a long time ago would be.
The Lenovo-Ericsson FRAND trial will be a long one, and it will be a huge amount of work for Mr Justice Meade to write his subsequent decision. But Ericsson never wanted the FRAND part of the dispute to be resolved in the UK. It’s just Lenovo’s preferred jurisdiction for this purpose.