UK appeals court unlikely to affirm InterDigital-Lenovo FRAND determination: Munich court also rejected it as unreliable

Last year, Mr. Justice James Mellor of the England & Wales High Court ruled that InterDigital was entitled to only $0.175 per Lenovo phone. Lenovo has recently put forward novel legal theories related to standard-essential patents (SEPs) in the UK, following the favorable outcomes in previous cases. 

Although a preliminary injunction bid against Ericsson failed, a particular theory in a case against InterDigital survived a jurisdictional challenge. 

In a separate infringement litigation filed later, the Munich I Regional Court prohibited Lenovo over an InterDigital SEP, rejecting the argument that Lenovo was a willing licensee only because it would conclude a license based on Mr. Justice Mellor’s determination. 

The England & Wales Court of Appeal (EWCA) is currently hearing the InterDigital-Lenovo cross-appeal, with InterDigital appealing the $0.175/unit rate set by Mr. Justice Mellor. The EWCA panel seems sympathetic to InterDigital’s argument that the rate undervalues its portfolio. 

The appeal is likely to result in an upward adjustment of the royalty rate, coupled with the ongoing enforcement of a German injunction. Consequently, Lenovo will need to seriously consider the possibility of taking a license. However, InterDigital may not wait for a formal decision by the appeals court, as an increased rate may still fall short of expectations. 

The ip fray has previously suggested that some implementers may be mistaken to consider the UK a jurisdiction favoring the devaluation of SEPs based on previous High Court rulings. 

At the EWCA hearing, the judges' interactions suggest a leaning towards revising Mr. Justice Mellor's decision. Lord Justice Birss and Lord Justice Nugee seem sympathetic to patentees, indicating a shift in the court's stance. Lenovo is facing challenges in defending the lower court’s rate-setting decision due to the judges' receptiveness to InterDigital’s argument. 

The court has raised questions about the fairness of InterDigital’s portfolio valuation and the impact of hold-out on negotiations. Lenovo's representation has encountered challenges in addressing these concerns, particularly regarding the application of discounts and the validity of the licensing agreements. 

The development of the UK appeal, alongside the enforcement of a German injunction, underscores the significance of the case for Lenovo and other SEP implementers. Lenovo’s forum-shopping tactics in the UK have faced obstacles, signaling that the England & Wales Court of Appeal is committed to preventing SEP devaluation. As the appellate hearing progresses, it is becoming evident that Lenovo's strategy may not yield the desired outcome, with implications for other potential litigants, such as Tesla.

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