“The judge said Lenovo would be subject to a FRAND injunction if it disagreed with the license terms. But after reviewing the draft judgment, Lenovo said it was ready to obtain a license.” .”
Lenovo orders InterDigital to make a one-time payment of $138.7 million for global FRAND (fair, reasonable, non-discriminatory) license covering sales of cellular devices from 2007 through December 31, 2023 was given.British courts following landmarks Unwired Planet Case.Interdigital Technology Corporation & Ors v Lenovo Group Ltd (FRAND Judgment – Public Version) [2023] EWHC 539 (patent)
In his edited ruling published March 15, Judge Mellor ruled that InterDigital’s August 2021 licensing offer (totaling $337 million) also outperformed Lenovo’s counter offer ($80 million +/- 15% of which consisted of bulk sales). In his six-year period until the end of 2023, fully releasing all past sales at no additional consideration) was FRAND or within FRAND.
landmark judgment
This is a big controversy that has been going on for over three years already. The FRAND trial alone, from January 2022 to February he was conducted over 17 days, with additional evidence presented in December 2022 and presented in January of this year. Inter Diguital provided approximately 23 testimony and 17 expert reports from 10 fact witnesses, and Lenovo provided 13 expert reports. The resulting judgment spans nearly 1,000 paragraphs.
In addition to the FRAND trial, there were five technical trials between the parties. Three of these have led to judgments (first instance or appeal) that InterDigital’s patents are valid and essential, but a fourth judgment is awaited. Judge Mellor said: [FRAND] InterDigital had established the right to decide FRAND, a position only reinforced by subsequent events. “
The lawsuit concerns Lenovo’s cellular products that implement 3G, 4G, and/or 5G standards. From Q3 2013 to Q2 2021, the company sold about 487 million devices (1.1% 2G, about 30% 3G, 69% 4G, 0.6% 5G). . China accounts for 22.6% of sales, Latin America for 34.6%, the United States for 12.9% and Europe for 9%. Lenovo is the world’s 9th largest mobile phone maker, according to the ruling.
InterDigital licenses standard essential patents to several other manufacturers including Samsung, Apple, Huawei, Xiaomi, LG Electronics and ZTE. We first approached Lenovo in 2008, and discussions continued on and off, including after Lenovo acquired Motorola Mobility in 2014.
InterDigital made various one-off, running royalty and hybrid offers culminating in the August 2021 offer, which Lenovo did not accept. The company initiated patent litigation against Lenovo in London and Delaware in August 2019. Lenovo then filed a lawsuit in China.
FRAND decision
Following the adopted approach unwired planetrecognized by the English Supreme Court, Judge Mellor’s primary task was to determine the worldwide FRAND license between the parties. did not.
For example, a judge ruled that the same rate should apply to past and future sales. This discovery was based on his two foundations. (1) InterDigital left a great deal of room for manipulation in how it apportioned its overall upfront consideration to past releases, so the preferred allocation to past and future was “somewhat artificial.” (2) In the judge’s words, “FRAND involves either party’s internal justification for amounts paid or received, or the manner in which one party seeks to process those amounts in its accounts. have not and should not be affected, especially if these internal justifications and financial reports do not form part of the license agreement, they should be made public.”
He also made the discovery of three major principles for FRAND decisions. First, he denied the statute of limitations claim, stating that he would not be willing to use the statute of limitations to avoid paying his FRAND royalties. Second, he finds that the size of the volume discounts supposedly applied by InterDigital results in discrimination and that InterDigital’s “program rate” is not a realistic indicator of his FRAND rate for his SEP portfolio. Did. Third, subjective views from the SEP licensor or his SEP licensee had to be set aside.
equivalent license
Both parties offered comparable license agreements, with InterDigital choosing 20 and Lenovo choosing 7. Of these, the judge said his 2017 agreement between InterDigital and LG was the “most comparable” because of the mix of 3G, 4G and 5G sales and split between developed and emerging markets. It’s easy and a great place to start.”
Based on this, he concluded that the willing licensor and willing licensee would agree on a per unit fee of $0.175 per cellular unit. Using sales figures going back to 2007 yielded a one-time payment of $138.7 million.
InterDigital had proposed a “top-down cross-check,” but the judge said “no part” of this was not persuasive and was not supported in his analysis of equivalent licenses.
Measure and react
Judge Mellor also addressed whether each party acted as a willing licensor/licensee. He found that InterDigital was not acting willingly as a licensor by consistently asking for ultra-FRAND rates. For the most part, Lenovo acted willingly as a licensee during negotiations, but ultimately it will be tested whether it accepts the court’s decision.
The judge said Lenovo would be subject to a FRAND injunction if it did not accept the terms of the license. However, after reviewing the draft ruling, Lenovo said it was ready to obtain a license.
In a statement, InterDigital Chief Legal Officer Josh Schmidt said: This could be a powerful way to prevent patent holdouts in the future. However, we believe certain aspects of the decision do not accurately reflect our licensing program and will be appealing. “
Vice President, Deputy General Counsel and Chief Intellectual Property Officer John Mulgrew said: Act as a reluctant licensor. “We are pleased that this ruling reinforces FRAND’s important role in promoting transparent and fair licensing practices for standardized technology, enabling us to spread affordable innovation to our customers around the world.” increase.”
A more complete version of the ruling is expected to be released after further hearings in early April.
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Author: Andrei Popov
