Ruling may lead to steeper licensing costs for all mobile phone makers

Jane Croft, Tim Bradshaw and Nic Fildes in London August 26, 2020
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Huawei has lost a lawsuit over technology licensing in a landmark Supreme Court ruling that could turn London into a hub for global patent litigation.

The UK’s highest court ruled on Wednesday that the English courts have the power to require telecoms companies and smartphone makers to take out a global patents licence or face a UK court injunction.

The decision has been hailed as one of the most significant intellectual property rulings in recent years because it hands an advantage to patent holders and could lead to steeper licensing costs for mobile device makers such as Apple and Samsung, as well as Huawei.

Huawei brought the long-running court case in 2014 when it was accused of infringing intellectual property belonging to US company Unwired Planet, which had acquired a clutch of patents covering wireless connectivity from Ericsson in 2013.

The Chinese company was ordered by the High Court in 2017 to pay a global licence fee for infringing two UK patents otherwise it would face an injunction. Huawei appealed against the decision to the Supreme Court, arguing that it should only pay licence fees for the technology in the UK, a relatively small market, rather than on its global sales.

Lord Patrick Hodge, deputy president of the Supreme Court, dismissed Huawei’s appeal. Lord Hodge confirmed on Wednesday that the courts have the power to grant an injunction to restrain infringement of a UK patent if a company refused to take out a global licence of a multinational patent portfolio.

Lord Hodge also dismissed an appeal from Huawei and ZTE brought against US group Conversant where the two Chinese companies had argued that the English courts were not the appropriate forum to determine the validity of foreign patents.

The decision will force any tech company that sells devices in the UK to strike global deals with patent holders such as Unwired Planet, which has a long history of litigation against the likes of Apple, Google and Samsung.

Yohan Liyanage, partner at Linklaters, said more litigation will follow. “There are already numerous similar cases pending in the UK and today’s judgment will inevitably lead to further telecoms disputes being brought in the UK,” he said. Some device makers may even consider withdrawing from the UK market altogether, in order to avoid being subject to global patent licensing fees, Mr Liyanage added.

The ruling comes as a further blow to Huawei which is already under fire for its alleged links to the Chinese government and which was banned by the UK government from supplying new kit for Britain’s 5G mobile phone networks from next year on national security concerns. It now faces entering into a licence with Unwired Planet otherwise it will face an injunction.

David Knight, partner at law firm Fieldfisher, said the ruling could be a “final blow” to Huawei and its desire to do business in the UK.

The ruling that the English courts can make decisions about worldwide licences has future implications for any company using essential patents for 5G, particularly with respect to the Internet of Things and connected vehicles.

Gary Moss, head of EIP Legal, which represented Unwired Planet and Conversant in the lawsuit, said the ruling would be closely watched. “The English courts are at the forefront of this area and it’s a very significant ruling,” he said.

Unwired Planet welcomed the ruling. “We look forward to continue working with other manufacturers to offer licences to our patents under this global framework,” it said.

A spokesman for Huawei said the company “has already made payments to Unwired Planet according to the agreement set by UK court and has settled with Unwired Planet’s parent company, PanOptis. As a result, no additional sums fall due as a result of this ruling.”