Apple Backs Down: Commits to Take Global FRAND License to Avoid Exile from UK Market

Mintz - Intellectual Property Viewpoints

For years, Apple has resisted taking a license to Optis’ standard-essential patent portfolio covering Long-Term Evolution (LTE) technology. However, it is now being reported that Apple committed to enter a global FRAND license with Optis so as to avoid being enjoined from, or voluntarily exiting, the UK market. Once effectuated, this agreement should end the global dispute between the two parties.

The events leading to this outcome have spanned multiple years and jurisdictions. In the United States, a jury from the Eastern District of Texas awarded Optis $300 million in damages this past August after Apple was found to infringe Optis’ SEP patents. Meanwhile, in the UK, the parties have conducted four technical trials to determine the validity of Optis’ SEPs and whether Apple infringes them. In June of 2021, one of Optis’ patents was found to be valid, essential, and infringed by Apple. A trial was scheduled for June of 2022 to determine the framework of a global FRAND license that Apple would have to enter in order to cease infringing Optis’ SEP. Optis requested an injunction until Apple entered the license resulting from the FRAND trial. 

In response to Optis’ injunction request, Apple threatened that it might leave the UK market to avoid committing to a FRAND license. At the time, presiding Justice Mead did not find Apple’s threat to be credible, stating that “I do not accept that Apple [] has shown any real-world likelihood of market exit in any normal circumstances, and certainly not by an implementer with a genuine desire to get a FRAND licence.” Justice Mead’s words ring prophetic today as Apple has backed down from its threat, and, instead, has indicated that it will accept the terms of a yet-to-be-determined FRAND license so as to avoid being enjoined from the UK market. It remains to be seen whether Apple will make good on its promise to enter a license with the court-determined a FRAND rate or if it will remove itself from the UK market if confronted by a FRAND rate it deems to be unsatisfactory.

Regardless, Apple’s commitment to a global FRAND license shines light on three important considerations for SEP owners and implementers. First, the UK market is valuable. With the option to leave it, Apple chose to stay. For patent owners, it follows that protecting IP in the UK is necessary as it can provide leverage when attempting to achieve a global license. Second, injunctions for the infringement of SEPs are obtainable and enforceable in the UK. Injunctive relief as redress for recalcitrant infringers is a powerful tool for patent owners. The UK, again, has demonstrated that it is willing to grant and enforce that relief. Third, global FRAND licenses can be achieved via UK courts. Although it remains to be seen what the framework of the FRAND license will look like between Optis and Apple, it is certain that UK courts have the authority and willingness to construct one. Because of this, patent owners and implementers must strongly consider the UK’s handling of SEPs when evaluating their strategic business objectives on a global level.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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