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Lenovo is a technology manufacturing company, and the InterDigital Technology Corporation designs and creates mobile technology. The following article discusses an appeal case pertaining to payable amounts by Lenovo for a licence on the terms of InterDigital’s patents.
Introduction
Proceedings began in August 2019. The dispute concerns Lenovo, who failed to be licensed on the use of the standardised 3G, 4G, and 5G network technology. InterDigital and Lenovo undertook negotiations spanning across ten years, before InterDigital commenced proceedings seeking conventional relief for the infringement of five patents. This was subject to Lenovo taking a global licence on fair, reasonable and non-discriminatory terms (FRAND).
Background and Previous Proceedings
At first instance, the court held Lenovo should pay a $138.7m lump sum for a licence covering its sales between 2007 and 2023, with a 4% compound interest.
However, InterDigital appealed, claiming Lenovo should pay $388.5m with a 4% compound interest. It also claimed the lower court ought to have declared InterDigital was a willing licensor.
Claim & Court’s Decisions
This case seeks to discover when the terms of a global licence of a portfolio of standard-essential patents (SEPs) are FRAND. InterDigital brought four grounds of appeal:
- The judge failed to consider non-FRAND effects, which had affected past sales.
- Dependent on ground 1, the judge erred in determining the FRAND rate for Lenovo.
- The judge wrongly rejected a top-down cross-check relied upon by InterDigital when deciding the FRAND rate for Lenovo.
- The judge failed to declare InterDigital was a willing licensor.
Lenovo brought two grounds of appeal:
- The judge wrongly required Lenovo to pay royalties for sales pre-2013.
- The judge wrongly required Lenovo to pay interest; it should be removed, or lowered.
The Court of Appeal asserted the lower court judge correctly ruled that limitation periods play no role in assessing FRAND terms. Therefore, Lenovo is required to pay royalties for all past sales. Furthermore, the Court of Appeal confirmed the judge rightly ordered Lenovo to pay interest on its payment.
Conclusion
This case highlights the significance of parties agreeing FRAND terms prior to using SEP technology. Due to the Court of Appeal expressing how limitation periods do not apply between licensors and licensees, this implies many other businesses could also be subject to costly lump sum payments relating to their evasion to licensing. Additionally, these may be accompanied with interest rates.
By Ava Edwards
