Huawei CFO loses bid for access to secret Canadian documents
U.K. judges can set global royalty rates for the use of telecommunications technology, Britain’s highest court said in a pair of cases over how much Huawei Technologies Co. owes a U.S. patent owner.
The U.K. Supreme Court on Wednesday affirmed a decision that
Huawei would either have to pay Unwired Planet International Ltd. a global rate
set by judges or face an order limiting its British sales. In a related
decision involving another patent owner, the court rejected Huawei and ZTE
Corp.’s argument that, if any court were to establish a global rate, it should
be in China, where manufacturing and the bulk of sales are located.
The ruling could effectively make British courts a one-stop shop
to set global royalty rates, though it also could set off a competition should
other countries, such as China, Germany and the U.S., decide they want to be
the arbiter of these disputes. Since the original ruling, U.K tribunals have
already become more popular with patent owners.
Companies worldwide are fighting over who will profit from
fundamental technology in wireless communications. The cases have pitted the
owners of patents on standardized technology, including Qualcomm Inc. and
Ericsson AB, against those who use the systems in their products, including
Apple Inc.
Regulators and courts around the world have grappled with
how to value patents for essential technology and whether their owners have any
rights to limit the use of the inventions. It’s a thorny issue that’s becoming
more important as the world transitions to the next generation of wireless
technology known as 5G.
Frustrations
The unclear rules have frustrated automakers and other
manufacturers of so-called Internet of things devices. Patent owners want to
get compensation for their research, while manufacturers want to reduce their
costs.
The “decision makes the U.K. one of the leading global
jurisdictions for the resolution of such disputes,” EIP, one of the law firms
representing the patent holders, said in a statement.
The “overall feeling” on both sides is that the U.K. courts
are more likely to rule in favor of owners of patents on essential technology,
said Dafydd Bevan, head of the high tech group at Marks & Clerk Law.
Companies may opt to limit British sales to avoid the court, he said.
It “could reshape technology licensing deals in the 5G era,”
Tamlin Bason, a Bloomberg Intelligence analyst said. It “may embolden patent
owners like Qualcomm, Nokia and Ericsson, while undermining leverage for Apple
and other device makers.”
The ruling also set out steps judges could take to determine
an appropriate global rate. The decision assumes that not all patents in a
portfolio are valid or essential to an industry standard since the potential
licensees will try to knock out as many patents as they can. Still, setting one
global rate is consistent with how companies decide their own disputes when
litigation isn’t involved, the court ruled.
‘Prodigious’ Spending
“No rational business would seek to license products country
by country if it could be avoided,” the court said. Otherwise, it would mean
“the expenditure of a prodigious amount of money and effort” by both sides.
Unwired Planet and Conversant Wireless Licensing Sarl each
have patents related to the 2G, 3G, and 4G telecommunications standards.
Unwired Planet is seeking royalties on Huawei’s phones and infrastructure,
while Conversant contends it’s entitled to royalties from both Huawei and ZTE.
The Unwired Planet patents originated with Ericsson, and Huawei had paid licensing
fees on them until the contract expired in 2012.
Officials with Huawei didn’t immediately return messages
seeking comment.
Businesses that are normally competitors have come together
to establish industry-wide standards so, for instance, a photo, text message or
phone call from a Samsung Galaxy phone can seamlessly transfer to an Apple
iPad, or a phone using a network can switch to Wi-Fi without a hiccup.
Because they have an advantage on getting their inventions
included in any standard, participants pledge to license their relevant patents
on “fair, reasonable and non-discriminatory terms.”
Court Shopping
The phrase, known as FRAND, has never been defined, as the
standard-setting boards rely on the companies to work out contracts among
themselves, sometimes through high stakes litigation. It was at the heart of
billion-dollar fights such as Apple’s since-resolved efforts to lower the
amount it pays Qualcomm.
Since patents are limited to national borders, judges
hearing these disputes decide the appropriate rate for the inventions in their
home country. Each side files lawsuits in courts they consider favorable, in
hopes that a ruling will give them an advantage in negotiations.
Patent owners, such as Unwired Planet, would prefer to have
issues resolved in one court, particularly if they get to choose the most
patent-friendly venue.
American courts have been limiting patent rights, even
though big damage awards are still possible, while Chinese courts have been
criticized for having low damage awards.
Unwired Planet is part of a Texas-based firm called PanOptis
Patent Management that won a US$506 million U.S. verdict against Apple on Aug.
11. Apple said the company failed to follow its obligation to license its 4G
patents on fair terms.
The cases are Unwired Planet International Ltd. v. Huawei
Technologies Co., UKSC 2018/0214; and Huawei Technologies v. Conversant
Wireless Licensing SARL, UKSC2019/0041, both U.K. Supreme Court.
Comments
Post a Comment