Judge Picks ‘Overall Winner,’ But UK High Court’s Latest FRAND Ruling Delivers Mixed Results for InterDigital and Lenovo

The UK High Court today issued an Approved Judgment in Interdigital Technology Corporation & Ors v Lenovo Group Ltd [2023] EWHC 1578 (Pat). While Lenovo was declared the “overall winner,” InterDigital was awarded interest, increasing their previous award by $46.2 million.

In March, the Hon. Mr Justice Mellor issued a judgment ordering Lenovo to pay InterDigital a lump sum of $138.7 million for a global FRAND (fair, reasonable and non-discriminatory) license covering sales of cellular devices from 2007 to December 31, 2023. It was the second full FRAND trial to be decided by the UK courts, following the landmark Unwired Planet case.

In his redacted judgment published on March 15, Mr. Justice Mellor found that neither InterDigital’s August 2021 license offer (which amounted to $337 million) nor Lenovo’s counter offer (which comprised a lump sum of $80 million +/-15% for all sales in the six-year term to the end of 2023 with a full release for all past sales for no additional consideration) were FRAND or within the FRAND range.

Today’s judgment was issued to deal with several outstanding matters, including:

• Whether interest should be awarded on the principal sum of $138.7 million, and if so, at what rate or rates?
• What the appropriate order should be as to the costs of the FRAND trial.
• The resolution of certain issues arising on the terms of the license.
• Whether the judge should grant permission to appeal.

A separate hearing on confidentiality–i.e., whether the judge should remove some of the redactions in the March 15 judgment– took place on April 5 and was dealt with in a separate ruling.

Ultimately, Mellor decided that several factors in his analysis pointed in favor of awarding interest, while none pointed toward not awarding it. These included the fact that the per unit rate of $0.175 to sales made by Lenovo in 2011indicates that if the royalty was not paid in that year, InterDigital should be entitled to compensation for the delay in receiving them. He awarded interest at the rate of 4% compounded quarterly, which yields an interest payment $46.2 million, for a total award of $184.9 million.

Despite this award, Mellor said he is “in no doubt that Lenovo are the overall winner of this FRAND trial,” including because InterDigital is “mounting a substantive appeal” against the judgment, because the per unit rate of $0.175 that was awarded “is very close to Lenovo’s contention of $0.16 and a long way from InterDigital’s contention,” and for other reasons.

The court also awarded most costs to Lenovo, but did deprive Lenovo of costs for certain issues, including the interest issue, and issues relating to foreign law. The estimates of the total costs attributable to the FRAND part of the action as of May 2023 were InterDigital: £17.25 million and Lenovo: £14.27 million.

In a statement, Lenovo said “[t]oday’s judgment further reinforces Lenovo’s continued commitment as a willing licensee and validates the license rate Lenovo advocated for in litigation,” and the company’s Vice President, Deputy General Counsel & Chief Intellectual Property Officer, John Mulgrew, said the judgment represents “a broader, landmark victory for the technology industry and the customers we serve.” Mulgrew added:

“The Court’s determination that InterDigital’s global cellular royalty rate should be US$0.175 per unit provides full transparency in the face of InterDigital’s supra-FRAND offers and behavior as an unwilling licensor. We are pleased that the UK Court’s judgment facilitates the proliferation of affordable innovation to customers around the world.”

InterDigital also issued a statement, noting the additional interest it was awarded and welcoming the court’s decision to grant permission to appeal.

Josh Schmidt, Chief Legal Officer at InterDigital, said:

“Our significant long-term investments in fundamental research and innovation in wireless and video technologies continue to benefit an increasing wealth of industries and consumers alike, including Lenovo and its customers.”

Both parties plan to appeal aspects of the ruling. Notice of appeal must be filed with the Court of Appeal by July 31, 2023, according to the judgment.

Image acquired via 123RF.com