On 7 June 2017, Justice Birss of the English High Court of Justice issued a "FRAND" (Fair, Reasonable and Non-Discriminatory) injunction against Huawei, a Chinese telecommunications company, in its longstanding licensing dispute pitting it against Unwired Planet, a US based patent assertion entity. The dispute involves a portfolio of patents which are considered essential to the 2G, 3G and 4G wireless telecommunications standards developed under the auspices of the European Telecommunications Standards Institute ("ETSI").

The present judgment follows the judgment handed down on 7 April 2017 in which Justice Birss found that Unwired Planet had not abused its dominant position in the present case and could directly enforce FRAND royalty rates (see VBB on Competition Law, Volume 2017, No. 5). In that earlier judgment, Justice Birss also determined a FRAND rate and took the preliminary position that an injunction to prevent Huawei from infringing Unwired Planet's patents should be granted because: (1) Unwired Planet had established that Huawei infringed valid patents; (2) Huawei was not prepared to accept a license on terms which the judge considered as FRAND; and (3) Unwired Planet was not in breach of competition law. Still, Justice Birss did not decide whether an injunction should actually be granted until the judgment of 7 June 2017.

Huawei argued that an injunction should not be granted because (i) the case was under appeal, and the Court of Appeal may determine that different FRAND rates from those determined by Justice Birss are appropriate; and (ii) if an injunction was granted, it would last until 2028 (i.e., until the expiry of the patent), while the FRAND licensing agreement would expire in 2020, which would put Huawei in a weak negotiation position against Unwired Planet should the license be renegotiated. In this respect, Huawei submitted that Unwired Planet would benefit from the injunction if new terms could not be agreed upon. As an alternative to an injunction, Huawei offered the judge two undertakings, namely that it would (i) enter into the licensing agreement following the final outcome of the appeal; and (ii) comply with the terms of the licensing agreement as if it was in effect – including the payment of the royalties – until the appeal was final.

Justice Birss did not accept Huawei's proposed undertaking and, instead, ordered that an injunction should be granted. However, Justice Birss acknowledged that a "standard" injunction would negatively impact future negotiations between the parties with respect to the terms of the license. He therefore granted Unwired Planet what would seem to be a new type of "FRAND" injunction, which includes two specific features, namely (i) a clause stipulating that the injunction would cease to have effect when the defendant enters into a FRAND license; and (ii) the freedom for the parties to return to court to decide whether the injunction should remain in force at the expiry of the FRAND license (which, as noted above, will end before the relevant patents expire).

Justice Birss annexed to his judgment a copy of the final form of the licensing agreement to be entered into by Unwired Planet and Huawei.

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