Court of Appeal upholds finding that Apple must undertake to enter into FRAND licence or be subject to FRAND injunction

28/10/22

On 27 October 2022, the Court of Appeal (Arnold, Asplin and Laing LJJ) dismissed Apple’s appeal against the Judgment of Meade J of 5 October 2021, in which Meade J held that Apple was not entitled to enforce Optis’ undertaking to licence its Standard Essential Patents (“SEPs”) on fair, reasonable and non-discriminatory (“FRAND”) terms, unless Apple undertook to enter into the licence on terms to be determined by the court to be FRAND following the FRAND trial held between Optis and Apple in June-July 2022.

The Court of Appeal upheld the Judge’s interpretation of Optis’ undertaking to licence its SEPs on FRAND terms, which is found in Clause 6.1 of the ETSI IPR Policy. Apple argued that this provision should be read so as to afford the implementer the opportunity to see the terms of the licence decided upon by the court before committing to enter into it, to guard against the possibility that the terms might be FRAND and yet uncommercial for the implementer. The Court found that Apple’s arguments would undermine a key part of the purpose of the ETSI IPR Policy in preventing hold-out by implementers, as analysed by the Supreme Court in Unwired Planet [2020] UKSC 37.

For similar reasons, the Court also rejected Optis’ cross-appeal, which challenged the Judge’s finding that Optis was entitled to an injunction only unless and until Apple undertook to take a licence on the terms subsequently determined by the court to be FRAND (a modified form of FRAND injunction), as opposed to an immediate and unqualified injunction that would have resulted in Apple becoming permanently disentitled to rely on Optis’ undertaking to ETSI. The Court of Appeal found that Optis’ arguments would promote hold-up by SEP owners and that the Judge had been correct to place some weight on the fact that the SEP owner’s undertaking under Clause 6.1 of the ETSI IPR Policy is “irrevocable”.

Apple also argued that the Judge’s approach wrongly facilitated Optis’ alleged abuse of a dominant position (which abuse had to be assumed for the purposes of this trial/appeal). The Court of Appeal found that the Judge was correct to find that injunctive relief should not be withheld from Optis, notwithstanding a putative violation of competition law, because to find otherwise would be to promote hold-out by implementers. The Court dismissed the objection that this approach “whitewashes” prior abuses on the basis that Apple can be compensated for any abuse found to have occurred in damages, which would be an adequate remedy.

The judgment appears here.