The 2017 decision by Justice Sir Colin Birss, which was upheld on appeal by Lord Sir David Kitchin and Lord Justices Sir Christopher David Floyd and Dame Sarah Jane Asplin in the matter of Unwired Planet v. Huawei, bears the potential to alter the Standard Essential Patents (SEPs) licensing ecosystem at the global level. In light of the fact that the case was heard by the U.K. Supreme Court in October 2019, this Article addresses some of its potential effects on future SEPs licensing negotiations that are to be concluded on fair, reasonable, and non-discriminatory (FRAND) terms.
The FRAND licensing rate set by the 2017 decision, which was set on a global basis, makes the validity, essentiality, and infringement of global SEPs contingent on the opinion of the judiciary of England and Wales. As this allows the patentee to reduce transaction costs associated with global FRAND licensing, it also increases information asymmetry with respect to extraterritorial SEPs, as a national court is inherently limited in an international undertaking. This can affect FRAND licensing negotiations that precede formal court intervention.
To overcome the inherent tension between a territorially limited patent system and an increasingly international economic order, a global FRAND licensing rate should be set by an international court, which has transnational authority. At the European level, the establishment of such a court is already under way in the form of the Unified Patent Court, which is expected to come into place at some point.