Interdigital v Lenovo

The appeal was from only the second-ever global FRAND determination by the English courts (InterDigital v Lenovo [2023] EWHC 1583 (Pat); [2023] RPC 13). After a 17-day trial, Mellor J had determined a global FRAND rate under InterDigital’s portfolio of 17.5 cents per device (¶813), which was 65% lower than the rate being sought by InterDigital (¶23). The Court also decided that FRAND required Lenovo to pay royalties on sales from 2007 onwards (¶¶424-433, 450-451, 515-527, 532-537, 548, 554-555, 559-561) and that interest was payable on past royalties at a rate of 4% ([2023] R.P.C. 14, pp.699 and 724 at ¶¶30–32, and 174(i))).

The Court of Appeal considered the case in a five-day hearing in June 2024.

InterDigital sought a per-unit rate of 61 cents per device before adjustment to Lenovo’s circumstances, and 49 cents after adjustment. The Court concluded that “the highest per unit rate […] that can be justified as being FRAND”, as adjusted for Lenovo, was 22.5 cents per device ([280] and [284] per Arnold LJ; and [317] per Birss LJ), and that “InterDigital’s $0.61, or a number close to it, would be far too high” (at [317] per Birss LJ).

The Court concluded that an uplift to Mellor J’s FRAND rate was required to account for certain “non-FRAND factors” he had identified in the market (see Arnold LJ at [252]-[271]; Birss LJ at [302]-[317]). Nugee LJ expressed “doubts whether the judge found that the practice of heavy discounting of past sales was ever more than an exercise in presentation, or whether he held (or should consistently have held) that the lump sum payable under LG 2017 was depressed below a FRAND rate” (at ¶300) but did not dissent in the result.

The Court rejected Lenovo’s cross-appeal against the Judge’s conclusions that limitation periods had no part to play in the assessment of FRAND terms (at [186]-[205] per Arnold LJ; at [289] Nugee LJ) or that interest should be payable (at [207]-[226] per Arnold LJ; at [290] per Nugee LJ). Arnold LJ also emphasised that “the comparables analysis is a much more reliable basis for estimating FRAND than InterDigital’s top-down cross-check” (at ¶286).

The judgment will make essential reading for the telecommunications industry and for many parallel ongoing FRAND disputes.

James Segan KC and Ravi Mehta acted for Lenovo, instructed by Kirkland & Ellis International LLP.

The judgment is available here.