UK Court of Appeal orders Apple to pay Optis more money in FRAND dispute

The UK Court of Appeal has amended a previous ruling that was in Apple's favour and awarded Optis a significantly higher FRAND rate for its global 4G portfolio. Apple must now pay $502 million to the NPE. The ruling marks a victory for SEP holders.

While continental Europe celebrated the May day bank holiday, it was business as usual in the UK. The UK Court of Appeal heard a significant IP case and published an important FRAND judgment in Optis vs Apple.

The court ruled that Apple should pay a lump sum of $502 million, not including interest, to Optis for the period from 2013 to 2027 (case ID: CA-2024-000695).

Texas-based Optis Cellular Technology sued Apple in London in 2019 over its use of eight patents which Optis claims are essential to certain technological standards, including 4G.

Esteemed panel

The Court of Appeal panel comprised three distinguished judges. Presiding judge Colin Birss was the first to calculate and set a global FRAND rate in the Unwired Planet vs Huawei dispute. The ruling established the UK courts as a key jurisdiction for FRAND rate determination.

Comparables preferred

The three judges unanimously increased the licence rate that Apple must pay to Optis. In February 2022, UK High Court judge Marcus Smith set the licence fee at a lump sum derived from an annual payment of $5.13 million over eleven years, totalling $56.43 million, not including interest. The period covers a five-year licence plus six years of past sales. Optis then appealed.

The Court of Appeal judges concluded that the FRAND royalty rate for the Optis portfolio should be $0.15 per Apple unit. They based this on unpacked DPU values from selected comparable licences between Optis and Google, and between Apple and Ericsson, InterDigital, Nokia and Sisvel.

Lawyers told JUVE Patent this confirms that using comparables is now the UK courts’ preferred method for calculating licence rates.

Third FRAND-rate determination

Regarding non-monetary terms, the Court of Appeal has taken a more neutral position, according to law firms analysing the ruling. The court did not impose conditions on either party. At first instance, the High Court had ruled on clauses such as requiring Optis to withdraw foreign proceedings.

This marks the third time the Court of Appeal has reviewed a FRAND-rate determination by the UK High Court. The previous cases were Unwired Planet vs Huawei and InterDigital vs Lenovo. In the latter case, the court also increased the licence rate for the patent holder last year.

SEP owners welcomed the ruling. In recent months experts had seen implementers gaining ground after the Court of Appeal ordered interim licences in disputes between Panasonic and Xiaomi, and Ericsson and Lenovo. Both disputes settled shortly afterwards. At present there is no clear indication which side has the advantage in UK courts.

Optis happy, Apple disappointed

Reuters reported that an Optis spokesperson welcomed the ruling, which they said “corrected a clearly flawed prior ruling and has made meaningful progress toward affirming the true value of our patents to Apple devices”.

“We will continue to ensure fair compensation for the Optis intellectual property that enables high-speed connectivity for millions of devices around the world,” the spokesperson added.

According to the same report, an Apple spokesperson said the iPhone maker is “disappointed by this decision”. Apple reportedly plans to appeal. Under UK law, Apple must first request permission from the Court of Appeal to take the case to the Supreme Court. The court rejects most such requests, though Apple could still petition the Supreme Court directly.

The Supreme Court has previously ruled on a FRAND case. In 2020, it upheld Colin Birss’ FRAND-rate determination in Unwired Planet vs Huawei and confirmed UK courts’ jurisdiction for global FRAND rate determinations.

Established teams for both sides

In that case, EIP and Osborne Clarke represented NPE Unwired Planet. The patent teams have continued to work together, led by EIP veteran Gary Moss and Osborne Clarke partner Arty Rajendra. They currently represent not only Optis against Apple but also Avanci against Tesla. In the latter case, the Court of Appeal recently denied jurisdiction to determine a FRAND rate for a global pool licence.

At EIP, senior partner and chairman Gary Moss is gradually transitioning leadership to Andrew Sharples. The team also includes Kathleen Fox Murphy, Mark Lubbock, Angela Jack, Catherine Howell, Myra Sae-Heng, Owen Waugh, Emily Atherton, and Ellen Keenan-O’Malley. Osborne Clarke associate Sam Bluteau-Tait works alongside Arty Rajendra on the case.

WilmerHale acts as Apple’s primary counsel in US and UK patent cases. While the iPhone manufacturer regularly instructs Hogan Lovells and Freshfields on the continent, WilmerHale’s patent team handles UK proceedings. The team comprises London-based partner Anthony Trenton and Annsley Merelle Ward, as well as Alex Calver and Mari Sierra.

Large barrister teams

Both parties instructed substantial teams of barristers. Optis relied on an unusually large team from 8 New Square comprising Adrian Speck, James Abrahams, Isabel Jamal and Thomas Jones. Commercial law barrister Josephine Davies of Twenty Essex completed the team.

Apple’s defence team was similarly extensive, with a focus on commercial law barristers. These included Jon Turner and Ligia Osepciu from Monckton Chambers, Hugh Mercer from Essex Court Chambers, Sarah Love from Brick Court Chambers and Michael Bloch from Blackstone Chambers.

Brian Nicholson from 11 South Square was the sole IP specialist barrister on Apple’s team.