Court of Appeal refuses appeal against refusal of interim injunction in international telecom patent dispute

About this case:

• Citation:
  [2024] EWCA Civ 1100
• Judgment:
  External link
• Court:
  England and Wales Court of Appeal
• Judge:
  Lord Justice Arnold

Motorola Mobility LLC and Lenovo (United States) Inc (collectively referred to as Lenovo) sought to restrain Ericsson Ltd and another related company from doing acts they alleged infringed a European Patent (UK) they held declared to be a standard essential patent (SEP). While Lenovo accepted that they were required to licence the SEPs in their portfolio, they argued that they ought to be a net recipient of sums payable under the cross-licence.

The appeal was heard by Lord Justice Moylan, Lord Justice Arnold, and Lord Justice Phillips. Michael Bloch KC and Kathryn Pickard appeared for the appellants and Michael Tappin KC, Josephine Davies KC and Fiona Petersen appeared for the respondents.

Not adequate remedy

The patent in question, EP 649, was granted on 10 January 2024 and declared to be essential to the European Telecommunications Standard Institute 5G standard. Clause 6.1 of the ETSI IP rights policy obliged Lenovo to licence the SEPs in their portfolio on fair, reasonable and non-discriminatory (FRAND) terms, and it was accepted that Ericcson was entitled to such a licence and obliged to licence its own SEPs to Lenovo on FRAND terms. It was thus common ground that there should be a global cross-licence of the two portfolios, and although they exploited each other’s SEPs the parties were not direct competitors.

Ericsson disputed validity and infringement of EP 649 and commenced proceedings in the US state of North Carolina seeking determination of the terms of the cross-licence. Meanwhile, Lenovo commenced proceedings in the UK Patents Court for the same reason. Neither party would have the benefit of a licence to the other’s portfolio until one of these courts had made a decision on the terms and the other party had decided to accept that determination or the consequences of not taking a licence on those terms.

It was alleged by Lenovo that Ericsson was exerting illegitimate pressure on them to agree to supra-FRAND rates for the licence to Ericsson’s portfolio, including obtaining injunctions against them in Brazil and Colombia and seeking relief from the US International Trade Commission with the aim of debarring Lenovo products from the US market, and thus damages equating to the royalties payable under a cross-licence would not be an adequate remedy. The High Court judge held that damages would be an adequate remedy since the losses Lenovo were sustaining were not caused by the alleged infringement of EP 649 in the UK.

On appeal it was argued by Lenovo that the judge was wrong to conclude that they would be adequately compensated by payment of royalties, and she ought to have held that the balance of the risk of injustice favoured the grant of the relief sought. It was additionally submitted that the judge ought to have found that Ericsson’s conduct was unconscionable.

Real complaint

In an opinion with which the other judges agreed, Arnold LJ said of the first ground of appeal: “The question which the court has to consider under American Cyanamid and Co v Ethicon Ltd (1975) is whether the claimant can be adequately compensated in damages in respect of loss caused by the alleged infringement if it succeeds at trial in establishing its right to final relief. In any event, Ericsson contend that the evidence does not establish that it is likely that Lenovo will be forced to accept the rates demanded by Ericsson rather than pursue this claim to trial.”

He continued: “In effect, Lenovo’s argument amounts to saying that they would not suffer the losses they rely on if Ericsson were to withdraw their foreign claims. But the relief claimed by Lenovo on this application is an interim injunction to restrain allegedly infringing acts by Ericsson in the UK, not an injunction requiring Ericsson to withdraw the foreign claims.”

Noting that Lenovo had challenged the application of the American Cyanamid principles in this case, Arnold LJ said: “This argument does not overcome the disconnection between the relief which Lenovo seek – an interim injunction to restrain Ericsson from infringing EP 649 in the UK – and the harm of which Lenovo complain – losses in Brazil and Colombia due to the injunctions obtained by Ericsson in those countries. Even assuming that Lenovo have a legitimate interest to protect in those countries, the injunction is not framed to protect that interest.”

He concluded: “It seems to me that Lenovo’s real complaint is that Ericsson’s behaviour in obtaining injunctions in Brazil and Colombia, and in seeking the relief they seek in the ITC, is inconsistent with the apparent acceptance by both sides that the FRAND rate for the cross-licence should be determined by a court. This complaint has considerable force, but it does not justify the relief which Lenovo seek on this application. The best way to resolve the dispute between the parties is for one court to determine what terms are FRAND as soon as possible.”

For these reasons, the appeal was dismissed.