The UK Court of Appeal’s landmark decision, on 28 February 2025, granting Lenovo an interim licence to use Ericsson’s 4G and 5G patents is set to reshape standard essential patent (SEP) licensing negotiations.
The ruling is expected to encourage more implementers to seek similar relief from the UK courts and elsewhere.
Peter Pereira, a London-based partner at Kirkland & Ellis who advised Lenovo on the case, described the ruling as a significant evolution in the English court’s approach, especially following the unfavourable first-instance judgment last November.
“It’s a very significant decision,” Pereira told China Business Law Journal, adding that it will influence future cases where one party attempts to coerce another into accepting licensing rates that are not FRAND-compliant.
The patent clash, sparked by Ericsson’s 2023 US lawsuits, extended to Brazil and Colombia. Lenovo shifted to UK courts in November 2023 to pursue a global cross-licence, later escalating with Motorola’s 2024 UPC suits in Munich (this hearing is delayed to May 2025), as UK FRAND trials proceed in April 2025.
In a recent development, Ericsson has refused to accept the interim license. As a result, the UK Court of Appeal officially ruled on 3 March that Ericsson is in breach of its FRAND (fair, reasonable, and non-discriminatory) obligations, designating it as an unwilling licensor.
The use of the word “coerce” in the judgment underscores its importance. Judge Richard Arnold stated: “Ericsson’s wish to coerce Lenovo into accepting terms more favourable to Ericsson than the English courts will determine to be FRAND.” This rare use of the term highlights the court’s stance against undue pressure in licensing negotiations.
Judge Arnold also questioned Ericsson’s global litigation strategy, including injunction orders obtained in Brazil and Colombia. “What is the point of Ericsson pursuing the Brazilian, Colombian and US proceedings, and attempting to exclude Lenovo’s products from those commercially important markets, with all the massive attendant effort and expense for both parties?” he said.
In a statement to CBLJ, Ericsson described the ongoing litigation as a countermeasure against Lenovo’s infringement of its patents, aimed at securing fair compensation to sustain its investment in innovation.
“While we cannot comment on any specific decision, we note that Lenovo has now been using Ericsson’s technology without a licence for over a decade, despite our best efforts to reach agreement,” said Urban Fjellestad, head of marketing and communications at Ericsson.
Central to the case is Ericsson’s potential breach of its FRAND obligations. The court found that Ericsson’s continued litigation, despite Lenovo’s willingness to accept a FRAND rate determined by the English court, constituted a breach. As a result, the court granted Lenovo an interim licence, which could lead to the withdrawal, dismissal or suspension of injunction lawsuits initiated by Ericsson.
“A willing licensor in the position of Ericsson would enter into an interim licence with Lenovo pending that determination,” said Judge Arnold.
Negotiation implications
The decision is expected to shift the balance of power in licensing negotiations, giving Lenovo more leverage, a source familiar with the case noted, adding that the ruling could lead to more implementers seeking interim licences to protect their business operations while negotiations or litigation are ongoing.
However, the long-term impact remains uncertain. Two key factors will determine the outcome: the consequences of Ericsson’s refusal of the interim licence and whether the ruling effectively halts judicial proceedings in other jurisdictions.
The court’s designation of Ericsson as an unwilling licensor, prompted by the patent holder’s refusal to its decision, is likely to result in the court determining a higher FRAND rate, Max Sun, a senior partner at Kaiwei Law Firm has told CBLJ.
Unlike the Panasonic-Xiaomi dispute, which was settled weeks after an interim licence was ordered by the same court in September 2024, Ericsson has not yet committed to accepting a licence determined by the UK court. Additionally, courts in other jurisdictions may assess the decision differently and continue their own proceedings.
Sun noted that interim licences were less intrusive to the judicial sovereignty of other jurisdictions compared to anti-suit injunctions, making them more likely to succeed. He added that the UK court’s precedent could inspire other jurisdictions to adopt similar measures, intensifying the competition for jurisdiction over SEP licensing disputes.
Experts believe the ruling will have far-reaching implications for future SEP licensing cases. It is likely to encourage more implementers to turn to courts to resolve disputes and secure lower licensing rates.
“The court’s approach to interim licences and its role in resolving disputes will influence future cases, leading to more interim licence requests,” said Pereira.
Sun explained that the interim licence creates a buffer zone allowing implementers to continue their business operations unscathed of global injunctions. This gives implementers more bargaining power in negotiations with SEP holders.
For multinational implementers, interim licences could end lawsuits or injunctions initiated by rights holders in other jurisdictions, provided the interim licence is accepted by those courts. Sun said this would alleviate the burden of defending against multiple lawsuits globally.
However, he warned that if interim licences became widely adopted, they could undermine the effectiveness of injunctions as a negotiating tool for rights holders. This could lead to lower licensing rates and delays in reaching agreements.
“It appears more friendly to licensees than licensors,” said Sun, predicting that more implementers would resort to courts instead of negotiations to resolve disputes over licensing terms.
Pereira, however, argued that the “court’s role is to ensure fairness and transparency in licensing, not to favour one side over the other”.
One point of consensus among experts is that the UK courts are likely to see an increase in SEP licensing disputes.
Pereira noted that the English court’s willingness to set rates and terms for licences makes it an attractive jurisdiction for implementers seeking resolutions. Sun added that this reflected the UK court’s ambition to position itself as the preferred jurisdiction for resolving SEP disputes.
“The UK courts have undoubtedly sent a friendly signal to implementers, making the UK a favoured jurisdiction,” he said.
The judgment also indicates that UK courts are open to issuing more interim licence declarations. Judge Arnold stated: “It is to be hoped that our decision in this case will provide the Patents Court with sufficiently clear guidance to avoid, or at least reduce, the need for further such appeals.”
Pereira said: “It makes it easier for the lower courts to apply the principles, rather than having to guess themselves.”
As the UK courts continue to assert their role in SEP licensing disputes, this decision is likely to set a precedent for future cases, reshaping the global landscape of SEP licensing negotiations.
Kirkland & Ellis’ London team, led by Nicola Dagg, oversees Lenovo’s global dispute strategy, supported by partners Jin Ooi, Peter Pereira and Oscar Robinson, and associates Ashley Grant and Andrew Marks. Lenovo’s barristers for the hearing in the Court of Appeal included Andrew Lykiardopoulos of 8 New Square, James Segan of Blackstone Chambers and Kathryn Pickard of 11 South Square.
Ericsson was represented by Monckton Chambers’ Meredith Pickford and Nikolaus Grubeck, and 8 New Square’s Edmund Eustace.
