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Court of Appeal upholds landmark Apple v Optis ruling

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Implementers must agree in advance to pay what the court determines as FRAND, the England and Wales Court of Appeal has ruled

Implementers must accept a court-determined royalty for standard-essential patents or face an injunction, the England and Wales Court of Appeal ruled in Apple v Optis yesterday, October 27.

The judgment, written by Lord Justice Richard Arnold, was issued just over a week after the final hearing in the dispute. It affirmed High Court judge Richard Meade’s landmark decision in September 2021.

In a notable postscript to the judgment, Arnold bemoaned what he described as the “dysfunctional state” of SEP dispute resolution.

In the 2021 ruling, Meade told Apple it must agree to pay whatever terms the court later deemed fair, reasonable, and non-discriminatory (FRAND) for a royalty to Optis’s SEP portfolio.

If Apple didn’t make that undertaking, it would be hit with a so-called FRAND injunction.

Apple committed to take a licence but later appealed against the judgment, on the grounds that implementers must be able to see the terms of a deal before they agreed to pay.

Optis filed its own cross-appeal, in which it argued that Meade’s proposed FRAND injunction was too generous to Apple.

Optis said Apple should be subject to an unqualified injunction, which would stop the smartphone maker from using the patented technology even after it had made the FRAND undertaking.

The Court of Appeal dismissed both appeals and instead endorsed Meade’s approach.

In his postscript, Arnold said each side had “adopted its position in an attempt to game the system in its favour”.

He added: “The only way to put a stop to such behaviour is for standard-development organisations like the European Telecommunications Standards Institute to make legally enforceable arbitration of such disputes part of their intellectual property rights policies.”

Optis was represented by EIP and Osborne Clarke. WilmerHale acted for Apple.

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