The recent Court of Appeal (CoA) ruling in Lenovo v. Ericsson [2025] EWCA Civ 182 has expanded the application scope of its earlier short-term licence ruling in Panasonic v. Xiaomi [2024] EWCA Civ 1143. The ruling reaffirms the English courts' approach which favours implementers that are willing to pay royalties pending the final determination of fair, reasonable and non-discriminatory (FRAND) terms. This deprives standard essential patent (SEP) owners of the exclusionary power of injunctions and leaves them between two options:

• Complying with the order: The immediate downsides of this option are (i) being paid royalties, albeit in the interim period, that might be closer to implementers' offers and (ii) forfeiting the right to enforce their SEPs not only in the UK, but also in other jurisdictions covered by the global interim licence.
• Not complying with the order: It is an option for SEP owners to disregard the English courts' short-term licence decisions. This is not fanciful, in particular if the SEP owner could afford the inability to enforce its SEPs in the UK. That said, these rulings brand SEP owners as "unwilling licensees" and declare that they are in breach of their obligation to negotiate FRAND licences in good faith. The English courts' determination is not binding in other jurisdictions. However, it is difficult to imagine how SEP owners could persist in conduct that has been condemned as a hold-up tactic by a court.

How has Lenovo v. Ericsson expanded the scope of Panasonic v. Xiaomi?

Panasonic v. Xiaomi

Panasonic v. Xiaomi was the CoA's first short-term licence ruling, overturning Leech J's rejection of Xiaomi's application at first instance. The key points of the ruling are:

• Acting contrary to the duty of good faith: Pursuing proceedings elsewhere, after having invoked the jurisdiction of the English courts and undertaken to submit to their FRAND determination, would fall short of the duty of good faith under clause 6.1 of the ETSI IPR Policy.
• Making an order for a short-term licence will serve a useful purpose: The short-term licence declaration would safeguard the integrity of the proceedings in England and could serve the useful purpose of encouraging the SEP owner to reconsider its position.
• The short-term licence ruling will not be contrary to comity (i.e. the need to respect the jurisdictions and judicial systems of other nations): Depending on the SEP owner's reaction to such a ruling, other jurisdictions would either be relieved of burdensome parallel litigation or they would proceed to make their own decisions.
• Calculating the interim royalty rate: Splitting the difference between the parties' offers to set the interim royalty rate was appropriate in the circumstances. This was considering that the final royalty rate is likely to be somewhere between the parties' offers. If necessary, the interim rate could be adjusted based on the final rate.

Following the short-term licence ruling, the parties agreed to enter into an interim licence and subsequently settled to end all their pending SEP-related litigation.

Lenovo v. Ericsson

Although it is similar to Panasonic v. Xiaomi, Lenovo v. Ericsson is not on all fours with this. The differences worth noting are:

• Not the SEP owner (Ericsson), but the implementer (Lenovo) started proceedings in England. In parallel, Ericsson filed claims and complaints in the Eastern District of North Carolina (EDNC) and the International Trade Commission (ITC) in the US.
• Ericsson also challenged the jurisdiction of the English courts. This challenge was rejected and it was not appealed further.
• Ericsson did not undertaken to be bound by the English courts' final FRAND determination. It undertook to enter into a cross-licence on terms as set by the EDNC.

Lenovo's application for an interim licence relying on Panasonic v. Xiaomi was initially rejected by Richards J. His reasoning was that:

• making such a declaration would be against comity and would not serve any useful purpose considering that Ericsson would probably not enter into a short-term licence;
• a royalty rate could not be set without properly considering evidence regarding the valuation of the parties' SEP portfolios and comparable licences; and
• he was not convinced that Ericsson had acted contrary to the good faith obligation stemming from its FRAND undertaking.

The CoA considered these issues in turn in its ruling overturning Richards J's decision. In summary, the conclusions are:

• Willing licensee v. unwilling licensor: Lenovo had been a willing licensee from the point it undertook to enter into a licence on the terms determined by the English courts to be FRAND. Ericsson was not complying with its obligation to negotiate a licence with Lenovo in good faith. It rather tried to extract more favourable terms than the English courts would determine to be FRAND.
• Methodology to determine FRAND terms for an interim licence: Determining FRAND terms for an interim licence is a much more limited task than the final determination, as the former's purpose is to hold the ring pending the final determination. Besides, any interim royalty payments could be adjusted following the determination of the final FRAND rate. For the purposes of setting the initial interim FRAND rate, splitting the difference between the parties' offers was an appropriate methodology.
• Short-term licence ruling will have a useful purpose: Considering what happened following the first short-term licence application and how much effort Ericsson has put into resisting the appeal, making the declaration would serve a useful purpose in forcing Ericsson to reconsider its position.
• Ericsson engaged in hold-up: It appeared that Ericsson did not want EDNC to determine FRAND terms either. This demonstrated that Ericsson's rejection of being bound by the English courts' FRAND determination was not driven by jurisdictional preference, but by the desire to leverage the exclusionary power of national injunctions. This was a hold-up tactic to extract supra-FRAND rates.
• Making a short-term licence declaration would not breach the principle of comity: The reason was twofold:
  • If Ericsson complies with the declaration, it will relieve courts in other jurisdictions of burdensome parallel litigation.
  • If, on the other hand, Ericsson ignores the declaration and refuses to enter into a
    short-term licence, other courts can still make their own assessment of the parties' conduct to decide whether Ericsson is entitled to any relief for the alleged patent infringements.

Ericsson sought permission to appeal from the Supreme Court on 28 March 2025 to challenge the CoA's ruling, but the parties subsequently announced that they had reached a global settlement. The settlement ended all ongoing SEP disputes between the parties including this potential further appeal. Therefore, Panasonic v. Xiaomi and Lenovo v. Ericsson are good law until the Supreme Court gets a chance to comment on the CoA's position if and when a new interim licence ruling makes its way to the highest court.

Key takeaways

The key practical takeaways from these rulings for stakeholders in the standardisation ecosystem are:

• Undertakings to be bound by the English courts' FRAND determinations give a clean slate for implementers. From that point on, they would be regarded as willing licensees and could request an interim FRAND licence.
• Not revoking the jurisdiction of the English courts or giving an undertaking to be bound by their FRAND determination are not material in assessing whether the short-term licence declaration will serve a useful purpose.
• Unless SEP owners can present the court with a convincing case that there is a forum, which is more appropriate than the English courts to handle the FRAND dispute, the comity argument would likely fail.
• In principle, the midpoint between the parties' offers will be used to determine the interim FRAND royalty rate, subject to adjustment following the determination of final FRAND terms.