Apple case could shape licensing of ‘standard essential’ patents globally

Hearings before the UK Supreme Court in the dispute between SEP holder Optis and technology company Apple start on Monday and are expected to last three days. The court will consider the correct approach to ‘FRAND’ licence rate setting in the UK. 

FRAND is a term that describes the fair, reasonable and non-discriminatory licensing of SEPs. SEPs are patents that protect technology believed to be essential to implementing a technical standard. In other words, you cannot operate a standard-compliant device without necessarily using the patented invention. Standards are important for interoperability in industries including telecommunications and the ‘Internet of Things’, as well as in other sectors that use smart technologies, such as energy and infrastructure.

Standards are developed by businesses working together under the auspices of standard-setting organisations (SSOs), such as the European Telecommunications Standards Institute (ETSI), which oversees the development of communications standards vital to many businesses. SSOs like ETSI typically require SEP rights holders to make SEPs available for others to use by way of a licence on FRAND terms. Disputes on what constitutes ‘FRAND’ often arise in the context of SEP licensing negotiations. Litigation can then follow if the parties are unable to agree. Disputes have arisen in many jurisdictions including the UK, Germany and France, as well as in the US and China.

In 2020, in the Unwired Planet v Huawei case, the UK Supreme Court confirmed that the UK courts have the power to determine the royalty rates and terms of a global 'FRAND' licence. Since then, the UK courts have established themselves as a prominent forum for resolving global disputes concerning the licensing SEPs on FRAND terms. The imminent appeal in the Optis v Apple case offers the UK Supreme Court an opportunity to refine that guidance in light of how lower courts have applied it in the intervening years. 

Litigation in the case arose after Optis and Apple could not agree on the terms of a FRAND licence under which Optis would license its SEPs to Apple. Optis issued proceedings in February 2019 and, following a number of technical trials in the High Court, Apple committed to entering into a FRAND licence to be determined by the UK court.

In 2023, Mr Justice Marcus Smith determined that Apple should pay an annual lump sum of $5.13 million per year for 11 years, totalling $56.43 million. Notably, he reached this conclusion by adopting a valuation methodology of his own devising, comprehensively rejecting the evidence adduced by both parties’ experts.

Optis believed it was entitled to a much larger sum. It was subsequently granted permission to rely on 25 grounds of appeal, 11 of which related to valuation with the remainder concerning other licence terms.

Optis' primary case on appeal was that valuation should be conducted on the basis of a separate licence agreement it had concluded with Google, which it considered to be the closest comparable to the one it was seeking to agree with Apple. Apple, for its part, largely supported the High Court decision, though it proposed certain modifications to the approach taken by the judge. 

Earlier last year, the Court of Appeal provided guidance on how UK courts should conduct FRAND rate settings in this long running dispute. Lord Justice Birss gave judgment on the FRAND rate, while Lord Justice Arnold addressed the other licence terms and the impact of parallel US proceedings on the remedies available.

The Court of Appeal ultimately overturned the High Court’s ruling and recalculated the total FRAND royalty payable by Apple to Optis at $502 million, excluding interest, covering a 15-year licence. Central to the appeal was whether the High Court judge had been correct to reject the evidence of the parties’ accounting experts. On this issue, the Court of Appeal found that judge had erred.

The upcoming appeal

In October 2025, the UK Supreme Court granted Apple permission to appeal the Court of Appeal’s decision, affording it the opportunity to consider the correct approach to determining FRAND terms for global licences of mobile telecommunications SEPs.

The issues before the UK Supreme Court are:

• What is the correct approach that UK courts should adopt when determining FRAND terms for global portfolio licences of SEPs?
• Did the Court of Appeal err in reaching its own determination of the FRAND rate in this case, instead of remitting the matter for re-assessment?
• Did the Court of Appeal err in its approach to the question of payment of royalties on past sales in FRAND licences?
• Did the Court of Appeal err in its consideration of the effects of parallel foreign patent infringement proceedings?

The hearing will take place from 29 June to 1 July before Lord Reed, Lord Briggs, Lord Leggatt, Lady Simler and Lord Kitchin. A ruling is not anticipated for a number of months.

The outcome of this decision is likely to be important in shaping the future approach of the English courts to FRAND determinations.  

Co-written by Regina Damigou of Pinsent Masons.