Case details at a glance

Jurisdiction: England & Wales
Decision level: Supreme Court
Parties: InterDigital Patent Holdings Inc, InterDigital Holdings Inc, Tesla Inc, Tesla Motors Ltd, Avanci Vehicle LLC
Citation: UKSC/2025/0058/A
Date: 27 July 2027
Decision: dycip.com/uksc-2025-0058 

The judgment is significant because the Supreme Court rejected the view that a SEP owner’s FRAND obligation falls away, or becomes irrelevant, when that SEP owner chooses to license through a collective licensing structure such as a patent pool or platform. The court held that Tesla had established a serious issue to be tried as to whether the FRAND obligation continues to apply where SEPs are offered through a platform, and as to whether, in the commercial circumstances of the Avanci 5G platform, the FRAND licence for InterDigital’s UK SEPs might itself be a global platform licence at a FRAND rate.

The background was the familiar ETSI FRAND framework. SEP owners who declare patents essential to ETSI standards give an irrevocable undertaking that they are prepared to grant licences on fair, reasonable and non-discriminatory terms. The Supreme Court reiterated that this obligation is intended to strike a balance: preventing SEP owners from “holding up” implementers while also preventing implementers from “holding out” and delaying legitimate royalty payment. The court also reaffirmed that industry practice is central to interpreting the ETSI IPR Policy and to assessing what licence terms are FRAND.

A key practical point was the role of Avanci. Avanci operates a platform through which multiple SEP owners license portfolios for connected vehicles. For the Avanci 5G platform, Avanci acts as agent for licensors and offers a standard patent licensing agreement on a global basis. Avanci itself owns no SEPs and has given no ETSI FRAND undertaking, but the licensors using the platform, including InterDigital, are subject to their own FRAND undertakings. The court accepted that this agency structure did not preclude Tesla from seeking declaratory relief involving Avanci, because the dispute concerned Tesla’s claimed right to a FRAND licence of SEPs owned by licensors who had undertaken FRAND obligations.

The Supreme Court held that there was a serious issue to be tried on Tesla’s argument that a SEP owner remains bound by its FRAND obligation even when it chooses to license through a pool or platform. The court found no basis in the wording or policy of the ETSI IPR Policy for concluding that the FRAND obligation ceases to apply where SEP owners jointly offer licences through an agent. On the contrary, the policy justification for applying FRAND principles may be even stronger where owners of a very large proportion of the relevant SEP stack act through a common licensing platform.

The court did not accept Tesla’s broadest contention that every offer of a licence made by a SEP owner must itself be FRAND. It held that the FRAND obligation requires SEP owners to ensure that FRAND terms are available, but does not necessarily prevent separate commercial negotiations that may produce non-FRAND commercial offers. However, the court accepted that Tesla had a real prospect of showing that, in the practical circumstances of Avanci 5G licensing, the only FRAND licence of InterDigital’s UK SEPs may be a global Avanci platform licence at a FRAND rate.

This is perhaps the most important practical effect of the judgment. The Supreme Court recognised that bilateral licensing may not be a realistic commercial alternative where an implementer needs access to thousands of SEPs owned by numerous licensors. The court referred to the commercial reality that negotiating individually with all relevant SEP owners may be impracticable, time-consuming and costly, and noted that Avanci’s own case described the alternative bilateral licensing landscape as a “licensing debacle”. That evidence supported Tesla’s case that, in practice, a platform licence may be the real-world mechanism by which implementers obtain access to the standard.

The court also held that Tesla had a real prospect of obtaining declaratory relief against both InterDigital and Avanci. As against InterDigital, Tesla’s claim was founded on its asserted right, as an implementer and beneficiary of InterDigital’s ETSI undertaking, to a FRAND licence of InterDigital’s UK SEPs. As against Avanci, the court accepted that although Avanci owes no independent FRAND obligation, it is the licensing agent responsible for offering the platform licence and is therefore a proper party to a dispute about whether the platform terms are FRAND.

The court further rejected the argument that all Avanci licensors had to be joined before the claim could proceed. It recognised the importance of procedural fairness, but held that it was not necessary, at least at this stage, for every SEP owner on the platform to be joined or represented. Avanci was described as the essential party for assessing the platform terms because it devised the royalty following its investigations and discussions with licensors and licensees, and individual licensors could apply to participate if they wished.

On pleading, the Supreme Court also held that Tesla’s claim included, in the alternative, a fallback claim for a bilateral FRAND licence from InterDigital. Although Tesla’s primary objective was a platform licence, the court found that the pleadings and prayer for relief embraced an alternative determination of the FRAND terms of a bilateral licence of InterDigital’s global SEP portfolio.

The jurisdictional rulings are equally important. The Supreme Court characterised Tesla’s licensing claim as being about the licensing of InterDigital’s UK SEPs on the Avanci 5G platform and the FRAND terms for such a licence, even though Tesla contended that only a global licence would be FRAND. The Court adopted the reasoning in Vestel and later cases: a claim to enforce the FRAND obligation attaching to UK SEPs remains a claim about UK patent rights, even if the resulting FRAND licence would also cover foreign patents.

That characterisation had several consequences. First, service on IDPH under CPR r 63.14(2) was valid because Tesla’s licensing claims “related to” IDPH’s UK patents: a licence would provide a defence to infringement of those UK SEPs. Secondly, IDH was a necessary or proper party because it had given the ETSI undertaking on behalf of the patent-owning entity. Thirdly, Gateway 11 was available because the subject matter of the claim related wholly or principally to property within the jurisdiction, namely UK patents.

Finally, the Supreme Court held that the Delaware Court of Chancery was not an available forum for the dispute as properly characterised. The evidence indicated that a US court would be unlikely to adjudicate a FRAND rate for UK patents or determine claims concerning foreign patent rights. Accordingly, the English court was the proper forum for Tesla’s implementer-led claim concerning the FRAND licensing of UK SEPs, even though the terms in issue were those of a global platform licence.

In practical terms, the judgment gives implementers a powerful route to “clear the way” proactively in the English courts where they need a licence to use standards in UK products and contend that a pool or platform rate is not FRAND. It also means SEP owners cannot avoid FRAND scrutiny simply by licensing through a platform or pool. For platform operators, the decision increases the likelihood that their advertised FRAND rates may be tested in English proceedings, even where the operator itself owns no patents and owes no direct ETSI undertaking. For SEP owners, the decision makes participation in a licensing platform commercially efficient but legally consequential: if they rely on platform licensing in practice, the FRAND status of that platform may become justiciable.