UK Court Allows SEP Owners to Choose Arbitration for FRAND Terms
The English Court of Appeal held a standard-essential patent owner can satisfy its FRAND licensing obligation by offering terms to be finalized in binding arbitration, even over the licensee's objection.
In Acer v. Nokia, the English Court of Appeal ruled that a standard-essential patent (SEP) owner can satisfy its licensing obligations by offering an immediate license with final global royalty rates to be determined by binding arbitration. The court stayed the underlying English court proceedings sought by the licensees, Acer and ASUS, effectively compelling them to accept arbitration over their objection. This grants a significant strategic advantage to SEP owners, who can now choose arbitration as the dispute resolution forum for setting global FRAND terms, bypassing potentially less favorable court systems. The decision rested on the principle that if multiple sets of terms can be considered FRAND, the SEP owner is entitled to select the option it prefers. For implementers, this ruling complicates the strategy of seeking court intervention to set license terms and may reduce their leverage in negotiations. The court noted arbitration offers advantages, such as global enforceability under the New York Convention. Counsel should monitor whether the UK Supreme Court will review the decision and consider how specific, substantiated objections to a proposed arbitration procedure might be received by courts in future disputes.