The UK Supreme Court overturned two previous unfavorable rulings on Monday, determining that Tesla Motors can continue to seek fair licensing terms for 5G standard essential patents from InterDigital and the patent licensing platform Avanci.
This decision clears a major legal obstacle for Tesla's plan to launch 5G-connected vehicles in the UK. The core of the dispute is whether the royalty rates for standard essential patents, when licensed collectively through a patent pool or platform like Avanci, must still be subject to the "Fair, Reasonable, and Non-Discriminatory" (FRAND) principle.
Avanci had previously proposed a fixed licensing fee of $32 per vehicle to Tesla, refusing to negotiate on the terms. Tesla argued that this fee was too high and filed a lawsuit with the London High Court in 2023, seeking a court-determined fair rate. Both the High Court and the Court of Appeal initially dismissed Tesla's request for a FRAND rate determination, ruling that the UK courts lacked jurisdiction over the matter.
However, the Supreme Court unanimously supported Tesla's appeal in its final judgment, stating that a patent holder's act of placing its patents on the Avanci platform does not exempt it from fulfilling its FRAND commitments made to the European Telecommunications Standards Institute. The court further determined that for Tesla, an Avanci global portfolio license might be the only viable option, thus granting the UK courts jurisdiction to hear the case.
This ruling is seen as a significant expansion of the UK courts' authority on FRAND jurisdiction, marking the first time it has confirmed the possibility of setting rates for a global patent pool license. The case will now be remanded to the High Court for a full trial, where it will decide whether Avanci's $32 per vehicle fee truly meets FRAND standards.
The decision could have a profound impact on the entire automotive industry, providing a key reference for other car manufacturers facing similar patent licensing challenges.
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