Patent ruling against Apple could see UK sales ban on iPhones and iPads
Apple may have a matter of weeks to commit to paying a licence for patented technologies owned by Optis Wireless Technology or face an injunction
Apple has been found guilty by in the UK High Court of infringing the patent rights of Optis, a technology-owning company based in Texas, in a move that could potentially see sale of Apple products banned in the UK if the company does not commit to an expensive licensing arrangement.
Optis Wireless Technology (also known as PanOptis and Unwired Planet) owns five patents for cellular technologies used by Apple in iPads, iPhones and smart watches. Optis purchased the patents from other IT vendors.
The trial was the latest in a series of court cases in the UK and US concerning Optis' Standard Essential Patents (SEPs), and the payment of a so-called FRAND licence.
FRAND (fair, reasonable and non-discriminatory) cases often arise when intellectual property rights covering essential or standard features used in a product are held by a third party. The product manufacturer may choose to pay a licence directly to the licence holder, or they may pay for a licence on agreed FRAND terms. On the other side of the equation, owners of SEPs must undertake to grant a licence on FRAND terms to sellers of standards-compliant products (e.g. mobile phones).
In the Apple-Optis case, Apple was judged to have infringed Optis' patent rights by using its IP without a licence.
According to the lastest court ruling, Apple must now commit to paying for a FRAND licence, or be subject to an injunction which could prevent the company selling affected products in the UK. So far Apple has refused to make such an undertaking.
Optis, represented by law firm Osborne Clarke, had proposed that Apple's refusal to commit to a FRAND licence meant it should lose the right to take this option. Apple stated that it needed to see the proposed agreement before committing to it.
However, Meade rejected both of these positions, ruling on Tuesday that Apple must commit to a global FRAND licence within a ‘short time', the terms of which would be decided by the court in the follow-up trial next year, or face an injunction which would prevent it selling affected products in the UK.
A short time in this context is likely to mean a matter of weeks.
Apple is likely to appeal the decision. It has accused Otis of abusing its dominant position with respect to the patents, but the Judge said this issue could not be considered until next summer, when the FRAND arrangements will be finalised in a follow-up trial.
The licence fee due to Optis could be as high $7 billion, so there's a lot riding on the outcome for Apple.
However, IP expert and blogger Florian Mueller said Apple's options were limited, and he doubted the injunction will be overturned on appeal: "Apple may not like the idea that it has to make a decision now, without knowing what terms will be set next year. But the UK courts are most likely going to continue to tell Apple that it has to trust them."
In August, Optis was awarded a $300 million settlement against Apple by a court in Texas, after having initially been granted $503 million, the judge ordering a retrial after finding that Optis may not have been acting in line with FRAND terms. Nevertheless, despite the amount owed being reduced, the basic judgement stood.
Apple said it plans to appeal the Texas ruling, and accused Optis, in not so many words, of being a patent troll.
"Optis makes no products and its sole business is to sue companies using patents they accumulate. We will continue to defend against their attempts to extract unreasonable payments," Apple spokesperson Josh Rosenstock told Reuters.