Court's decision could shape legal principles on global royalty rates for other technologies
Apple Inc. is heading to the UK Supreme Court to challenge a ruling requiring it to pay approximately US$502 million to patent owner Optis for the use of mobile technology patents in devices including the iPhone, the Financial Times reported.
The case, which is scheduled to begin on Monday and last three days, marks the latest stage of a long-running dispute over patents for highly technical standards that underpin voice and data communications between mobile devices.
Optis owns a portfolio of patents that were originally developed by contributors to mobile communications standards, including Ericsson, Samsung and Panasonic. The patents were acquired in stages by Optis, which is owned by funds managed by New York-based hedge fund and private equity manager Brevet Capital.
Negotiations between Apple and Optis over licensing terms collapsed in 2019. Optis subsequently sued in England, where courts have the authority to determine global royalty rates.
In 2023, the High Court in London ruled that Apple should pay US$56 million to Optis. Last year, however, the Court of Appeal increased the award to approximately US$502 million.
The Court of Appeal arrived at the higher figure in part by using a licensing agreement between Optis and Google as a benchmark. It also included royalty payments dating back to 2013, whereas the High Court had concluded that a six-year limitation period applied.
Apple accepts that it is required to pay for a licence on fair, reasonable, and non-discriminatory terms. However, the Financial Times reported that in written submissions to the Supreme Court, the company argued that the Court of Appeal "erred in law" and that its valuation methodology was "arbitrary".
Apple's submissions state that if UK courts adopt a subjective, unprincipled or erratic approach to setting royalty rates, it could affect industries worldwide. The company also argued that royalty levels should remain reasonable because they can affect innovation, product quality and consumer prices.
Optis has disputed Apple's position. In written submissions, it argued that Apple had delayed paying a fair and reasonable amount and sought to use its market power to reduce royalty rates. Optis also submitted that the High Court's assessment contained "numerous errors" and that the Court of Appeal was right to set it aside.
The appeal has attracted interventions from several industry participants. Apple is supported by a coalition that includes chipmaker Intel and leading Hollywood film studios. Qualcomm, which develops and licenses mobile technology, opposes Apple's appeal and argues that the company's approach departs from widely accepted principles and threatens incentives to innovate.
A panel of five Supreme Court judges, including president Lord Robert Reed, will hear the appeal. The decision is expected to establish legal principles that could influence the determination of global royalty rates for other technologies.
