Apple takes $500m global patent dispute to UK Supreme Court
Apple is heading to the UK’s highest court to fight a $500mn bill that judges have said the tech giant must pay to embed patented mobile technology in its devices, such as iPhones, worldwide.
As reported by FT, the Supreme Court case, due to begin on Monday, is the climax of a bitter, long-running dispute over patents for highly technical standards that underpin voice and data communications between mobile devices.
Apple, which is being supported by a powerful coalition including chipmaker Intel and leading Hollywood film studios, has warned that if it loses the case other device makers could face large patent bills, threatening to stifle innovation and increase prices for consumers.
Legal principles established in the case will set a precedent that will help shape global royalty rates for other technologies.
Original contributors to complex protocols that underpin mobile connections, including Ericsson, Samsung and Panasonic, sold a selection of the patents in stages to a group called Optis.
Optis is owned by funds managed by New York hedge fund and private equity manager Brevet Capital.
Negotiations over licensing terms between Apple and Optis collapsed in 2019, prompting the patent owner to sue in England, where the courts have the power to set global royalty rates.
In 2023 the High Court in London ruled that Apple had to pay $56mn to Optis, but the Court of Appeal last year increased the iPhone maker’s bill ninefold to $502mn.
The Court of Appeal arrived at the figure in part by using a deal that Optis struck with Google as a baseline. The judges’ calculation also included royalties going back to 2013, whereas the High Court said a six-year limit should apply.
Apple accepts that it needs to pay to use the licence on “fair, reasonable and non-discriminatory” terms but contends that the Court of Appeal “erred in law” and its approach to valuation was “arbitrary”.
“If the UK courts’ approach to determining rates is subjective, unprincipled or erratic, this damages the proper functioning of industries worldwide,” lawyers for Apple said in written arguments for the Supreme Court case.
Unless royalties are “kept to a reasonable level . . . this harms innovation, quality and product prices borne by consumers”, they added.
Optis argues that Apple has dragged its feet in paying a fair and reasonable amount and sought to use its market power to depress royalty rates.
“Every single patent which is raised with Apple receives the same response: that a licence is not needed, as the patent is either not essential or invalid,” lawyers for Optis said in a written submission to the court.
The High Court’s assessment of the sum Apple owed had “numerous errors” and the Court of Appeal is “obliged and right to set it aside”, the submission added.
Apple’s appeal is also being opposed by Qualcomm, a chipmaker that licences and develops mobile technology and is among the interveners in the case. Lawyers for the company said in a written submission that Apple’s approach departs from “widely accepted principles” and threatens incentives to innovate.
A panel of five Supreme Court judges, including president Lord Robert Reed, is due to hear the case, which is scheduled to last three days.
World Affairs Correspondent
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