Published: 1/1/13
In this decision, a Chinese appellate court determined the FRAND royalty for FRAND-encumbered SEPs relating to various telephony standards. The court determined that the SEP holder breached its FRAND commitments by seeking excessive royalties. The court affirmed a lower court’s determination of the FRAND rate by reference to the estimated royalty rates of the SEP holder’s licenses to two licensees, Apple and Samsung, which the court extrapolated by allocating the price of paid up licenses to an estimate of the number of units sold that were subject to the licenses. The court held that the SEP holder acted improperly in asking for a royalty-free grantback to the prospective licensees SEPs. The court notably held that Chinese law, and not the law of the relevant standard setting organization’s jurisdiction, applied to the interpretation of the FRAND commitment.