A big splash in a patent pool! Supreme Court rules in Tesla v InterDigital and Avanci

Can an implementer ask the English courts to determine whether the terms of the licence offered by patent pools are FRAND (Fair, Reasonable and Non-Discriminatory), where the operator of the pool or platform is not the owner of the patents it licenses and has made no FRAND commitment itself? Yes, said the UK Supreme Court.

In Tesla v InterDigital, the Supreme Court allowed Tesla’s appeal, holding that an implementer is able to bring proactive declaratory proceedings to test whether a SEP (Standard Essential Patent) licence offer is FRAND even when that offer is made through a patent pool or patent platform. The decision will be welcomed by many implementers, especially those facing pool demands (be it Avanci or any other pool administrator) and who feel that those pool offers might warrant review as to whether they are truly FRAND. 

For nearly a decade, the landmark Supreme Court decision Unwired Planet v Huawei has underpinned the English courts' status as a forum of choice for the determination of global FRAND terms. However, Unwired Planet was a bilateral dispute brought by a patent owner against an implementer. The Supreme Court in Tesla v InterDigital and Avanci now fills the patent pool gap. It takes the pragmatic view that bilateral licensing with every pool member is not realistic or aligned to market practice: the licence to a patent pool (at a FRAND rate) may be the only available FRAND licence for licensees.

Why this matters

As the Supreme Court said, this case is “of great importance for all those innovators and implementers concerned with the production and operation of vehicles and other products which need to connect with one another”. For any business that builds standardised technology into its products – from vehicles and smart meters to televisions and IoT devices – patent platforms and pools are a practical route to becoming licensed. The Supreme Court has confirmed that the rates those pools charge can arguably be tested against the FRAND standard in the English courts, rather than sitting beyond judicial scrutiny. 

It is important to keep the procedural context in view: this was a jurisdiction appeal. The court decided only that the Tesla’s case raises serious issues to be tried: whether the platform licence must in fact be FRAND, and whether Avanci’s 5G Platform licence is FRAND, will now be determined at trial.

The wider stakes

Several industry bodies, including the Computer & Communications Industry Association , the App Association, the Motion Picture Association and the Fair Standards Alliance, intervened in support of Tesla. The common theme advanced was the commercial reality that, across sectors from IoT to video codecs, pools and platforms are frequently the only realistic route to a licence and that, if platform rates cannot be scrutinised, SEP owners may be able to extract supra-FRAND royalties without effective judicial oversight. By contrast, the International Center for Law & Economics advanced the contrary view, contending that extending FRAND obligations to pools and platforms is legally unfounded and economically unsound.

Background to the dispute

Tesla wanted to sell 5G-enabled vehicles in the UK (Tesla’s fourth largest market) and to do so lawfully, it needed a licence to the many UK SEPs declared essential to the 5G standard. 

Most of those SEPs are offered collectively through the Avanci 5G Platform – a global "one-stop" licence covering the SEPs of over 65 licensors (89 by the time of the Supreme Court hearing), including InterDigital, at a single flat-rate licence, in this case $32 per vehicle. 

Avanci acts as an agent to the SEP owners who have granted it the non-exclusive right to license their SEPs through its platform. Avanci offers a licence to all SEPs on that platform to implementers on terms which have been pre-determined between the SEP owners and Avanci. 

Tesla considered the rate offered by Avanci excessive and issued proceedings in the English High Court seeking a declaration that the rate for Avanci’s 5G Platform licence was supra-FRAND and a determination of what the correct FRAND rate should be. Tesla also challenged the validity and essentiality of three UK InterDigital patents which were included in the Avanci pool. 

Tesla originally also sued InterDigital as representative of all the other platform licensors under CPR 19.8, but that representative claim failed before Fancourt J and the Court of Appeal and was not pursued before the Supreme Court.

Avanci considered its rate to be FRAND (and indeed made public statements to that effect), but claimed it had no obligation to provide a FRAND rate as it has not given an undertaking to ETSI to grant a licence on FRAND terms.

In July 2024, Fancourt J set aside service of Tesla's claim on most of the defendants and struck out its licensing claims. The Court of Appeal, by majority (Arnold LJ dissenting), upheld that outcome in March 2025. The Supreme Court has now allowed Tesla's appeal.

InterDigital being singled out?

InterDigital argued that it had been unfairly singled out as a target. The Supreme Court rejected that argument because (i) InterDigital holds a significant portfolio of patents declared essential to the ETSI 2G-5G standards; (ii) InterDigital informed Tesla that it needed a bilateral licence or an Avanci platform licence; (iii) InterDigital has been an Avanci platform member since the beginning of the Avanci program; and (iv) it has shown a preparedness to assert its SEPs in litigation in England.

Jurisdiction: over-reach or well-anchored?

A recurring theme in this litigation is how an implementer can bring a global FRAND dispute before the English courts when the platform SEPs are overwhelmingly foreign (only around 7% of the patents covered by Avanci’s 5G Platform are UK patents). Fancourt J had treated the dispute as, in substance, a global licensing claim, a characterisation that pointed away from England and towards the Delaware Court of Chancery as an available forum. The Supreme Court, endorsing Arnold LJ’s dissenting judgment, took a different view. It held the claim was properly about the terms of a FRAND licence of InterDigital's UK SEPs (not a free-standing global licensing dispute) even though the resulting licence would be worldwide in scope. 

Notwithstanding that Avanci, InterDigital and Tesla's parent are all US-headquartered, the defendants' preferred forum — the Delaware Court of Chancery — was rejected as an available forum. On the expert evidence, US courts would very likely decline to set a FRAND rate for foreign patents, and no US court has in fact ever determined global FRAND terms without the parties' consent. England was therefore the only available forum.

On that footing, the claim was validly served on InterDigital at its UK patent address for service under CPR 63.14(2), because a claim to a licence that would preclude infringement of a UK SEP "relates to" that registered right. Various jurisdictional “gateways” were established: InterDigital was a necessary or proper party, the property (the UK patents) were within the jurisdiction, and following Birss LJ in Vestel the fact that the FRAND licence would be global does not alter the UK subject matter of the claim. 

The Supreme Court accepted there may be forum shopping but considered that "an inherent consequence of the fact that national courts may determine global FRAND terms".

The FRAND obligation applies to pool licensing

The Supreme Court held that Tesla had established a serious issue to be tried as to whether the FRAND obligation applies to an offer to license jointly through a platform. It found nothing in the wording of the FRAND obligation or in the wider IPR Policy to support the conclusion that the obligation ceases to apply where two or more owners choose to offer a licence through a licensing agent. Indeed, the policy against "hold up" applies "with as much if not more force" to offers to license jointly. 

The policy justification was "even stronger" where, on Tesla’s case, SEP owners controlling the majority of the entire global stack of 2G–5G cellular SEPs had come together to offer terms to the market, and the utility of the FRAND obligation "would be severely compromised were it to cease to apply in circumstances such as these". The Supreme Court concluded that joining a pool or platform does not release the SEP owner from the FRAND obligation it has already undertaken.

Only a platform licence may be FRAND?

The Supreme Court decided that Tesla had a real prospect of establishing that the only FRAND licence for the relevant InterDigital UK SEPs covered by the Avanci 5G Platform was a global platform licence, extending to the whole Avanci 5G Platform at a FRAND rate. The Court considered that what is or is not FRAND is to be informed as a matter of “commercial reality” and the impractical nature of negotiating bilateral licences was a “powerful factor” in supporting the conclusion that only a platform licence can be FRAND. While the Supreme Court recognised the freedom of SEP owners to leave the Avanci platform on giving notice, it considered that for any SEP owner which is a member of the Avanci 5G Platform, there is a serious issue to be tried.

Declaratory relief and fairness

Reviewing case law on the court’s power to make declarations, the court confirmed the broad jurisdiction of the English courts to grant declarations even where "the rights or obligations the subject of the declaration are not vested in any party to the proceedings" provided “the parties have a legitimate interest in their outcome and the declaration serves a useful purpose and further the interests of justice”. 

The Supreme Court distinguished Vestel (which also concerned an implementer seeking a declaration of the FRAND terms for a pool licence), because Tesla's claim was founded on the contractual FRAND obligation embodied in the IPR Policy (whereas Vestel had dropped its associated competition claim, and ultimately not asserted any legally enforceable right to a FRAND licence).

On fairness, the court rejected the argument that all platform licensors needed to be joined or represented at this stage. Avanci was the "essential party" in any assessment of the platform licence terms, and individual licensors retained the option to apply to participate.

Bilateral licence claim

The court held that Tesla's pleading did, in the alternative, embrace a claim for the FRAND terms of a bilateral licence of InterDigital's global portfolio, agreeing with Arnold LJ against the majority below.

Conclusion

The decision does not establish whether the Avanci rate for its 5G Platform licence is FRAND or not, nor that a pool licence will be the only FRAND licence for automotive Original Equipment Manufacturers or in any other pool scenario. What it does establish is that these questions are capable of judicial determination in England. In doing so, the Supreme Court has extended the logic of Unwired Planet from bilateral licensing disputes to collective licensing structures and reinforced the English courts' role as a forum for the determination of global FRAND disputes. Critics of the English approach will no doubt see this as further evidence of judicial overreach, but the decision is rooted in English jurisdictional principles which Tesla played to its advantage.

More broadly, the Supreme Court has taken a pragmatic approach that reflects the realism of pool licensing in making clear that pool licensing structures are not beyond FRAND scrutiny in the English courts. This result cements England as a forum in which implementers can challenge FRAND rates, even where the licence is offered through a patent pool or any other agent.