Economic Analysis in the Context of the UK Supreme Court Decision in Unwired Planet vs Huawei
What are the economic effects of sanctioning a global FRAND rate with an injunction in the UK? Should a national Court set global FRAND rates? How can this affect the FRAND licensing rate? What impact can it have on an eco system consisting of downstream innovators, patent assertion entities and corporations acting both as standard essential patent owners and implementers?
To assess these comprehensive questions we made use of a game theoretical model that assessed the bargaining power of various market participants under the peculiar governance framework proposed under the decision in Unwired Planet vs Huawei. In particular, we took interest in information asymmetry. The FRAND licensing rate set by the 2017 decision, which was set on a global basis, makes the validity, essentiality, and infringement of global SEPs contingent on the opinion of the judiciary of England and Wales. As this allows the patentee to reduce transaction costs associated with global FRAND licensing, it also increases information asymmetry with respect to extraterritorial SEPs, as a national court is inherently limited in an international undertaking. This can affect FRAND licensing negotiations that precede formal court intervention.
The economic analysis undertaken by OxFirst was used by Counsel to support its arguments. Its insights and assessment were fed into the Court submissions and also formed the baseline of substantial discussion at a series of conferences that followed in the aftermath of the Supreme Court’s Decision.