The UK Court of Appeal takes a step towards arbitration of FRAND disputes

Lord Justice Arnold, giving the leading judgment in the Court of Appeal (CA), has ordered a permanent stay of FRAND proceedings (cancelling the trial set for June/July 2026) based on case management grounds, in a dispute between Nokia and Acer/ASUS (Acer Incorporated & Anor v Nokia Technologies Oy [2026] EWCA Civ 564, 12 May 2026). Arnold LJ  ruled that in making an "Adjustable Licence Offer" that was subject to a royalty to be determined by an arbitral panel, Nokia had fulfilled its FRAND obligations, leaving no FRAND defence available for Acer and ASUS. Importantly, he held that the offer of the arbitral process did not involve any compulsion to arbitrate and thus was a consensual arbitration process. 

David Webb senior associate in our IP practice commented: 

While the present case offers an option for SEP holders that wish to avoid UK litigation over FRAND licensing rates, it is not clear how many SEP holders will be interested in pursuing arbitration. As the Court of Appeal noted, there is no practice in the industry of pursuing arbitration currently and offering arbitration effectively prevents the SEP holder from pursuing injunctive relief in other jurisdictions, such as the UPC and Germany. Time will tell whether further SEP holders look to arbitration as a means to resolve global FRAND disputes.

Subsequently in another judgment in relation to points in dispute relating to the consequential order (Acer Incorporated & Anor v Nokia Technologies OY [2026] EWCA Civ 604, 18 May 2026) the CA reviewed a specific disputed term of the Adjustable Licence Offers "which permits either party to contend that the arbitration should include the terms of a (F)RAND (cross-) licence in respect of any patents which the other party (or its group) owns, controls or manages within its scope, and which requires the other party to stay, withdraw or abandon (or procure the stay, withdrawal or abandonment of) any litigation concerning such patents", to determine whether this element was F(RAND) or not. Arnold LJ considered that this disputed term was not RAND, finding that the choice between arbitration and court proceedings for determining (F)RAND terms in respect of the Claimants' own SEPs lies with the Claimants and not Nokia, and that Nokia's RAND obligation cannot be made conditional upon the Claimants submitting to arbitration a dispute over cross-licences of SEPs in a different area of technology declared essential to different standards under a different intellectual property rights policy. Accordingly, the case management stay was made conditional upon Nokia excising the disputed term from the Adjustable Licences.

Background

This claim for determination of (F)RAND global licence terms in the UK was brought by Acer and ASUS, the prospective licensees of Nokia's SEP portfolio relating to ITU-T H.264/AVC and H.265/HEVC video coding standards, following several years of unsuccessful licensing negotiations. Separately, Nokia had brought patent infringement proceedings against Acer and ASUS in Germany, the UPC, Brazil and India. As this case involved standards issued by the ITU-T, this case concerns the determination of RAND rather than FRAND licence terms, although in practice the two are treated as essentially the same in the UK courts.

The High Court held that it had jurisdiction to set global RAND terms for Nokia’s video codec SEPs, ruling that Nokia’s ITU-T commitment requires offering and granting RAND licences, not just an offer that these be later determined in arbitration. The High Court ordered interim licences, with rates set at the midpoint between the two parties' positions, pending final determination.

Nokia appealed, raising issues as to jurisdiction, whether a case management stay should be granted, and whether the court should make interim licence declarations. 

Jurisdiction 

On jurisdiction, Nokia only challenged Mellor J's conclusion that "there is a good arguable case that the claim falls within one of the gateways for service out specified in paragraph 3.1 of CPR Practice Direction 6B". This was concluded on the basis that the RAND claims passed through each of gateways 11 (that the subject matter relates wholly to property within the jurisdiction), 16A (declaration of non-liability) and 4A (closely connected claims).

Arnold LJ held that the RAND claim did not pass through gateways 16A or 4A, as there was no evidence of a threat to enforce SEPs in the UK by Nokia, and the patent claims argued to be closely connected were not considered to have anything to do with Nokia's RAND obligation. 

Nonetheless, the appeal on jurisdiction was dismissed as it could be upheld through gateway 11, as the case concerned a dispute over the contractual obligations attaching to property in the UK. 

Case management stay 

Arnold LJ highlighted that "this is not a conventional application for stay on case management grounds". Nokia was seeking a permanent stay based on the fact that its "Adjustable Licence Offers" meant there was no serious issue to be tried and thus the RAND claims had no real prospect of success. The fact that Nokia had not applied for a summary judgment did not matter, as Arnold LJ found that there was no prejudice to the claimants; Nokia's arguments remained the same in substance whether put forward as an application for summary judgment or for a case management stay.

In assessing this point, the CA recognised that FRAND licence terms can and have been determined by arbitration, and indeed that two such arbitration determined (F)RAND licences involved Nokia, although Arnold LJ noted that there is "no settled industry practice for FRAND disputes to be determined by arbitration".

The court considered that the Adjustable Licence Offers were "essentially identical to the interim licences sought by the claimants" except for the fact that the final (F)RAND licence would be determined by an arbitral tribunal rather than the English courts. While Acer/ASUS argued that they could not be forced to arbitrate, Arnold LJ applied similar reasoning to the Supreme Court's decision in Unwired Planet in the context of whether a global licence could be FRAND to conclude that the implementers still had a choice whether or not to accept arbitration. If they chose not to do so then they could proceed with litigation in the UK but would effectively waive their FRAND defence. This could result in a finding that they were an unwilling licensee and risk an injunction in the UK. Otherwise, Arnold LJ held that they could accept Nokia's licence offer, which provided for arbitration as part of its terms. 

Arnold LJ noted some of the benefits of resolving (F)RAND disputes through arbitration, including:

• Resolution through a single tribunal, rather than via multi-jurisdictional litigation. 
• Availability of global enforcement under the New York Convention, while national courts are territorially limited.
• As a result of the above factors, reduced risk of jurisdictional conflict. 
• Determination by an independent and impartial tribunal under established rules (in this case the ICC). 

These factors weighed in favour of Arnold LJ's finding that an offer subject to arbitration was FRAND. 

Given the above, the CA held that Nokia's offer fulfilled its FRAND obligations and Acer and ASUS could not pursue UK court litigation to set interim licence rates. The CA ordered a permanent stay and cancelled the trial scheduled for June and July 2026.

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