Apple Ordered to Pay ‘Cellular Technology Company’ (Patent Troll) Optis $700M+ in UK Patent Ruling
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Apple has been ordered to pay over $700 million to Texas-based “cellular technology company” Optis in what is being called a landmark UK patent ruling, reports ipfray.
The England and Wales Court of Appeal ruled today that Apple must pay a lump sum of $502 million to Optis Cellular Technology LLC due to its use of standard-essential 4G patents in iPhones and iPads over a 14-year period, which stretched from 2013 to 2027.
Optis was initially awarded $56.43 million by the High Court in a 2023 ruling, so today’s amount is quite a jump from that. Apple must also pay interest, which could amount to more than $200 million, making Apple’s liability over $700 million.
Optis is a Texas-based company that does not manufacture products but holds and licenses intellectual property. Such companies are formally called “non-practicing entities,” but a more appropriate term is “patent trolls.” Their sole business model is buying up portfolios of patents invented by others and then generating revenue by suing every company they can find that happens to be using them.
Filed in 2019, the UK case took a while to play out. However, it ultimately decided that Apple had breached its obligations to license the patents on FRAND (fair, reasonable, and non-discriminatory) terms. International standards for the use of essential wireless technology require as much.
For its part, Apple had argued that the royalty rates Optis had proposed were excessive and did not comply with FRAND principles.
The UK case was further complicated by the UK’s broad jurisdictional claims. In much the same way the UK has recently felt it has the right to demand Apple provide secret access to the data of every iCloud user in the world, it also believes that English courts can set global FRAND licensing terms. While most patent lawsuits only affect royalties generated within the jurisdiction of the court, the UK Supreme Court ruled in 2020 that UK courts can set the rate that a company like Apple should pay for all of its patents worldwide — even though it’s still only considering the infringement of patents in the UK.
This led to a 2021 standoff where Apple threatened to pull out of the UK entirely in response to a judgment that could have seen the tech giant paying over £5 billion (~$7 billion USD) in court-mandated royalties for the alleged global infringement of Optis’ patents. That amount would have potentially exceeded Apple’s annual revenue from sales in the UK. Thankfully, the number turned out to be less staggering, but it still represents what critics have called an “extraterritorial overreach” by the UK courts.
Apple made a statement to Reuters, saying “We are disappointed by this decision and plan to appeal.”
Optis makes no products and their sole business is to sue companies using patents they buy. We will continue to defend against their attempts to extract unreasonable payments.
While Apple can petition the UK Supreme Court to review the case, such appeals are granted on a limited basis only when significant points of law or matters of public interest are involved.
As you can imagine, Optis was quite pleased with the ruling, telling MacRumors:
We’re pleased the UK Court of Appeals has recognized and corrected a clearly flawed prior ruling and has made meaningful progress toward affirming the true value of our patents to Apple devices. In addition to ordering payment that exceeds $700 million with interest and fees, the Court has judged that “Apple’s significant negotiating strength leads some parties to agree lower rates than would be agreed between a willing licensor/willing licensee” thereby gaining an unfair advantage. We will continue to ensure fair compensation for the Optis intellectual property that enables high-speed connectivity for millions of devices around the world.”
This is not the first time Apple has fought a losing court battle with Optis or its sister companies.
In 2020, Apple was ordered by a Texas federal jury to pay PanOptis $506 million for infringing a handful of 4G LTE technology-related patents. However, a Texas judge vacated that award in 2021, ordering a new trial to focus only on damages. US District Judge Rodney Gilstrap said the first jury was not adequately equipped to determine if the award amount met FRAND (a fair, reasonable, and non-discriminatory basis) terms.
