Opening the Door to Pool Determination: Tesla v InterDigital and Avanci

The UK Supreme Court has considered the fundamental principles of (F)RAND, this time in the context of a jurisdiction challenge in Tesla v InterDigital and Avanci. In what could prove to be a significant shake-up in the FRAND world, in a decision dated 27 July 2026, the UK Supreme Court allowed Tesla’s appeal and thus opened the door to potential pool-rate setting actions in the UK in the future.

Background

In December 2023, Tesla started proceedings in the UK against InterDigital (a major licensor of the Avanci 5G Platform) and Avanci (the administrator of the platform, which does not own any SEPs itself). As part of these proceedings, Tesla sought declarations from the English Patents Court regarding the Avanci 5G Platform, including that a FRAND licence to InterDigital’s UK SEPs would be a global licence to the entire Avanci 5G Platform. Tesla also sought a declaration that the Avanci 5G Platform itself was not FRAND and a declaration as to what the FRAND rate would be. Together, these are known as “the Licensing Claims”.

There was a jurisdiction challenge in 2024 where the Patents Court held that there was no serious issue to be tried on the Licensing Claims against InterDigital and Avanci. This was appealed to the Court of Appeal, where the majority dismissed Tesla’s appeal, with Lord Justice Arnold (a very experienced patents judge) dissenting.

Serious Issue to be Tried

In a judgment given by Lord Hamblen and Lord Kitchin, and with which the other Justices of the Supreme Court agreed, the Supreme Court split this overarching question into three distinct sub-issues:

1. Is there a serious issue to be tried as to whether the FRAND obligation applies to an offer to license jointly through a platform?
2. Is there a serious issue to be tried as to whether the FRAND licence under the UK SEPs is a platform licence at a FRAND rate?
3. Does Tesla have a real prospect of being granted the declarations it seeks?

On the first sub-issue, the Supreme Court considered the cases that Tesla had advanced. First, Tesla’s “extreme” contention was that a SEP owner is under an obligation to make sure that all its offers are on FRAND terms including to both bilateral and platform licences. Alternatively, the SEP owner remains bound by the FRAND obligation regardless of whether it makes an offer on a bilateral basis or via a pool or platform. Tesla’s position on this alternative was that, in circumstances where a SEP owner licenses through a pool or platform, it may be the case that only the pool or platform licence is FRAND.

The Supreme Court considered that the common element of Tesla’s cases was that the SEP owner would remain bound by the FRAND obligation even if licensing through a pool or platform. Considering the wording of the ETSI FRAND obligation, the drafting of the obligation in conjunction with the European Commission (and thus the importance of competition policy), and the general policy justification where over 90% of the stack was offering its patents through the platform, the Supreme Court held that there is a serious issue to be tried as to whether the FRAND obligation applies to offers made through a platform.

On the second sub-issue, the Supreme Court commented that it did not find Telsa’s “extreme” formulation of its case to be persuasive.  Rather the FRAND obligation requires SEP owners to ensure that FRAND terms are available, but it does not preclude them from negotiating different commercial but non-FRAND terms.  In finding that there was a serious issue to be tried here too, the Court again pointed to the commercial realities of the market and the impracticalities of implementers bilaterally licensing with every SEP-owner in the platform. In particular, it noted that most licensors to the Avanci 5G Platform rely on it as meeting their FRAND obligation, and noted the impracticality of seeking bilateral licences to every licensor in the platform. In assessing this issue, the Supreme Court made clear that this is not a requirement for SEP holders to join a platform and offer their SEPs via that platform, and it recognised the commercial freedom of a particular SEP holder to join or leave a platform as it sees fit. However, the core issue related to a SEP holder which is a member of the platform, so there was a serious issue to be tried.

The third sub-issue required the Supreme Court to determine whether Tesla had a real prospect of being granted the declarations sought against both InterDigital and Avanci. After a review of the Court’s declaratory powers and the circumstances in which these should be exercised, the Supreme Court considered that the declarations sought against InterDigital were based on a real and present dispute stemming from InterDigital’s FRAND obligation. For Avanci, the Supreme Court found that it was not necessary for Tesla to have a cause of action against Avanci, so long as there was a useful purpose.

The Supreme Court considered that Tesla had a real prospect of showing that the declarations it sought served a useful purpose. In particular, if a declaration was to be made that the FRAND rate for the Avanci 5G Platform was less than that on offer, Avanci would likely reconsider its position. The Supreme Court also considered that, if such declarations were not available, this would seriously undermine the effectiveness of the FRAND regime, as there could be no possibility of court scrutiny of a pool or platform rate.

The Supreme Court also considered that there was no procedural unfairness associated with granting the declarations. It noted that Avanci was the “essential party” in any court determination of the Avanci 5G Platform licence and other licensors in the platform would be able to apply to join proceedings should they so wish.

Jurisdiction

The Supreme Court considered the “formidable line of authority” which has developed in the UK since the Vestel case and found that the Licensing Claims were properly characterised as a licensing claim relating to UK SEPs. Therefore, the Supreme Court found that the Licensing Claims were properly served on InterDigital Patent Holdings according to CPR r.63.14, which allows service on the address registered with the UK IPO for the relevant UK patents. The claims also passed through the relevant “gateways” for service out of the jurisdiction. In particular, the Licensing Claims passed through:

• Gateway 3, which is that the party is a necessary or proper party. This applied to Avanci, as the terms of the Avanci 5G Platform would be considered, and to InterDigital Holdings as the entity which had given the FRAND undertaking.
• Gateway 11, relating to property wholly or principally within the jurisdiction, applied to InterDigital Holdings as the claim related to UK patents.

The Supreme Court considered whether the Delaware Court of Chancery was a more appropriate forum to hear the dispute than the UK. It held that it would not be more appropriate, as the Delaware Court of Chancery would only adjudicate FRAND terms for US patents and not for UK patents.

It is important to note that this is not a finding by the Supreme Court that pool or platform administrators are subject to the FRAND obligation, nor is it a finding that the only FRAND licence available to a particular licensor’s SEPs must be the global platform licence. The Supreme Court has only held that there are serious issues to be tried on these points, and those issues will now go back to the Patents Court to be decided on the merits. So this is likely not the end of the story.