Tesla Inc & Anor v InterDigital Patent Holdings, Inc & Ors

This dispute sat at the intersection of patent licensing, connected products and court jurisdiction. Tesla wanted to launch 5G-enabled vehicles in the UK. It accepted that selling those vehicles would require a licence to standard-essential patents, commonly called SEPs, tied to telecoms standards.

Many of those patents were available through the Avanci 5G platform. Avanci offered a global licence for connected vehicles at a flat rate of $32 per vehicle. Tesla said that rate was too high and wanted the English Patents Court to determine what FRAND terms should be for that licence.

Tesla sued InterDigital group companies, which owned and declared certain SEPs essential to ETSI standards, and Avanci, which administered the platform. Tesla also challenged three UK patents owned by InterDigital. But the appeal was mainly about the licensing claims, not the technical patent validity points.

The case mattered because Tesla was not asking the court to decide a standard SEP owner-versus-implementer dispute in the usual bilateral way. Instead, it wanted the court to assess the terms of a worldwide platform licence offered by an administrator acting for many patent owners.

The legal fight was not simply about price. It was about whether Tesla had a claim the English court could properly hear against Avanci and InterDigital in the form it had chosen.

Tesla’s position was that, in commercial reality, a FRAND licence for the relevant UK SEPs had to be a global licence through the Avanci 5G platform. Tesla said negotiating bilateral licences with more than 65 SEP owners was impracticable. It also argued that the platform rate should therefore be capable of court scrutiny as a FRAND rate.

Avanci and InterDigital resisted that. Avanci said it was not itself a SEP owner, had given no ETSI FRAND undertaking, and did not assume SEP owners’ FRAND obligations. InterDigital said the ETSI framework created obligations on individual SEP owners to license their own patent families, not a collective obligation to offer a discounted platform licence with many other owners.

That distinction became decisive. The court had to ask whether Tesla was relying on an actual legal right recognised by the relevant arrangements, or whether it was trying to create a new route to challenge a platform offer because that would be commercially convenient.

The Court of Appeal dismissed Tesla’s appeal. Lords Justices Phillips and Whipple agreed that Tesla’s claim, as framed, should not proceed. Lord Justice Arnold would have allowed the appeal to continue, but he was in the minority.

The majority reasoning was that Tesla’s case was directed at obtaining declarations about a worldwide Avanci platform licence, even though Avanci had not itself given the FRAND undertakings relied on and the SEP owners had not undertaken to license collectively through the platform on FRAND terms.

The court accepted that individual SEP owners who declare patents essential under the ETSI framework are contractually obliged to negotiate and grant licences for their own SEP portfolios on FRAND terms. But that did not mean they had agreed to license on a collective basis with many other owners through Avanci, still less that Avanci itself could be required by the English court to offer a FRAND platform licence.

The majority also stressed that commercial convenience, even if real, does not create the missing legal foundation. In short, Tesla could not turn individual FRAND obligations into a court-supervised right to a collective platform licence from Avanci.

This case is a strong reminder that licensing disputes often turn on structure before they turn on price. The court looked closely at who owned the patents, who had made ETSI undertakings, who could grant what licence, and what Avanci was authorised to do.

Avanci acted as administrator of the platform and as agent for participating licensors when offering the standard platform licence. But the judgment records that Avanci did not hold the SEPs, had never given FRAND undertakings in respect of them, and did not agree to fulfil members’ FRAND obligations. The platform arrangements also preserved each member’s right to offer bilateral licences directly.

That meant there were two different commercial routes in play. One was the platform route: a one-stop global package on Avanci’s terms. The other was the bilateral route: separate FRAND negotiations with individual SEP owners. Tesla wanted the convenience of the first route with the court-enforced pricing discipline of the second. The majority said the legal arrangements did not support combining them in that way.

For businesses, this is the practical point: before litigating, map the contractual architecture. If the legal obligation sits with one party but the commercial offer comes from another, your claim may fail before the court ever reaches the commercial merits.

Most SMEs will never face a dispute on this scale, but the operating lesson is still useful. If you sell connected products, import devices, or build hardware using telecoms standards, SEP exposure can become a launch issue rather than a back-office legal issue.

The judgment shows that timing matters. Tesla brought proceedings more than a year before its intended launch of 5G-enabled vehicles because it wanted certainty before entering the market. That is a sensible commercial instinct. But the case also shows that early action only helps if the legal route matches the licensing structure.

Businesses should not assume that a platform or pool administrator is automatically the right target for a FRAND claim. Equally, they should not assume that a global package licence can always be challenged in England simply because UK patents are part of the package. The court may ask whether the right you say you have is actually grounded in the relevant undertaking or contract.

If your product roadmap depends on standards-based technology, legal review should happen alongside procurement, product launch and market-entry planning, not after a demand letter arrives.

If your business is preparing to sell connected products in the UK, use this case as a planning checklist rather than a litigation manual. The aim is to avoid being forced into rushed licensing decisions close to launch.

Start by treating SEP licensing as a commercial dependency. If your product cannot lawfully be sold without a licence, the licensing path should be tracked like any other critical supply-chain item. Then separate the legal questions from the commercial ones: what rights do SEP owners owe, what does a platform administrator offer, and what happens if you reject the package price?

Also remember that a platform licence may be commercially attractive even if it is not court-resettable in the way you hoped. Convenience, speed and broad coverage may still justify the package. But that should be a conscious business decision, not an assumption that the court can later rewrite the deal structure for you.