Access Advance warns UK courts against setting patent pool royalty rates

The UK Supreme Court's potential jurisdiction over patent pool royalty rates threatens the stability of standardized video codecs like HEVC. If courts set rates below market value, the resulting exit of major patent holders would force implementers into costly bilateral negotiations, reversing the efficiency gains of collective licensing. This shift could delay the adoption of newer compression standards if licensors perceive pool participation as a financial liability rather than a volume-based asset. For the streaming ecosystem, this translates to higher compliance costs and potential interoperability hurdles. Watch for whether the UK court attempts to calculate a specific numerical rate in the Tesla v. InterDigital case or defers to the administrator's proposed 'FRAND-or-not' binary ruling.

The Tesla v. InterDigital case has drawn attention from across the patent licensing ecosystem, with multiple pool administrators watching closely. In October 2024, InterDigital and Lenovo agreed to enter binding arbitration to determine final terms of a new patent license agreement covering wireless, video, and AI portfolios, settling all pending litigation between the two companies. That resolution removed one of the most prominent active FRAND disputes from the docket but left the Tesla v. InterDigital matter as the next major test of whether UK courts will set specific numerical rates for patent pools rather than individual patent holders. Avanci, meanwhile, has expanded its licensing program to cover video codecs including HEVC and VVC for automotive and IoT implementations, placing it in direct competition with Access Advance's HEVC Advance program for the same pool of implementers. The UK Court of Appeal's July 2024 ruling in the InterDigital v. Lenovo case established important precedent for how UK courts calculate FRAND rates. The court raised Lenovo's licensing payment to approximately $240 million for past sales through December 2023 and confirmed that implementers must pay for all past sales starting from 2007, rejecting Lenovo's appeal in its entirety. InterDigital's Chief Legal Officer Josh Schmidt described the decision as making it harder for implementers to delay taking licenses to patented technologies. That precedent of courts setting specific numerical rates is precisely what Access Advance warns could destabilize patent pool economics if extended to pooled licensing structures. Access Advance's HEVC Advance program currently covers more than 30,000 patents from over 130 licensors, and the administrator has argued that its rate structure reflects real-world market negotiations rather than judicial calculation. InterDigital signed a separate multi-year HEVC license with Lenovo in November 2023 covering Lenovo's PCs and smartphones, demonstrating that bilateral deals on video codec patents continue to close at rates the parties negotiate directly. If the UK Supreme Court sets a rate below what licensors consider commercially viable in the Tesla case, the resulting withdrawals could fragment the HEVC licensing landscape at precisely the moment when streaming and automotive implementations are scaling. The outcome will likely influence whether other jurisdictions, including the Unified Patent Court in Europe adopt similar rate-setting authority over pooled patents.