Patents - Tesla Inc v InterDigital Patent Holdings Inc

UK Supreme Court

Author: Dietmar Rabich Licence: CC BY-SA 4.0 Source: Wikimedia Commons

Jane Lambert

Supreme Court (Lord Sales (Deputy President), Lord Briggs, Lord Hamblen, Lord Burrows and Lord Kitchin) Tesla, Inc and another v InterDigital Patent Holdings, Inc and others [2026] UKSC 27 (27 July 2026)

This was an appeal against the Court of Appeal's decision in  Tesla Inc and another v IDAC Holdings Inc and Others [2025] EWCA Civ 193 (6 March 2025) to dismiss the appeal by Tesla Inc and Tesla Motors Ltd. ("Tesla") against Mr Justice Fancourt's order refusing service of process outside the jurisdiction in Tesla, Inc and Another v Idac Holdings, Inc and others [2024] EWHC 1815 (Ch) (15 July 2024).   The key issue was whether the courts of England and Wales had jurisdiction to decide a dispute concerning the terms of a licence to use a standard essential patent ("SEP") in circumstances where the claim was brought by an implementer rather than a SEP owner, the SEP formed part of a platform of SEPs with different owners, and the licence was offered by the platform operator acting as agent for those owners.  Lord Hamblen explained it succinctly in his summary of the Supreme Court's judgment on the Court's YouTube channel.

How it Arose

Tesla makes and sells electric vehicles, batteries, chargers and related products and services.   It wished to launch a 5G-enabled range of vehicles on the British market.  Such vehicles are connected to the internet whenever they are on the road.  They can communicate with other vehicles, traffic signs and other installations that affect traffic flows and road safety without the need for human intervention.  In order to deploy 5G technology, motor manufacturers must comply with a set of standards issued by the European Telecommunications Standards Institute ("ETSI").

To comply with those standards, it is often necessary to use an invention protected by a SEP.  Art 6.1 of ETSI's Intellectual Property Rights Policy requires SEP owners to offer licences to implementers on fair, reasonable and non-discriminatory ("FRAND") terms.  I have discussed this topic in  FRAND 8 Oct 2017, FRAND - A Recap  8 Aug 2020 and Patents: Supreme Court upholds Court of Appeal and Sir Colin Birss on FRAND 27 Aug 2020 and my slides A SEP and FRAND Overview 13 Aug 2024 and The Supreme Court Rules on FRAND 2 Sept 2020.

InterDigital Patent Holdings Inc ("IDPH") and InterDigital Holdings Inc ("IDH") are SEP owners. They are members of the InterDigital group ("InterDigital"), which licenses wireless communications technology. They have a worldwide portfolio of SEPs for 2G, 3G, 4G and 5G standards.  In accordance with art 6.1 of ETSI's IP Rights Policy, IDH has given an undertaking to ETSI to offer implementers licences to use those patents on FRAND terms.  Companies in the group make some of their patents available through platforms operated by Avanci LLC ("Avanci").

Tesla enquired about licences for three IDPH patents through one of the Avanci platforms but considered them too expensive.   It issued proceedings in the Patents Court claiming:

"(i) declarations of invalidity and non-essentiality in respect of three UK patents—the Challenged Patents—owned by IDPH and disclosed as essential or potentially essential to the 5G standard; and consequential orders for the revocation of the Challenged Patents. These claims ("the Patent Claims") are brought against IDPH and IDH only.

(ii) declaratory relief (the Licensing Claims) in relation to FRAND issues including:
(a) declarations that it is contractually entitled to a FRAND licence to the 2G–5G SEPs of all Licensors on the Avanci 5G Platform including the Challenged Patents and other UK SEPs on the Avanci 5G Platform which are owned by InterDigital;
(b) a declaration that the FRAND licence to the Challenged Patents and other InterDigital 5G Platform SEPs extends to the entirety of the Avanci 5G Platform; and
(c) a declaration that the standard (or "rack rate") royalty for the Avanci 5G Platform is not FRAND and should be lower; and a determination of what that lower rate should be."

Tesla served process under CPR 63.14 (2) and sought the Court's permission to serve the InterDigital companies and Avanci outside the jurisdiction pursuant to CPR 6.36 and para 3.1 (3) and (11) of Practice Direction 6B, which Mr Justice Mellor granted.   The defendants acknowledged service but challenged the jurisdiction of the  English courts over the Licensing Claims for want of a serious issue to be tried, the unavailability of any relevant gateways and for IDPH CPR r 63.14(2), and the availability of the Delaware Court of Chancery as an alternative and more appropriate forum.  InterDigital also challenged jurisdiction in respect of the Patent Claims, alleging they were an abuse of process and that there had been a lack of full and frank disclosure.

Those applications came before Mr Justice Fancourt, who held in the second judgment mentioned in the first paragraph that he had no jurisdiction to try the Licence Claims and/or that he should not exercise any jurisdiction over them if he did, and set aside service.  Tesla appealed unsuccessfully to the Court of Appeal.  Its judgment is the first judgment mentioned in the first paragraph. 

Questions for the Court

Tesla applied for permission to appeal to the Supreme Court.  Its application was granted in part by Lord Briggs, Lord Sales and Lord Burrows on 1 July 2025.   The questions before the Court were whether:

• There is a serious issue to be tried on Tesla's Licensing Claims for declaratory relief against the InterDigital companies and Avanci;
• The courts of England and Wales have jurisdiction to decide a dispute concerning the terms of a licence to use a SEP in circumstances where the claim is brought by an implementer rather than the SEP owner, the SEP forms part of a platform of SEPs having different owners, and the licence is offered by the platform operator acting as agent of those different SEP owners; 
• The Licensing Claims against IDPH were properly served pursuant to CPR 63.14 (2) and the scope of that rule;
• The Licensing Claims against IDH fell within the classes of case for which permission to serve out of the jurisdiction may be given because they pass through what is known as Gateway 3 or Gateway 11 of Practice Direction 6B;
• The Delaware Court of Chancery is an available forum, and if so, whether permission to serve IDH and Avanci out of the jurisdiction should be set aside on the basis that England and Wales is not clearly the more appropriate forum;
• The proceedings against IDPH should be stayed on the ground of forum non conveniens; and whether
• Permission to serve the proceedings out of the jurisdiction should be refused as a matter of discretion.

The Hearing

The appeal came before Lord Sales, Deputy President, Lord Briggs, Lord Hamblen, Lord Burrows and Lord Kitchin between 26 and 29 April 2026.  Tesla's written case is here, InterDigital's here and Avanci's is here.  The hearing was videoed, and the recordings can be watched here or on the Supreme Court's YouTube channel.  

Judgment

Judgment was written by Lord Hamblen and Lord Kitchin with the other justices' agreement and read by Lord Hamblen on 27 July 2026.  By para [220] of Tesla, Inc and another v InterDigital Patent Holdings, Inc and others [2026] WLR(D) 427, [2026] UKSC 27, their lordships allowed Tesla's appeal.  The case is summarised in Issues and Facts and explained in the Statement of Facts and Issues pursuant to Supreme Court Rule 27 (1).  There is also a press summary.

Whether there was a Serious Issue to be tried on the Licensing Claims against Avanci or InterDigital

One of the requirements to be satisfied when seeking permission from the court to serve process outside the jurisdiction is that there must be a serious issue to be tried. The other requirements are that there is a good arguable case that the claim falls within one or more of the classes of case for which permission to serve out of the jurisdiction may be given and that the court ought to exercise its discretion to permit such service of the proceedings. 

According to Lord Hamblen and Lord Kitchin, the test of whether there is a serious issue to be tried was the same as for resisting summary judgment, namely whether there is a real, as opposed to fanciful, prospect of success.  To determine that issue, the Court had to consider whether:
(i)  There was a serious issue to be tried as to whether the FRAND obligation applies to an offer to license through a platform?

(ii)  There was a serious issue to be tried as to whether the FRAND licence is a platform licence at a FRAND rate? And whether

(iii) Tesla had a real prospect of being granted the declarations it sought against InterDigital and Avanci?

Their lordships noted that, by bringing its Licensing Claims, Tesla was asking the Court what it needed to do to avoid infringing the Challenged Patents.   That amounted to ascertaining the terms of a platform licence. Tesla submitted that the FRAND obligation did not cease to apply simply because a SEP owner chose to license his patent through a platform or pool.  As InterDigital had placed its SEPs on Avanci 's 5G platform, any licence for those patents would be a global platform licence. Indeed. it was arguable that the only FRAND licences for SEPs, including the Challenged Patents, were platform licences at FRAND rates.

Tesla's case had a further aspect. Tesla contended that, even if the Avanci 5G Platform licence did not have to be FRAND, there was still a useful purpose in determining whether it was FRAND.  Such a determination would assist all parties and not just implementers.  InterDigital and other actual and potential licensors could learn whether they could satisfy their obligation to ETSI by offering licences through Avanci's platforms.

It was also Tesla's case that in circumstances such as these, the court had jurisdiction to grant appropriate declaratory relief. Tesla recognised that Avanci did not itself owe any contractual obligation to ETSI (and was not itself subject to any separate FRAND obligation), but it submitted that was not determinative. The obligation had been undertaken by InterDigital and was enforceable by Tesla, but the real issue lay between Tesla and Avanci.   Their lordships considered that there was considerable merit in that part of Tesla's argument.

 

Was there a Serious Issue to be tried as to whether the FRAND Obligation applies to an Offer to license jointly through a Platform?

The majority of the Court of Appeal had held that the offer of a pool or platform licence was a voluntary commercial offer to which FRAND did not apply at all.  Tesla argued that a SEP owner is bound by his undertaking to ETSI  to offer a FRAND licence whether through a platform or otherwise. The Supreme Court held that Tesla had established a serious issue to be tried on this question for the following reasons:

1. Patentees accept the FRAND obligation as a condition of having their patents and the technology they describe adopted as part of a standard.
2. Nothing in the wording of the undertaking or ETSI's IPR Policy provides any basis for concluding that the FRAND obligation ceases to apply if two or more owners choose to offer a licence of their patents through or using a licensing agent appointed for that purpose.
3. Most SEP owners around the world had accepted the FRAND obligation, and its utility would be seriously compromised if it ceased to apply if patentees could avoid it by offering platform licences,
4. The FRAND undertaking had been drafted in consultation with European Commission officials to comply with EU competition law.
5. FRAND licences are now being agreed covering pools of patents, not least because of the obvious efficiencies and cost savings involved.

Their lordships considered that it was open to any licensor on the Avanci 5G Platform to seek to rely on the availability of platform licences to satisfy its FRAND obligation.

Was there a Serious Issue to be tried as to whether the FRAND Licence under the UK SEPs—including the Challenged Patents—was a Platform Licence at a FRAND Rate?

The Court concluded that Tesla did indeed have a real prospect of establishing that the FRAND licence for UK SEPs was a platform licence at a FRAND rate. Many, if not most, licensors on the Avanci 5G Platform relied on the availability of platform licences to meet their FRAND obligations. Further, as it is simply not practicable for potential licensees to negotiate bilateral licences with all platform licensors, only platform licences are likely to be FRAND.

Did Tesla have a Real Prospect of Obtaining the Declarations?

Lord Hamblen and Lord Kitchin considered the power to make declarations. They reviewed the case law from Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536 to Tyne and Wear Passenger Transport Executive (trading as Nexus) v National Union of Rail, Maritime and Transport Workers  [2024] WLR(D) 495, [2024] 3 WLR 909, [2025] ICR 153, [2024] UKSC 37, [2025] AC 1222 and concluded at para [125] of their judgment that the exercise of the power should not be unduly constrained.  They added that "the court will refuse to make a declaration where it will serve no useful purpose; but where a declaration would serve a useful purpose and help to ensure the aims of justice are achieved then the court should not be reluctant to exercise its power to make it."  

As for declarations in FRAND cases, their lordships said at [126]: 

"It is now well understood that the power of the court to make declarations has proved of very great utility in resolving disputes between SEP owners and implementers seeking to make products or carry out processes according to a standard, and in particular in resolving disputes as to what amounts to the performance of the FRAND obligation required by ETSI, whether the terms of a proposed licence are FRAND and, so far as necessary and appropriate, what terms would be FRAND."

Tesla had contended that it had a real prospect of obtaining the declarations sought in the Licensing Claims. The Court agreed that Tesla had a real prospect of obtaining declaratory relief against InterDigital. The claim against Avanci was different because Avanci did not own any SEPs and had not given any undertakings to ETSI. Nevertheless, the justices said that Tesla did have a real prospect of success in its Licensing Claims against Avanci.  Individual SEP owners were subject to the FRAND obligation, and Avanci, as their agent, was responsible for licensing those SEPs through its platform.  Moreover, the claim concerned a legal right, namely the right claimed by Tesla to a FRAND licence pursuant to the FRAND obligation owed to all implementers by all the SEP owners participating in the Avanci 5G Platform. Also, the case law showed that the court may make a declaration even though no other relief is claimed and it was not necessary for Tesla to have a cause of action against Avanci.

The justices considered whether Tesla had a legitimate interest in obtaining the relief sought against InterDigital and Avanci and decided that it had.   They rejected the Court of Appeal's objection that it was unfair to make a declaration that might affect SEP owners who were not before the court.   They concluded that there was a serious issue to be tried against InterDigital and Avanci on the Licensing Claims.

Was Tesla entitled to a Bilateral Licence?

Although Tesla's primary objective was a FRAND licence of all the SEPs on the Avanci 5G Platform, it maintained that its pleaded case arguably advanced and at least embraced the possibility of a declaration of its entitlement to a bilateral licence from InterDigital of its 2G–5G SEPs and for a determination of the FRAND terms of such a licence.  The Court of Appeal had rejected that claim on the grounds that it had not been pleaded properly and that it had been raised for the first time in oral argument before the Lords Justices.   The Supreme Court found that the case had been set out adequately in the body of the pleading and the prayer, while noticing with regret that it had been raised very late. Their lordships suggested that appropriate case management directions might be given should the claim go further.

Jurisdiction

Lord Hamblen and Lord Kitchin identified the following issues relating to whether the courts of England and Wales have jurisdiction to determine this claim at para [152] of their judgment:

"(i) The characterisation of the Licensing Claims.
(ii) CPR r 63.14: Whether the Licensing Claims against IDPH were properly served pursuant to CPR r 63.14 (2).
(iii) Gateway 3: Whether the Licensing Claims against IDH pass through Gateway 3.
(iv) Gateway 11: Whether the Licensing Claims against IDH pass through Gateway 11.
(v) Appropriate forum:

(a) The proper characterisation of the Licensing Claims for the purpose of assessing the appropriate forum.
(b) Whether the Delaware Court of Chancery is an available forum for the Licensing Claims, as properly characterised.
(c) If the Delaware Court of Chancery is an alternative available forum, whether:

(i) permission to serve Avanci out of the jurisdiction should be set aside on the basis that England and Wales is not clearly the more appropriate forum;
(ii) the proceedings against IDPH should be stayed on grounds of forum non conveniens; and/or
(iii) permission to serve IDH out of the jurisdiction should be set aside on the basis that England and Wales is not clearly the more appropriate forum.

(vi) Discretion to refuse permission for service out: Whether permission to serve the Licensing Claims out of the jurisdiction ought, in all the circumstances, to have been refused as a matter of discretion."

Characterisation of the Licensing Claims

A central issue regarding jurisdiction was the proper characterisation of the Licensing Claims. Tesla contended that its entitlement to a licence on FRAND terms to use the SEPs on Avanci's 5G Platform owned by InterDigital (including the Challenged Patents) and a declaration of the terms of such a licence was at the heart of its claim. InterDigital submitted that, properly characterised, Tesla's claim was to worldwide licensing through the Avanci 5G Platform. It was a contractual claim, under the FRAND obligation governed by French law. Insofar as the claim related to any patents, it related to all Avanci 5G Platform SEPs worldwide.

In the Court of Appeal, Lord Justice Arnold observed at para [116] of his dissenting judgment:

"I would characterise Tesla's Licensing Claims against Avanci as a dispute about what terms for a licence of the UK SEPs in the Avanci 5G Platform are FRAND even though it is Tesla's case (and Avanci does not dispute) that only a global licence, rather than a UK-only licence, would be FRAND. More specifically, the dispute is as to what royalty rate is FRAND."

In para [177] of their judgment, Lord Hamblen and Lord Kitchin agreed with Lord Justice Arnold: 

"We consider that the claims made relate principally to InterDigital's UK SEPs on the Avanci 5G Platform and that Arnold LJ was correct to characterise the Licensing Claims as being about the licensing of those patents and "what terms for a licence of the UK SEPs in the Avanci 5G Platform are FRAND even though it is Tesla's case (and Avanci does not dispute) that only a global licence, rather than a UK-only licence, would be FRAND"

Whether the Licensing Claims against IDPH were properly served pursuant to CPR r 63.14 (2)

Tesla served IDPH with the claim form in accordance with CPR 63.14 (2) (a).  That rule provides:

"A claim form relating to a registered right may be served ... on a party who has registered the right at the address for service given for that right in the appropriate register at ... the United Kingdom Patent Office ... provided the address is within the United Kingdom..."

The parties agreed that this was proper service in relation to the Patent Claims. Tesla contended that this was also valid service in relation to the Licensing Claims. InterDigital disagreed. It argued that rule 103 of the Patents Rules 2007 provides that "For the purposes of any proceeding under the [Patents Act 1977] or these Rules", an address for service must be furnished by an applicant for a UK patent, and may be given by a proprietor. The address for service under CPR r 63.14 is that given under the relevant Rules. Its intended function is to permit service of proceedings about rights arising under the relevant Acts and Rules within rule 63.1 (1) and not more broadly. It is a technical provision intended for service of claims that are properly UK patent, trade mark or registered design proceedings, about UK intellectual property rights. It is not meant for claims in respect of other legal rights.

While not considering it necessary to seek to define the scope of CPR 63.14 for the purposes of the appeal, Lord Hamblen and Lord Kitchin did not accept that the phrase "relating to" should be glossed so as to be given the narrow meaning of "substantially or really about" an intellectual property right. A claim may relate to a legal right if it concerns the scope of the right.  Thus, a claim to a licence to carry on a particular activity which, if made out, would preclude a finding of infringement of a UK SEP was, in their lordships' view, a claim relating to that UK SEP.   As Lord Justice Arnold had observed in para [210] of his judgment in the Court of Appeal,  the Licensing Claims relate to those UK patents because a licence would provide a defence to any claim for infringement of them.   The justices upheld Lord Justice Arnold's conclusion on the issue.

Whether the Licensing Claims against IDH passed through Gateway 3

This issue arose because IDH (unlike IDPH) was incorporated outside the UK.  One of the consequences of the United Kingdom's departure from the European Union and the Commission's objection to its accession to the Lugano Convention (Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 339, 21.12.2007, p. 3–41) is that new rules have been adopted for service of process abroad.  For more information on this topic, see my article EU Commission rejects the UK's Application to rejoin Lugano 6 May 2021 IP After Brexit.

   

CPR 6.36 provides:

"In any proceedings to which rule 6.32 or 6.33 does not apply, the claimant may serve a claim form out of the jurisdiction with the permission of the court if any of the grounds set out in paragraph 3.1 of Practice Direction 6B apply."

Para 3.1 of the Practice Direction states:

"The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where –
.............
(3) A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –

(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and

(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim."

This subparagraph is known as "Gateway 3".  The Supreme Court justices said at para [190]:

"If IDPH was properly served within the jurisdiction under CPR r 63.14(2) then another person may be served under Gateway 3 if that person is "a necessary or proper party to that claim,"

Lord Justice Arnold had said at para [213] of his judgment in the Court of Appeal:

"I do not understand it to be in dispute that if, as I have concluded in paragraph 167 above, Tesla have a proper claim against IDPH with regard to the Licensing Claims and if, as I have concluded in paragraphs 206–212 above, the Licensing Claims were validly served on IDPH pursuant to rule 63.14 (2), then IDH is a necessary or proper party to those claims."

InterDigital submitted that Lord Justice Arnold should not have addressed that issue since it was not properly before the court. Lord Hamblen and Lord Kitchin replied that whether or not he was correct to do so, Lord Justice Arnold did address the issue and they could see no good reason to go behind his conclusion.

Whether the Licensing Claims against IDH passed through Gateway 11

Gateway 11 is para 3.1 (11) of Practice Direction 6B, and it is another ground on which a claim form may be served outside the jurisdiction with the permission of the court.   It applies where:

"The subject matter of the claim relates wholly or principally to property within the jurisdiction, provided that nothing under this paragraph shall render justiciable the title to or the right to possession of immovable property outside England and Wales."

The availability of Gateway 11 for implementer-commenced claims for declarations as to the terms of a global FRAND licence has been confirmed in a number of cases since Vestel Elektronik Sanayi Ve Ticaret AS v Access Advance LLC  [2021] 4 WLR 60, [2021] WLR(D) 178, [2021] EWCA Civ 440.  InterDigital argued that that line of authority was wrong.   It raised several other objections, each of which was answered by the justices.

Appropriate Forum

The justices agreed with Lord Justice Arbold that the case concerned the licensing of InterDigital's UK SEPs on the Avanci 5G Platform and what should be the FRAND terms of a licence to use those patents. They considered InterDigital's submission that the Chancery Court of Delaware would be a suitable forum but rejected it on the ground that US courts lacked jurisdiction to adjudicate on the validity or infringement of non-US patents or set a FRAND rate for UK patents.

Whether Permission to serve the Licensing Claims out of the Jurisdiction ought, in all the Circumstances, to have been refused as a Matter of Discretion

InterDigital submitted that permission to serve out of the jurisdiction was discretionary and should be refused even if all the other requirements for service out had been satisfied. It argued that the Licensing Claims did not fall within Gateway 11 as Tesla sought a worldwide licence. Relying on Insurance Corpn of Ireland v Strombus International Insurance Co [1985] 2 Lloyd's Rep 138, 144, it contended that Tesla could not show "solid practical benefit" from the Licensing Claims against InterDigital. Even if an arguable useful and legitimate purpose could be identified, the benefits of suing InterDigital were insubstantial, the targeting of it unjustified and the costs disproportionate.   It would be inappropriate to use Gateway 3 where IDPH was sued to get at IDH.

The Supreme Court doubted that the point was open to InterDigital as it had not been determined by Mr Justice Fancourt or argued before the Court of Appeal. There would have to be good and compelling reasons for permission to be refused even though all the requirements for service outside the jurisdiction had been met.  No such reasons had been met, and InterDigital's arguments for refusing permission to serve out had already been answered.

Comment 

Even though there have been appeals to the Court of Appeal and the Supreme Court, this case is at a very early stage.  The defendants have yet to file their defences and any counterclaims.   The parties have to disclose documents and exchange expert and factual evidence. The justices have held that there is a serious issue to be tried that the FRAND obligation applies to the offer of a licence through a platform but they have not made a ruling on that point.   I shall discuss this case at the Winter IP Conference at the Rothman Campus of the University of Chicago's Booth Business School in London.  Anyone wishing to discuss this case may call me on +44 (0)20 7404 5252 during normal business hours or send me a message through my contact form at any other time.