Background
Nokia holds a portfolio of patents essential to video encoding and decoding standards (the Nokia Video Portfolio, or NVP) and sought royalties from Warner Bros. Discovery (WBD) and Paramount, both of which have streamed video content using those standards since 2011. After Nokia decided following a January 2026 hearing that a single global RAND determination in the UK was preferable to worldwide multi-forum litigation, the parties entered into an “Agreed Mechanism” in early 2026. Under that mechanism they withdrew all parallel proceedings worldwide, agreed to accept a global RAND licence on terms to be set by the court at trial, and reserved Nokia’s right to seek an interim payment in the meantime. The judgment concerns only that interim payment question, not the final licence terms.
The parties were far apart on quantum. WBD and Paramount argued the final RAND rate should be anchored to royalty pool rates scaled to the size of the NVP, producing a floor of roughly $250,000–$300,000 for a forward-looking licence (before any past-use component). Nokia relied primarily on a bilateral comparable licence (Agreement A, or an average of Agreements A–C), producing figures several orders of magnitude higher. A further point of contention was the Nokia Lump Sum Offer (NLSO), a 2024 settlement offer Nokia made to Paramount covering a limited past period, which both sides invoked—on very different terms—as a reference point for the interim payment. The parties also disagreed sharply on whether royalties should run back to 2011, when streaming began, or only from a more recent date.
Mr Justice Meade had recently addressed the governing principles for RAND interim payments in TP-Link v Huawei [2026] EWHC 179 (Pat), building on a line of Court of Appeal authority including Lenovo v Ericsson [2025] EWCA Civ 182 and InterDigital v Lenovo [2024] EWCA Civ 743. He applied those principles here, with modifications to address the unusual features of this dispute.
The Court’s Holding
Meade J held that there should be both a non-refundable minimum interim payment (reflecting the undisputed floor from pool-scaling) and a refundable (adjustable) interim payment. He rejected WBD’s and Paramount’s argument that no adjustable payment should be ordered on the basis that Nokia could not recognise the money as revenue: the Court of Appeal in Lenovo v Ericsson had already rejected that reasoning as a matter of principle, and in any event an interim sum could be placed in an interest-bearing account or used to offset debt. The court’s task was to reflect what willing parties would agree at an interim stage given the uncertainty about the final RAND outcome—not to assess whether the patentee was in pressing financial need.
On methodology, the judge declined to reject Agreements A–C or the pool-scaling approach outright, as doing so would amount to a mini-trial. However, he gave primary weight to the NLSO as a reference point: it was an actual offer, made between Nokia and a party to the very litigation before him, for the same portfolio. He modified the conventional mid-point approach—which would normally split the difference between the parties’ most recent positions—because the gap between the camps was unusually large, there had been no meaningful convergence during litigation, and a shift away from pool scaling at trial would produce a sudden, dramatic increase in the amount owed rather than a gradual adjustment. He declined to treat the mid-point mechanically and instead set the refundable amounts slightly above the average of the NLSO-based midpoints to give some weight to the possibility that Nokia might ultimately prevail on Agreements A–C.
On the question of how far back the payment should run, Meade J acknowledged the Court of Appeal’s general rule in InterDigital v Lenovo requiring payment for all past use but found that this case presented unusual features: Nokia had not attempted to monetise its video patents until well after 2011, and WBD and Paramount had a tenable argument that the industry had developed on the understanding that codec royalties would be borne by device manufacturers rather than streaming services. He therefore declined to hold with certainty that Nokia was entitled to recover back to 2011, introduced a discount for that uncertainty, and awarded in US dollars rather than euros (rejecting Nokia’s attempt to use a more favourable 2024 exchange rate).
Key Takeaways
- A RAND patentee is entitled to an adjustable interim payment even where it cannot immediately recognise the funds as accounting revenue; the court’s focus is on what willing parties would agree at an interim stage, not on the patentee’s immediate financial need.
- The mid-point approach to RAND interim payments is not mandatory and may need modification where the gap between parties is unusually large, methodologies are conceptually incompatible (bilateral comparables vs. pool scaling), and potential trial outcomes would produce abrupt, step-change shifts in quantum rather than gradual adjustments.
- An actual settlement offer made between Nokia and one of the implementing parties (the NLSO) can anchor the interim payment analysis even where Nokia has not formally abandoned higher-value bilateral comparables, particularly where it provides simplicity and directness that aligns with the no-mini-trial principle.
- The InterDigital v Lenovo rule requiring payment for all past use admits of case-specific exceptions: where a patent holder did not establish a licensing programme for many years and the industry arguably developed on a different royalty model, a court may discount the likelihood of full recovery to 2011 at the interim stage.
- Interim RAND payments should be calculated in the currency in which payment will actually be made at the time of the order, not a historical exchange rate that favours one party.
Why It Matters
This decision is a significant addition to the UK’s growing body of RAND interim payment jurisprudence and will be of immediate relevance to streaming platforms and video codec patent holders worldwide. The Agreed Mechanism—under which Nokia persuaded major US studios to accept a single binding UK determination in exchange for a global licence—illustrates the continuing attractiveness of the English Patents Court as a forum for resolving multi-jurisdictional SEP disputes. The court’s willingness to depart from a purely mechanical mid-point approach, and its nuanced treatment of the “pay-back-to-2011” question for a sector where patent licensing emerged late, signal that UK judges will tailor the interim payment framework to the specific commercial history of each industry rather than applying a one-size-fits-all formula.
For the broader streaming and technology sectors, the case raises an unresolved question—left for the full RAND trial—about whether companies that adopted video standards before patent holders had established licensing programmes can be required to pay full retroactive royalties. The answer will have substantial financial implications for the over-the-top video industry and may influence how SEP holders time and structure their licensing programmes in future standards cycles.