Tesla v InterDigital: a new FRAND claim, and an awkward funding question
On 27 July 2026 the UK Supreme Court gave judgment in Tesla v InterDigital & Avanci [2026] UKSC 27, unanimously allowing Tesla’s appeal and reversing the High Court’s decision to strike out the licensing claims and the majority decision of the Court of Appeal.
Avanci operates a platform through which SEP owners collectively license patents used in 5G-enabled vehicles for a single fee. At the time of the first-instance hearing, more than 65 SEP owners had joined the platform and were estimated to own around 170,000 declared 5G SEPs. By the Supreme Court hearing, that had grown to 89 SEP owners licensing 86 automotive brands.
Avanci owns no SEPs itself, has given no FRAND undertaking to ETSI, and itself offers only the platform licence.
The Supreme Court held that there is a serious issue to be tried. It rejected the proposition, at this stage, that licensing through a platform takes SEP owners outside their existing FRAND obligations, and held that Tesla has a real prospect of establishing at trial that the only FRAND licence of InterDigital’s UK SEPs is a global licence to the entire platform.
The Supreme Court also held that the English court has jurisdiction, notwithstanding that UK SEPs represented around 7% of the platform SEPs. The case now returns to the High Court.
Since Unwired Planet v Huawei [2020] UKSC 37, the English court has been able to determine global FRAND terms. What Tesla adds is that this proactive approach may extend beyond bilateral licensing: an implementer can use an English action to test the FRAND compliance of a worldwide platform rate.
The economics are different from a damages claim
Claims of this kind could potentially be funded, insured, or both. But the value of winning is usually not a payment. It is a reduction in an ongoing royalty across global volumes over the life of a licence.
That means success has to be defined at the outset: the counterfactual rate, the volumes to which it applies, the period over which the saving is measured and the treatment of any settlement on different terms.
It also creates a practical funding problem. Where the win is a saving, there is no lump sum recovery from which to pay a funder’s return or an insurer’s contingent premium.
Which can favour the businesses that need it least
Payment must instead come from future cash flow. In substance, the arrangement becomes a long-dated obligation supported by the claimant’s balance sheet and by savings that have yet to be realised.
A large implementer can usually carry that comfortably. It may self-fund, use insurance selectively to cap the downside, and walk away if the economics change.
A smaller implementer has the opposite profile. The saving may be more material to it, but it may also be less able to demonstrate that it can service a return over several years.
The features that make the claim worth bringing can therefore be the same ones that make it harder to fund.
That is an uncomfortable point for a funder to make, but an important one. In its Corporate Plan for 2026 to 2027, the UKIPO identified costly and complex dispute resolution as a problem which can particularly disadvantage SMEs.
On a pure rate-reduction claim, external capital may therefore be most readily available to those who need it least.
What improves the position
The clearest improvement is a cash element alongside the forward-looking determination.
Where there is a realistic claim for amounts already overpaid, that can create a recovery from which a return is paid at the point of success. Fundability improves materially.
It is worth asking that question before the litigation strategy is fixed.
Separately, adverse costs cover addresses a more conventional exposure. It protects against the downside of bringing the claim rather than depending on the upside, and that is TheJudge’s side of the business.
None of this removes the asymmetry. It narrows it.
At TheJudge, we would rather state that limitation clearly than suggest that external capital or insurance solves an access problem which, on this structure, it may only partly address.
The Supreme Court held that Tesla’s claim passes the threshold test, not that Tesla is right.
For an implementer considering funding or insurance options for a claim of this kind, one of the earliest questions should therefore be simple: how is a win defined, and how is it actually paid for?
Tesla, Inc and another v InterDigital Patent Holdings, Inc and others [2026] UKSC 27, judgment of 27 July 2026. Platform and portfolio figures are as recorded in the proceedings. The UKIPO reference is to its Corporate Plan for 2026 to 2027, published on 11 May 2026. This piece reflects general market observations and is not legal, insurance or investment advice.KEY CONTACTS
Robert Warner, Director (UK)
James Blick, Director (USA)