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VJP Germany Patent Litigation Newsletter
3/2020
I. Regional Court Düsseldorf, Decision of 26 November 2020, Case No. 4c O 17/19 –– Nokia v Daimler re. German Part of EP 2 087 629
In the connected car patent war, Düsseldorf – as expected by many – stayed the infringement proceedings brought by Nokia against Daimler AG and referred the case to the Court of Justice of the European Union ("CJEU") to answer the following questions (unofficial English translation):
A. Is there a priority licensing requirement for suppliers?
- Can a company of a downstream economic level hold the objection of abuse of a dominant position within the meaning of Art. 102 TFEU against the patent infringement action for injunctive relief of the proprietor of a patent, whereas the patent is essential for a standard adopted by a standardization organization (SEP) and whereas the proprietor irrevocably obliged himself to grant each third party a license under FRAND conditions, if the standard for which the patent in suit is essential, or parts of the standard, already is implemented in a pre-product which Defendant obtained from suppliers which are willing to take a license but to which the patent holder refuses to grant their own unrestricted license for all under patent law relevant types of use at FRAND conditions for the standard implementing products?
- Does this apply in particular if it is customary in the relevant industry field of the end product distributor that the IP situation for the patents used in the supplier part is cleared by the supplier taking a license?
- Is there a licensing priority vis-á-vis the suppliers on every level of the supply chain or just towards that supplier who is directly downstream of the end product distributor in the supply chain? Is also here decisive what is customary in the industry field?
- Does the prohibition of abuse under anti-trust law require the supplier to be granted its own, unrestricted license for all types of use relevant to patent law under FRAND conditions for the standard-implementing products in the sense that the end distributors (and, if applicable, the upstream buyers) do not need an own separate license from the SEP owner in order to avoid patent infringement in the event that the relevant supplier part is used as intended?
- If the question under 1. is answered in the negative: Does Art. 102 TFEU impose any special qualitative, quantitative and/or other requirements on the criteria according to which the holder of a standard essential patent decides which potential patent infringers at different levels of the same production and exploitation chain he sues for patent infringement suit claiming injunctive relief?
B. Specification of the requirements established in the decision of the Court of Justice in the case Huawei ./. ZTE (judgment of July 16, 2015, C170 / 13):
- Irrespective of the fact that the obligations to act mutually to be undertaken by the SEP owner and the SEP user (notification of infringement, licensing request, FRAND license offer; license offer to the supplier to be licensed with priority) are to be fulfilled in advance of a court action, is there the possibility to rectify any such obligations (which were missed in the phase before filing a court action) in the course any/during any legal proceedings without losing any rights?
- Can a patent user be considered to have sufficiently asked for a license only if, on the basis of a comprehensive assessment of all accompanying circumstances, the will and readiness of the SEP user to conclude a license agreement with the SEP owner under FRAND conditions, whatever FRAND may be (in the absence of a license offer formulated at this point in time, conditions that are yet fully unknown), clearly and unambiguously reveals?
- Does an infringer who remains silent for several months on the infringement notice regularly thereby indicate that he is not interested in obtaining a license so that – despite a verbally formulated license request – such license request is to be considered missing, with the result that the SEP Owner's claim for injunctive relief is to be granted?
- Is it possible to conclude from license conditions, which the SEP user introduced with a counter-offer, that a license request is missing, with the result that the SEP owner's action for injunctive relief is granted without prior checking whether the SEP’s own license offer (which preceded the counter-offer of the SEP User) corresponds to FRAND conditions at all?
- Is such a conclusion not allowed if these license conditions of the counter-offer (based on which a lack of a license request is considered to be concluded) are conditions for which it is neither obvious nor clarified by the highest court that they are incompatible with FRAND conditions?
In summary, Part A relates to the question of component level licensing (license to all v access to all), i.e. as to whether, as a priority, a willing (part) supplier is to be granted a license instead of the upstream end product distributor (here Daimler). Part B, instead, shows that Düsseldorf has doubts about the practice the Munich and Mannheim courts recently have shown in SEP infringement cases (see the reports below), namely to focus on any non-FRAND behavior of the infringement Defendant irrespective of the behavior of the SEP owner.
As a result, it may be expected that many Defendants in any SEP cases pending in Germany facing similar legal questions will try to have their cases be stayed in light of the Düsseldorf referral. With the CJEU shedding light on the above questions, hopefully, guidance for both SEP owners and implementers will be provided on how to position themselves in the context of SEP licensing.
A copy of the original press release can be found here:
https://www.lg-duesseldorf.nrw.de/behoerde/presse/Pressemitteilungen-2020/22-20.pdf
II. Regional Court Mannheim, Judgment of 21 August 2020, Case No. 2 O 136/18 –– Godo Kaisha IP Bridge 1 v N.A. re German part of EP 2 294 737 B1
In this case, the Plaintiff and patent owner, Godo Kaisha IP Bridge 1, sued the Defendant for distributing LTE compatible mobile phones in Germany, therefore allegedly infringing EP 2 294 737 B1. The Regional Court found on infringement but at the same time considered the Defendant's FRAND objection to be successful. The Regional Court considered the Plaintiff's license offer applying a Top-down approach and using as base multiplier an industry-wide, worldwide average sales price (ASP) of all LTE compatible mobile phones to be not FRAND in the case at hand. The ASP would be beneficial for licensees which sell high price mobile phones, but would form a disadvantage for licensees selling low price mobile phones. On the other hand, the Regional Court considered the Defendant's offer FRAND applying as well a Top-down approach but applying as multiplier the worldwide average sales price of their own sales. The Defendant determined in its offer the royalty rate based on a cumulated maximum royalty rate for LTE of 8.8% (i.e. 8.8% for all LTE patents) and on the percentage share of LTE patents which the Plaintiff had indicated itself. The result of this calculation is not disclosed in the published decision. Since this case was limited to claims for injunctive relief, recall and destruction, this finding led to fully dismissing the complaint.
In this judgment, the Regional Court in detail argued why it believed that it may focus on the FRAND offer of the Defendant as a priority. i.e., simplified, it argued that generally no matter whether the SEP Owner's offer was FRAND, it was decisive for the FRAND objection whether the Defendant's offer was FRAND. Whether this approach will be maintained remains to be seen in light of the future decision of the CJEU (see above under I.).
A free copy of the complete decision in German language is not published so far, but available on commercial digital libraries.
III. Regional Court Mannheim, Judgment of 18 August 2020, Case No. 2 O 34/19 –– Nokia v Daimler re German Part of EP 2 981 103 B1
The Regional Court Mannheim granted Nokia an injunction against Daimler concerning devices comprising search units in the sense of EP 2 981 103 B1. The finding is not limited to LTE, but based on the finding that the accused devices would be compatible with LTE.
In essence, the Regional Court considered Daimler an unwilling license for directing the SEP Owner to Daimler's suppliers for taking a license. Also, the fact that Daimler argued that the selling price of the supplier part should be used as base multiplier in a license would show Daimler's unwillingness to license.
Also in this judgment, the Regional Court applied the above-outlined approach (it argued that generally no matter whether the SEP Owner's offer was FRAND, it was decisive for the FRAND objection whether the Defendant's offer was FRAND, i.e. it may reject the FRAND objection if the Defendant's offer was not FRAND without looking at the Plaintiff's offer), but here reaching a different result. Whether this approach will be maintained remains to be seen in light of the future decision of the CJEU (see above under I.).
A free copy of the complete decision in German language is not published so far, but available on commercial digital libraries.
IV. Regional Court Munich I, Judgment of 10 September 2020, Case No. 7 O 8818/19 –– Sharp v Daimler re. German Part of EP 2 667 676 B1
The Regional Court Munich I granted Sharp an injunction against the cars of Daimler to the extent they comprise telematics modules implementing the LTE standard since Release 8.
In essence, the Regional Court considered Daimler an unwilling licensee for Daimler referring the SEP owner to Daimler's suppliers to take a license. Even a license counter-offer made by Daimler during the pending proceedings could not rectify this. Also, the fact that Daimler had not properly identified all its suppliers to the SEP Owner would indicate a lack of willingness to take a license on terms whatever FRAND may be.
Similar to the Mannheim Court outlined above, the Regional Court Munich I focused on the behavior of the Defendant (Implementer, potential licensee) and appeared to agree with Mannheim that in case of a non-FRAND behaving Defendant, the FRAND objection could be rejected irrespective of the quality of the behavior of the SEP Owner. Whether this approach will be maintained remains to be seen in light of the future decision of the CJEU (see above under I.).
A copy of the complete decision in German language is published here:
https://www.gesetze-bayern.de/Content/Document/Y-300-Z-BECKRS-B-2020-N-22577?hl=true&AspxAutoDetectCookieSupport=1
This news is circulated for your information only. It should not be taken as a statement of law and should not be used without legal advice. For further information, please contact our German Litigation Department [lit@vjp.de] or:
Jörg Wahl
jwahl@vjp.de
Dr. Uli Foerstl
ufoerstl@vjp.de
Eric-Michael Dokter
edokter@vjp.de
Adam Bogsch
abogsch@vjp.com.sg
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