Source: https://caselaw.4ipcouncil.com/search/tag/notification%20of%20infringement
Timestamp: 2019-01-23 07:00:49
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Matched Legal Cases: ['§ 30', '§ 242', '§ 30', '§ 242', 'In casu', '§ 242', 'CJEU ', 'CJEU ']

4iP Council :: Case Law Search :: Case law search :: notification of infringement
The court left open the question of whether the SEP conferred market power to Claimant since it did, in any case, find no abuse of such potential market power (cf. below). As to the infringement notification, [132] the court did not decide whether the meetings with individual companies of the group to which Defendants belong already satisfied the requirements established by the ECJ. Since, in the present case, Claimant filed its actions before the judgment in Huawei v ZTE was rendered the court considered it sufficient that the infringer was alerted of the infringement through the statement of claims: The rules of conduct established by the German Federal Court (Bundesgerichtshof) in its Orange Book-ruling do not require the patent holder to give notice or submit a licensing offer prior to suing a (purportedly) infringing standard implementer. Although Orange Book addressed a de facto Standard and was heavily criticized by scholars and the EU Commission alike, it was being applied by German lower courts to de jure standards until the ECJ handed down its Huawei decision. In consequence, Claimant could—prior to the Huawei decision—reasonably consider itself to comply with the law by acting in accordance with the Orange Book rules. In terms of content, the District Court left undecided the question whether of the infringement notification must only indicate the patent for which prohibitory injunction is sought, whether—on the contrary—reference to other IP rights with respect to which a license is offered has to be made, or whether such additional reference is relevant only in determining FRAND licensing conditions. The court also left open whether the alleged infringer must accept a FRAND offer since the patent holder has then fulfilled its obligations according to antitrust law and thus there is no room for a counter-offer.
As regards the Huawei requirement to present the alleged infringer with a specific, written offer for a license on FRAND terms, three statements of the district court deserve attention: Firstly, the SEP holder is in compliance with the ECJ conditions if the licensing offer is submitted not to all individual companies within a group but to the group parent only. Secondly, the court did not decide on whether an offer providing for a worldwide portfolio license and encompassing also non-SEPs could be considered as FRAND because, thirdly, the alleged infringers did not comply with their duties of conduct under Huawei (cf. below). [133]
According to the court even if the patent proprietor’s licensing offer is not FRAND-compliant, a standard implementer would still have to respond to that offer. The question of whether the alleged infringer may respond to a non-FRAND offer in a different manner than by submitting a specific counter-offer, in particular by merely demonstrating that the SEP owner’s offer was not FRAND, was left undecided. [134] Since Defendants decided to submit a counter-offer, the court stated that they were obliged to render account in respect of acts of use and to provide security for potential royalties, both based on their counter-offer and starting with the refusal of the first counter-offer, regardless of whether subsequent offers and counter-offers were formulated. These obligations also apply to “transitional” cases in which the (first) counter-offer has been rejected before the Huawei ruling because the—previously applicable—Orange Book-rules of conduct were even more demanding for the standard implementer. In the present case, Defendants did not comply with this prerequisite because they rejected, on 1 September 2014, the offers presented by Claimant on 17 February and 29 August 2014 without formulating any counter-offer, submitting such a counter-offer only belatedly, on 12 August 2015. [135] Furthermore, Defendants did not comply with their duties to render account and to provide security because they did so only on 29 September 2015, i.e. more than one month after their first counter-offer had been rejected by the claimant on 24 August 2015. [136]
In addition to its considerations regarding Huawei, the court deliberated on two other important issues: As regards the transfer of a SEP from the original patent proprietor to a non-practicing entity, registration in the patent register in accordance with § 30 (3) PatG establishes presumption of ownership, allowing the proprietor to enforce all rights derived from the SEP as long as the presumption has not been successfully rebutted by Defendants. [137] Furthermore, no patent ambush-defense based on § 242 BGB could successfully be raised because, firstly, Defendants could not substantiate the alleged patent ambush by “A” (being the original SEP proprietor); secondly, the alleged patent ambush would, arguably, have resulted only in a FRAND licensing obligation while, thirdly, Claimant had declared its willingness to grant a license on FRAND terms anyway. [138]
[132] Case No. 4a O 93/14, para. 90-94
[133] Case No. 4a O 93/14, para. 96-98, 125
[134] Case No. 4a O 93/14, para. 98-101
[135] Case No. 4a O 93/14, para. 14, 103-109
[136] Case No. 4a O 93/14, para. 103-111
[137] Case No. 4a O 93/14, para. 37-40
[138] Case No. 4a O 93/14, para. 118-123
Wiko v Sisvel, Tribunal de Commerce de Marseille
20 September 2016 - Case No. RG: 2016F01637
Claimant WIKO S.A.S. markets mobile phones as well as telecommunication products and services, produced by its parent company TINNO, in France and Europe. Defendant SISVEL UK LTD is a division of SISVEL INTERNATIONAL and performs the function of an intermediary between manufacturers seeking access to high-level technology and intellectual property rights holders willing to grant licenses to their portfolio. Claimant considers itself a victim of acts of unfair competition committed by Defendant. The latter sent letters to several French distributors and customers of Claimant, such as Carrefour, Casino or LDLC, alerting them that they (purportedly) infringed Claimant’s patents allegedly essential to the LTE standard. In consequence, Claimant sued Defendant before the Tribunal de Commerce de Marseille, seeking, inter alia, a decision declaring Defendant’s letters to be acts of unfair competition, forcing Defendant to issue a notice of revocation, and awarding damages to Claimant.
The Tribunal de Commerce de Marseille rejected Claimant’s submission regarding the alleged violation of the French rules on unfair competition. Against the background of paras. 61, 63 of the Huawei judgment, requiring the SEP proprietor to alert the alleged infringer about the infringement prior to the initiation of proceedings and to present a specific, written offer for a license on FRAND terms, the Court considered the letters as prior notice in the sense of the Huawei rules of conduct and denied a violation of the French rules on unfair competition. In particular, the court stressed that the documents communicated by Defendant provided an overview including each SEP, its filing date as well as the parts of the LTE standard implementing the respective patented technology. They indicated not only the consequences of acts of unauthorized use and the devices allegedly embodying such use but informed the distributors also about their option to contest both the communicated information and the validity of the patents at issue. Furthermore, Defendant had offered to grant a FRAND license in the sense of the Huawei decision, defined a response period for this offer and attached a terms sheet substantiating the general framework, the basic clauses and, in particular, the royalties of a potential FRAND licensing agreement. The letters did not, however, ask for a cessation of sales of the allegedly infringing products.
Since Claimant only entered into licensing negotiations with and addressed all licensing offers to ZTE Corporation, being the parent company of Defendant I, it did not comply with its Huawei obligations vis-à-vis Defendant I. Claimant neither noticed Defendant I of the alleged infringement prior to initiating litigation nor did it provide the necessary documents indicating the essential character of the patent in question. [385]
While rejecting all other actions , particularly as to the seizure of devices using the patent-in-suit, raised against Defendant II, who neither became involved into the licensing negotiations between Claimant and ZTE Corporation nor possesses mobile devices implementing the UMTS standard anymore, the court upheld the action for prohibitory injunction because the confirmation of cessation of sales does not completely exclude periculum in mora. [386] Furthermore, the court rejected the preliminary measures raised by Claimant against Defendant I.
[385] Case No. 30308/20215 R.G., para. 3
[386] Case No. 30308/20215 R.G., para. 5, a-c
The court left open the question of whether the SEP conferred market power to Claimant since it did, in any case, find no abuse of such potential market power (cf. below). As to the infringement notification, [139] the court did not decide whether the meetings with individual companies of the group to which Defendants belong already satisfied the requirements established by the ECJ. Since, in the present case, Claimant filed its actions before the judgment in Huawei v ZTE was rendered the court considered it sufficient that the infringer was alerted of the infringement through the statement of claims: The rules of conduct established by the German Federal Court (Bundesgerichtshof) in its Orange Book-ruling do not require the patent holder to give notice or submit a licensing offer prior to suing a (purportedly) infringing standard implementer. Although Orange Book addressed a de facto Standard and was heavily criticized by scholars and the EU Commission alike, it was being applied by German lower courts to de jure standards until the ECJ handed down its Huawei decision. In consequence, Claimant could—prior to the Huawei decision—reasonably consider itself to comply with the law by acting in accordance with the Orange Book rules.
As regards the Huawei requirement to present the alleged infringer with a specific, written offer for a license on FRAND terms, three statements of the district court deserve attention: Firstly, the SEP holder is in compliance with the ECJ conditions if the licensing offer is submitted not to all individual companies within a group but to the group parent only. Secondly, the court did not decide on whether an offer providing for a worldwide portfolio license and encompassing also non-SEPs could be considered as FRAND because, thirdly, the alleged infringers did not comply with their duties of conduct under Huawei (cf. below). [140]
According to the court, even if the patent proprietor’s licensing offer is not FRAND-compliant, a standard implementer would still have to respond to that offer. The question of whether the alleged infringer may respond to a non-FRAND offer in a different manner than by submitting a specific counter-offer, in particular by merely demonstrating that the SEP owner’s offer was not FRAND, was left undecided. [141] Since Defendants decided to submit a counter-offer, the court stated that they were obliged to render account in respect of acts of use and to provide security for potential royalties, both based on their counter-offer and starting with the refusal of the first counter-offer, regardless of whether subsequent offers and counter-offers were formulated. These obligations also apply to “transitional” cases in which the (first) counter-offer has been rejected before the Huawei ruling because the—previously applicable—Orange Book-rules of conduct were even more demanding for the standard implementer. In the present case, Defendants did not comply with this prerequisite because they rejected, on 1 September 2014, the offers presented by Claimant on 17 February and 29 August 2014 without formulating any counter-offer, submitting such a counter-offer only belatedly, on 12 August 2015. [142] Furthermore, Defendants did not comply with their duties to render account and to provide security because they did so only on 29 September 2015, i.e. more than one month after their first counter-offer had been rejected by the claimant on 24 August 2015. [143]
In addition to its considerations regarding Huawei, the court deliberated on two other important issues: As regards the transfer of a SEP from the original patent proprietor to a non-practicing entity, registration in the patent register in accordance with § 30 (3) PatG establishes presumption of ownership, allowing the proprietor to enforce all rights derived from the SEP as long as the presumption has not been successfully rebutted by Defendants. [144] Furthermore, no patent ambush-defense based on § 242 BGB could successfully be raised because, firstly, Defendants could not substantiate the alleged patent ambush by “A” (being the original SEP proprietor); secondly, the alleged patent ambush would, arguably, have resulted only in a FRAND licensing obligation while, thirdly, Claimant had declared its willingness to grant a license on FRAND terms anyway. [145]
[139] Case No. 4a O 93/14, para. 90-94
[140] Case No. 4a O 93/14, para. 96-98, 125
[141] Case No. 4a O 93/14, para. 98-101
[142] Case No. 4a O 93/14, para. 14, 103-109
[143] Case No. 4a O 93/14, para. 103-111
[144] Case No. 4a O 93/14, para. 37-40
[145] Case No. 4a O 93/14, para. 118-123
On 9 December 2014, the Intervener declared willingness to take a license, inter alia for the patent-in-suit, provided infringement was found in court. It further declared that it would accept royalties determined by a court or arbitration tribunal. Claimant, in turn, offered a licensing agreement by letters as of 12 January 2015 and 25 March 2015 respectively. In the course of meetings taking place since 23 January 2014, [180] Claimant offered a license to the Intervener. On 23 February 2015 and on 2 April 2015 respectively, the Intervener made two licensing offers, including third party determination (arbitration panel or English court) of the amount of royalty, for the whole German patent portfolio of Claimant. An additional offer for a licensing agreement, limited to Germany and implementing a royalty of USD 0.0055 per patent by reference to the “WCDMA Patent Pools”, was made by the Intervener on 6 March 2015 and 24 September 2015 respectively, but it was finally refused by Claimant on 4 October 2015. Moreover, the Intervener provided a bank “guarantee of payment” as of 3 September 2015, being modified by letter as of 10 November 2015, and also rendered account of past and prospective sales in Germany since 2011.
The court leaves open the question of whether the SEP conferred market power to Claimant since it did, in any case, find no abuse of such potential market power. [181] The court declared the Huawei rules applicable to claims for the recall of products. [182]
As regards the Huawei requirement to alert the standard user of the infringement, the decision arrived at various findings of interest: Firstly, the judges found that—in “non-transitional” cases where the lawsuit was brought after the Huawei decision—the infringement notification has to take place before the action is filed, or the latest before the advance payment on costs is made. In transitional cases, such as the present case, a delayed infringement notification, taking place after the advance payment on costs as well as the submission of the court action, but before the statement of claims is served, is admissible. [183] Moreover, an infringement notification could possibly be omitted (in particular) if—as in the present case—the patent user already disposes of all necessary information and lacks willingness to license. [184] In non-transitional cases, however, the court doubts whether it is possible to rectify an omitted infringement notification without withdrawing the action. [185]
Secondly, the court specified the minimum content of the infringement notification which has to indicate at least the number of the patent, the contested embodiments and the alleged acts of use performed by the standard implementer. The court did not decide whether additional information has to be provided, in particular regarding the interpretation of the patent claims or on which part of the standard the patent reads, but it stated that such additional information is not harmful to the patent proprietor. [186]
Lastly, the court detailed on the particular situation of the Intervener, being Defendant’s manufacturer and supplier in the present case: Even though a FRAND defense successfully raised by the Intervener would in general also cover subsequent levels of the distribution chain, the Huawei requirements apply only indirectly to suppliers of contested embodiments which have not been sued themselves. Accordingly, the SEP proprietor is not obliged to notify the patent infringement to third parties, but as soon as a request to grant a license on FRAND terms is submitted the (adapted) Huawei procedure applies. [187] In casu, no separate infringement notice vis-à-vis the Intervener was required since the Intervener was, since August 2014, aware of the action having been brought.
Since the patent user did not express its willingness to conclude a licensing agreement in due time, the court found Claimant to comply with the Huawei requirement to submit a licensing offer on FRAND terms even though the offer was made in the course of the ongoing litigation. For transitional cases, as the present one, this holds true even if infringement notification and court action take place at the same time. [188]
Besides, the court analyzed under which circumstances licensing conditions can be considered as FRAND according to Huawei. In the opinion of the judges, the more licensing agreements implementing comparable terms the SEP proprietor has already concluded, the stronger is the presumption that these conditions are FRAND, unless factual reasons—which are to be demonstrated by the patent user—justify modified terms. Recognized commercial practice in the relevant sector has to be considered when defining the admissible scope of the licensing agreement. If patent portfolios are usually covered by group or worldwide licenses in the relevant market, a (worldwide) portfolio license will be FRAND unless the circumstances of the specific case, e.g. the SEP proprietor’s market activity being limited to one geographic market, require a modification. [189] Accordingly, Claimant’s (worldwide) licensing offer to Defendant for the whole AMR-WB pool, demanding royalties of USD 0.26 per mobile device that implemented the standard and was produced or marketed in countries in which the SEP was in force, and complying with Claimants existing licensing practice (accessible on the Internet and already implemented in 12 licensing agreements) was declared FRAND. While the court considered that comparable licensing agreements “represent an important indicator of the adequacy of the license terms offered” it clarified that the significance of a patent pool as an indication of FRAND conformity is “limited”. Defendant and the Intervener failed to show that the portfolio comprised (non-used) non-SEPs as well. [190] They further failed to show that the pre-concluded licensing agreements provided no valid basis for comparison as they were concluded under the threat of pending litigation. [191]
In order to fulfill the Huawei obligation of specifying the calculation of royalties, the SEP proprietor only has to provide the information necessary to determine the amount of royalties to be paid, e.g. the royalty per unit and the products covered by the license. While the court left undecided whether additional indications, e.g. concerning the FRAND character of the licensing offer, are necessary to comply with Huawei, it found that the SEP proprietor’s duty to inform should not be interpreted too strictly as FRAND does regularly encompass a range of values that will be fair, reasonable, and non-discriminatory. [192]
Claimant’s licensing offer presented to the Intervener was considered as being FRAND for the same reasons. Furthermore, the court emphasized that the contractual clause allowing for judicial review of the royalties offered could be a possible way to avoid abusive practices and to ensure that licensing offers correspond to FRAND terms. [193]
The court found that the more details the infringement notification contains, the less time remains for the standard user to examine the patent(s) at issue and to express its willingness to conclude a licensing agreement on FRAND terms. In the present case, Defendant did not comply with Huawei because it took more than five months to react and then only asked for proof of the alleged infringement. Given this excessive delay, the court did not decide whether Defendant’s reaction satisfied the Huawei requirements in terms of content. It denied the possibility to remedy a belated reaction by a subsequent declaration of willingness to license. On the contrary, and as a consequence of the patent user’s non-compliance, the SEP proprietor may continue the infringement action without violating Article 102 TFEU, but it still has to grant licenses on FRAND terms. [194] Whether the Intervener satisfied the ECJ criteria was left undecided. [195]
The court made some further remarks of interest as to the Huawei requirements concerning the standard implementer: Firstly, it left undecided whether the obligation of the patent user to diligently respond is caused also by a (potentially) non-FRAND licensing offer. [196] Secondly, a standard user who has taken a license is not prevented from challenging validity and essentiality of the SEP afterwards, nor is the SEP proprietor entitled to terminate the license if such a challenge takes place. However, the standard implementer may not delay the (unconditional) conclusion of the licensing agreement until a final court decision on these issues has been rendered. While validity and standard-essentiality is litigated, the licensee remains obliged to pay royalties and it cannot request to insert into the licensing contract a clause entitling it to reclaim paid royalties in case of its success in court. [197] Thirdly, as, in the present case, no specific counter-offers satisfying FRAND terms were submitted and Defendant could not establish that Claimant had waived this requirement the court did not decide on whether a SEP proprietor is obliged to negotiate further although itself and the patent user have submitted FRAND offers. [198]
None of the counter-offers of the Intervener were FRAND in terms of content. They were either inadmissibly limited to Germany, contained no precise royalty, were not submitted “promptly” because the standard user had waited until the oral pleadings in the parallel procedure, or they proposed royalties per device which the court considered as too low. [199] While it was therefore held to be irrelevant whether, in the first place, the Intervener duly declared its willingness to license, the court emphasized that the Intervener’s readiness to take a license only after the SEP infringement was determined in court did not satisfy the Huawei standard of conduct. [200]
Moreover, the obligation imposed by Huawei to provide appropriate security and to render account was not fulfilled. While Defendant refrained from taking any of these actions, the Intervener waited several months after the counter-offers were refused in order to submit its bank “guarantee of payment”, which was not recognized as “appropriate security” due to its amount and its limitation to acts of use in Germany. [201] Neither was the Intervener’s initial proposal to have the security—if requested by Claimant—determined by an arbitration tribunal or by an English court accepted as an appropriate way to provide security. [202]
According to the court, the Huawei requirements apply to both non-practicing entities and other market participants. [203]
Suing a network operator instead of the undertakings producing devices operating in the network constitutes (at least under the circumstances of this case and absent selective enforcement) no violation of competition law even though this strategy might aim at using the action against the network operator as a “lever” to obtain licensing commitments from the device suppliers. On the other hand, device manufacturers are entitled to a FRAND license as well and can raise the FRAND defense if such a license is not granted. In consequence, the court perceives a fair balance of interests as the SEP proprietor can choose on which level of the chain of production to sue while the undertakings in the chain of production can choose on which level to take a license. [204]
Furthermore, no patent ambush-defense based on § 242 BGB could be raised because, firstly, Defendant and the Intervener could not substantiate the alleged patent ambush by “Y” and “C”, being the original SEP proprietors; secondly, they could not show that a different patent declaration conduct would have resulted in a different version of the standard excluding the patent-in-suit; thirdly, the alleged patent ambush would, arguably, have resulted only in a FRAND-licensing obligation and, fourthly, Claimant had declared its willingness to grant a license on FRAND terms anyway. [205]
[180] This is the date mentioned by the court although “23 January 2015” may seem more plausible and the date given by the court may result from a scrivener’s error.
[181] Case No. 4a O 73/14, para. 184
[182] Case No. 4a O 73/14, para. 187
[183] Case No. 4a O 73/14, para. 195 et seq.
[184] Case No. 4a O 73/14, para. 208-210
[185] Case No. 4a O 126/14, para. IV, 3, a, bb, 2, c
[186] Case No. 4a O 73/14, para. 193
[187] Case No. 4a O 73/14, para. 270 et seq.
[188] Case No. 4a O 73/14, para. 222 et seq.
[189] Case No. 4a O 73/14, para. 225 et seq.
[190] Case No. 4a O 73/14, para. 225 et seq. On the relevance of the SIPRO-pool royalty rates, cf. LG Düsseldorf, 31 March 2016 – Case No. 4a O 73/14, para. 245-248. On the facts indicating that a worldwide license was appropriate LG Düsseldorf, 31 March 2016 – Case No. 4a O 73/14, para. 249-255.
[191] Case No. 4a O 73/14, para. 234-242. The court argued that it is questionable in principle how much the threat of a claim for injunctive relief can (inadmissibly) affect license agreement negotiations, since the Orange Book case law of the BGH (German Federal Court of Justice), the Motorola decision of the European Commission, and now the CJEU judgment in the Huawei Technologies/ZTE Case could be and can be invoked against inappropriate demands that are in breach of antitrust law.
[192] Case No. 4a O 73/14, para. 256 et seq.
[193] Case No. 4a O 73/14, para. 279 et seq.
[194] Case No. 4a O 73/14, para. 214-220
[195] Case No. 4a O 73/14, para. 214-220; 278
[196] Case No. 4a O 73/14, para. 266
[197] Case No. 4a O 73/14, para. 185 et seq.; 262 et seq.
[198] Case No. 4a O 73/14, para. 264.
[199] Case No. 4a O 73/14, para. 291 et seq.
[200] Case No. 4a O 73/14, para. 278
[201] Case No. 4a O 73/14, para. 267 et seq.; 299 et seq.
[202] Case No. 4a O 73/14, para. 304
[203] Case No. 4a O 73/14, para. 189
[204] Case No. 4a O 73/14, para. 309-313
[205] Case No. 4a O 73/14, para. 317 et seq.
As regards the Huawei condition to submit a written offer on FRAND terms prior to the initiation of proceedings, the court requires a contractual offer that is ready to be adopted and comprises the essentialia negotii. However, in the opinion of the judges, Huawei does not oblige the infringement court to determine pursuant to objective criteria whether the licensing offer complies with FRAND terms, if the latter fact is disputed by the alleged infringer. [343] The SEP proprietor’s offer is only considered not FRAND and in violation of antitrust law, if it constitutes an expression of exploitative abuse, taking into account the specific negotiation situation and, in particular, the market conditions.
Taking into account the summary examination of the Higher Regional court in Karlsruhe granting the SEP proprietor much leeway in determining FRAND terms [344] , the Mannheim court left in the present case undecided whether it has to reassess its own standards of review, because Claimant did not sufficiently explain why royalties of USD 1.00 per unit should be FRAND in accordance with Huawei. The mere indication of the multipliers underlying the calculation of the royalties were deemed inadequate, since on the basis of this incomplete (market) information the alleged infringer is neither able to assess whether Claimant’s offer is FRAND nor to submit a FRAND counter-offer.
The subsequent explanations as well as the expert opinion, seeking to prove the non-discriminatory character of the royalties, forming part of Claimant’s reply, did not fulfill the Huawei requirements, because prior to the initiation of proceedings Claimant has to substantiate both the manner of patent infringement and the way of calculating the royalties. Without completely dissenting from the decision previously rendered by the OLG Düsseldorf [345] , the Mannheim court, by reference to the subsequent rectification order issued by the ECJ on 15 December 2015, denied the SEP proprietor’s unlimited possibility to perform its Huawei obligations within the ongoing trial without incurring sanctions, because otherwise the central idea underlying the ECJ decision of being able to negotiate without the burden of pending proceedings while having all necessary information to evaluate the FRAND conformity of the licensing offer would be diminished.
The standard implementer is obliged to react to a licensing offer, even if it deems the later not as FRAND in accordance with Huawei [346] , unless it is established by means of summary examination that the licensing offer is evidently not FRAND and therefore constitutes an abuse of dominance.
Besides, the Court denied the exhaustion of the patents in-suit. [347]
[343] The judges stated in an even more general manner that the infringement court shall not be required under Huawei to determine the FRAND terms, if the proceedings do not involve the payment of royalties, but only relate to actions for a prohibitory injunction or for the recall of products.
[344] See above OLG Karlsruhe, 31 May 2015 – Case No. 6 U 55/16
[345] See above OLG Düsseldorf, 9 May 2016 – Case No. 15 U 36/16
[346] See also LG Mannheim, 27 November 2015 – Case No. 2 O 106/14 and LG Düsseldorf, 3 November 2015 – Case No. 4a O 144/14
[347] Para. V, p. 34 et seq.
TThe court did not comment on the existence of a dominant market position. It focused on the notice of infringement and the license offer. The court held that the notice of infringement should enable the alleged infringer to examine and assess the patent situation. [348] It is insufficient to indicate that the alleged infringer is marketing products covered by a standard and is therefore infringing a patent. Rather, the SEP proprietor needs to specify the patent number and the standard for which it has been declared essential. The SEP proprietor also needs to describe the technical functionality of the standard which is at issue. The level of detail of these descriptions depends on the particular situation. [348] The SEP proprietor needs to take into consideration the level of the alleged infringer’s technological knowledge, or its ability to gain the required knowledge through professional advice. In the eyes of the court, the customary claim charts (which show the relevant patent claims and the corresponding passages of the standard) will typically be sufficient. However, the description does not need to be as thorough as a statement of claim in patent litigation.
The court stated that the SEP proprietor’s written license offer needs to contain all relevant aspects of the contract, to enable the alleged infringer to accept the offer. [349] If the alleged infringer argues that the conditions of this offer are not FRAND – and, according to the court, alleged infringers typically do so – it is not the role of the infringement court to examine the conditions of the offer and decide whether they are FRAND or not. The Court acknowledged that the Higher Regional Court of Karlsruhe had rejected this view in the decision 6 U 55/16 of 31 May 2016. [350] The Mannheim District Court, however, reiterated its view that a reduced standard of review of the offered conditions is sufficient, referring to the final opinion given by the Advocate General in the ZTE/Huawei ruling. [349] It was, the court argued, the CJEU’s intention to keep the infringement proceedings free of the determination as to what precise conditions would exactly be FRAND in each particular situation. [349] Only an offer that is clearly abusive, i.e. evidently non-FRAND, would not meet the CJEU criteria at this point. [349]
Of course, the SEP proprietor’s mere assertion that the offer is FRAND would be insufficient. [349] Instead, the Court requires the SEP proprietor to be transparent about the calculation. That means that it needs to specify how the terms of the license offer are calculated. [351] It needs to make clear the basis of the SEP proprietor’s conclusion that the offer is FRAND. Merely stating the royalties owed per unit (in this case: USD 1,- per unit without further explanation) [352] is also insufficient. Rather, the SEP proprietor needs to find a proper way of substantiating its view as to what royalties are owed. This could be a standard license agreement entered into with third parties, or other references such as fees for a pool license that contains SEPs of the respective standard.
The SEP proprietor needs to make these explanations before it commences infringement proceedings. [353] Only then, the alleged infringer is able to assess the situation unburdened by the treat of an ongoing court case. The Court was aware that the Higher Regional Court of Düsseldorf had recently (Case No. I – 15 U 36/16, 9 May 2016) expressed its view that this understanding might be overly formal. However, the Mannheim District Court upheld its opinion that only a thorough explanation by the SEP proprietor enabled the alleged infringer an informed decision as to whether the license offer is FRAND. [353]
The Court held that, in theory, the claimant could be exempt from this transparency obligation if the defendant had been unwilling to enter into a license agreement. [354] However, in the case at issue the defendant had demonstrated its willingness to enter into a license agreement. The Court took into account four factors:
the defendant’s had repeatedly requested the claimant to explain the basis of the license offer calculation, [354]
the defendant had offered to transfer some of its own patents in exchange, [354]
the defendant had made an offer and had commissioned an expert opinion that elaborated why the respective conditions were FRAND, [354]
the defendant had deposited a substantial amount. [355]
The Court repeated its view expressed in the decision 2 O 106/14 of 27 November 2015. [356] Accordingly, the alleged infringer needs to respond to the SEP proprietor’s offer, even if the infringer considers that the offer does not meet the FRAND criteria. The only possible exception is an offer that, by means of summary examination, is clearly not FRAND and therefore constitutes an abuse of market power. A potential counter offer needs to be made in due course, which means as soon as possible, taking into account the recognized commercial practices in the field and good faith.
[348] Case No. 7 O 19/16, para 77
[349] Case No. 7 O 19/16, para 78
[350] Case No. 7 O 19/16, para 76
[351] Case No. 7 O 19/16, para 79
[352] Case No. 7 O 19/16, para 84
[353] Case No. 7 O 19/16, para 86
[354] Case No. 7 O 19/16, para 87
[355] Case No. 7 O 19/16, para 88
[356] Case No. 7 O 19/16, para 80
The Claimant, IP Bridge, is a non-practising entity holding a European patent (German part) which was declared essential to the wireless telecommunications standard LTE (Standard Essential Patent or SEP) developed by the European Telecommunications Standards Institute (ETSI) [357] . The previous holder of the SEP in question had made an undertaking towards ETSI according to Article 6.1 of ETSI IPR Policy to make the patent accessible to users on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions [358] .
The Defendant is a German subsidiary of HTC, a company which manufactures and sells electronic devices worldwide, including mobile phones complying with the LTE standard [359] . The Defendant filed an action for invalidity against the Claimant’s SEP in Germany [359] .
In December 2014, the Claimant contacted the Defendant’s parent company (parent company) suggesting that the parties entered into negotiations regarding a licence for Claimant’s patent portfolio which also included the aforementioned SEP [359] . Subsequently, several licensing offers and counter-offers were made by the Claimant and the parent company respectively [359] . On 29 February 2016, the Claimant sent a letter to the parent company explaining how the LTE standard made use of the technology covered by its SEP inter alia under reference to an attached claims chart [360] . In response, the parent company confirmed that it is willing to obtain a licence, among others, by letter dated 7 September 2016 [361] . However, no licensing agreement was concluded.
On 27 September 2016, the Claimant brought an infringement action against the Defendant before the District Court of Mannheim (Court) requesting for a declaratory judgment confirming Defendant’s liability for damages arising from the use of its SEP as well as for information and rendering of accounts [362] .
On 16 February 2018, during the course of the pending proceedings against the Defendant, the Claimant made a further licensing offer to the parent company [363] . On 11 April 2018, after the parent company had signed a Non-Disclosure Agreement, the Claimant presented existing licensing agreements with third parties concerning its relevant patent portfolio (comparable agreements) to the parent company and requested the latter to respond to its last licensing offer of 16 February 2018 within one week (that is until 18 April 2018) [363] . This deadline was extended for almost three weeks until 7 May 2018 [363] .
On 15 May 2018, the Claimant extended its claims in the ongoing proceedings; in addition to its already pending claims, it sought for injunctive relief and also requested the recall and the destruction of products infringing its SEP (claims for injunction) [363] .
With the present judgment the Court ruled that the Defendant is liable for damages arising from the infringement of the SEP in suit [364] . The Court also ordered the Defendant to render accounts and to provide relevant information to the Claimant [364] . On the other hand, the Court dismissed the claim for injunctive relief and the recall and destruction of infringing products as being unenforceable for the time being [365] .
The Court held that the products sold by the Defendant in Germany infringe Claimant’s SEP [366] . Thus, the Defendant is obliged to compensate the damages suffered by the Claimant and the previous holder of the patent in suit [364] . Since the Claimant has no knowledge of the details required for the quantification of the damages suffered, the Defendant is obliged to provide information on relevant uses (starting from the publication of the patent grant) and render accounts for such uses (starting from one month after the publication of the patent grant) [364] .
In the Court’s view, the Defendant cannot raise a defence based on a so-called “patent ambush” against these claims [367] . A “patent ambush” requires that the patent holder deliberately – in terms of a willful fraudulent misconduct – misled the participants in the standardisation process and intentionally prevented the adoption of an alternative technology into the standard [368] . Insofar, it needs to be established (by the defendant) that the disclosure of the patent during the standardisation process would have led to an alternative structure of the standard, which would have avoided making use of the teaching of the patent in suit; the mere theoretical possibility of an alternative technical solution does not suffice for supporting the allegation of a “patent ambush” [368] . The Court held that the Defendant failed to establish such fact [367] . Accordingly, the Court left the question regarding the legal consequences of a “patent ambush” open (obligation to licence royalty-free or just an obligation to offer FRAND licences?) [367] .
Furthermore, the Court stressed out that the FRAND undertaking given by the previous holder of the SEP in suit has no impact on both the scope and the enforceability of the above claims [369] .
In the Court’s eyes, the Claimant is bound to the FRAND undertaking made by the previous holder of the SEP in suit towards ETSI [370] . The wording of Article 6.1. ETSI IPR Policy establishes a respective assumption [370] . In any case, the assignee of a SEP abuses its market power, if it is aware of the FRAND-undertaking of its predecessor, but, nevertheless, refuses to fulfil the obligations arising from it [360] . The assignee of an SEP cannot draw benefits from the inclusion of its patent into a standard, without being bound to the FRAND commitment of its predecessor, since the latter enabled the inclusion of the SEP in the standard in the first place [360] . Indeed, antitrust law and particularly Article 101 of the Treaty for the Functioning of the EU (TFEU) obliges standard development organisations to make the inclusion of patented technology into a standard subject to a FRAND commitment of the patent holder, in order to secure that essential technology will be accessible to users [371] .
Having said that, the Court made clear that SEP holder’s claims for information and rendering of accounts are not limited by the FRAND undertaking [369] . Even if one would assume that such undertaking limits the SEP holder’s claims for damages to the amount of the FRAND royalty (which the Court left undecided), the patent holder would, nevertheless, be entitled, in principle, to information regarding the use of its SEP [369] .
In addition, the Court explained that a FRAND undertaking has also no influence on the enforceability of the claims for damages (on the merits), information and rendering of accounts asserted by the Claimant [369] . In particular, these claims are not subject to the conduct requirements set forth by the Court of Justice of the European Union (CJEU) in the matter Huawei v ZTEHuawei v ZTE, Court of Justice of the European Union, judgement dated 16 July 2015, Case No. C-130/13. (Huawei requirements or framework) with respect to dominant undertakings in terms of Article 102 TFEU [373] .
The opposite is, on the other hand, the case with respect to the claims for injunction asserted by the Claimant. These claims are not enforceable for the time being, since the Claimant failed to fully comply with the Huawei requirements [374] .
Regarding to the SEP in suit, the Court ruled that the Claimant has a dominant market position in terms of Article 102 TFEU: The patent is essential to the LTE standard, which, in turn, cannot be substituted by an alternative standard (from the users’ point of view) [375] .
Looking at the negotiations between the parties involved, the Court did not see any flaws in the parties’ conduct with respect to the first two steps of the framework; the Claimant had effectively notified the Defendant about the infringing use of its SEP and the Defendant (in fact, its parent company) had effectively declared its willingness to obtain a licence covering also the SEP in suit [360] . In this context, the Court pointed out that the SEP holder’s obligation to notify the user of the infringing use of its SEP is also met, when the respective notification is addressed to the parent company of the (alleged) infringer (as is was the case here, especially with the Claimant’s letter to the parent company dated 29 February 2016) [360] .
However, the Court held that the Claimant failed to fulfil its consequent obligation under the Huawei framework, namely to make a FRAND licensing offer to the Defendant (respectively its parent company) [376] .
The Court considered only two offers made by the Claimant to the Defendant’s parent company prior to the extension of its claims in the pending proceedings on 15 May 2018 (since the other offers made were either indisputably not FRAND or were not produced by the Claimant in trial) [361] .
An offer made in February 2016 was found not to be FRAND in terms of content, since it contained a clause, according to which the licensee was obliged to pay the full amount of the royalties agreed, even if only one patent of the licensed portfolio was valid and used by the Defendant [361] .
The Court reached the same conclusion also with respect to the further offer made by the Claimant on 11 April 2018 (that is short before the Claimant extended its claims in the proceedings, adding the claims for injunction) [377] . The Court held that this offer did not comply with the Huawei requirements, since the Defendant was not given sufficient time to assess the offer and eventually make a counter-offer to the Claimant, before the latter asserted the claims for injunction against him in the proceedings [361] .
In the Court’s eyes, a licensing offer complying with the Huawei requirements is only given, when the SEP holder provides the SEP user with all information required from assessing the FRAND conformity of the offer [378] . Only then, the SEP user’s consequent obligation under the Huawei framework to make a FRAND counter-offer to the SEP holder is triggered [378] . In particular, the SEP holder must make the requested royalty amount transparent with reference to a standard licensing programme implemented in the market or to rates actually paid by third parties to a patent pool, covering also patents relevant to the standard [378] . For the assessment of the non-discriminatory character of the offer, information on comparable agreements is needed [378] .
Based on the above considerations, the Court held that the period of 22 workdays between the presentation of the comparable agreements to the parent company (11 April 2018) and the assertion of the injunction claims in the proceedings by the Defendant (15 May 2018) was too short for a competent assessment of the Claimant’s licensing offer [379] . The fact that the Defendant (and/or its parent company) would have had sufficient time to react to the Claimant’s offer until the end of the oral hearings in mid-July 2018 was considered irrelevant by the Court in this respect [379] . The Huawei framework aims at preventing the situation, in which the SEP user agrees to unfavourable licensing conditions under the pressure of pending infringement proceedings (defined by the Court as “patent hold-up”) [379] . In case that the SEP holder has not fulfilled the Huawei requirements prior to the initiation of proceedings (as it was the case here), it has to make sure that the parties can again negotiated without the pressure of an ongoing trial, for instance by asking the court to stay its proceedings pursuant to Article 251 of the German Court of Civil Procedure [380] . Otherwise, the initiation of the infringement proceedings shall be considered as abusive in terms of antitrust law [380] . In the present case, the Claimant chose to not ask for a stay in the proceedings, ignoring the Court’s respective indication [380] .
The Court explained that the registration in the patent register allows the registered patent holder to assert the patent rights in court [381] . On the other hand, it does not define the ownership of the patent in material legal terms [382] . Nevertheless, the patent registration establishes an assumption of ownership which must be rebutted by the defendant in infringement proceedings based on concrete indications [383] .
Besides that, the Court pointed out that a stay in the infringement proceedings (pursuant to Article 148 of the German Code of Civil Procedure) until the end of parallel invalidation proceedings concerning the patent(s) in suit can be considered only under special circumstances [384] . As a rule, it must be expected with a sufficient degree of probability that the patent(s) in suit will be invalidated [384] . The Defendant failed convince the Court that this was the case with the SEP in suit [384] .
[357] District Court of Mannheim, judgment dated 28 September 2018, Case-No. 7 O 165/16, page 2 and 23.
[358] Ibid, page 23 et seq.
[359] Ibid, page 5.
[360] Ibid, page 25.
[361] Ibid, page 26.
[362] Ibid, pages 5 et seq.
[363] Ibid, page 6.
[364] Ibid, page 19.
[365] Ibid,page 23.
[366] Ibid, pages 16 et seqq.
[367] Ibid, page 20.
[368] Ibid, page 21.
[369] Ibid, page 22.
[370] Ibid, page 24.
[371] Ibid, pages 24 et seq.
[372] Huawei v ZTE, Court of Justice of the European Union, judgement dated 16 July 2015, Case No. C-130/13.
[373] District Court of Mannheim, judgment dated 28 September 2018, Case-No. 7 O 165/16, pages 22.
[374] Ibid,pages 23 and 25.
[375] Ibid, page 23.
[376] Ibid, pages 23 and 25 et seq.
[377] Ibid, pages 26 et seqq.
[378] Ibid, page 27.
[379] Ibid, page 28.
[380] Ibid, page 29.
[381] Ibid, page 10.
[382] Ibid, pages 10 et seq.
[383] Ibid, page 11.
[384] Ibid, page 30.
Firstly, the court of appeal focused on the Huawei requirement to submit an infringement notification prior to the initiation of proceedings. Although the court voiced some doubts over whether a distinction between transitional and non-transitional cases is permitted and whether, in transitional cases, reliance of a SEP proprietor on the Orange Book standard of conduct is worthy of protection, it did not consider the result reached by the lower court as manifestly erroneous. Since the SEP proprietor has the option to withdraw its action, to perform its Huawei obligations and to re-file the claim afterwards, it seems overly formalistic to deny the option to perform the Huawei obligations within the ongoing trial. Among a number of further reasons [44] for its position the court stressed that the ECJ intended the Huawei framework to be fact-sensitive. [45]
Secondly, the court confirmed the lower court’s view that Defendant did not comply with its Huawei obligation to express its willingness to conclude a licensing agreement because it reacted belatedly (more than five months after the infringement notification) and in an evasive manner. The fact that proceedings have been initiated by Claimant does not alter the Huawei requirements and Defendant will particularly not be granted more time to comply with its respective obligations. [46]
The court left it undecided whether the lower court erred in focusing on a licensing offer which Claimant presented solely to the Intervener but not to Defendant. According to the court the conduct of the parties required by Huawei constitutes a mechanism of alternating, consecutive steps in which no subsequent conduct requirement is triggered unless the other party performed the previous “step”. In consequence, Claimant was, in the present case, not obliged to submit a FRAND licensing offer at all since Defendant had failed to signal willingness to license. [47]
The lower court’s finding that Claimant’s licensing offer was FRAND while the Intervener’s counter-offer failed to meet this threshold was accepted. Hence, the court considered it as irrelevant under the present circumstances—and as a completely open question in general—whether a SEP proprietor is obliged, before bringing an action for prohibitory injunction against the supplier of a standard-implementing device, to (cumulatively) submit a FRAND licensing offer not only to the supplier but also to the producer of said device. [48]
The remarks of the lower court rejecting, in the present case, a patent ambush-argument were not deemed manifestly erroneous, mainly because the lower court had reasonably argued that such an abusive practice would only result in the SEP proprietor’s obligation to grant licenses on FRAND terms. [49]
Licensing negotiations (allegedly) undertaken by Defendant after the decision of the lower court provided no reason to suspense execution since it was not evident to the court that Defendant had thereby fulfilled its Huawei obligations. [50]
[44] For details, cf. OLG Düsseldorf, 9 May 2016 - Case No. I-15 U 36/16, para. 2, b, aa
[45] Case No. I-15 U 36/16, para. 2, b, aa
[46] Case No. I-15 U 36/16, para. 2, b, bb
[47] Case No. I-15 U 36/16, para. 2, b, cc
[48] Case No. I-15 U 36/16, para. 2, b, ff
[49] Case No. I-15 U 36/16, para. 2, b, ee
[50] Case No. I-15 U 36/16, para. 2, b, dd