News Detail Banner
All News & Events

March 2017: EU Litigation Update

March 01, 2017
Business Litigation Reports

Asserting Standard Essential Patents in Germany After the European Court of Justice’s Huawei v. ZTE Decision. In its Huawei v. ZTE decision (C-170/13) dated July 16, 2015, the European Court of Justice (ECJ) established a new legal basis for the owners of standard essential patents (SEP) for obtaining injunctive relief against an infringer without abusing their market dominant position under Art. 102 TFEU. The six steps set out by the ECJ are:

1. The patentee must notify the defendant of the alleged infringement;
2. The defendant then must show its willingness to license on FRAND terms;
3. The patentee must make a specific, written offer for a license on FRAND terms;
4. The defendant must diligently respond to that offer without delaying tactics;
5. If the defendant rejects the patentee’s offer, it must make a counter-offer on FRAND terms; and
6. If the patentee rejects the counter-offer, the defendant must provide appropriate security (including for past use) and be able to render an account of its acts of use.

Since the decision of the ECJ, the German patent litigation chambers in Düsseldorf, Mannheim and Karlsruhe have rendered a number of fundamental and, in some instances, deviating decisions.

In a judgment dated January 24, 2017 (case no. 2 O 131/16), the Regional Court of Mannheim indicated that for the infringement notification by the patentee, it considers sufficient specifying the concerned SEP as well as the infringing acts of use and the infringing embodiments (no claim charts necessary) even to a parent entity. The Mannheim court found that a temporal offset between the infringement notice and the patent owner’s initial offer is not required.

Moreover, the Regional Court of Düsseldorf (case 4a O 73/14) in a judgment dated March 31, 2016 stressed that a notification of infringement could be dispensable if the supplier learned about the infringement case, e.g., by a third party notification or by being informed by the defendant of an already pending infringement case. The Düsseldorf Court of Appeals (case I-15 U 36/16) confirmed this view in a decision regarding the enforcement of a first instance judgment.

German case law is not uniform when it comes to the examination whether the patent owner’s offer or patent user’s counter-offer is actually FRAND. The courts in Mannheim and Düsseldorf have imposed different requirements for the standard of the examination, i.e., whether only an evident contradiction to FRAND terms is relevant (see Regional Court Mannheim, judgment of March 4, 2016, case no. 7 O 96/14) or whether it must be positively determined that the offer meets the FRAND conditions (see Higher Regional Court Düsseldorf, decision of November 17, 2016, case no. I-15 U 66/15).

In the most recent case-law, both the Düsseldorf and Mannheim courts gave several indications on the requirements to be met by a license offer in order to be FRAND:

  • In an indicative order dated November 17, 2016, the Higher Regional Court Düsseldorf (case no. I-15 U 66/15) indicated that the SEP owner has to present a full-fledged written licensing offer containing details with regard to all factors which are usually the subject matter of a licensing agreement. However, the Düsseldorf court acknowledged that the SEP owner has a certain amount of discretion, in particular, in terms of the determination of the FRAND license fee. It stated that, however, the patent owner has to specify “the way in which the royalty is to be calculated” by disclosing all factors that as such contribute to the concrete amount instead of merely referring to the claimed royalty rate and the respective calculation base. The Court also brought forward that a FRAND-compliant offer would require “adaption clauses”, e.g., in terms of the royalty rate allowing for adoptions in cases of clearly perceivable changes in the SEP-portfolio.

  • According to the Düsseldorf court, the determination of a non-discriminatory FRAND-offer requires proof from the patent owner that the licensing offer is in line with an established licensing practice by, e.g., production of already existing licensing agreements with third parties to the court. The 7th Chamber of the Regional Court Mannheim (case no. 7 O 19/16) has taken a similar approach and, in a judgment dated November 17, 2016, dismissed the plaintiff’s action, because it found that the plaintiff had not met its obligation to sufficiently disclose to the alleged infringer the reasons why it considered the demanded per-unit royalty FRAND. Contrary to this view, the 2nd Chamber of the Regional Court Mannheim, in its decision dated January 24, 2017 (case no. 2 O 131/16), stated that, even though the offer has to contain all conditions that are generally listed in a license agreement for the respective field of business, a pre-trial explanation of the requested amount of the license fee is not necessary under the ECJ’s decision.

  • When it comes to the scope of the license offer, the Regional Court of Mannheim (judgment of March 4, 2016, case no. 7 O 96/14) and Düsseldorf (judgment of March 31, 2016, case no. 4a O 126/14) have taken a similar approach and found an offer containing a worldwide portfolio license FRAND if that was common in the pertinent field and if at least the alleged infringer uses the SEP worldwide.

The decisions issued so far show that there is not yet a uniform approach of the German courts in establishing the FRAND conditions in accordance with the Huawei v. ZTE decision of the ECJ. In particular, there is no uniform standard line concerning the requirements for both the patent owner’s offer and the patent user’s counter-offer to comply with the FRAND terms. Thus, it is essential for both the owner of an SEP and the alleged infringer to be informed with respect to recent decisions and to develop a clear strategy in order to comply with the requirements established in the case law based on the ECJ’s decision.