Case Law post CJEU ruling Huawei v ZTE

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Updated 6 March 2018

OLG Düsseldorf

OLG Düsseldorf
18 July 2017 - Case No. I-2 U 23/17

A. Facts

The Claimant is holder of a patent declared as essential to a standard (Standard Essential Patent, SEP). The Defendant is a provider of telecommuni­cation services. Under the policy governing the relevant standard, the Claimant is obliged to license its SEP on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions. Against Claimant’s SEP a nullity action is pending. The Claimant, nevertheless, concluded portfolio licensing agreements also covering the SEP in question with two companies.

Since November 2012, the Claimant made efforts to license his SEP also to the Defendant. The parties could, however, not reach an agreement. In January 2016, the Claimant brought an action against the Defendant before the Regional Court of Düsseldorf requesting for a declaration of the Defendant’s liability for damages as well as rendering of accounts (main proceedings). After the main proceedings were ini­tiated, the Claimant made two offers for a license agreement to the Defendant. In order to protect busi­ness secrets connected with these offers, the Claimant requested the Defendant to sign a Non-Disclosure Agreement (NDA). The Defendant refused to sign a NDA. Moreover, the Defendant brought an action against the Claimant before an Irish Court requesting for a declaration that Claimant’s offers did not comply with FRAND.

Subsequently, the Claimant filed a motion for a preliminary injunction against the Defendant before the Regional Court of Düsseldorf. The Regional Court of Düsseldorf dismissed Claimant’s motion. The Claimant appealed this judgement. With the present ruling the competent Higher Regional Court of Düsseldorf in­dicated that the Claimant’s appeal has no prospects of success.

B. Court’s reasoning

The court made clear that preliminary injunctions involving SEPs are subject to the same strict prerequi­sites as injunctions referring to non-SEPs. The SEP-holder has, therefore, to adequately establish the va­lidity of the SEP, its use by the alleged infringer as well as the urgency of its request for a preliminary injunction.

Besides this, prior to seeking for a preliminary injunction, the SEP holder also has to fulfill the require­ments set forth by the Court of Justice of the European Union in its decision in the matter Huawei ./. ZTE (Huawei judgement). This follows from the fact that SEP-holders’ claims for injunctive relief are, in prin­ciple, only enforceable, after the prerequisites established by the Huawei judgement have been fully met.

Since preliminary injunctions may severely affect alleged infringer’s ongoing business, such injunctions can only be granted, when both the validity and the use of the SEP by the alleged infringer appear to be given with a high degree of certainty.

The validity of a SEP is deemed to be given, when the SEP has been confirmed in patent opposition or nullity proceedings. Without a prior confirming decision, the validity of a SEP can, exceptionally, also be regarded as being given, when

  • the alleged infringer has unsuccessfully intervened in the proceedings, in which the SEP was granted,
  • no opposition or nullity proceedings were initiated against the SEP, because it is universally consid­ered to be able to receive patent protection (one indication for this being, for instance, the fact that the SEP was licensed to renowned licensees),
  • the objections raised against SEP’s validity can be proven to be unfounded even by the limited means of the summary examination foreseen in proceedings for interim relief, as well as
  • in “extraordinary circumstances”, in which the SEP-holder will face substantial disadvantages, if he is forced to wait with the initiation of proceedings against the infringer, until after the end of opposition or nullity proceedings pending against the SEP.

Against this background, the court argued that the Claimant is most likely not entitled to the requested preliminary injunction.

First, the Claimant failed to establish the validity of the SEP in dispute with the required high degree of certainty. A decision confirming the SEP in dispute is missing, since the nullity proceedings are still pending. Furthermore, the exceptions allowing this conclusion to be drawn, even without a prior con­firming decision, do most likely not apply. In particular, the fact that the Claimant concluded portfolio licensing agreements with two other companies covering also the SEP in question, does not suffice to adequately establish its validity. This fact only proves that the licensees held the SEP-holder’s portfolio as being able to receive patent protection as a whole, not, however, that they considered the SEP itself as being worthy of such protection. Furthermore, due to the high level of technical complexity, the court does not expect that the objections raised against the validity of the SEP can be proven as being unfounded solely on basis of the limited examination means available to the court in the present pro­ceedings for interim relief.

Second, the court has also substantial doubts that urgency is given. The Claimant was aware of the alleged infringement since 2012. Nevertheless, the Claimant refrained from making his claim for injunctive relief enforceable by fulfilling the Huawei judgement requirements. Furthermore, in the main proceedings ini­tiated prior to the present proceedings for preliminary injunction, the Claimant did not request for injunc­tive relief, but limited his action against the Defendant to damages and rendering of accounts. In terms of urgency, it could be expected from the Claimant to request for injunctive relief already in the main proceedings. Furthermore, the fact that the Defendant brought an action before an Irish Court requesting a declaration that Claimant’s offers did not comply with FRAND, also fails to establish urgency. It is the Defendant’s right to seek legal redress.

C. Other issues

In addition, the court expressed its view regarding the consequences of the refusal of a potential licensee to sign a NDA covering information connected with the SEP-holder’s offer for a licensing agreement on FRAND terms, without, however, ruling on this question on the merits of the present case.

The court suggested that the unjustified refusal of a licensee to enter into a NDA does not release the SEP-holder from the obligations established by the Huawei judgement, namely the obligation to make a FRAND offer to the licensee and specify the underlying conditions (particularly the price calculation). An unjusti­fied refusal of the licensee to sign a NDA shall, however, lead to easing the SEP-holder’s burden to provide the licensee with detailed explanations regarding the justification of its licensing conditions, to the extent that this is required for protecting its justified confidentiality interests. Instead of detailed information, “merely indicative observations would, basically, suffice. The licensee cannot object the FRAND con­formity of the SEP-holder’s offer based on the insufficient specification of the licensing terms.
Updated 22 August 2018

TQ Delta LLC v Zyxel Communications and Ors., EWHC

English court decisions
13 June 2018 - Case No. HP-2017-000045, [2018] EWHC 1515 (Ch)

A. Facts

The Claimant acquired patents which were declared as essential to the DSL standard under the so-called "ITU Recommen¬dations" (Standard Essential Patents, or SEPs) from a company called Aware Inc [8] . The ITU Recommendations require from the SEP holder to make its patents accessible to users on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions [9] . The Defendants manufacture and sell various types of equipment complying with the DSL standard [9] .

The Claimant asserted claims against the Defendants before the UK High Court of Justice (Court) based on two SEPs it holds [10] . The proceedings involve, on the one hand, technical issues concerning the validity, essentiality and infringement of the SEPs in question and, on the other hand, the licensing of these SEPs on FRAND terms [11] .

Prior to service of the statements of case, the Court ordered the Claimant to disclose licence agreements concluded with third parties covering the SEPs in suit (comparable agreements) [12] . The Claimant entered into licences with two companies (in the following referred to as "counterparty A" and "counterparty B") [13] and also possesses copies of licences previously granted by Aware Inc. to other SEP users [14] . Counterparty A and Aware Inc. argued that their licence agreements can only be disclosed on an "external eyes only" basis (that is only towards i.e. external counsels and independent experts), since they contain confidential information, such as party names, pricing terms and other commercial information [15] . Counterparty B did not object to the disclosure of its licence agreement to the Defendant (provided that this would take place on a confidential basis), but argued that any other confidential information provided to the Claimant in the course of negotiations for the licence can only be disclosed to "external eyes only" [16] .

The Claimant suggested that the parties to the proceedings enter into a co-called "Confidentiality Club Agreement". The agreement proposed by the Claimant differentiated between "Confidential Infor-mation" and "Highly Confidential Information" [17] . Whether information is designated as "Confidential" or "Highly Confidential" would be determined by the disclosing party [17] . Information designated as "Highly Confidential" would be subject to an "external eyes only" limitation [17] . This limitation would apply to both comparable licences granted by the Claimant and licences granted by Aware Inc. [18] . The Defendants did not agree with the Claimant’s proposal. Instead, they requested that two named individuals from the Defendant’s group should be given access to the comparable licences [17] .

The Court did not approve the establishment of an "external eyes only" mechanism as suggested by the Claimant [19] and ordered disclosure of the comparable licences. Nevertheless, the Court temporarily stayed that order to give the third parties affected (counterparties A and B and Aware Inc.) the opportunity to set it aside or vary it, before disclosure of the comparable licences is made [20] .


B. Court’s reasoning

In the Court’s eyes, it is "common practice" in patent cases for parties to reach Confidentiality Club Agreements [17] ; such agreements are "often essential", when disclosure of confidential information is required in court proceedings [21] . In cases involving intellectual property rights, a mechanism for disclosure limiting access to confidential documents to specific representatives of one of the parties is considered "commonplace" [21] . Furthermore, documents can be redacted to exclude confidential material which is irrelevant to the dispute [21] .

Looking particularly at "external eyes only" mechanisms, the Court takes the view that such mechanisms can be included in Confidentiality Club Agreements upon agreement of the parties (as it was the case in the matter Unwired Planet v Huawei [22] ) [23] . If no agreement can be reached on such a provision, parties can request the Court to restrict access to specified documents to "external eyes only" [14] .

The Court finds, however, that such a confidentiality regime can be applied only to exceptional cases [24] . An "external eyes only" mechanism enables one party to exclude access to any document that it chooses, placing the burden of seeking access to documents to the opposing party, despite the fact that the latter is prima facie entitled to such access [25] . In the Court’s view, the opposite should rather be the case: The party wishing to limit access to documents to "external eyes only" should be obliged to justify that limitation [26] .

According to the Court, when determining whether "external eyes only" restrictions should be ordered, the role which the affected documents are expected to play in the case must be considered [27] . Where the documents are of limited, if any, relevance to the proceedings and their disclosure could be unnecessarily damaging for the party asserting confidentiality, ordering an "external eyes only" limitation may be justified in specific cases [21] (insofar the Court adopts the notion expressed in the matter IPCom v HTC [28] ). Furthermore, the Court did not rule out that in certain exceptional cases an "external eyes only" mechanism might also be justified with respect to specific documents of "greater relevance", at least at an interim stage of the proceedings [29] .

When it comes to documents key to the case, the Court finds, however, that the "blanket exclusion" of access to such documents enabled through "external eyes only" mechanisms is not in line with the right to a fair hearing stipulated by Article 6 of the European Convention on Human Rights and the principles of natural justice . Such a regime is further incompatible with the obligation of lawyers to share all relevant information of which they are aware with their clients . If key documents were to be subject to an "external eyes only" restriction, the opposing party would be unable to discuss the respective documents with its legal representative, to attend parts of the trial and to see all of the reasons for the judgment .

Against this background, the Court held that in the present case, approving the establishment of an "ex-ternal eyes only" mechanism as suggested by the Claimant would "merely postpone the resolution of the dispute" . The Court had ordered the disclosure of the comparable licences, because they are, or are likely to be, key documents in the above sense . Since the Court may be asked to decide on a FRAND licence which must be reasonable and non-discriminatory, existing licence agreements entered into by the Claimant (and its pre¬decessor, Aware Inc.) may be highly relevant documents as comparators .

  • [8] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 13 June 2018, Case-No. HP-2017-000045, [2018] EWHC 1515 (Ch), para. 2.
  • [9] Ibid, para. 3.
  • [10] Ibid, para. 1.
  • [11] Ibid, para. 1. With respect to the relationship between the 'technical trials' (that means the proceedings concerning the validity, essentiality and infringement of the SEPs in suit) and the 'non-technical trial' regarding to FRAND licensing see, TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 21 November 2017, Case-No. HP-2017-000045, [2017] EWHC 3305 (Pat)
  • [12] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 13 June 2018, Case-No. HP-2017-000045, [2018] EWHC 1515 (Ch), paras. 25 and 30.
  • [13] Ibid, para. 25.
  • [14] Ibid, para. 25.
  • [15] Ibid, paras. 26 and 28.
  • [16] Ibid, para. 27.
  • [17] Ibid, para. 4.
  • [18] Ibid, para. 22.
  • [19] Ibid, paras. 34 et seqq.
  • [20] Ibid, para. 35.
  • [21] Ibid, para. 23.
  • [22] Unwired Planet v Huawei, UK High Court of Justice, 5 April 2017, Case-No. HP-2014-000005, [2017] EWHC 711 (Pat).
  • [23] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 13th June 2018, Case-No. HP-2017-000045, [2018] EWHC 1515 (Ch), para. 23.
  • [24] Ibid, para. 21.
  • [25] Ibid, paras. 21 and 34.
  • [26] Ibid, para. 34.
  • [27] Ibid, para. 15.
  • [28] IPCom GmbH and Co KG v HTC Europe Co. Limited and ors, judgement dated 23 January 2013, Case No. HC11 C02064, [2013] EWHC 52 (Pat).
  • [29] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 13 June 2018, Case-No. HP-2017-000045, [2018] EWHC 1515 (Ch), para. 23.

Updated 21 November 2018

Core Wireless v LG, Court of Appeal (Cour d’ Appel) of Paris

French court decisions
9 October 2018 - Case No. RG 15/17037

A. Facts

The Claimant, Core Wireless Licensing S.à.r.l., holds a portfolio of patents declared essential to the GSM, UMTS and LTE wireless telecommunication standards (Standard Essential Patents or SEPs). The Defendants, LG Electronics France S.A.S. and LG Electronics Inc., manufacture and sell – among others – mobile devices complying with the above standards.

The Claimant acquired its portfolio of SEPs from Nokia by a ‘Purchase and Sale Agreement’ concluded in 2011 [102] . The Claimant, Nokia and Microsoft also concluded a so-called ‘Royalty Participating Agreement’, referring to encumbrances [103] .

The parties failed to reach an agreement on a licence for Claimant’s SEP portfolio. Consequently, the Claimant brought an infringement action against the Defendants before the District Court (Tribunal de Grande Instance) of Paris, based on five French patents of its portfolio. The District Court of Paris dis-missed Claimant’s action [104] .

In the ongoing appeal proceedings before the Court of Appeal (Cour d’ Appel) of Paris (Court), the Defendants requested the Court to order the Claimant to produce the ‘Purchase and Sale Agreement’, the ‘Royalty Participating Agreement’, as well as all licensing agreements concluded by the Claimant with third parties, covering the patents in suit [102] . A few days prior to the oral hearing, the Claimant requested, in turn, that the Defendants produce four license agreements which they had entered with third parties [105] .

With the present decision, the Court dismissed Claimant’s request; it held that it was delayed and that the Claimant failed to explain the relevance of the requested licensing agreements to the present pro-ceedings [103] .

On the other hand, the Court granted the Defendants’ request [103] under the following conditions: First, the relevant documents will be made available (unredacted) only to the parties’ counsels, within a deadline of one month after the Court’s order [106] . The parties’ counsels will then be given the opportunity to argue by written submissions which parts or elements of these documents may affect business secrets [106] . On this basis, the Court will decide whether further measures (as set-forth in paragraphs 2, 3 or 4 of Article L. 153-1 of the French Commercial Code) are required for the protection of potential confidential information, or not [106] .


B. Court’s reasoning

The Court made use of the procedural possibilities for the protection of business secrets in court pro-ceedings recently introduced to the French Commercial Code by Law No. 2018-670 dated 30 July 2018 [107] .

In particular, the Court referred to paragraph 1 of Article L. 153-1 of the French Commercial Code, which reads as follows:

‘Where, in the course of civil or commercial proceedings aimed at obtaining a pre-trial order for investiga¬tive measures before any proceedings on the merits, or in the course of proceedings on the merits, the communication or production of a document is requested, which has been deemed to infringe or alleged by a party to the proceedings or a third party to be capable of infringing a trade secret, the court may take any of the following steps on its own motion or at the request of a party to the proceedings or a third party, if the trade secret cannot be otherwise protected, without prejudice to the rights of defence:

(1°) The court alone will review the document and, if deemed necessary, order an expert valuation and request the opinion, for each of the parties, of a person authorized to assist or represent the party, in order to decide whether to apply the protective measures set out in this Article.’

According to the paragraphs 2-4 of Article L. 153-1 of the French Commercial Code, the Court can order the following protective measures:

  • (2°) Decide to limit the disclosure or production of the document to certain parts thereof, order disclo¬sure or production of a summary of the document only, or restrict access to the document, for each of the parties, to a single individual person and a person authorized to assist or represent that party;
  • (3°) Decide that hearings will be held and the decision will be issued in chambers;
  • (4°) Adapt the grounds of the decision and the mode of publication thereof to the needs of protecting the trade secret.’

  • [102] Court of Appeal (Cour d’ Appel) of Paris, judgment dated 9 October 2018, page 5.
  • [103] Ibid, page 5.
  • [104] District Court (Tribunal de Grande Instance) of Paris, judgment dated 17 April 2015, Case No. 14/14124.
  • [105] Ibid, page 2.
  • [106] Ibid. page 6.
  • [107] Ibid, page 5 et seq.

Updated 6 June 2019

Conversant v LG, Court of Appeal of Paris

French court decisions
16 April 2019 - Case No. 061/2019

A. Facts

On 1 September 2011, the Claimant, Conversant Wireless Licensing SARL (Conversant; previously named Core Wireless Licensing SARL), acquired from Nokia more than 2,000 patents declared essential to the GSM, UMTS or LTE standards (Standard Essential Patents, or SEPs) towards ETSI [127] .

Conversant contacted the Defendants, LG Electronics France SAS and LG Electronics Inc. (LG) for a licence under the patents in March 2012. The parties held a few meetings to find an agreement on a Fair, Reasonable and Non-Discriminatory (FRAND) rate for a global license under Conversant’s essential patents [128] .

On 30 September 2014, Conversant brought an infringement action against LG based on five patents before the Paris Court (Court), asking inter alia for a FRAND rate determination [129] .

In first instance, the Court rejected Conversant’s claims, as it held that Conversant had not demonstrated the essentiality of the patents in suit [130] .

On appeal, Conversant solely asserted two out of the five patents asserted in first instance [131] . With the present judgment, the Court of Appeal of Paris (Court of Appeal) confirmed the first instance decision, finding the patents in suit valid but not essential [132] .

B. Court’s reasoning

Validity, Essentiality and Infringement

In first instance, Conversant alleged five patents to be essential and infringed by LG [127] . On appeal, both parties acknowledged that, for three of them, the essentiality was not sufficiently supported [133] .

Therefore, the Court of Appeal limited the analysis of validity, essentiality and infringement to the two other patents, EP 978 210 (EP 210) and EP 950 330 (EP 330) [129] . LG raised prior art documents to challenge the validity, novelty and inventive steps of the patents. The Court of Appeal analysed those documents to determine that none was destroying the validity of the patents [134] .

Regarding the essentiality, Conversant had alleged that EP 210 was essential to both UMTS and LTE standards [135] and EP 330 was essential to the LTE standard [136] . The Court of Appeal rejected those claims by comparing the patent specifications to the technical specifications of the relevant standards [137] and found hold that standard compliant devices do not necessarily have to use the patents in suit. The Court considered that it is possible to comply with the UMTS and LTE standards without implementing said patents. The Court, therefore, found that the patents are not essential [129] .

FRAND determination

Conversant and LG both had requested the Court to make a FRAND determination. However, as Conversant’s infringement claim was based on the essentiality of the patents, the Court of Appeal declared any request concerning a FRAND rate determination, past damages and the nomination of an expert without object [138] .

FRAND duties and abuse of a dominant position

In its decision, the Court of Appeal also briefly summarized two points addressed by the first instance Court regarding parties’ duties in negotiation and a potential abuse of dominant position without any further analysis.

One of them is the determination of bad faith of the parties in the negotiations. In first instance, the Court stated that it was difficult to assess bad faith in view of the history of the negotiations. The Court had underlined that the fact that the parties negotiated for more than two years tended to demonstrate that none of them was of particularly bad faith to push the other not to further pursue the negotiations [131] . The Court had further stressed that as each company passed the buck to the other, it was difficult to declare that bad faith lied more on one side than the other [129] .

Regarding a potential abuse of dominant position through the filing of an action based on SEPs by Conversant, the Court had stated that filing a judicial complaint to have a FRAND rate determined that could not be amicably fixed, without any other circumstance demonstrating among others the express willingness to deprive LG of its rights to exploit the patents against a fair and proportionate compensation, could not constitute an abuse of a dominant position [129] .

Confidentiality and Trade Secret Protection

The Court of Appeals also briefly referred to the rules for the protection of trade secrets that had been agreed upon by the parties and accepted by the Court of Appeal.

In application of Article L153-1 of French Commercial Code, the parties had set up a protection mechanism for confidential documents, which included the following steps [139] : (1) access to some licensing agreements from Nokia and Conversant would be restricted to the parties’ legal representatives, the court and persons (translators or experts) obliged to confidentiality by a Non-Disclosure Agreement, (2) the parties would submit two versions of each party’s written conclusions to the Court of Appeal, one with a reference to all disclosed agreements in full with confidential information highlighted and one without any reference to any confidential information [140] .

  • [127] Court of Appeal of Paris, judgement dated 16 April 2019, page 3.
  • [128] Ibidem.
  • [129] Ibid.
  • [130] Court of Appeal of Paris, judgement dated 16 April 2019, pages 5-6.
  • [131] Court of Appeal of Paris, judgement dated 16 April 2019, page 6.
  • [132] Court of Appeal of Paris, judgement dated 16 April 2019, pages 15-24.
  • [133] Court of Appeal of Paris, judgement dated 16 April 2019, page 15.
  • [134] Court of Appeal of Paris, judgement dated 16 April 2019, pages 15 and subsequent.
  • [135] Court of Appeal of Paris, judgement dated 16 April 2019, pages 19-21.
  • [136] Court of Appeal of Paris, judgement dated 16 April 2019, pages 23-24.
  • [137] Court of Appeal of Paris, judgement dated 16 April 2019, pages 19-21 and 23-24.
  • [138] Court of Appeal of Paris, judgement dated 16 April 2019, pages 24-25.
  • [139] Court of Appeal of Paris, judgement dated 16 April 2019, page 13
  • [140] Court of Appeal of Paris, judgement dated 16 April 2019, page 14

Updated 6 June 2017

OLG Düsseldorf

OLG Düsseldorf
14 December 2016 - Case No. I-2 U 31/16

  1. Facts
    The Claimant is holder of a patent declared as essential to a standard (Standard Essential Patent, SEP). The Defendant is a telecommunications company, which inter alia sells mobile phones allegedly using Claimant’s SEPs. Upon Claimant’s action, the Regional Court of Düsseldorf (1) ordered the Defendant to render accounts regarding the sales of mobile phones embedding Claimant’s SEPs and (2) recognized Defendant’s obligation to pay damages to the Claimant resulting from the infringement of its SEPs (cf. Regional Court of Düsseldorf, decision dated 19th January 2016, Case No. 4b O 49/14). The Defendant appealed this judgement. In the appeal proceedings before the Higher Regional Court of Düsseldorf (Case No. 2 U 31/16), one issue in dispute was whether the license fees, which the Claimant had calculated, were Fair, Reasonable and Non-Discriminatory (FRAND). The Claimant explained its calculation in a statement to the court that was produced in two versions. In the first version, which was filed only with the court, the information regarding the FRAND calculation (including comparable license agreements pre¬sented as evidence), were fully disclosed. In the second version, which was presented to the Defendant and a third party that had joined the proceedings (Intervener), the respective sections (and evidence) were redacted.
    With the present interlocutory application, the Claimant requested the court to order that disclosure of full information (and evidence) regarding its FRAND calculation shall be required only towards Defendant’s and Intervenor’s counsels, provided that the court would oblige the counsels to full confi-dentiality towards everyone, including their clients themselves (that is the Defendant and the Intervener). The Defendant objected this request. The Intervener, on the other hand, stated that it agreed with the proceeding defined in Claimant’s request.
    In its first decision dated 14th December 2016, the court rejected the application with respect to both the Defendant and the Intervener. Instead, the court encouraged the parties to enter into a Non-Disclosure Agreement (NDA) reinforced by a contractual penalty, in case confidentiality was breached.
    This decision was consequently modified by a further decision rendered by the court on 17th January 2017. The court granted Claimant’s application in respect to the Intervener, but again rejected the application in respect to the Defendant. The court, however, requested from the Defendant to present an offer for an NDA to the Claimant incorporating particularly the following conditions within a deadline of three weeks:
    • The confidential information should be used only in the context of the present litigation.
    • The information would be made available only to four company representatives of the Defendant (as well as any experts engaged by the Defendant in the ongoing litigation).
    • These persons shall be themselves obliged to confidentiality by the Defendant.
    • In case confidentiality was breached, the Defendant shall be liable for payment of a contractual pen-alty amounting to EUR 1 million.




  2. Court’s Reasoning
    In its first decision, the court found that the German rules of Civil Procedure do not provide a legal basis for granting an order in the form requested by the Claimant. [360] Such an order would exclude Defendant’s right to be heard with respect to Claimant’s FRAND calculation, in breach of Art. 103 Sec. 1 of the German Constitutional Law (Grundgesetz). [360] The fact that Defendant’s counsels would have access to the relevant information, does not suffice to meet the requirements set forth by the aforementioned provision. Party’s right to be heard contains also the right to personally participate in the proceedings. Consequently, a limitation of a party’s right to be heard reaching so far as Claimant requested, is not possible, unless the party affected expressly waives its right to personally participate in the proceedings. [360] Since the Defendant decided to not do so, a respective order cannot be rendered against it.
    The fact that the Intervener waived its respective right, can also not justify rendering such an order against the Defendant. [361] The Intervener does not join the proceedings as a party, but merely in support of one of the parties. [362] Accordingly, it cannot make decisions that would affect the party’s standing, such as a declaration to waive the right to be heard. In the present case, the Intervener’s decision to waive its respective right may, therefore, impact its own standing in the proceedings, but cannot affect Defendant’s position.

    As a result, the Claimant can either make the confidential information available to the Defendant or keep this information redacted, accepting that the court cannot take redacted information into consideration for its decision. [363]

    Notwithstanding the above, under reference to the “Umweltengel für Tragetaschen” judgement of the German Federal Supreme Court (Bundesgerichtshof) [364] the court held, that, as a rule, it can be expected from the implementer of SEPs to enter into a NDA reinforced by a contractual penalty with the SEP holder. [365] SEP implementer is obliged to facilitate FRAND licensing negotiations to the best of its ability. This includes also taking justified confidentiality interests of the SEP holder into account. [365]

    In its second decision dated 17th January 2017 the court applied the above considerations. Since the Intervener waived its right to be heard, the court found that there is no reason to deny Claimant’s request in relation to the Intervener. On the other hand, due to Defendant’s denial to waive its respective right, the court still refrained for granting Claimant’s request against the Defendant. Taking Claimant’s confi¬dentiality interests into account, the court ordered, however, the Defendant to submit an offer for a NDA to the Claimant based particularly on the conditions mentioned above.
  • [360] Judgement dated 14th December 2016, para. 1
  • [361] Judgement dated 14th December 2016, para. 2
  • [362] Judgement dated 14th December 2016, para. 2
  • [363] Judgement dated 14th December 2016, para. 3
  • [364] Bundesgerichtshof, Decision dated 19th February 2014, Case No. I ZR 230/12
  • [365] Judgement dated 14th December 2016, para. 5

Updated 27 June 2018

OLG Düsseldorf

OLG Düsseldorf
25 April 2018 - Case No. I-2 W 8/18

A. Facts

The Claimant holds a patent essential to a technical standard (Standard Essential Patent or SEP) which is subject to a so-called “FRAND-undertaking”, that is a commitment to make the SEP accessible to users on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions. The Claimant entered into nego¬tiations for a FRAND licensing agreement with the Defendant. In June 2017, the parties signed a Non-Disclosure Agreement (NDA). [112] A few days later, the Claimant entered into an NDA also with a third party, the Intervener . Shortly after signing the NDA, the Intervener [113] argued that several clauses of the agreement were void. [114]

In September 2017, the Claimant initiated infringement proceedings against the Defendant before the District Court of Düsseldorf (District Court). The Intervener joined these proceedings in support of the Defendant. After joining the proceedings, the Intervener claimed that the NDA with the Claimant does not cover information which the latter has to produce in the trial. This is particularly the case with infor-mation regarding to comparable licensing agreements concluded by the Claimant with third parties (comparable licences), which the Claimant regarded as strictly confidential. [115]

In December 2017, the Intervener requested full access to the court files. [116] The District Court dismissed the Intervener’s motion in part, namely by excluding access to confidential information, including information on comparable licences. The District Court held that the protection of such information was not adequately ensured, since the Intervener’s behaviour raised significant doubts that he considered himself bound to confidentiality by the NDA signed with the Claimant. [117] The Intervener appealed this decision.

The Higher District Court of Düsseldorf (Court) set the above ruling aside and requested the District Court to further clarify the facts of the case and decide again on the Intervener’s motion for full access to the court files on basis of the principles set forth in its present judgement. [118] In particular, the Court requested from the District Court to (re-)examine whether the Claimant actually possessed confidential business information which needed protection. [118] If this fact could be positively established, then a limited access to the court files would, basically, be justified, if the party seeking access to the files refused to commit itself to confidentiality. [119]

B. Court’s reasoning

The Court pointed out that parties to court proceedings seeking to protect confidential information must undertake efforts to sign an NDA with the opposing party and any intervener that has joined or is expected to join the proceedings with a high degree of certainty, before disclosing such information in the trial. [120] A party doing so without an NDA has to accept that the opposing party and/or the intervener could gain access to confidential information through an inspection of the court files. [121]

In the eyes of the Court, requesting from the party seeking to protect confidential information to actively pursue the conclusion of NDAs with other parties involved in the proceedings does not put that party at a disadvantage. The unjustified refusal of the opposing party (or an intervener) to enter into an NDA allows the party seeking protection to use only non-confidential information in the proceedings for specifying the FRAND conformity of its licensing offer to the potential licensee. [122] Although still obliged to specify the conditions of its FRAND licensing offer, the party has a lower burden to bear; to the extent (and not be¬yond) that is required for protecting its justified confidentiality interests, the party can meet its respective obligation by making “merely indicative observations” in the trial. [123]

In case that an intervener joins the proceedings at a point in time, in which a party has already produced confidential information on grounds of an NDA previously signed with the opposing party, the intervener’s right to inspect the court files can only be limited, if it was (or can) be established that the party seeking protection actually possesses confidential business information. [124] The fact that the other parties involved in the proceedings have already signed an NDA does not of itself limit the intervener’s right to full access to the court files. [125]

To establish that it possesses confidential business information worthy of protection, a party must identify such information and concretely explain why this information constitutes a business secret. [126] The party also needs to present in detail which measures were taken so far for securing confidentiality with respect to the information in question. [126] In addition, the party has to demonstrate in a substantiated and verifiable manner (for each information separately), which concrete disadvantages would be suffered, if the information would be disclosed. [126] It also needs to be explained, with which degree of certainty the said disadvantages are expected to occur. [126]

When protection of confidential information contained in comparable licences is sought, the existence of confidentiality interests requires, in general, special justification. [127] In the Court’s view, the SEP holder’s FRAND-undertaking entails transparency vis-à-vis interested stakeholders with respect to licensing conditions. [127] Moreover, knowledge of licensing conditions already accepted in the market can help potential licensees exercise their rights in infringement proceedings effectively. [127] Considering the non-discriminating element of SEP holder’s FRAND undertaking, it is not immediately apparent to the Court which interest worthy of legal protection the SEP holder could have in keeping conditions agreed in existing licensing agreements confidential. [127] In fact, several licensing pools (e.g. MPEG) publish their licensing agreements online. [127]

Should the party seeking protection fail to establish that it possesses confidential business information needing protection, full access to the court files must be granted to the intervener upon request, irrespective of whether the latter signs an NDA or not. [128] Conversely, if the existence of confidential business information is established, the intervener’s right to inspect the court files can be limited only to non-confidential information, as long as the intervener refuses to enter into an NDA with the party seeking protection of its confidentiality interests. [119]

In case that a party which has signed an NDA breaches its obligations under this agreement or “backs out” of the NDA, the party relying on the protection of its confidentiality interests can again limit its (future) submissions of facts in the proceedings to non-confidential information. [129] In other words, in terms of detail, the party must again not present information going beyond “merely indicative observations”. [129] Whether a party has “backed out“ of an NDA is a question of fact which has to be decided on a case-by-case basis. [130] For this, it is required that the party’s behaviour has caused a high risk of a breach of confidentiality. [130] For instance, this could be the case, when legal arguments brought by the party against the validity of the NDA are not reasonable, but rather serve as a pretext. [130]

  • [112] Higher District Court of Düsseldorf, judgement dated 25 April 2018, Case No. I-2 W 8/18, para. 26
  • [113] Ibid, para. 26
  • [114] Ibid, para. 32
  • [115] Ibid, para. 35
  • [116] Ibid, para. 2
  • [117] Ibid, para. 27
  • [118] Ibid, para. 36 et seq
  • [119] Ibid, para. 17
  • [120] Ibid, paras 11 and 14
  • [121] Ibid, para. 11
  • [122] Ibid, para. 13
  • [123] Ibid, para. 13
  • [124] Ibid, para. 15
  • [125] Ibid, para. 15 et seq
  • [126] Ibid, para. 23
  • [127] Ibid, para. 24
  • [128] Ibid, para. 16
  • [129] Ibid, para. 20
  • [130] Ibid, para. 21

Updated 21 June 2019

Unwired Planet v Huawei, Higher District Court (Oberlandesgericht) of Düsseldorf

OLG Düsseldorf
22 March 2019 - Case No. I-2 U 31/16

A. Facts

The Claimant, Unwired Planet International Limited, acquired patents relevant to the 2G (GSM) and 3G (UMTS) wireless telecommunications standards developed by the European Telecommunications Standards Institute (ETSI).

The previous holder of the patents in question, Telefonaktiebolaget LM Ericsson (Ericsson), had made an undertaking towards ETSI to grant users access to its patents should they become essential to a standard (Standard Essential Patents or SEPs) on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions.

The Defendants, China-based Huawei Technologies Co. Ltd (Huawei China) and its German affiliate Huawei Technologies Deutschland GmbH, offer for sale and sell devices in Germany complying with the 2G and 3G standards.

In March 2014, the Claimant brought an action against the Defendants before the District Court (Landgericht) of Düsseldorf (District Court) based on one of its SEPs, asking for a declaratory judgement recognising the Defendants’ liability for damages on the merits, as well as information and the rendering of accounts [1] . At the same time, the Claimant also initiated infringement proceedings against the Defendants in the UK (UK proceedings). During the course of the UK proceedings, the parties made certain licensing offers. However, an agreement was not reached.

By judgment dated 19th January 2016, the District Court found that the Defendants infringed the patent in suit, recognised the Defendant’s liability for damages on the merits and ordered the Defendants to render accounts to the Claimant [2] . The Defendants appealed the District Court’s ruling.

With the present judgment, the Higher District Court (Oberlandesgericht) of Düsseldorf (Court), basically, upheld the decision of the District Court. However, following a partial withdrawal of claims by the Claimant, the Court limited the Defendants’ obligation to render accounts by excluding information about production costs (broken down by single cost factors) and realised profits [3] .

The Court allowed for an appeal on points of law before the Federal Court of Justice (Bundesgerichtshof). The parties appealed the present decision.

B. Court’s reasoning

The Court confirmed the District Court’s finding that the Defendants had infringed the patent in suit by offering for sale and selling standard-compliant products in Germany [4] .

The Court also agreed with the District Court’s finding that the Claimant was entitled to assert claims against the Defendants: in its view, the patent in suit had been validly transferred to the Claimant [5] .

Transfer of SEPs

The Defendants had argued that the agreements underlying the transfer of said SEP to the Claimant had several flaws, which the District Court had not evaluated properly. In a lengthy reasoning, the Court dismissed this argument and confirmed the validity of the agreements in question [6] .

Besides that, the Defendants had claimed that the relevant agreements were void from an antitrust perspective, because they violated Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). The Court rejected these claims as well.

In the Court’s eyes, the – repeated – transfer of a SEP does not constitute an abuse of market power in violation of Article 102 TFEU [7] , since the FRAND undertaking, which – according to the Court – irrevocably limits the exclusion rights arising from a patent ‘in rem’ (‘dinglich’) [8] , is directly and indispensably binding for the new patent holder (irrespective of any contractual obligation assumed by the latter) [9] . Due to the ‘automatic’ transfer of the FRAND undertaking, there is no reason for prohibiting the transfer of SEPs or imposing limitations regarding to whom the SEP is assigned to; insofar, the patent holder has a free choice [10] .

Furthermore, the Court found that the transfer of the SEP in suit to the Claimant did not violate Article 101 TFEU [11] . Reciprocal agreements, as the agreements underlying the transfer of said patent, per se do not violate Article 101 TFEU, unless they contain side agreements which could impede competition [12] . According to the Court, this was not the case here. In this context, the Court explained that the fact that Ericsson had transferred only a part of its portfolio to the Claimant could not have any anti-competitive effect in terms of Article 101 TFEU [13] . Reason for this is that the FRAND-undertaking, to which both Ericsson and the Claimant are bound, sets the upper limit for the financial or other kind of burden from the licence that can be imposed on any licensee with respect to the entire patent portfolio [13] .

FRAND-undertaking

Having taken the view that the FRAND-undertaking is ‘automatically’ transferred to the new SEP holder, the Court suggested that it is binding for the latter not only ‘on the merits’ (‘dem Grunde nach’), but also in terms of ‘amount and content’ (‘der Höhe und dem Inhalt nach’) [14] . In other words: the new patent holder is not only – generally – obliged to offer access to the SEP on FRAND terms, it is, moreover, bound to the actual licensing practice of the previous patent holder [14] . The Court found that this is needed for ensuring that the SEP holder will not exempt itself of its FRAND commitment – especially the non-discrimination obligation – by transferring the SEP to a third party [15] .

Existing licensing agreements / Confidentiality

Accordingly, the Court held that existing licensing agreements of the previous patent holder (which have not expired yet) need to be considered for the assessment of the non-discriminatory character of licensing offers made by the new SEP holder [16] . Consequently, in the Court’s view, the SEP holder’s FRAND undertaking obliges the latter to provide its successor with information regarding to the content of licensing agreements which it had concluded with third parties [16] .

To be able to establish the non-discriminatory character of its licensing offer, the new SEP holder needs to make sure that it will be able to refer to and present licensing agreements of the prior SEP holder, particularly in court proceedings [17] . An exception could be made only when presenting such agreements would violate contractual confidentiality obligations. For this, the content of relevant confidentiality clauses must be presented in detail in trial, in order to allow an assessment of the extent of the patent holder’s obligations [18] . In addition, the party bound to respective clauses must demonstrate that it cannot release itself from its confidentiality obligations, by showing that all existing licensees have refused – upon request – to waive their rights arising from each clause in question [18] . Notwithstanding this, the Court expressed the view that agreeing to comprehensive confidentiality clauses will, as a rule, bar the SEP holder (and/or its successor) from invoking confidentiality with respect to existing licences in pending court proceedings: in this case, the refusal to present licences cannot be justified, since the patent holder acted culpably by agreeing to confidentiality with other licensees, regardless of its FRAND-obligation to provide information to its successor with respect to the licensing agreements it has signed [18] . Its unjustified refusal to present existing licences will, moreover, also affect the position of the new patent holder in trial (leading potentially to a dismissal of its claims for lack of evidence of the FRAND-conformity of its licensing offer) [18] .

In this context, the Court noted that presenting existing licensing agreements with third parties in trial does not raise antitrust concerns (especially under Article 101 TFEU) [19] . According to the Court, the fact that business secrets will be disclosed to potential competitors of the existing licensees is not harmful from an antitrust perspective, since measures to protect confidentiality in trial are available [19] . In particular, the addressee of confidential information is obliged to sign a Non-Disclosure Agreement (NDA), if the holder of such information (a) concretely explains why this information constitutes a business secret, (b) presents in detail which measures were taken so far for securing confidentiality with respect to the information in question, (c) demonstrates in a substantiated and verifiable manner (for each information separately), which concrete disadvantages would be suffered, if the information would be disclosed and (d) also explains, with which degree of certainty the said disadvantages are expected to occur [19] . If these requirements are met, the opposing party’s refusal to sign an NDA would allow the party holding confidential information to limit its pleadings in trial to ‘general, indicative statements’ [19] . According to the Court, this was, however, not the case here.

Application of the Huawei framework

On the merits of the case, the Court made clear that the conditions established by the Court of Justice of the European Union (CJEU) in the matter Huawei v ZTE [20] (Huawei framework or obligations) apply only to claims for injunctive relief and the recall of infringing products, not to the patent holders’ claims for information, rendering of accounts and damages [21] . In particular, when deciding about the implementer’s liability for damages on the merits, courts do not have to consider whether the patent holder has met its Huawei obligations or not [22] .

This question is, however, relevant for deciding on the amount of damages owed to the patent holder. The non-compliance of the SEP holder with the Huawei framework can limit the amount of damages that it can claim to the amount of a FRAND royalty (for certain periods of time) [23] . Since the right to request the rendering of accounts serves the calculation of the amount of damages, the Court took the view that the SEP holder is barred from claiming information about production costs and/or realised profits for periods of time, in which it is not entitled to damages going beyond the FRAND royalty, because this information is not required for calculating the latter [24] .

SEP holder’s offer to the implementer

Looking at the present case, the Court held that the Claimant had not fulfilled its Huawei obligation to make a written and specific FRAND licensing offer to the Defendants [25] . In particular, in the offers made the Claimant failed to adequately specify both the calculation and the non-discriminatory nature of the royalties proposed [26] .

For allowing the implementer to assess the non-discriminatory character of the SEP holder’s licensing offer, the Court repeated that the latter is obliged to disclose whether other licensees exist and, if so, to which conditions they have been licensed [27] . This obligation extends also to licensing agreements concluded by the previous patent holder(s) [27] . Only agreements that have expired or have been terminated do not need to be considered in this respect [28] . As a result, the Claimant should have referred to both the licences covering the SEP in suit that it had concluded with third parties after the transfer of the patent, and to all licences, which Ericsson had concluded with licensees prior to the transfer of said patent and were still in force, when the Claimant made the respective licensing offer to the Defendants [29] .

The Court took the view that, prior to granting the very first FRAND licence, the SEP holder ought to select a specific ‘licensing concept’. This ‘concept’ is ‘legally binding’ for the future licensing conduct of the SEP holder and potential successors. In other words: the licensing conditions established by the first FRAND licence granted outline the leeway available to the SEP holder for future licensing negotiations [30] . This is also the case, when the royalties agreed for the first licence lie at the lower end of the FRAND scale available to the patent holder [31] . Accordingly, any deviation from the ‘licensing concept’ is allowed only and to the extent that (existing and new) licensees are not discriminated through less favourable conditions [30] .

The Court allowed SEP holders to select a new ‘licensing concept’ (within the available FRAND range), provided that all licensing agreements subject to the existing ‘concept’ will expire at the same point in time [32] . In the Court’s view, this could be achieved, for instance, by agreeing with all later licensees that their licence will expire at the same time as the first FRAND licence ever granted [28] . The Court recognised that this would require substantial efforts, particularly when considerable patent portfolios are involved; this fact did not, however, speak against binding the successor to the licensing practice of the previous SEP holder [33] .

C. Other important issues

According to the Court, the fact that the UK proceedings were directed towards setting the terms of a worldwide licence between the parties, covering all SEPs held by the Claimant did not require the Court to stay its own proceedings [34] . According to Article 27 of the Brussels I Regulation, the court later seized of the matter has to stay its proceedings until the jurisdiction of the court first seized of the case has been settled. The Court saw, however, no indication that the UK proceedings (had ever) concerned the claims asserted in the proceedings brought before it (claims limited to Germany) [34] .

Besides that, the Court confirmed that German courts have international jurisdiction for the claims brought against Huawei China [35] . If infringing products are offered over the internet, the international jurisdiction of German courts is established, when German patent rights are being affected and the website can be accessed in Germany [35] .

  • [1] Unwired Planet v Huawei, Higher District Court of Düsseldorf, 22 March 2019, para. 32 (cited by www.nrwe.de).
  • [2] Ibid, para. 41. See District Court of Duesseldorf, judgement dated 19 January 2016, Case No. 4b O 49/14.
  • [3] Ibid, paras. 139 et seqq.
  • [4] Ibid, paras. 252-387.
  • [5] Ibid, paras. 161 et seqq.
  • [6] Ibid, paras. 169-199.
  • [7] Ibid, para. 203 et seqq.
  • [8] Ibid, para. 205.
  • [9] Ibid, paras 205 et seqq.
  • [10] Ibid, para 209.
  • [11] Ibid, paras. 235 et seqq.
  • [12] Ibid, para. 236.
  • [13] Ibid, para. 242.
  • [14] Ibid, paras. 212 et seqq.
  • [15] Ibid, para. 214.
  • [16] Ibid, paras. 216 et seq.
  • [17] Ibid, para. 216.
  • [18] Ibid, para. 218.
  • [19] Ibid, para. 220.
  • [20] Huawei v ZTE, Court of Justice of the European Union, judgment dated 16 July 2015, Case No. C-170/13.
  • [21] Unwired Planet v Huawei, Higher District Court of Düsseldorf, 22 March 2019, para. 159 (cited by www.nrwe.de).
  • [22] Ibid, para. 396.
  • [23] Ibid, para. 402.
  • [24] Ibid, para. 402 et seq. Insofar the Court expressly disagreed with the District Court of Mannheim, which in a previous decision had denied any limitations of the patent holder’s right to demand the rendering of accounts, in case of non-compliance with the Huawei framework; cf. District Court of Mannheim, judgment dated 10 November 2017, Case No. 7 O 28/16, GRUR-RR 2018, 273.
  • [25] Ibid, paras. 406 et seqq.
  • [26] Ibid, para. 411.
  • [27] Ibid, para. 419.
  • [28] Ibid, para. 420.
  • [29] Ibid, para. 423.
  • [30] Ibid, paras. 413 et seq.
  • [31] Ibid, para. 413.
  • [32] Ibid, paras. 414 and 420.
  • [33] Ibid, para. 421.
  • [34] Ibid, para. 144.
  • [35] Ibid, paras. 153 et seqq.

Updated 30 October 2018

TQ Delta LLC v Zyxel Communications UK Ltd. and Ors., UK High Court of Justice

English court decisions
28 September 2018 - Case No. HP-2017-000045, [2018] EWHC 2577 (Pat)

A. Facts

The Claimant, TQ Delta LLC, acquired patents that had been declared as essential to the DSL standard under the so-called “ITU Recommen­dations” from a company called Aware Inc. (Standard Essential Patents, or SEPs) [415] . The ITU Recommendations require from the SEP holder to make its patents accessible to users on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions [416] . The Defendants, Zyxel Communications UK Ltd. and Zyxel Communications A/S, manufacture and sell various types of equipment complying with the DSL standard [416] .

The Claimant brought an infringement action against the Defendants before the UK High Court of Justice (Court) based on two SEPs it holds [416] . The proceedings involve, on the one hand, technical issues concerning the validity, essentiality and infringement of the SEPs in question and, on the other hand, the licensing of these SEPs on FRAND terms [417] .

Prior to service of the statements of case, the Court ordered the Claimant to disclose licence agreements concluded with third parties, covering also the SEPs in suit (comparable agreements) [418] . The Claimant requested the Court to establish an “external eyes only” regime with respect to comparable agreements, especially a licence entered with a company called Zhone (Zhone licence) as well as a licence concluded with another company referred to as company “X” (X licence). In June 2018, the Court dismissed Claimant’s motion [419] . After that, the Court ordered standard disclosure, requesting both parties to search for documents relevant to the case and produce so-called “disclosure statements”, containing the documents identified [420] .

In its disclosure statement, the Claimant included only the licences concluded by Aware Inc. with third parties covering also the patents in suit (of which he possessed only redacted copies; “Aware licences”), the assignment agreement signed with Aware Inc., the inter partes correspondence with the latter as well as a few public validity findings made by the US Patent and Trademark Office on certain patents of its portfolio [421] .

The Defendants, who had obtained unredacted copies of the Aware licences directly from Aware Inc. [421] , complained that the Claimant’s disclosure was not appropriate and set out various categories of documents which, in their view, should have been in disclosure [421] . Accordingly, the Defendants requested an order for standard disclosure to be repeated, backed this time by a so-called “unless order” (meaning that non-compliance with the order will be sanctioned by the dismissal of Claimant’s claims) [422] .

On 28 September 2018, the Court made an order requesting disclosure of the following specific categories of documents by the Claimant [423] :

  • Documents concerning the assignment of patents from Aware Inc. to the Claimant (besides the assignment agreement itself);
  • documents regarding to the assessment of the (technical) essentiality of the patents in suitIbid, pages 5 et seq., and
  • documents concerning the Claimant’s royalty calculationIbid, pages 6 et seq..

On the other hand, the Court refused to order disclosure of documents relating to the negotiations leading to the Zhone licence, the X licence and the Aware licences, documents concerning licensing negotiations between the Claimant and third parties which have not resulted in a licence yet [426] , as well as documents regarding to assessments of the validity [427] or the technical significance of Claimant’s patents within the standard [424] .

With judgment dated 11 October 2018, the Court set forth the specific terms of the order [428] . Since the Court held that the Claimant did not carry out a proper search for existing documents under the previous standard disclosure order, it required the Claimant to conduct such a search and deliver a new statement of disclosure [429] . In addition, the Court ordered the Claimant to disclose the aforementioned specific categories of documents, ruling that failure to comply with this order, will lead to the dismissal of Claimant’s claim [429] .

B. Court’s reasoning

The Court explained that disclosure can be refused only with respect to documents not relevant to the case and/or documents which are relevant but might have been privileged or disproportionate to search for [430] . In the Court’s eyes, proportionality comes in play in this context under two aspects: On the one hand, the cost and complexity of searching for and extracting the relevant material should be considered [431] . On the other hand, the impact of the documents on the trial as well as the cost and complexity of deploying any material which is produced in the proceedings needs also to be taken into account [431] .

Further, the Court made clear that disclosure cannot be refused on the grounds that documents referring to a specific transaction (e.g. a licensing agreement) are subjective in nature (whereas FRAND is objective); in the Court’s eyes, even then, the acts of individuals working in a field is capable of being evidence on what “reasonable business people” might do in similar circumstances [426] .

On this basis, the Court held that documents concerning the assignment of the SEPs in suit from Aware Inc. to the Claimant should be disclosed [426] . The fact that the Claimant had disclosed the assignment agreement itself does not mean that further disclosure is not necessary [426] . Documents referring to the assignment might be “potentially highly relevant information” in FRAND-related trials, since they could provide insights into how different parts of the patent portfolio assigned were valued, offering (presumably “at arm's length”) a “concrete data point” for the respective valuation [426] .

The Court further found that documents concerning the assessment of whether the patents in suit are (from a technical perspective) essential to the DSL standard should also be disclosed [427] , because it is particularly relevant to know what proportion of the patents which were assigned to the Claimant by Aware Inc. are essential to the DSL standard [427] .

Furthermore, the Court requested disclosure of documents referring to the Claimant’s royalty calculation, since they were regarded as “directly relevant” to the case [427] . The fact that respective documents were prepared in connection with previous litigation between the parties in the United States does per se hinder disclosure, unless litigation was the “dominant purpose” for which the documents were made [423] . In other words, the litigation privilege applies only to documents created in litigation to put forward arguments about what is and is not FRAND in court; on the contrary, documents which – in Claimant’s practice as a licensing company – led to the creation of the royalty rates and other terms in FRAND offers are subject to disclosure [423] .

On the other hand, the Court held that disclosure of documents relating to the negotiations which had led to the Zhone licence, the X licence and the Aware licences was not required [431] . Although such documents might, in principle, be relevant to the case (particularly for demonstrating what the parties may have said in the licensing negotiations about the value of the patents and their relevance to the standard) [432] , the Court found that disclosure of documents related to the Zhone licence and the X licence would be disproportionate in the present case, since it would have limited probative value [431] . This is because the Defendants had argued that the Zhone licence was not a relevant comparable agreement [422] . In addition, none of the parties advanced the X licence as a comparable agreement in connection with the royalty rates; in the Court’s eyes, the fact that it might be comparable in relation to other licence terms, did not have “significant utility” for the case [431] . With respect to documents related to the negotiations of the Aware licences, the Court refrained from ordering disclosure, because it was convinced that the Claimant was not in possession of such documents [432] .

Regarding to documents concerning licensing negotiations between the Claimant and third parties the Court held that, although these documents might be relevant to the case, their disclosure would also be disproportionate in light of the rather limited probative value that they are likely to have [426] .

Furthermore, the Court explained that documents referring to the individual technical significance of a patent within a standard (in a sense that some patents might be of higher value to the standard than others), were not relevant in the present case, since no party pleaded that respective considerations need to be taken into account for the royalty determination [424] . In this context, the Court expressed doubts about whether a method of determining royalties based on such considerations is workable in practice at all [426] .

The Court finally refused disclosure of documents relating to the validity of Claimant’s patents [427] . Insofar, the Court followed the usual practice of UK Courts in patent cases, according to which, as a rule, unspecific disclosure relating to patent validity is refused [427] .

  • [415] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 28th September 2018, Case-No. HP-2017-000045, [2018] EWHC 2577 (Pat), page 1.
  • [416] Ibid, page 1.
  • [417] Ibid, page 1 et seq. With respect to the relationship between the “technical trials” (that means the proceedings concerning the validity, essentiality and infringement of the SEPs in suit) and the “non-technical trial” regarding to FRAND licensing see, TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 21st November 2017, Case-No. HP-2017-000045, [2017] EWHC 3305 (Pat); summary available at caselaw.4ipcouncil.com/english-court-decisions/tq-delta-llc-v-zyxel-communications-ewhc
  • [418] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 13th June 2018, Case-No. HP-2017-000045, [2018] EWHC 1515 (Ch), paras. 25 and 30; summary available at caselaw.4ipcouncil.com/english-court-decisions/tq-delta-llc-v-zyxel-communications-and-ors-ewhc
  • [419] Ibid, TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 13th June 2018.
  • [420] Q Delta LLC v Zyxel Communications, UK High Court of Justice, 28th September 2018, Case-No. HP-2017-000045, [2018] EWHC 2577 (Pat), page 2.
  • [421] Ibid, page 2.
  • [422] Ibid, page 3.
  • [423] Ibid, page 7.
  • [424] Ibid, pages 5 et seq.
  • [425] Ibid, pages 6 et seq.
  • [426] Ibid, page 5.
  • [427] Ibid, page 6.
  • [428] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 11th October 2018, Case-No. HP-2017-000045, [2018] EWHC 2677 (Pat).
  • [429] Ibid, pages 2 et seq.
  • [430] TQ Delta LLC v Zyxel Communications, UK High Court of Justice, 28th September 2018, Case-No. HP-2017-000045, [2018] EWHC 2577 (Pat), page 2.
  • [431] Ibid, page 4.
  • [432] Ibid, pages 3.