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Updated 1 April 2021

InterDigital v Xiaomi, District Court (Landgericht) Munich I

LG Munich
25 February 2021 - Case No. 7 O 14276/20

A. Facts

The claimants are two US-based companies that are part of InterDigital Group (InterDigital). InterDigital Group holds a portfolio of patents declared as (potentially) essential, to various wireless telecommunications standards (standard essential patents, or SEPs) developed by the European Telecommunications Standards Institute (ETSI). The claimants hold German SEPs which are subject to a commitment to be made accessible to standard users on fair, reasonable and non-discriminatory (FRAND) terms and conditions, in accordance with the ETSI IPR Policy.

The defendants are four companies belonging to the Xiaomi group that has its headquarters in China (Xiaomi). Xiaomi produces and sells -among other products- smartphones that comply with ETSI standards worldwide.

On 9 June 2020, Xiaomi filed an action against InterDigital before the Intermediate People’s Court in Wuhan, China (Wuhan Court). In its complaint, Xiaomi asked the Wuhan Court to determine specific rates or a range of rates for the licensing of InterDigital’s worldwide 3G/UMTS and 4G/LTE SEP portfolio (Chinese main proceedings). On 28 July 2020, Xiaomi, for the first time, informed InterDigital by telephone that it had filed a case in China. However, the Xiaomi representative did not provide any details regarding the filing.

On the 29 July 2020, InterDigital filed an infringement action against Xiaomi before the High Court of Delhi, India (Delhi Court) with a request for injunctive relief (Indian proceedings). In addition, InterDigital requested a preliminary cease-and-desist order against Xiaomi.

On 4 August 2020, Xiaomi, applied for an anti-suit injunction (ASI) before the Wuhan Court.

On 23 September 2020, the Wuhan Court issued its ASI order, ordering InterDigital to withdraw or suspend the actions in the pending Indian proceedings (Wuhan ASI). InterDigital was also ordered to refrain from filing infringement actions on its 3G and 4G SEPs for (1) permanent and/or temporary injunctions or (2) FRAND rate determinations against Xiaomi in any country of the world during the pendency of the Chinese main proceedings. The Wuhan Court ordered a fine amounting to RMB 1,000,000 per day in case of violation of the above order. InterDigital was advised of the issued ASI for the first time when the Wuhan court sent an email to several InterDigital email addresses on 25 September 2020.

On 29 September 2020, InterDigital filed an action for an anti-anti-suit injunction (AASI) before the Delhi Court. On 9 October 2020, the Delhi Court issued an AASI, restraining Xiaomi from enforcing the Wuhan ASI (Delhi AASI).

On 30 October 2020, InterDigital filed a motion for an AASI before the District Court of Munich I (Munich District Court or Court) as well.

On 9 November 2020, the Munich District Court issued an AASI ordering Xiaomi to refrain from pursuing the Wuhan ASI or take further (court and/or administrative) measures against InterDigital, intended to directly or indirectly prevent InterDigital from prosecuting infringement proceedings based on its SEPs in Germany (Munich AASI). Each violation of the Munich AASI order triggers a fine amounting up to EUR 250,000 or detention up to six months.

On 22 December 2020, Xiaomi filed an appeal of the Munich AASI and also requested a stay of the enforcement of this order. On 24 January 2021, the Munich District Court rejected the request for a stay of the enforcement of the AASI.

With the present judgment dated 25 February 2021, the Munich District Court dismissed Xiaomi’s appeal on the merits and confirmed the Munich AASI. [1] (cited by www.gesetze-bayern.de/Content/Document/Y-300-Z-BECKRS-B-2021-N-3995?hl=true)
 

B. Court’s reasoning

The Munich District Court held that InterDigital had a claim for preliminary injunction and that sufficient grounds for issuing an AASI were given. [2]
 

Claim for preliminary injunction

The Court explained that the filing, prosecution and enforcement of an ASI in China with the goal to prevent the assertion of claims for injunctive relief against patent infringement in Germany impairs the ‘property-like legal position’ of the patent holder and constitutes a tortious act (in terms of Section 823 para. 1 of the German Civil Code). [3] The same is true with respect to court orders, which restrain a party from initiating AASI-proceedings in Germany (so-called ‘anti-anti-anti-suit injunctions’, or AAASI). [3]

In the eyes of the Munich District Court, the Wuhan ASI had the aforementioned effect. According to its wording and reasoning, the Wuhan ASI attempted to have a global reach and would also have impacted those InterDigital Group entities holding German SEPs that were involved in the present proceedings. [4] The fact that these companies did not directly face fines or other sanctions imposed by the Wuhan Court, did not change the fact that the Wuhan ASI tried to impair their legal position: These measures threatened other affiliated companies within InterDigital Group and, thus, created a coercive situation in an attempt to limit the freedom of the companies that actually hold German SEPs to act for their protection of their rights. [4]

In addition, the Court expressed the view that InterDigital was in a position to invoke the right for self-defence against the Wuhan ASI. [3] Section 227 of the German Civil Code provides that any action, which is necessary for averting a present illicit attack, is not unlawful.

 

Grounds for preliminary injunction

Furthermore, the Munich District Court found that there was sufficient justification for ordering interim measures. [5]

First, it could not be requested from InterDigital to defend itself against the Wuhan ASI in regular (main) court proceedings. [6] Given that injunctions are available only for the limited lifetime of a patent, regular proceedings against an ASI would not sufficiently protect patent holders’ rights; the latter would be, effectively, deprived of the right to injunctive relief for a considerable period of time, at least until the enforcement of the first instance decision of the German court. [7] This limitation would occur irrespective of the fact that a foreign ASI violates public order (ordre public) and, thus, does not have any legal effect in Germany. [6] The Court repeated that sanctions imposed or threatened in foreign jurisdictions can place the patent holder under pressure and stand in the way of effective patent enforcement in Germany. [6] This applies equally, when a foreign court has granted an AAASI, preventing a party to seek for protective measures in the form of a AASI in Germany, as was the case with the order of the Wuhan Court. [8]

Second, the Munich District Court held that the urgency required for interim measures was given. [9] Inter-digital had filed the request for an AASI in a timely fashion. [10] As a rule, Munich courts require that requests for preliminary injunctions concerning patents must be filed within a deadline of one-month of knowledge of the act. [11] The Munich District Court suggested that this deadline, basically, also applies to AASIs (refraining, however, from a final assessment of this question). [12]

In case that an AASI is directed against an ASI already granted by a foreign court (risk of repetition), the respective request should be filed within a month after the patent holder obtained ‘secure knowledge’ of the foreign court order, irrespective of whether formal service took place or not. [13] For assuming ‘secure knowledge’, it can be required that the patent holder gets access to the ASI request as well as the evidence used in the foreign proceedings, especially when the court order itself does not contain clear information about the parties, the content and the legal grounds of the order. [14]

If a request for an AASI is filed before a foreign ASI has been issued, that is when only a ‘risk of first infringement’ of a violation of SEP holder’s ‘property-like’ rights exists, the one-month deadline begins at the moment in time, in which the patent holder gains ‘secure knowledge’ of the filing of an ASI request before the foreign court or of the existing risk of such measures, which is especially materialized, when the implementer threatens with respective action. [15] In this context, the Court clarified that filing early countermeasures before a grant of an ASI is only an option; patent holders are, basically, free to wait for the outcome of foreign ASI proceedings, before filing a request for an AASI. [15]

Having said that, the Munich District Court outlined that it will, as a rule, assume that a required risk of a first infringement’, which could result in an AASI, is present, if the one of the following circumstances occur:

  • The implementer has threatened to file a request for an ASI;
  • The implementer has filed a request for an ASI;
  • The implementer has filed a (regular) action for the grant of a licence or the determination of reason-able global licensing rates in a jurisdiction, in which ASIs can, in principle, be granted;
  • The implementer has already threatened an ASI or filed a respective request against other patent holders and the party filing an AASI in Germany has no indication that the implementer will refrain from such actions against it in the future;
  • The implementer failed to declare in text form within a short deadline set by the patent holder (e.g. with the first notification of infringement) that it will not file a request for an ASI. [16]
ASI and implementer’s willingness to obtain a licence

The Munich District Court further made clear that an implementer who threatens an ASI or files a respective request, can, as a rule, not be treated as a ‘willing licensee’ within the meaning of the Huawei v ZTE ruling (Huawei v ZTE) [17] of the Court of Justice of the EU (CJEU) and the recent case-law of the German Federal Court of Justice (Bundesgerichtshof) in the Sisvel v Haier [18] cases. [19] According to the Court, an implementer truly willing to obtain a FRAND-licence would regularly refrain from actions impairing SEP holder’s ‘property-like’ rights even further than the past and ongoing acts of patent infringement (such as the filing of a request for an ASI). [20]

Looking particularly at the negotiation framework established in Huawei v ZTE, the Munich District Court noted that balanced negotiations on an equal footing -as envisioned by the CJEU- can only be ensured if the parties have equal access to legal remedies: The implementer’s ability to attack patent validity should be counterbalanced by the patent holder’s ability to assert its patent rights before court. [21] This is no longer the case when the judicial assertion of claims against patent infringement is precluded based on an ASI. [21] In this context, the Court noted that an ASI directly violates the SEP holders’ right to have access to courts which is established in both European law (Article 47 para. 1 of the EU Charter of Fundamental Rights) and German constitutional law. [21]

Furthermore, the Munich District Court expressed the view that an implementer who has been notified about the infringement of SEPs can be required not only to adequately demonstrate willingness to obtain a FRAND-licence, but also to declare that it will not file a request for an ASI against the patent holder. [20] The Court explained that, otherwise, the negotiation process set forth by Huawei v ZTE could not be followed. [22] In particular, the SEP holder could no longer be obliged to notify the implementer about the infringement before filing a court action. [22] By making a notification of infringement, the patent holder exposes itself to an ASI. If an ASI is granted, then the patent holder will in many cases be de facto prevented from exercising its right to injunctive relief even towards implementers unwilling to take a licence. [23] According to the Court, this result conflicts with the so-called EU IPR Enforcement-Directive (Articles 9-11) [24] as well as the case law of the CJEU. [25]

The Court also added that SEP holders cannot be expected to pre-emptively prepare countermeasures against potential future ASIs [20] . Even when SEP holders seek global portfolio licences, preparing the filing of AASIs in many different jurisdictions would lead to disproportionate high costs at a point in time, in which neither the risk nor the impact of an ASI could be reliably assessed. [20]
 

Balance of interests

After weighing the interests of the parties against each other, the Munich District Court held that an AASI was justified. [26]

On the one hand, the Court recognized that InterDigital had an interest to be granted the requested AASI. Although the Wuhan ASI violated public order and could not be enforced in Germany, InterDigital had an interest to limit the reach of the Chinese order as far as German SEPs are concerned; otherwise, the threat of sanctions that could be imposed in China would de facto prevent InterDigital from enforcing its patent rights in Germany for an unforeseeable period of time. [27]

On the other hand, the Court highlighted that a German AASI would not impair the rights of Xiaomi. [28] The AASI would only oblige Xiaomi to withdraw the Wuhan ASI and, therefore, have no impact on the Chinese main proceedings. [28] The Chinese main proceedings would also not be impaired, in case that InterDigital filed infringement proceedings against Xiaomi in Germany, following the grant of an AASI. The Munich District Court expects that German infringement proceedings would not revolve around the same question raised in the Chinese proceedings, that is the determination of the global rate for InterDigital’s SEP portfolio. [28] On the contrary, German infringement courts would probably not examine the amount of an adequate global licensing rate, because it is very unlikely that they would examine a FRAND defence raised by Xiaomi on the merits. [28] The Court reasoned that the very act of requesting an ASI, or threatening to do so, is evidence that the implementer is an unwilling licensee, such that a FRAND defence raised by Xiaomi in German infringement proceedings would hardly have any prospects of success. [28]

In addition, the Court took the view that Xiaomi’s interest to avoid infringement trials in Germany during the pendency of the Chinese main proceedings was not worthy of protection. [29] Xiaomi did neither constantly monitor the IPR landscape, as it is obliged to, nor obtain necessary licences before starting production. [29] What is more, Xiaomi refused to do so for more than seven years, such that InterDigital can no longer be expected to further wait to assert its rights. [29]

 

C. Other issues

The Munich District Court also confirmed that InterDigital had a legitimate interest in legal remedies. [30] Under German law, this is a prerequisite for any court action and is, basically, given, when the claims asserted by the claimant have not been fulfilled by the defendant yet. [31] The fact that InterDigital could defend itself against the ASI also in so-called ‘reconsideration proceedings’ before Chinese courts did not remove InterDigital’s legitimate interest that its case is heard by German courts. [32] The Court held that such proceedings could not sufficiently protect InterDigital’s ‘property-like’ rights in Germany, especially since a reliable assessment of the prospects of success of such legal remedy is very challenging. [32]

Furthermore, the Court confirmed that the pendency of the Chinese and Indian proceedings did not prevent German courts from hearing the case in question (no lis pendens). [33]

Finally, the Court also found that the Munich AASI had been served to Xiaomi within the relevant deadline, which under German law is a prerequisite for such orders to remain in force. [34]

  • [1] InterDigital v Xiaomi, District Court (Landgericht) Munich I, judgment dated 25 February 2021, Case-No. 7 O 14276/20.
  • [2] Ibid, para. 75.
  • [3] Ibid, para. 120.
  • [4] Ibid, para. 121.
  • [5] Ibid, para. 129.
  • [6] Ibid, para. 130.
  • [7] Ibid, para. 130. The Munich District Court highlighted that the right to injunctive relief is the ‘essential feature’ of exclusionary rights, such as patent rights, and the ‘sharpest weapon’ against infringement. Patents would be ‘worthless’, if the patent holder would be denied the possibility to enforce its rights by way of court proceedings.
  • [8] Ibid, para. 131.
  • [9] Ibid, para. 132.
  • [10] Ibid, para. 132 as well as paras. 151 et seqq.
  • [11] Ibid, para. 133.
  • [12] Ibid, paras. 134-135.
  • [13] Ibid, para. 134.
  • [14] Ibid. para. 136.
  • [15] Ibid, para. 138.
  • [16] Ibid, para. 142.
  • [17] Huawei v ZTE, Court of Justice of the EU, judgment dated 16 July 2015, Case No. C-170/13.
  • [18] Sisvel v Haier I, Bundesgerichtshof, judgment dated 5 May 2020, Case No. KZR 36/17 and Sisvel v Haier II, Bundesgerichtshof, judgment dated 24 November 2020, Case No. KZR 35/17.
  • [19] InterDigital v Xiaomi, District Court (Landgericht) Munich I, judgment dated 25 February 2021, Case-No. 7 O 14276/20, para. 146.
  • [20] Ibid, para. 146.
  • [21] Ibid. para. 148.
  • [22] Ibid, para. 147.
  • [23] Ibid, para. 149.
  • [24] Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ L 157, 30.4.2004).
  • [25] InterDigital v Xiaomi, District Court (Landgericht) Munich I, judgment dated 25 February 2021, Case-No. 7 O 14276/20, para. 149.
  • [26] Ibid, para. 168.
  • [27] Ibid, para. 169.
  • [28] Ibid, para. 170.
  • [29] Ibid, para. 173.
  • [30] Ibid, para. 75.
  • [31] Ibid, para. 107.
  • [32] Ibid, para. 108.
  • [33] Ibid, paras. 75 and 109.
  • [34] Ibid, para. 75 and paras. 80-106.

Updated 16 June 2021

Conversant v Daimler, District Court (Landgericht) of Munich I

LG Munich
30 October 2020 - Case No. 21 O 11384/19

A. Facts

The claimant, Conversant, holds patents declared as (potentially) essential to the practice of several wireless telecommunications standards (standard essential patents, or SEPs). Conversant has made a commitment towards the European Telecommunications Standards Institute (ETSI) to make patents essential to a standard accessible to users on fair, reasonable and non-discriminatory (FRAND) terms and conditions.

The defendant, Daimler, is a global car company with headquarters in Germany. Daimler manufactures and sells vehicles with connectivity features complying with the LTE standard developed by ETSI.

In October 2018, Conversant joined the Avanci licensing platform, which offers a patent licensing program tailored to connected cars. On 18 December 2018, Conversant made an offer for a bilateral worldwide licence to Daimler and provided information about its SEP portfolio including claim charts concerning several individual patents to the latter.

On 27 February 2019, following a respective reminder sent by Conversant, Daimler replied that it was willing to sign a FRAND licence, highlighted, however, that in the automotive sector it is common that intellectual property rights (IPRs) are licensed to suppliers. Daimler also requested information about existing licensees to Conversant's portfolio as well as an explanation which patents read on which components and why the terms offered were FRAND. Subsequently, Daimler started negotiations for a pool licence with Avanci.

On 5 July 2019, Conversant sent an e-mail to Daimler suggesting a meeting in person on 15 July 2019, since it had been informed by Avanci that the negotiations with Daimler had not been successful. Conversant also pointed out that the car makers participating in the Avanci-programme are licensed under its SEP portfolio and explained the royalty calculation underlying its own bilateral offer -inter alia- by reference to court cases (especially Unwired Planet v Huawei, UK High Court of Justice, judgment dated 5 April 2017). Conversant also intended to provide a full list of patents included in its portfolio to Daimler, the respective document was, however, not attached by mistake to the e-mail sent to Daimler.

On 29 July 2019, Daimler responded and referred to the ongoing negotiations with Avanci. It repeated the view that licensing at supplier level was more efficient and countered that a meeting in person should take place at a later point in time, since Conversant had not shared all necessary information yet.

On 13 August 2019, Conversant filed an infringement action against Daimler before the District Court of Munich I (Court), which did not include a claim for injunctive relief. On 24 August 2019, Conversant informed Daimler about the case filed in Munich and noted that it assumed that Daimler had no actual interest in obtaining a FRAND licence. Conversant also highlighted that for the calculation of royalties the value generated at end-device level should be taken into account.

On 18 September 2019, Daimler reiterated its willingness to obtain a licence and pointed out for the first time that Conversant's e-mail dated 5 July 2019 had not contained the full list of portfolio patents referred to by Conversant. This list was shared with Daimler on 20 September 2019. At the same time, Conversant suggested a meeting in person in the beginning of October 2019. On 8 October 2019, Daimler responded that a meeting could take place only in the end of October, since information needed was still missing.

On 4 December 2019, the parties met in person in Daimler's headquarters. On 15 January 2020, Conversant sent the presentation held in this meeting to Daimler and pointed out that it was willing to establish a licensing programme for Daimler's tier-1 suppliers and that it was prepared to have a meeting with Daimler and all supplier to that end. Conversant had also offered to take recourse to a neutral third party, e.g. in arbitration proceedings, for the determination of the licensing value. On 24 January 2020, Daimler explained that it had already discussed with its suppliers and was willing to organise a meeting.

On 29 January 2020, Conversant additionally raised claims for injunctive relief and the recall and destruction of infringing products against Daimler in the pending proceedings in Munich.

In February and March 2020, the parties discussed about a meeting with Daimler's tier-1 suppliers. Daimler did, however, not organise a meeting with the participation of all suppliers.

On 8 April 2020, Daimler made a counteroffer to Conversant. The counteroffer was based on the value of the Telematic Control Unit (TCU), which is the component enabling LTE-connectivity in cars.

On 30 June 2020, Conversant made a further offer to Daimler that was not accepted. On 10 August 2020, Daimler provided information to Conversant about past vehicle sales and placed security for past uses.

With the present judgment [35] , the Court found in favour of Conversant and – among other things – granted an injunction against Daimler.
 

B. Court's reasoning

The Court found that the patent in suit is essential to the LTE standard and infringed [36] . Consequently, the claims asserted by Conversant were given. The claims for injunctive relief as well as the recall and destruction of infringing products were also to be granted. By initiating infringement proceedings against Daimler, Conversant neither abused a dominant market position in terms of Article 102 TFEU (competition law defence, cf. item 1), nor violated its contractual obligations under ETSI's IPR Policy (contract law defence, cf. item 2.) [37] .
 

1. Competition law defence
Dominant market position

The Court held that Conversant had a dominant market position within the meaning of Article 102 TFEU [38] .

The exclusivity rights arising from a patent do not establish a dominant market position by themselves. [39] A market dominant position is established, when the patent is technically essential for complying with a standard developed by a standardisation body (or a de facto standard) and technical alternatives are not available for products brought on a (downstream) market [40] . In the Court's eyes, this applied to the patent in suit. [41]

Exceptional circumstances that could exclude Conversant's market dominant position here were not present. According to the Court, the sole fact that Conversant had made a FRAND commitment towards ETSI establishing an obligation to grant FRAND licences did not per se exclude market dominance; decisive is, moreover, whether the SEP holder actually meets this obligation. [42] Furthermore, the additional option to get a license from the patent in suit from Avanci did not limit Conversant's market dominant position. [43]
 

No abuse of market dominance

The Court found, however, that Conversant had not abused its dominance by filing an action for injunctive relief as well as the recall and destruction of infringing products against Daimler.

In cases, in which the implementer already uses protected standardised technology, the assessment of the SEP holder's behaviour requires a comprehensive analysis, in which the constitutionally guaranteed strong protection of IPRs, on the one hand, and the interest of users to access the standard, on the other hand, must be balanced against one another. [44] In this context, not only private interests, but also the public interest must be taken into account. [45] The Court highlighted that the public interest is not to be seen as just the 'sole sum of private interests in using standardised technology', but equally includes the substantial interest of the public to protect the integrity of IPRs and secure effective enforcement. [46]

Considering the 'particular nature' of SEPs especially in the telecommunications field, the Court held -in line with the Huawei v ZTE judgment (Huawei judgment) of the Court of Justice of the EU (CJEU) [47] - that it is justified to impose certain conduct obligations on SEP holders. Reason for this is, basically, that -unlike 'regular' patents- SEPs are established in the market through their inclusion in the standard, without further action by the patent holder. [48] Consequently, the need to secure a competitive advantage for the inventor of a patented technology in the market by granting exclusivity rights for a certain period of time is less compelling in relation to SEPs compared to non-standard-essential patents. [49]

Having said that, the Court made, however, clear that the conduct duties imposed on the SEP holder by the Huawei judgement exist only towards an implementer, who 'seriously and not only in words' wants to sign a licence. [50] Accordingly, a defence based on an alleged abuse of market dominance can be successful, only when the implementer that wants to use, or already uses the patent without authorisation is willing to obtain a FRAND licence and refrain from delaying tactics throughout the licensing negotiations with the SEP holder. [51] The Court noted that the key notion underlying the Huawei judgment that parties are best situated to determine FRAND in fair, balanced and swift negotiations relies on a constructive involvement of both parties which is driven by the actual 'sincere motivation' to reach an agreement. [52]
 

Notification of infringement

Looking at the parties' behaviour, the Court held that Conversant fulfilled the duty to notify Daimler about the infringement of its SEPs by sending the letter dated 18 December 2018, which contained sufficient information about its portfolio, including claim charts covering several patents. [53] Whether Conversant had sufficiently explained the royalty calculation underlying the licensing offer that was also attached to this letter, was not relevant, since, at this stage, Conversant had not even been obliged to make an offer to Daimler. [54]
 

Willingness

On the other hand, the Court found that Daimler had not been willing to take a licence from Conversant: On the contrary, the Court identified a 'particularly clear case of missing willingness'. [55]

In terms of content, the implementer must 'clearly' and 'unambiguously' declare willingness to conclude a licence agreement with the SEP holder on 'whatever terms are in fact FRAND' and, subsequently, engage in negotiations in a 'target-oriented' and 'constructive' manner. [56] By contrast, it is not sufficient, in response to the (first) notification of infringement, to just demonstrate willingness to consider signing a licensing agreement or to enter into negotiations about whether and under which conditions taking a licence comes into question. [56]

The Court explained that the assessment of willingness requires a comprehensive analysis of all facts until the end of the oral hearings in the infringement proceedings. [57] Establishing whether willingness is given cannot be a question answered by a 'formalistic snapshot' of the implementer's conduct; what is more, the implementer cannot remain inactive until -in its view- the SEP holder has met its obligations first. [57]

In addition, the Court highlighted that timing in negotiations is a factor, which must be considered in the assessment of willingness as well. [58] Otherwise, implementers would lack motivation to seriously engage in negotiations in a timely manner. [59] Rigid deadlines cannot be set, a case-by-case assessment is needed. [60] An implementer, who has been notified about the infringement, is, however, obliged to legitimize the -unlawful- use of the patent(s) as soon as possible by signing a FRAND-licence with the SEP holder. [60]

Furthermore, the Court reasoned that whether and at which time the implementer made a counteroffer to the SEP holder can also be an 'important indicator' of (un-)willingness. [61] A counteroffer made after the initiation of infringement proceedings will, as a rule, not be acceptable. [62] According to the Court, implementers should not be allowed to engage in negotiations only 'for appearance's shake' and then pull the 'emergency brake' against a potential conviction in infringement proceedings by making a counteroffer. [59] Exceptionally, a counteroffer made during trial could be considered in the assessment of willingness in cases, in which the implementer was willing from the start of the negotiations and always engaged constructively in the discussions with the patent holder. [63]

In line with the above, the Court pointed out that, in general terms, delaying tactics initially applied by an implementer cannot be 'undone' at a later point in time without more ado. [64] Nevertheless, the belated declaration of willingness does not 'automatically' prevent an implementer from raising a 'FRAND-defence' in infringement proceeding: Whether this will be the case or not, shall be decided on a case-by-case basis on grounds of the overall circumstances of the negotiation history. [65]

Against this backdrop and under consideration of Daimler's overall behaviour, the Court reached the conclusion that -although acting in a FRAND-compliant manner would have actually been possible and reasonable [66] - Daimler had chosen to apply delaying tactics [67] .

The Court found that by directing Conversant to its suppliers, Daimler had not expressed willingness to take a licence on 'whatever terms are in fact FRAND', but rather made clear that it was not prepared to take a licence from Conversant itself. [68] Indemnification clauses regarding third-party IPRs potentially agreed between Daimler and its suppliers played insofar no role, as Daimler infringed Conversant's patents independently and must, therefore, be held accountable for that. [68]

A further indication of Daimler's unwillingness was the fact that it took Daimler more than two months to inform Conversant that it had not received a list of portfolio patents that was unintentionally not attached to the e-mail sent by Conversant on 5 July 2020. [69] The Court equally criticized the fact that Daimler had at no point in time posed questions to Conversant on the claim charts provided by the later, but raised concerns against the quality of the patents only in the pending infringement trial. [70]

The Court saw an additional 'substantial' indication of unwillingness in Daimler's response dated 27 July 2020, in which the latter had expressly limited its willingness to sign a licence to products, which were either not licenced yet or purchased by suppliers unwilling to take a licence from Conversant themselves. [71] The Court particularly objected Daimler's choice to define the 'unwillingness' of its suppliers as a condition for signing an own licence with Conversant. [72]

The fact that Daimler had not responded to the proposal to use alternative dispute resolution methods and particularly arbitration for the determination of FRAND-royalties, which Conversant had made at the parties' meeting on 4 December 2019, was also considered as a sign of unwillingness on the side of Daimler. [73]

An additional 'clear' indication of unwillingness and delaying tactics was -according to the Court- the fact that, following the discussion of 4 December 2019, Daimler did not organise a meeting with all tier-1 suppliers, in order to discuss a potential direct licensing option with Conversant, despite having implied that this option had already been discussed with its suppliers. [74]
 

Counteroffer

Subsequently, the Court noted that Daimler's counteroffer dated 8 April 2020 could not remedy the missing willingness which Daimler had displayed until then. [75] Moreover, it rather served as an 'alibi'. [66]

In the eyes of the Court, the counteroffer was belated, since it was made more than 1 year and 4 months after Conversant's offer. [75] What is more, Daimler made the counteroffer during the pendency of the infringement proceedings, which was not acceptable, given that until that point it had been clearly unwilling to take a licence. [76] The Court also explained that Daimler could not excuse the delay by claiming that Conversant had not provided necessary information, since the counteroffer was based on generally known and available data without an underlying detailed analysis; accordingly, it could have been made earlier, that is shortly after receipt of Conversant's initial offer. [77]

Besides that, the Court found that Daimler's counteroffer was, in terms of content, 'evidently not FRAND'. [78] Based on a summary analysis, the licensing fees offered by Daimler were considered to be evidently too low. [79]

The Court noted that FRAND is a range and that there are several methods for calculating FRAND royalties. [79] The Court relied on the so-called 'top-down'-approach (which both Conversant and Daimler had used). [80] Looking at Daimler's 'top-down'-calculation, the Court held that taking the number of all patents declared as standard-essential towards ETSI as the basis for determining Conversant's share of LTE-related SEPs was not in line with FRAND-principles. [81] Considering that not all declared patents are actually standard-essential (a phenomenon described as 'over-declaration'), the use of the total number of declared patents benefits Daimler: Conversant's share of SEPs would per se be higher, if the (lower) number of actually standard-essential LTE patents would be used as basis for the calculation. [81]

In addition, the Court pointed out that the average purchase price of the TCU is no adequate royalty base under FRAND principles. [82] The value of a SEP is reflected by a royalty, which is adequately in proportion to the value of the service provided. [83] According to the Court, in the present case, economic value is created by the offering of LTE-enabled functionalities in Daimler's cars and the use of such functionalities by Daimler's customers. [83] As a consequence, relevant is the value, which Daimler's customers attach to the LTE-based features in a car. [83] The purchase price of TCUs paid by Daimler to its suppliers does not mirror this value. [83]
 

FRAND defence raised by suppliers / licensing level

The Court further explained that Daimler could not invoke the (alleged) willingness of its suppliers to take a licence from Conversant for establishing a FRAND defence. [84]

If an implementer, along with its own declaration of willingness, expresses the wish that licensing takes place at supplier level, it is obliged to comprehensively disclose in writing, which standard-compliant components are integrated in its products and which suppliers provide such components. [85] If this information and disclosure duty is not met, as it was the case here, a request for licensing at supplier level contradicts the implementer's declaration that it is willing to sign an own licence with the SEP holder, and is, therefore, a sign of bad faith (Sec. 242 German Civil Code). [86] In this context, the Court made clear that the implementer is obliged to still pursue bilateral negotiations with the SEP holder in a timely and target-oriented manner, even if -after having provided the aforementioned information to the latter- it is in parallel actively engaged towards facilitating the establishment of a licensing regime at supplier level. [87] In the bilateral negotiations with the SEP holder, the implementer could, however, insist that a clause excluding double payments for components already licensed to suppliers is included in the agreement. [87]

In line with the above, the Court confirmed that by seeking to license Daimler, Conversant did not act in an abusive or discriminatory way. [88]

In the view of the Court, the fundamental question whether the so-called 'license-to-all' or 'access-to-all' approach should be followed with respect to SEP licensing in a supply chain, did not need to be answered here. [89] In legal disputes between a SEP holder and an end-device manufacturer it is sufficient from a competition law angle that the objectives pursued by the SEP holder in the proceedings do not exclude suppliers from the market; this is true, when suppliers are granted access to the standardised technology through 'have-made' rights established by the licence signed by the end-device manufacturer, as Conversant had offered. [89] Whether suppliers have individual claims for being granted a licence is a distinct question, that could be potentially raised in separate proceedings between the SEP holder and the supplier. [90]

The Court added that the SEP holder is free to decide against which infringer within a supply chain court proceedings will be initiated. [91] The respective right of choice is derived from the constitutionally guaranteed protection of property as well as the very nature of patents as exclusionary rights. [92]

According to the Court, the common practice in the automotive field that components are sold to car manufacturers free of third-party rights does not render Conversant's pursuit to license Daimler abusive in antitrust terms. [93] Respective agreements between end-device manufacturers and suppliers have only bilateral (contractual) effects and cannot impair the legal position of third parties. [93] In particular, they cannot limit the SEP holder's right to choose the level of the value chain for the assertion of its patents. [94] The Court noted that the need to abandon existing practices in the automotive sector is of no importance from an antitrust angle, given that the integration of additional technologies serves Daimler's economic interest to access new markets and customer groups. [94]

In this context, the Court also explained that the SEP holder is not obliged to perform duties under the Huawei judgment towards suppliers, as far as infringement proceedings are initiated only towards the end-device manufacturer. [95] Accordingly, a supplier joining such proceedings cannot invoke that the SEP holder abused its market dominance e.g. by omitting a separate notification of infringement addressed to the supplier. [96] The Court denied such comprehensive notification duty of SEP holders, since in multi-level supply chains it is neither feasible nor reasonable to identify all suppliers involved. [97]

In the Court's view, the question whether the SEP holder has abused its market dominance by denying a direct licence to a supplier is subject to general competition law principles. [98] In the present case, the Court did not see sufficient grounds for such abuse. [98] It was not convinced that -absent an own bilateral licence- suppliers are left without rights or face legal uncertainty. [99] The fact that an individual bilateral licence would give suppliers broader freedom to operate than 'have-made' rights might serve their commercial interests, is, however, not of relevance with respect to proceedings between SEP holders and end-device manufacturers, as long as adequate access to the standard is provided to suppliers through 'have-made' rights. [100] Insofar, the Court noted that co-operation within a supply chain on basis of 'have-made' rights is wide-spread and common in practice and also supported by EU law (Commission notice of 18 December 1978 concerning its assessment of certain subcontracting agreements in relation to Article 85 (1) of the EEC Treaty, OJ C 1, 3 January 1979). [100]

Finally, the Court dismissed the argument, that Conversant had allegedly colluded with other members of the Avanci platform to specifically discriminate implementers by excluding access to the relevant standards. [101] The Court saw no indication that this was the case here, but rather highlighted the pro-competitive effects which patent pools are generally recognised to have, not least by EU law (para. 245 of the Guidelines on the application of Article 101 TFEU to technology transfer agreements; 2014/C 89/03). [101]
 

2. Contract law defence

The Court further found that Daimler could not defend itself against the claim for injunctive relief by invoking a contractual claim against Conversant for being granted a FRAND licence, since such claim did not exist. [102] Daimler had argued that Conversant's FRAND commitment towards ETSI prevented the latter from asserting claims for injunctive relief before court.

The Court found that the ETSI FRAND undertaking does not establish duties or rights different than those established by European competition law (especially Art. 102 TFEU), which Conversant had met in the present case. [103] In legal terms, the ETSI FRAND undertaking is a contract for the benefit of a third party under French law ('stipulation pour l'autrui'), containing a binding promise of the SEP holder to grant a FRAND licence at a later point in time. [104] The content and the extent of the corresponding obligation to negotiate a licence is, however, to be interpreted in line with the Huawei judgment, which has defined a standard of conduct based on Art. 102 TFEU. [104] The fact that the ETSI FRAND commitment materialises the requirement to provide access to the standard stipulated by Art. 101 TFEU speaks also in favour of applying a uniform standard of conduct. [104] In the eyes of the Court, French law cannot establish further going conduct duties, since it must be interpreted within the spirit of EU law. [104]
 

C. Other important issues

Finally, the Court took the view that there are no grounds for a limitation of Conversant's claim for injunctive relief due to proportionality considerations. [105] Under German law, proportionality is a general principle of constitutional rank to be considered also with respect to injunctive relief, if a respective objection is raised by the defendant in trial. [105] The Federal Court of Justice (Bundesgerichtshof) has also recognised that an injunction might not be immediately enforceable in exceptional cases, in which the implementer would suffer hardships not justified by the patent holder's exclusionary right in violation of the principle of good faith ('Wärmetauscher'ruling dated 10 May 2016, Case No. X ZR 114/13). [105] In the eyes of the Court, Daimler had, however, not pleaded any relevant facts in the present proceedings. [105]

  • [35] Conversant v Daimler, District Court of Munich I, 30 October 2020, Case-No. 21 O 11384/19 (cited by juris).
  • [36] Ibid, paras.122-265.
  • [37] Ibid, para. 285.
  • [38] Ibid, para.286.
  • [39] Ibid, para.288.
  • [40] Ibid, paras.287 et seqq.
  • [41] Ibid, paras.291 et seqq.
  • [42] Ibid, para.295.
  • [43] Ibid, para.296.
  • [44]  Ibid, para. 299.
  • [45] Ibid, para. 300.
  • [46] Ibid, para.300.
  • [47] Huawei v ZTE, Court of Justice of the EU, judgment dated 16 July 2015, Case No. C-170/13.
  • [48] Conversant v Daimler, District Court of Munich I, 30 October 2020, Case-No. 21 O 11384/19, para.301.
  • [49] Ibid, para.301.
  • [50] Ibid, para.307.
  • [51] Ibid, para.308.
  • [52] Ibid, paras.302 and 308.
  • [53] Ibid, paras. 323 et seqq.
  • [54] Ibid, para.324. The Court expressed, nevertheless, doubts that the sole reference to the calculation method used by the UK High Court in Unwired Planet v Huawei would prove sufficient for the explanation of the rates offered by Conversant to Daimler.
  • [55] Ibid, para. 309.
  • [56] Ibid, para. 310.
  • [57] Ibid, para. 316.
  • [58]  Ibid, para. 311.
  • [59] Ibid, para. 312.
  • [60] Ibid, para. 320.
  • [61] Ibid, para. 311.
  • [62] Ibid, paras. 312 and 316.
  • [63] Ibid, para. 315.
  • [64] Ibid, paras.317 et seqq.
  • [65] Ibid, para. 321.
  • [66] Ibid, para.357.
  • [67] Ibid, paras.322 and 358.
  • [68] Ibid, para.328.
  • [69] Ibid, paras.331 and 336.
  • [70] Ibid, para.332.
  • [71] Ibid, paras.334 and 336.
  • [72] Ibid, para.335.
  • [73] Ibid, para.337.
  • [74] Ibid, para.338.
  • [75] Ibid, para.339.
  • [76] Ibid, para.340.
  • [77] Ibid, paras.355 et seq.
  • [78] Ibid, paras.341 and 354.
  • [79] Ibid, para.341.
  • [80] Ibid, paras.341 and 348.
  • [81] Ibid, para.352.
  • [82] Ibid, para.353.
  • [83] Ibid, para.353
  • [84] Ibid, para.360.
  • [85] Ibid, para.362.
  • [86] Ibid, paras.362 and 364.
  • [87] Ibid, para.363.
  • [88] Ibid, para.365.
  • [89] Ibid, para.366.
  • [90] Ibid, para.367.
  • [91] Ibid, paras.368 and 382.
  • [92] Ibid, para.368.
  • [93] Ibid, para.370.
  • [94] Ibid, para.372.
  • [95] Ibid, paras.373 and 376-378.
  • [96] Ibid, para.373.
  • [97] Ibid, paras.373 and382.
  • [98] Ibid, paras.373 and 379.
  • [99] Ibid, para.374.
  • [100] Ibid, para.375.
  • [101] Ibid, para.380.
  • [102] Ibid, para.384.
  • [103] Ibid, paras.384 et seqq.
  • [104] Ibid, para.385.
  • [105] Ibid, para.269.

Updated 6 May 2021

Sisvel v Haier

Federal Court of Justice - BGH
24 November 2020 - Case No. KZR 35/17

A. Facts

The claimant, Sisvel, holds patents declared as (potentially) essential to the practice of several wireless telecommunications standards (standard essential patents, or SEPs). Sisvel has made a commitment towards the European Telecommunications Standards Institute (ETSI) to make SEPs accessible to users on fair, reasonable and non-discriminatory (FRAND) terms and conditions.

The defendants are two European subsidiaries of the Haier group (Haier), which has its headquarters in China. The Haier group produces and markets -among other things- mobile phones and tablets complying with various standards, including the GPRS and UMTS standards developed by ETSI.

On 20 December 2012, Sisvel informed the parent company of the Haier group (Haier China) that it offers licences for its SEPs and shared a list of approx. 235 patents included in its portfolio. In August and November 2013, Sisvel sent further letters with information about its licensing program to Haier China.

Haier China replied to Sisvel only in December 2013. It expressed 'hope' to have 'a formal negotiation' with Sisvel and asked for information regarding potential discounts mentioned in previous communi­cations.

In August 2014, Sisvel made an offer for a global portfolio licence to Haier, which was rejected.

Shortly after that, Sisvel filed infringement actions against Haier before the District Court of Duesseldorf (District Court). One of the actions was based on a SEP reading on the UMTS standard (patent in suit). The other action involved a patent reading on the GPRS standard. Haier filed nullity actions against both patents asserted before the German Federal Patent Court.

During the infringement proceedings, Haier made certain counteroffers to Sisvel. These offers had a limited scope, since they covered only the patents (patent families) asserted against Haier in court.

On 3 November 2015, the District Court decided in favour of Sisvel in both cases [106] . It granted injunctions against Haier and ordered the recall and destruction of infringing products. The District Court further recognised Haier's liability for damages on the merits and ordered Haier to render full and detailed account of the sales of infringing products to Sisvel. Haier appealed both decisions.

In the subsequent proceedings before the Higher District Court of Duesseldorf (Appeal Court), Haier argued –among other things– that the District Court had not adequately taken into account the conduct requirements imposed on SEP holders by the Court of Justice of the EU (CJEU) in the Huawei v ZTE ruling [107] (Huawei judgment) rendered after Sisvel had filed the infringement actions.

On 16 January 2016, during the course of the proceedings before the Appeal Court, Haier declared that it was willing to take a FRAND licence from Sisvel, however, only in case that the German courts would finally confirm the validity and infringement of the patent in suit. Haier also requested claim charts with respect to all patents included in Sisvel's portfolio.

In December 2016, Sisvel made a further licensing offer to Haier, which was also rejected.

On 20 January 2017, that is a few weeks prior to the end of the oral arguments in the appeal proceedings, Haier made a further counteroffer to Sisvel. The licence offered would cover only the two subsidiaries of the Haier group sued in Germany. An agreement was not reached.

By two judgments dated 30 March 2017, the Appeal Court partially granted Haier's appeals in both parallel proceedings [108] . The claims for injunctive relief as well as the recall and destruction of infringing products were dismissed on the grounds that Sisvel had not complied with its obligations under the Huawei judgment, especially by failing to make a FRAND licensing offer to Haier.

Sisvel appealed the decisions of the Appeal Court.

In April 2020, the Federal Court of Justice (FCJ or Court) finally dismissed the invalidity action filed by Haier against the patent in suit [109] .

On 5 May 2020, FCJ rendered a judgment in the parallel proceedings pending between the parties concerning the patent reading on the GPRS standard [110] . The Court decided in favour of Sisvel and reversed the judgment of the Appeal Court. With the present judgmentSisvel v Haier, Federal Court of Justice, judgment dated 24 November 2020, Case No. KZR 35/17 (cited by )., the Court reversed the decision of the Appeal Court also in the case involving the patent in suit.

B. Court's reasoning

The Court found that the patent in suit was essential to the UMTS standard and infringed [112] .

Contrary to the view previously taken by the Appeal Court, FCJ found that by initiating infringement proceedings against Haier, Sisvel had not abused a dominant market position in violation of Article 102 of the Treaty on the Functioning of the EU (TFEU) [113] .

Dominant market position

The Court held that Sisvel had a dominant market position within the meaning of Article 102 TFEU [114] .

FCJ explained that a dominant market position is given, when a patent is technically essential for comply­ing with a standard developed by a standardisation body (or a de facto standard) and technical alterna­tives to the standard are not available for products brought on a downstream market [115] . Even when alternative (technical) options exist, market domi­nance can arise as long as products not using the teaching of the patent cannot compete in a (downstream) market. [115] According to the FCJ, this applied with respect to the patent in suit.

Abuse of market dominance

The Court found, however, that Sisvel had not abused its dominant market position by filing infringement actions against Haier [116] . An abuse of market dominance can occur, when the SEP holder

  • refuses to grant a FRAND licence to an implementer willing to take such licence and brings a court action against the latter, asserting claims for injunctive relief (and/or the recall and destruction of infringing products), or
  • has not made 'sufficient efforts' in line with the 'particular responsibility' attached to its dominant position to facilitate the signing of a licence agreement with an implementer, who is, basically, willing to take a licence [117] .

In the eyes of the Court, in both above scenarios, the filing of an action against a 'willing' implementer amounts to an abuse, only because the latter has a claim to be contractually allowed by the SEP holder to use the teachings of the patent under FRAND conditions [118] . On the other hand, an abuse is regularly not per se established by an offer made by the patent holder at the beginning of negotiations, even when the terms offered would unreasonably impede or discriminate the implementer, if contractually agreed. [118] An abuse would be given, if the SEP holder insisted on such conditions also at the end of licensing negotiations with the imple­menter. [118]

Notification of infringement

The Court explained that the 'particular responsibility' of a market dominant patent holder materializes in an obligation to notify the implementer about the infringement of the patent in suit prior to filing an action, in case that the implementer is (potentially) not aware that by complying with the standard said patent is used [119] .

In the present case, the Court found that by the letter dated 20 December 2012 and the following correspondence Sisvel had given proper notification of infringement to Haier [120] .

Willingness

On the other hand, the Court found that Haier did not act as a licensee willing to obtain a FRAND licence from Sisvel [121] . In this respect, FCJ disagreed with the Appeal Court, which had taken the opposite view.

In the Court's eyes, the implementer must 'clearly' and 'unambiguously' declare willingness to conclude a licence agreement with the SEP holder on FRAND terms and, subsequently, engage in negotiations in a 'target-oriented' manner [122] . By contrast, it is not sufficient, in response to a notification of infringement, to just demonstrate willingness to consider signing a licensing agreement or to enter into negotiations about whether and under which conditions taking a licence comes into question [122] .

The Court reasoned that the willingness of the implementer to legitimise the unauthorized use of the patent for the future by creating a respective contractual base is a prerequisite for placing the burden on the SEP holder to negotiate a FRAND licence with the implementer. [123] What is more, willingness (on both sides) is essential, because an adequate solution balancing the opposing interests of the parties results, as a rule, from an interest-based negotiation. [124] The fact that a party fails to contribute in negotiations towards a FRAND agreement will regularly be considered to its detriment. [125] An implementer, who has not shown interest in a FRAND-licence over a longer period after receipt of an infringement notification will have to undertake 'additional efforts' to make sure, that despite the delay caused a licence can be signed as soon as possible. [126]

The Court highlighted particularly that implementers should not engage in 'patent hold-out' by exploiting the 'structural disadvantage', which SEP holders face due to the limitation of their right to assert patents in court. [127] Otherwise, competition could be distorted, because the infringer would gain unfair advantages over implementers that have taken a licence in a timely manner. [127]

FCJ took the view that the above interpretation of the requirements related to the implementers' obligation to demonstrate willingness to obtain a FRAND-licence is in line with the Huawei judgment; a new referral of the respective questions to the CJEU, as requested by Haier, was not needed. [128] The Huawei judgment created a 'safe harbour' against antitrust liability in the sense that compliance with the obligations established will regularly suffice to exclude an abuse of market dominance. [129] Under special circumstances, however, stricter or less strict conduct duties of the parties could be justified. [129]

The Court observed that the Huawei judgment supports the notion that the implementer should remain willing to obtain a licence throughout the course of negotiations. [129] The 'continuous' willingness is an 'indispensable condition' for successful negotiations or, in case negotiations fail, for a finding of abuse of market dominance on the side of the SEP holder. [130] The refusal of SEP holder to grant a FRAND licence would, indeed, have no relevance in antitrust terms, when the implementer is not objectively willing and able to obtain such licence. [131]

Accordingly, FCJ explained that willingness shall (still) be in place, also when the SEP holder makes a licensing offer. [132] In this regard, the Court disagreed with the District Court of Duesseldorf, which had expressed the opposite view in the recent referral of certain FRAND-related questions to the CJEU in the matter Nokia v Daimler. [133] According to FCJ, the offer of the SEP holder is just the 'starting point' of negotiations; since FRAND is a range, it is the goal of negotiations to reach a fair and reasonable result considering the interests of both sides. [134] The implementer has, therefore, a duty to examine the FRAND-conformity of the terms of the SEP holder's offer. [135] If the offer is 'obviously' not FRAND, it will be sufficient that the implementer explains the reasons why this is the case. [135]

In this context, the Court made clear that the implementer's duty to examine SEP-holder's licensing offer exists, irrespective of whether the offer is, in terms of content, FRAND-compliant in every respect. [136] If one would require from the SEP holder to make a 'perfect' FRAND offer right away, licensing negotiations would be obsolete. [137] It is also not possible to assess the FRAND-conformity of the offer in the abstract, without reference to the aspects which each side considers relevant. [138] The Court reiterated that an non-FRAND licensing offer does not per se amount to an abuse of market dominance. [139]

Having said that, FCJ noted that for the assessment of the willingness of the implementer its entire conduct (including its reaction to the SEP holder's licensing offer) must be taken into account. [140] Consequently, willingness can change in the course of time: a court action filed by the SEP holder could become abusive at a later point in time, if the implementer adequately raises a request for a FRAND-licence. [141] However, the longer the implementer waits with asserting such request, the higher the threshold for considering it as a willing licensee will be. [142] The Court again noted that the above inter­pretation is in line with the Huawei judgment, so that no additional referral to the CJEU is needed, as Haier had requested. [140]

Against this background, the Court observed that the first response of Haier China to Sisvel's notification almost one year after receipt of the infringement notification was belated [143] . An implementer taking several months to respond to a notification of infringement, typically, sends a signal that there is no interest in taking a licence [143] . Besides that, FCJ found that Haier's response in December 2013, in which only the 'hope' to have a 'formal negotiation' was expressed, was not a sufficient declaration of willing­ness, in terms of content [144] . Since it had reacted belatedly to the notification of infringement, Haier should have undertaken 'additional efforts' to demonstrate willingness, which had been, however, not the case. [145]

Similarly, Haier's letter dated 16 January 2016 did not contain a sufficient declaration of willingness, since Haier had made the signing of a licence subject to the prior confirmation of the validity and infringement of the patent in suit by German courts [146] . Although the implementer is, in principle, allowed to preserve the right to contest the validity of a licensed patent after conclusion of an agreement, the Court held that a declaration of willingness cannot be placed under a respective condition [147] . Besides that, requesting the production of claim charts for all patents of Sisvel's portfolio almost three years after the receipt of the notification of infringement was, according to the Court, an indication that Haier was only interested in delaying the negotiations until the expiration of the patent in suit [148] .

Furthermore, FCJ found that Haier's willingness to enter into a FRAND licence could also not be extracted from the counteroffers made during the infringement proceedings. [149] The fact that these counteroffers were, in terms of scope, limited only to the patents asserted by Sisvel in court indicated that Haier had not seriously addressed Sisvel's request for a worldwide portfolio licence. [150] Given that it had more than sufficient time to examine Sisvel's portfolio, one could expect from Haier to provide substantive grounds for such 'selective licensing'. [150]

What is more, the Court held that the counteroffer dated 20 January 2017, which Haier had made shortly before the end of the appeal proceedings, was no sufficient demonstration of willingness either. [151] The Court focused particularly on the fact that the licence would cover only the two affiliates of the Haier group sued in Germany. [152] According to FCJ, Haier had no 'legitimate interest' on such 'selective licensing'; on the contrary, a limited licence would offer no sufficient protection against infringement by other companies of the Haier group and force Sisvel to a cost-intensive assertion of its SEPs 'patent to patent and country-by-country'. [153]

In addition, the Court also criticised the proposed royalty regime. [154] Haier based the royalty calculation only on a small portion (four patent families) of the SEPs that should be included in the licence, which, in its eyes, were 'probably' essential. [155] The Court reasoned that the scope of the licence must be clarified in negotiations, whereas in the ICT-sector, due to the large number of relevant patents, it is common to rely on estimations regarding both essentiality and validity, which, on the one hand, allow to take 'necessary remaining uncertainties' adequately into account and, on the other hand, help to avoid disproportionate high transaction costs. [156]

Apart from that, the fact that the counteroffer was made only in the 'last minute' of the appeal proceedings allowed the conclusion that Haier was not actually aiming at signing a FRAND licence, but was rather motivated by tactical considerations with respect to the pending proceedings. [157]

SEP holder's licensing offer

Having found that Haier had not sufficiently demonstrated willingness to obtain a FRAND licence, the Court did not examine the FRAND-conformity of Sisvel's licensing offers to Haier in the present case [158] . According to FCJ, this question is not relevant, when the implementer has not adequately expressed willingness to sign a FRAND licence. [159]

The Court highlighted that -apart from the obligation to notify the implementer about the infringement- duties of the SEP holder (including the duty to make a FRAND licensing offer) arise only if the implementer has demonstrated willingness to obtain a licence on FRAND terms. [160] The FRAND-undertaking of the patent holder towards the relevant standardisation body does not change the fact that the user of a patent is, in principle, obliged to seek a licence from the right holder. [160]

C. Other important issues

Patent ambush

The Court dismissed Haier's defence based on the 'patent ambush' argument. [161] Haier argued that the patent in suit was unenforceable, because the initial patent holder, from whom Sisvel had acquired said patent, had failed to disclose the patent towards ETSI in due course during the development of the UMTS standard.

The Court did not examine whether a 'patent ambush' in the above sense indeed occurred in the present case. [162] FCJ took the view that an implementer can assert 'patent ambush' only against the patent holder that actually participated in the standard development process; on the contrary, such defence cannot be raised against its successor (here: Sisvel). [162]

Notwithstanding the above, the Court noted that a 'patent ambush' requires that the decision-making process within the relevant standardisation body was distorted by the withheld information. [163] Insofar, the implementer must establish at least some indication that the standard would have taken a different form, if the information considering the relevant patent application had been disclosed in time. [164] Haier had, however, failed to do so. [164]

Damages

Finally, the Court found that Sisvel's damage claims were given on the merits. Negligence establishing Haier's liability for damages was given: The implementer is, in principle, obliged to make sure that no third party rights are infringed, before starting manufacturing or selling products, which Haier had not done. [165]

What is more, Sisvel's claim for damages was not limited to the amount of a FRAND licensing rate ('licensing analogy'). [166] The SEP holder is entitled to full damages, unless the implementer can assert an own counterclaim, requesting to be placed in the position, in which it would have been, in case that the SEP holder had fulfilled the obligations arising from its dominant market position. [165] An implementer is, however, entitled to such (counter)claim, only when it adequately expressed its willingness to enter into a licence, which had not been the case here. [165]

  • [106] Sisvel v Haier, District Court of Duesseldorf, judgment dated 3 November 2015, Case No. 4a O 144/14 (UMTS-related patent) and Case No. 4a O 93/14 (GPRS-related patent).
  • [107] Huawei v ZTE, Court of Justice of the EU, judgment dated 16 July 2015, Case No. C-170/13.
  • [108] Sisvel v Haier, Higher District Court of Duesseldorf, judgment dated 30 March 2017, Case No. I-15 U 65/15 (UMTS-related patent) and Case No. I-15 U 66/15 (GPRS-related patent).
  • [109] Federal Court of Justice, judgment dated 28 April 2020, Case No. X ZR 35/18.
  • [110] Sisvel v Haier, Federal Court of Justice, judgment dated 5 May 2020, Case No. KZR 36/17.
  • [111] Sisvel v Haier, Federal Court of Justice, judgment dated 24 November 2020, Case No. KZR 35/17 (cited by ).
  • [112] Ibid, paras. 10-43.
  • [113] Ibid, para. 44.
  • [114] Ibid, paras. 48 et seqq.
  • [115] Ibid, para. 49.
  • [116] Ibid, para. 52.
  • [117] Ibid, para. 53.
  • [118] Ibid, para. 54.
  • [119] Ibid, para. 55.
  • [120] Ibid, para. 84.
  • [121] Ibid, paras. 86 et seqq.
  • [122] Ibid, para. 57.
  • [123] Ibid, para. 58.
  • [124] Ibid, para. 59.
  • [125] Ibid, para. 60.
  • [126] Ibid, para. 62.
  • [127] Ibid, para. 61.
  • [128] Ibid, para. 63.
  • [129] Ibid, para. 65.
  • [130] Ibid, para. 68.
  • [131] Ibid, paras. 66 and 68.
  • [132] Ibid, para. 69.
  • [133] Ibid, para. 69. See Nokia v Daimler, District Court of Duesseldorf, order dated 26 November 2020, Case No. 4c O 17/19.
  • [134] Ibid, paras. 70 and 71.
  • [135] Ibid, para. 71.
  • [136] Ibid, para. 72.
  • [137] Ibid, para. 73.
  • [138] Ibid, para. 74.
  • [139] Ibid, para. 76.
  • [140] Ibid, para. 77.
  • [141] Ibid, paras. 79 et seqq.
  • [142] Ibid, para. 83.
  • [143] Ibid, para. 87.
  • [144] Ibid, paras. 88 et seqq.
  • [145] Ibid, para. 89.
  • [146] Ibid, paras. 93 et seqq.
  • [147] Ibid, para. 95.
  • [148] Ibid, paras. 96-99.
  • [149] Ibid, paras. 102 et seqq.
  • [150] Ibid, para. 102.
  • [151] Ibid, paras. 108 et seqq.
  • [152] Ibid, para. 116.
  • [153] Ibid, para. 118.
  • [154] Ibid, paras. 124 et seqq.
  • [155] Ibid, para. 124.
  • [156] Ibid, para. 125.
  • [157] Ibid, para. 126.
  • [158] The Court had, however, undertaken such analysis in its earlier decision between the same parties dated May 2020. See Sisvel v Haier, Federal Court of Justice, judgment dated 5 May 2020, Case No. KZR 36/17, especially paras. 76-81 and 101 et seqq.
  • [159] Sisvel v Haier, Federal Court of Justice, judgment dated 24 November 2020, Case No. KZR 35/17, para. 107.
  • [160] Ibid, para. 56.
  • [161] Ibid, paras. 127 et seqq.
  • [162] Ibid, para. 130.
  • [163] Ibid, para. 131.
  • [164] Ibid, paras. 131 et seq.
  • [165] Ibid, para. 135.
  • [166] Ibid, paras. 134 et seqq.

Updated 7 April 2021

Sisvel v Wiko

OLG Karlsruhe
9 December 2020 - Case No. 6 U 103/19

A. Facts

The claimant, Sisvel, holds patents declared as (potentially) essential to the practice of the UMTS and LTE wireless telecommunications standards, which are subject to a commitment to be made accessible to users on fair, reasonable and non-discriminatory (FRAND) terms and conditions (standard-essential patents or SEPs). Sisvel also administrates a patent pool, comprising patents of several SEP holders, including Sisvel's own SEPs (patent pool).

The defendants are two companies that are part of the Wiko group (Wiko). [167] Wiko sells mobile phones complying with the LTE standard - among other markets- in Germany.

In June 2015, the patent pool informed Wiko for the first time about the need to obtain a licence. On 1 June 2016, Sisvel (as the patent pool's administrator) offered Wiko a portfolio licence, which also covered the patent in suit. Agreement was, however, not reached.

On 22 June 2016, Sisvel brought an action against Wiko before the District Court (Landgericht) of Mannheim in Germany (District Court) based on one patent reading on the LTE standard (infringement proceedings). Sisvel requested a declaratory judgment confirming Wiko's liability for damages on the merits, as well as information and rendering of accounts.

On 23 June 2016, Sisvel made an offer for a bilateral licence limited to its own SEP portfolio to the German subsidiary of Wiko. This offer was not accepted. Moreover, Wiko filed a nullity action against the SEP in suit before the German Federal Patent Court (nullity proceedings).

In October 2016, Sisvel extended the lawsuit. Claims for injunctive relief as well as the recall and destruction of infringing products were added to the other claims initially asserted.

On 11 November 2016, Wiko made a counteroffer to Sisvel. Some days prior to the oral hearing in the infringement proceedings, Wiko informed the Court that it had provided information to Sisvel and had also deposited a security amount for past uses.

On 8 November 2017, Sisvel made a new offer to Wiko with reduced royalty rates. Wiko did not immediately react to this offer.

On 22 December 2017, Sisvel asked the District Court to order a stay of the infringement proceedings, until the decision of the Federal Patent Court in the parallel nullity proceedings. Wiko agreed with Sisvel's motion. On 30 January 2018, the infringement proceedings were stayed.

On 9 February 2018, Sisvel sent a reminder to Wiko regarding the offer made on 8 November 2017. Wiko responded on 16 February 2018, requesting further claim charts and more time to examine the patents covered by the offer.

On 26 June 2018, during the stay of the infringement proceedings, Sisvel made another licensing offer to Wiko based on a new restructured licensing program (2018 offer). Along with the 2018 offer, Sisvel provided Wiko with claim charts regarding 20 selected patents and a list of existing licensees of both its new licensing program and two pre-existing programs. The list contained the date of the conclusion of each agreement as well as the agreed licence fees. The names of the licensees were, however, redacted.

Wiko did not react to the 2018 offer for more than three months. On 15 October 2018, following a respective reminder sent by Sisvel on 14 September 2018, Wiko replied, without, however, commenting the 2018 offer; it just referred back to its counteroffer dated 11 November 2016. Wiko also criticized the fact that Sisvel did not disclose the names of the existing licensees so far.

In response to that claim, Sisvel shared a draft Non-Disclosure Agreement (NDA) with Wiko on 22 October 2018, based on which it would be willing to disclose the names of the existing licensees. Wiko refused to sign the NDA proposed by Sisvel.

In October 2018, the Federal Patent Court upheld the SEP in suit in part. Subsequently, the District Court moved on with the infringement proceedings. After the end of the oral hearings in July 2019, Wiko made a new counteroffer to Sisvel and provided the latter with additional information. However, Wiko did not increase the amount of security deposited after its first counteroffer dated 11 November 2016.

In the beginning of September 2019, Sisvel set up an electronic data room containing redacted versions of Sisvel's existing licensing agreements with third parties and granted Wiko respective access rights. Wiko did not make use of this data room at any point in time.

On 4 September 2019, the District Court granted an injunction against Wiko and ordered the removal and destruction of infringing products from the market. It also confirmed Wiko's liability for damages on the merits and ordered Wiko to provide Sisvel with information required for the calculation of damages. Wiko appealed the decision of the District Court.

Shortly after the District Court rendered its decision, the term of the patent-in-suit expired. Sisvel, however, enforced the injunction granted by the District Court.

With the present judgment [168] (cited by http://lrbw.juris.de/cgi-bin/laender_rechtsprechung/list.py?Gericht=bw&GerichtAuswahl=Oberlandesgerichte&Art=en&sid=2b226ea73cc9637362d8e1af04a34d05), the Higher District Court (Oberlandesgericht) of Karlsruhe (Court) predominantly upheld the judgment of the District Court [169] .
 

B. Court's reasoning

The Court found that Wiko could not successfully raise a so-called 'FRAND-defence' based on an alleged abuse of market dominance (Article 102 TFEU) against the claims for injunctive relief and the recall and destruction of infringing products asserted by Sisvel. [170]

This question was still decisive in the present case, despite the fact that the patent-in-suit expired before the start of the appeal proceedings. The Court explained that the expiration of a patent affects only future acts of use (which, then, no longer constitute infringement): On the contrary, claims that had arisen prior to expiration based on acts of use during the lifetime of the patent are not impaired. [171] Whether claims were given before the expiration of the patent-in-suit is of particular importance, especially when the patent holder has enforced a (first-instance) judgment delivered in proceedings conducted within the term of protection of the patent, as it was the case here. [172]
 

Dominant market position

Having said that, the Court agreed with the finding of the District Court that Sisvel had a market dominant position in terms of Article 102 TFEU with respect to the patent-in-suit in the relevant time period prior to its expiration. [173]

The Court followed the District Court also insofar, as it confirmed that, by filing an infringement action, Sisvel had not abused its market dominance.
 

Notification of infringement

In the eyes of the Court, Sisvel had sufficiently notified Wiko about the infringement of the patent-in-suit prior to filing a court action. [174] The purpose of the notification of infringement is to draw the implementer's attention to the infringement and the necessity of taking a license on FRAND terms and conditions. [175] In terms of content, the notification must identify the patent infringed, the form of infringement and also designate the infringing embodiments. [175] Detailed technical or legal analysis of the infringement allegation is not required. [175] The production of so-called 'claim charts', which is common in practice, will, as a rule, suffice, but is not mandatory. [175] If the patent holder offers a portfolio licence, respective extended information duties occur. [175]

In the present case, it was not disputed that Sisvel had notified Wiko about the patent-in-suit prior to litigation. [176] As far as Wiko complained that no claim charts were presented before trial, the Court reiterated that no respective obligation of Sisvel existed. [177] What is more, the Court held that the court action initially filed by Sisvel, which did not include claims for injunctive relief and the recall and destruction of infringing products, could also be seen as an adequate notification of infringement. [176]
 

Willingness to obtain a licence

The Court then found that Wiko behaved as an unwilling (potential) licensee both prior and during the infringement proceedings [178] . The Court agreed with the assessment of the District Court that Wiko delayed the licensing negotiations between the parties with the goal to avoid taking a licence for as long as possible, in order to gain economic benefits. [179]

According to the Court, the 'expression of a general willingness to license' is not sufficient for assuming that an implementer is a 'willing licensee'. [180] Moreover, the implementer must 'clearly and unambiguously' declare willingness to conclude a license agreement on FRAND terms, 'whatever FRAND terms may actually look like" [180] . The respective declaration must be 'serious and unconditional'. [180]

The Court highlighted that for the assessment of willingness the overall facts and the particular conduct of the implementer shall be taken into account. [180] Willingness is not 'static': the finding that an implementer was willing (or unwilling) at a certain moment in time does not remain unchanged henceforth. [180]

The implementer must always be willing to obtain a licence and participate in negotiations in a 'target-oriented manner'; since implementers might be inclined to delay negotiations until the expiration of the patent-in-suit, there is a need to make sure that their behaviour in negotiations will not lead to delays. [181] Moreover, it should be expected that a willing implementer would seek a license as soon as possible, in order to shorten the period, in which it makes use of the patent-in-suit or the SEP holder's portfolio without authorisation and without paying licensing fees. [182] Accordingly, a willing licensee would not consider the 'negotiation obligations' of the SEP holder primarily as a means to defend itself against a court action, but as a means to utilize in order to reach a FRAND agreement, if needed. [182]

In the view of the Court, the above requirements are in line with the Huawei v ZTE judgment (Huawei judgment or Huawei) [183] of the Court of Justice of the EU (CJEU). [184] In Huawei, CJEU focused on the will of the infringer to conclude a license agreement on FRAND terms and emphasized that the latter must not pursue 'delaying tactics'. The Court explained that, although in Huawei the requirement to refrain from 'delaying tactics' is expressly mentioned only with respect to the duty of the implementer to react to a licensing offer of the SEP holder, it applies 'at all times' as long as the implementer uses the patents without a licence; otherwise, the suspension of SEP holder's right to the injunctive relief cannot be justified. [185]

In this context, the Court pointed out that not every 'reluctant involvement' of the implementer in licensing discussions will necessarily allow for the assumption of unwillingness. [186] Such behaviour could be justified in individual cases, especially when the SEP holder does not act in a 'target-oriented' manner itself. [186] Nevertheless, implementers must, as a rule, react timely even to a belated action of the SEP holder. [186] Furthermore, implementers must, in principle, inform the SEP holder of any objections at an early stage and should not wait to raise those much later in court proceedings. [186]

Looking at Wiko's conduct, the Court criticized especially the fact that it became active mostly as a reaction to new developments in the pending infringement proceedings. [187] A willing implementer would have, however, sought a licence independently of the initiation of legal steps and independently of the course of litigation. [188] As an example, the Court highlighted the fact that Wiko's counteroffer dated 11 November 2016 was made only shortly after Sisvel extended the infringement suit by adding a claim for injunctive relief. [189] Wiko also provided information on past acts of infringement only a few days prior to the first oral hearing in February 2017 (and refrained from constantly updating this information afterwards, as it would be expected by a willing licensee). [190]

The Court identified also further facts that indicate that Wiko engaged in delaying tactics. [191] Wiko reacted to Sisvel's licensing offers made during the course of the proceedings always belatedly and only after a reminder by Sisvel (for instance, it took Wiko more than three months to react to the 2018 offer) [192] . It also demanded further claim charts in February 2018, years after the action was filed. [193]

Wiko's refusal to sign the NDA offered by Sisvel -despite multiple reminders of the latter- without providing any reasons was also considered as a sign of unwillingness. [194] According to the Court, it should be expected by a willing licensee, who is not interested in delaying negotiations, to swiftly raise any criticisms regarding an NDA proposed by the SEP holder in writing or by e-mail, and not wait to raise any concerns several months later in the infringement proceedings, as Wiko had done here. [195] The Court also considered the fact that Wiko did not access the electronic data room set up by Sisvel containing redacted versions of Sisvel's third party agreements as an additional indication of unwillingness. [196]

Furthermore, the Court clarified that -contrary to Wiko's view- school holidays and/or staff shortages cannot provide sufficient justification for delays in negotiations. [197] Even if such circumstances occur, a willing implementer would have communicated any obstacles immediately. [197] Wiko failed to do so.
 

SEP holder's offer

Since Wiko was found to have been an unwilling licensee, the Court explained that the question whether Sisvel fulfilled its duty to make and adequately elaborate a FRAND licensing offer, was no longer decisive. [198] In fact, no such duty had arisen in the present case, due to Wiko's unwillingness to obtain a licence. [198] Notwithstanding the above, the Court provided guidance on the content and extend of the respective obligation of the SEP holder.

The Court first explained that FRAND is a 'range', which leaves room for flexibility. [199] As a rule, FRAND is determined in bilateral good faith negotiations between SEP holders and implementers, taking into account the specific circumstances of each individual case [199] ; indeed, parties are best situated to determine the exact content of FRAND in a specific setting. [199]

In order to meet its obligation, an SEP holder must present an offer to a willing licensee, which 'in general' complies with FRAND requirements and is fair, reasonable and not discriminatory with respect to the 'average licensee'. [200] The SEP holder shall further explain its offer in a way that permits the licensee to understand the assumptions, on which the offered rate and further conditions are based. [201] The rationale behind this obligation is to create a sufficient basis of information for the implementer for assessing the offer and eventually formulating a counteroffer. [202]

In this context, the Court made clear that implementers should not expect that the SEP holder individually adapts its (first) offer to the specific circumstances of each particular case. [203] The SEP holder's FRAND commitment does not give rise to such obligation. [203] The (first) offer is intended to launch the negotiations and provide an adequate information basis to the implementer, who will then be in a position to suggest necessary amendments by means of a counteroffer. [203] Accordingly, it will regularly be acceptable that the SEP holder's offer is 'not clearly and evidently' non-FRAND and sufficient information was provided to the implementer. [204]

The Court dismissed the notion that the implementer is obliged to negotiate (and eventually) make a counteroffer, only when the SEP holder's offer was fully FRAND-compliant. [204] This would bring the negotiations to a stand-still and, therefore, conflict with the spirit of the Huawei judgment, which is to encourage the parties to reach agreement on the licensing terms. [205] Moreover, the Court explained that –irrespective of whether the offer triggers an obligation of the implementer to submit a counter-offer– the latter will be regularly required, at least, to analyse the SEP holder's offer in due course and express any objections and queries without delay. [206]

Against this background, the Court found that none of the offers made to Wiko during the infringement proceedings was 'clearly and evidently' non-FRAND. [207] The fact that the offers did not define the start of the contract or the amount of royalties payable for past uses was not considered problematic. [208] The Court also found that the royalty rates offered were not 'evidently non-FRAND', since they were sufficiently substantiated by reference to existing licensing agreements and calculated on basis of a 'top-down' method. [209] A need to calculate royalties on grounds of the costs that incurred for the creation of the patented invention (cost-based approach) was not given, since this factor was not relevant for establishing value. [210]

In addition, the Court did not raise any concerns against the fact that Sisvel's offer concerned a worldwide portfolio licence: On the one hand, agreements with such scope are common in the telecommunications industry. [211] On the other hand, Wiko had worldwide activities, so that a licence with a limited scope would not provide sufficient coverage. [211]

The fact that some of the patents included in Sisvel's portfolio were -allegedly- not standard-essential did not render the offers 'un-FRAND'. [212] The Court stressed that, for the purpose of licensing negotiations and the conclusion of a licence, it is not necessary to conclusively clarify whether each portfolio patent is standard-essential. [213] Implementers can reserve the right to challenge the validity and essentiality of affected patents even after the conclusion of a licensing agreement. [213]

Similarly, the Court had no objections against a clause placing the burden of proof with regard to the exhaustion of licenced patents on Wiko. [214] This rule corresponds with the common allocation of the burden of proof under German law and does not place unreasonable weight on the licensee, since it will be better situated to trace the licensing chain by engaging with its suppliers. [215]

The question whether an adjustment clause is necessary for an offer to be considered FRAND was left unanswered by the Court. [216] Such clause would allow the implementer to adapt the agreed royalties, in case that patents fall out of the scope of the licence (e.g. due to expiration or invalidation). The Court saw no need for a respective contractual provision, since the licences offered by Sisvel would expire and, therefore, be re-negotiated after five years. [216] The Court did not express any concerns against the term of the offered licence or the termination clauses contained therein, either. [217]

Furthermore, the Court made clear that Sisvel had adequately elaborated the licensing rates offered to Wiko. [218] In the infringement proceedings, Sisvel responded to the 'top-down' calculation of Wiko in detail and made relevant clarifications. [219] According to the Court, Sisvel was under no circumstances obliged to elaborate on a cost-based calculation of royalties, as requested by Wiko; such demand was considered just another means to delay negotiations. [220]
 

Implementers' counteroffer

The Court also found that the counteroffers made by Wiko during the course of the first instance infringement proceedings were not FRAND. [221]

The Court highlighted that the obligation of the implementer to submit a FRAND counteroffer to the SEP holder is already triggered, when the previous licensing offer of the latter is not 'clearly and evidently' non-FRAND and sufficient information was provided, enabling the implementer to formulate its counteroffer. [222]

Having said that, the Court took the view that the royalty rates which Wiko offered were very low and, thus, not FRAND-compliant. [223] The Court criticized especially the fact that the rates were significantly lower than the rates which were considered to be adequate in previous court decisions. [224] Notwithstanding the above, the Court explained that, even if Wiko's counteroffer had been FRAND, this would not change the conclusion that Wiko had acted as an unwilling licensee. [225] According to the Court, a willing licensee would not have submitted a counteroffer around one year after receipt of the SEP holder's offer, as Wiko did. [226]
 

C. Other important issues

The Court stressed that for generating pressure-free licensing negotiations during pending infringement proceedings, it will, as a rule, be sufficient, if the proceedings are stayed with a view to parallel nullity proceedings concerning the patent-in-suit. [227] This is particularly true, when the SEP holder takes the respective initiative, as it was the case here. [227] Nevertheless, even if a pressure-free negotiation situation is not given, the infringers is not released from the obligation to act in good faith and engage in licensing negotiations, for instance by analysing a licensing offer of the SEP holder. [227] The refusal of the infringer to act accordingly could, in the eyes of the Court, allow the conclusion that it is an unwilling licensee. [227]

Apart from that, the Court confirmed that Wiko had no legal ground for requesting full disclosure of Sisvel's third party agreements [228] . Even if one would recognize a duty of the SEP holder to share information about the core content of existing licensing agreements (that are still in force), it is questionable whether this duty would also extend to agreements signed by previous patent holders. [229] The Court expressed particular doubts that this applies in cases in which a portfolio was assembled from patents acquired from different patent holders, since the relevance of bilateral or pool licensing agreements of the former patent holder can be limited in this case. [230]

Furthermore, the Court expressed the view that under German law a so-called 'covenant not to sue' does not have the effect of a (royalty-free) licence: such agreements will, as a rule, have only a procedural effect in terms of a pactum de non petendo, excluding only the initiation of court proceedings. [231]

Finally, the Court denied Wiko's motion to order a stay in the appeal proceedings due to the recent referral of several questions regarding the interpretation of the Huawei framework to the CJEU by the District Court of Düsseldorf in the matter Nokia v Daimler [232] . [233] According to the Court, it appears unlikely that the CJEU will establish criteria, by which SEP-based court actions against implementers engaging in delaying tactics would amount to an abuse of market dominance. [234]
 

  • [167] The action was extended to a third defendant, an individual person, who had served as a managing director for both aforementioned companies.
  • [168] Sisvel v Wiko, Higher Regional Court Karlsruhe, judgment dated 9 December 2020, Case-No. 6 U 103/19
  • [169] The claims for injunctive relief, rendering of accounts and damages asserted against the former managing director of the two Wiko companies were limited to the period of time until the end of its tenure; ibid, paras. 265-288.
  • [170] Ibid, para. 289.
  • [171] Ibid, paras. 284 et seqq.
  • [172] Ibid, para. 287.
  • [173] Ibid, paras. 290 et seq. Insofar, the Court made clear that a market dominant position ceases to exist after the expiration of the relevant patent.
  • [174] Ibid, paras. 292 et seqq.
  • [175] Ibid, para. 293.
  • [176] Ibid, para. 297.
  • [177] Ibid, paras. 297 et seq.
  • [178] Ibid, para. 299.
  • [179] Ibid, para. 299 and paras. 320 et seqq.
  • [180] Ibid, para. 301.
  • [181] Ibid, para. 302.
  • [182] Ibid, para. 303.
  • [183] Huawei v ZTE, Court of Justice of the EU, judgment dated 16 July 2015, Case-No. C-170/13.
  • [184] Sisvel v Wiko, Higher Regional Court of Karlsruhe, judgment dated 9 December 2020, para. 304.
  • [185] Ibid, para. 304.
  • [186] Ibid, para. 305.
  • [187] Ibid, paras. 321 et seqq.
  • [188] Ibid, para. 321.
  • [189] Ibid, para. 322.
  • [190] Ibid, paras. 323 et seq.
  • [191] In addition, the Court found that Wiko’s lack of willingness to obtain a license is also manifested in the fact that it (i) attempted to impede the enforcement of the first instance ruling of the District Court by questionable means (para. 335) and (ii) did not accept the offer of the District Court of The Hague, in which proceedings between the parties were pending in parallel, to engage in settlement negotiations (para. 336).
  • [192] Ibid, paras. 325, 328 and 331.
  • [193] Ibid, para. 327.
  • [194] Ibid, paras. 333 et seqq.
  • [195] Ibid, paras. 334 and 338.
  • [196] Ibid, paras. 337 and 341 et seqq.
  • [197] Ibid, para. 330.
  • [198] Ibid, para. 342.
  • [199] Ibid, para. 307.
  • [200] Ibid, para. 308.
  • [201] Ibid, paras. 308 and 310.
  • [202] Ibid, para. 309.
  • [203] Ibid, para. 310.
  • [204] Ibid, paras. 311 et seqq.
  • [205] Ibid, paras. 311 and 313 et seqq.
  • [206] Ibid, paras. 316 et seqq.
  • [207] Ibid, para. 352.
  • [208] Ibid, para. 353.
  • [209] Ibid, paras. 354 et seqq.
  • [210] Ibid, para. 358.
  • [211] Ibid, para. 359.
  • [212] Ibid, para. 360.
  • [213] Ibid, para. 361.
  • [214] Ibid, para. 362.
  • [215] Ibid, para. 363.
  • [216] Ibid, paras. 365 et seqq.
  • [217] Ibid, paras. 367 et seqq.
  • [218] Ibid, para. 366.
  • [219] Ibid, para. 344.
  • [220] Ibid, para. 346.
  • [221] Ibid, paras. 379 et seqq.
  • [222] Ibid, para. 311.
  • [223] Ibid, paras. 379 et seqq.
  • [224] Ibid, para. 380.
  • [225] Ibid, para. 378.
  • [226] Ibid, para. 384.
  • [227] Ibid, para. 348.
  • [228] Ibid, para. 389.
  • [229] Ibid, paras. 389 et seq.
  • [230] Ibid, para. 391.
  • [231] Ibid, paras. 260 et seqq.
  • [232] Nokia v Daimler, District Court of Düsseldorf, order dated 26 November 2020, Case No. 4c O 17/19.
  • [233] Sisvel v Wiko, Higher Regional Court of Karlsruhe, judgment dated 9 December 2020, para. 395.
  • [234] Ibid, para. 395.