SEP BASED INJUNCTIONS AVAILABLE ACROSS EUROPE
On May 5, the German Federal Supreme Court (Bundesgerichtshof (BGH)) gave its decision in the case Sisvel v. Haier. The decision was eagerly awaited, as it was expected to bring clarity on the question of whether injunctive relief is available to a holder of standard-essential patents (SEPs) despite its obligation to offer licenses under FRAND conditions. In the Netherlands, this question was already confirmed by the Court of Appeal in The Hague – and now the highest court in Germany confirmed this position as well. Therefore, we may now safely expect this to be accepted as the prevailing position across Europe.
It was only last week, on Thursday 9 July, that the BGH published the reasons for its decision. These provide interesting information on the relevant criteria for successful FRAND litigation in Germany. Overall it will be clear that the BGH’s decision is quite favorable to the SEP patent owner. Summarizing, one can deduct the following main points from the court’s reasoning:
- The requirements for the initial letter of the SEP holder to make the implementer aware of the SEPs are quite limited.
- The implementer must leave no doubt that it is a willing licensee.
- The implementer must participate in the process to achieve a FRAND license which usually includes a FRAND counteroffer.
- The SEP holder can combine SEPs with non-SEPs (under certain conditions) without violating antitrust law.
- The SEP holder’s claim to damages for the past use is not automatically limited to a FRAND license. In principle, the SEP holder can recover the full amount of profits the implementer has made with the SEP and request relevant financial data concerning such profits. Only if the implementer raises a valid claim for a FRAND license as a counterclaim, then the SEP holder’s damage claim will be limited to a FRAND royalty from that moment onwards.
- FRAND principles also apply to “de facto” standards.
This was the first case to reach the highest German patent court following the landmark decision of 16 July 2015 of the Court of Justice of the European Union (CoJEU) in the Huawei v. ZTE case. In that decision, the CoJEU provided a framework for assessing FRAND disputes.
According to the CoJEU framework, a SEP holder claiming an injunction against a company implementing its SEP is obliged to first inform that company and specify the alleged infringement. Subsequently, the alleged infringer must declare its willingness to take a license, upon which the SEP holder must offer a license under specific (FRAND) terms. The alleged infringer can then either accept this offer or make a counteroffer under FRAND terms and must do so within a reasonable period of time. Only if the parties fail to come to an agreement, then the SEP owner may sue. The Huawei v. ZTE decision did not make clear in what circumstances injunctive relief would be available to a SEP holder
The BGH matter of Sisvel v. Haier addressed this particular question. Sisvel requested injunctive relief for infringement of two of its SEPs. Haier not only disputed the validity of the patents invoked by Sisvel, but also raised a FRAND defense, stating that an injunction was not available to the SEP holder because it was a willing licensee and thus entitled to a license under Sisvel’s SEPs.
The case was brought before the BGH after the Higher Regional Court (Oberlandesgericht (OLG)) in Düsseldorf in March 2017 decided in favor of Haier, overturning a first instance decision. Applying the Huawei v. ZTE framework, the OLG held that the license offered by Sisvel was not FRAND, as Sisvel treated Haier differently from other licensees. As a consequence, the OLG found there was no reason to ban Haier’s products from the German market, in spite of the finding that Haier infringed Sisvel’s SEPs and was liable for damages. Whereas the first instance judges held – without assessing whether the initial license offer by Sisvel was FRAND – that Haier did not submit its counter-offer in a timely manner and thus neglected its FRAND obligations, the OLG held that it must examine whether both parties have fulfilled their FRAND obligations and that Sisvel (also) failed to meet these obligations – and therefore it concluded that injunctive relief must, therefore, be denied.
Reversing the OLG decision, the BGH ruled that Haier failed to act as a willing licensee under the Huawei v. ZTE framework, and therefore the injunctive relief claimed by Sisvel could be rewarded. The grounds for the decision as published last week provide new guidance and set a new legal standard that is likely to have an effect for FRAND disputes across Europe. Among patent practitioners, the BGH is considered a highly reputable court, and its implementation of the CoJ EU guidance on FRAND issues is expected to have an impact on the legal standards applied in most EPC jurisdictions. As such, it is expected that the BGH decision will play an important role in future litigation before the European courts.
Bas Berghuis van Woortman (firstname.lastname@example.org)
Peter Meyer (email@example.com)