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Opportunity for the CJEU to further clarify the matter of SEP/FRAND

On November 26, 2020, the 4c ​​civil chamber of the Düsseldorf Regional Court announced its long-awaited decision in a patent infringement dispute between Nokia Technologies Oy and Daimler AG concerning the licensing of a patent pertaining to the LTE standard (4G). This legal dispute is one of several that the parties are engaged in regarding various standard essential patents (SEP) in different German courts (Düsseldorf, Mannheim, Munich). The case law decided on this issue has so far lacked a uniform approach. In particular, the determination of the licensing level (unrestricted right of choice for the SEP owner?) and the rules of conduct during license negotiations have raised questions that remain largely unanswered.

The 4c ​​civil chamber suspended the pending legal dispute (AZ: 4c O 17/19) and submitted to the CJEU a catalogue of a total of ten questions for clarification, which are divided into two subject areas.

Essentially, the submissions should clarify,

The catalogue of questions submitted by the Chamber was published with a press release from the Düsseldorf Regional Court on 26 November 2020; an English convenience translation is displayed below:

A. Is there an obligation to offer a priority granting of licences to suppliers?

1. Can a company at a downstream market stage, faced with a patent infringement suit for an injunction by the owner of a patent that is essential for a recognized standard by a standardization organization (SEP), which company has made an irrevocable commitment to this organization to grant any third party a license on FRAND terms, raise the objection of abuse of a dominant position within the meaning of Art. 102 TFEU, if the standard for which the patent in suit is essential, or parts thereof, is already implemented in a preliminary product obtained from the defendant, whose supplier(s) the patent owner refuses to grant their own unrestricted license on FRAND terms for all types of usage relevant to patent law for products implementing the standard?

a) Does this apply in particular if it is customary in the relevant branch of the end product distributor that the protective rights situation for the patents used in the supplied parts is clarified by the supplier by way of licensing?

b) Is there licensing prioritisation for suppliers at every stage of the supply chain or only towards the supplier who is immediately upstream of the distributor of the product at the end of the value-added chain? Are standard business practices decisive also in this respect?

2. Does the anti-trust prohibition of abuse require that the supplier be granted his own, unrestricted license on FRAND terms for all types of usage relevant to patent law for products implementing the standard, in the sense that the end distributors (and, if applicable, the upstream buyers) do not require their own separate license from the SEP owner in order to avoid patent infringement, in the event that the relevant supplied part is used according to its intended purpose?

3. If question 1. is answered in the negative: Does Art. 102 TFEU place special qualitative, quantitative and/or other requirements on the criteria according to which the holder of a standard essential patent may decide against which potential patent infringer(s), at different stages of the same production and value chain, they shall file a patent infringement suit for injunctive relief?

B. Specification of the requirements from the decision of the Court of Justice in the case Huawei ./. ZTE (judgment of July 16, 2015, C170/13):

1. Irrespective of the fact that there is an obligation to fulfil pre-litigation mutual undertakings made by the SEP owner and the SEP user (notification of infringement, licensing request, FRAND license offer; license offer to the supplier with priority rights to a license), is there still a possibility, in the course of legal proceedings, to resolve any legal obligations that were omitted in pre-litigation proceedings?

2. Can it be assumed that the patent user has made sufficient effort to obtain a license request only if, on the basis of a comprehensive assessment of all accompanying circumstances, the intention and willingness of the SEP user to conclude a license agreement on FRAND terms with the SEP owner is clear and unambiguous, whatever such FRAND terms may be (which are not at all foreseeable at this point in time, in the absence of a currently formulated license offer).

a) Can an infringer’s lack of response for several months to an infringement notice regularly be judged as a lack of interest in obtaining a license so that – despite there having been a verbally formulated license request – such request shall be deemed non-existent, with the result that the SEP holder must be granted their injunction claim?

b) Can it be concluded that there is no license request if the SEP user submitted other license terms in a counter-offer, with the result that the SEP owner’s injunction claim shall be granted without a prior examination of whether the SEP owner’s own license offer (which preceded the SEP user’s counter-offer) meets FRAND terms at all?

c) Is such a conclusion prohibited in any case if it is neither obvious nor has it been clarified by the highest court that the license terms in the counter-offer, from which the lack of a license request is to be inferred, are incompatible with FRAND terms?

Should the CJEU in particular affirm an obligation to give priority to the licensing of suppliers, this will not only be of decisive importance for the automotive industry and the topic of “Connected Cars” but would also be ground-breaking in the use of standards in the entire field of the “Internet of Things”.

Our blog contributions shall provide an overview with regard to legal topics, legislation and case law and are supposed to provide some general information rather than constituting any specific advice. Please do not hesitate to contact Maiwald and in particular the authors of the particular contributions if have any questions on the addressed topics or on other legal issues.

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Authors

Heike Röder-Hitschke

Counsel

Counsel

Attorney-at-Law

Certified Specialist Lawyer for Intellectual Property