In July of last year, the CJEU issued its decision in Huawei v. ZTE, which sets out the conditions under which E.U. competition law precludes the owner of a FRAND-committed standard-essential patent (SEP) that enjoys a dominant position in the market from seeking injunctive relief for the unauthorized use of its patent. In relevant part, the court stated:
 Accordingly, the proprietor of an SEP which considers that that SEP is the subject of an infringement cannot, without infringing Article 102 TFEU, bring an action for a prohibitory injunction or for the recall of products against the alleged infringer without notice or prior consultation with the alleged infringer, even if the SEP has already been used by the alleged infringer.
 Prior to such proceedings, it is thus for the proprietor of the SEP in question, first, to alert the alleged infringer of the infringement complained about by designating that SEP and specifying the way in which it has been infringed. . . .
 Secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, it is for the proprietor of the SEP to present to that alleged infringer a specific, written offer for a licence on FRAND terms, in accordance with the undertaking given to the standardisation body, specifying, in particular, the amount of the royalty and the way in which that royalty is to be calculated. . . .
 As the Advocate General has observed in point 86 of his Opinion, where the proprietor of an SEP has given an undertaking to the standardisation body to grant licences on FRAND terms, it can be expected that it will make such an offer. Furthermore, in the absence of a public standard licensing agreement, and where licensing agreements already concluded with other competitors are not made public, the proprietor of the SEP is better placed to check whether its offer complies with the condition of non-discrimination than is the alleged infringer.
 . . . [I]t is for the alleged infringer diligently to respond to that offer, in accordance with recognised commercial practices in the field and in good faith, a point which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.
 Should the alleged infringer not accept the offer made to it, it may rely on the abusive nature of an action for a prohibitory injunction or for the recall of products only if it has submitted to the proprietor of the SEP in question, promptly and in writing, a specific counter-offer that corresponds to FRAND terms.
 Furthermore, where the alleged infringer is using the teachings of the SEP before a licensing agreement has been concluded, it is for that alleged infringer, from the point at which its counter-offer is rejected, to provide appropriate security, in accordance with recognised commercial practices in the field, for example by providing a bank guarantee or by placing the amounts necessary on deposit. The calculation of that security must include, inter alia, the number of the past acts of use of the SEP, and the alleged infringer must be able to render an account in respect of those acts of use.
 In addition, where no agreement is reached on the details of the FRAND terms following the counter-offer by the alleged infringer, the parties may, by common agreement, request that the amount of the royalty be determined by an independent third party, by decision without delay.
The judgment nevertheless leaves many unanswered questions, which scholars have begun to document (see posts here, here, and here). One of the most important of these is whether the patent owner must make a FRAND offer to the implementer in the manner recited above; or whether instead the implementer’s failure to respond without delay, to submit a counteroffer, or to provide appropriate security means that the patentee may obtain an injunction even in the absence of evidence that its own offer was FRAND. As I have noted in three other posts (see here, here, and here), in two recent decisions the district courts in Düsseldorf and Mannheim interpreted Huawei as not requiring them to determine whether the patentee’s offer was FRAND because, in the courts’ view, the defendants failed to comply with their Huawei-imposed obligations; thus, the competition-law defense would not prevent an injunction from issuing.
In a judgment rendered on January 13, 2016, however, an appellate court—the Oberlandesgericht Düsseldorf—reversed the Düsseldorf district court on this issue (judgment available here, in German). (The matter came up on a motion for an interim stay of enforcement of the district court judgment.) According to the appellate court, “the view that the patent infringer must independently fulfill [Huawei] conditions 3-5 would turn the decision of the CJEU on its head” (para. 38; my translation). Rather, the patent owner’s initial offer must be FRAND. The court bases its reading of Huawei in part on the CJEU’s reference in para. 65 to “this offer,” which in the court’s view indicates that the initial offer must be on FRAND terms.
This judgment came to my attention by way of a short article on the decision published in the February 2016 issue of Mitteilungen der deutschen Patentanwälten (pages 62-65) by Tilman Müller and Volkmar Henke titled Erste Rezeption des EuGH-Urteils „Huawei-ZTE‟ durch die Instanzgerichte: Zugleich Besprechung von OLG Düsseldorf, Beschluss vom 13.1.2016, I-15 U 65/15 (“First Reception of the CJEU Judgment in Huawei v. ZTE by the Courts of First Instance: Together with Discussion of the Decision of the OLG Düsseldorf of Jan/ 13, 2016, I-15 U 65/15”). The abstract reads as follows (again, my translation):
The present article discusses the first court of first instance decisions which have received the CJEU judgment in Huawei v. ZTE. In particular, the courts have had to address the question whether the first offer by the patent owner must already, in terms of its content, satisfy the FRAND criteria or not. The Düsseldorf and Mannheim district courts had concluded not, but the Düsseldorf appellate court has now concluded that the answer is yes. The authors show that this certainly could be correct—but that a full evaluation of the contents of the offer leads to heightened procedural problems and does not fit into the Huawei framework. The authors propose as a solution that both parties’ offers should merely be submitted for a reasonableness evaluation.
More precisely, the authors argue that courts should simply consider whether, on summary examination, the patentee’s offer falls within the range of reasonableness, and if so whether (again on summary examination) the defendant’s does as well. If the initial offer is not FRAND based on this evaluation, then the patent owner cannot obtain an injunction. If it is, and the defendant’s counteroffer is not FRAND, the patent owner may obtain an injunction; but if the counteroffer is FRAND, then rather than having the court determine the appropriate FRAND terms the matter should be submitted to a third party, as suggested in the Huawei excerpt above.
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