I may have more to say about these two matters next week, and I highly recommend that readers review Florian Mueller’s posts on ip fray (see here, here, and here), if you have not done so already; but I also wanted to post something today (even if it is somewhat cursory), while these matters are fresh. The two are (1) the decision of the Mannheim Local Division of the UPC in Fujifilm Corp v. Kodak GmbH, UPC_CFI_365/2023 (July 18, 2025) (available here), and (2) the Guidance (Hinweis) of Judge Oliver Schön of the Munich Regional Court I, dated July 14, 2025 (available here).
The first of these holds that, under the CJEU’s decision in BSH Hausgeräte, where the defendant is domiciled in the court of an E.U. member state, a court (here, the UPC) may adjudicate the infringement of a non-E.U. member state (here, the U.K.) patent; assess the patent’s validity, at least "as a mere prerequisite for the question of infringement with inter partes effect only"; and enjoin the defendant from practicing that patent in the non-E.U. member state, applying the non-E.U. member state’s law of remedies. (Damages for the U.K. portion of the patent also will be determined under English law.) This is not a surprising development in view of BSH Hausgeräte, but it is obviously significant.
The second—in which the names of the parties are redacted, but it’s clearly part of the global FRAND dispute between ZTE and Samsung—includes the following important points:
1. In the event the implementer rejects the owner’s offer, the implementer may manifest its willingness to license by paying the owner at least the “undisputed” amount it eventually will have to pay (not just by posting security). Presumably the undisputed amount would correspond to the implementer’s counteroffer.
2. As has been made clear in many other decisions before this one, there is an emphatic difference of perspective between the German and English approaches to FRAND. Consistent with the German courts' perspective, the Guidance emphasizes the difficulty of establishing the value of patents and the importance of channeling the parties toward agreement—whereas the English view is that these cases essentially are all about money, and that the English courts are as good as any at determining the right sum. The Munich decision also discusses at length the value of comparables as evidence of market value (and provides guidance as to what sort of inferences reasonably may be drawn from the comparables at issue, e.g., regarding the FRAND range); and it downplays top-down as, at most, a check (which is one respect, arguably one of the few, in which the Guidance is consistent with the British perspective). To be sure, a critic would argue that reliance on comparables is problematic to the extent any given comparable may reflect some degree of holdup, and that the further use of such comparables only reinforces that problem. In response, Judge Schön probably would say, as in fact he does say in the opinion, that if anything it’s better to over- than to undervalue patents in order to preserve the patent incentive scheme. See p.6, part 3, third paragraph (my somewhat nonliteral, but I think reasonably accurate in conveying the meaning, translation):
It is a fundamental principle that the revenue to be gained through licensing must be high enough to preserve incentives for firms and inventors to invest the time and expense needed to further develop the technologies at issue. In order to achieve this, high license payments are fundamentally welcome (begrüßenswert). Royalties would be excessive only when license revenues would result in portions of the world’s population being excluded from the use of the technologies.
Judge Schön also discusses the reasons why implementers would, in his view, practice holdout, and why it is undesirable for them to do so (pp. 6-7)
3. Judge Schön discusses different types of royalty structures (per-dollar, per-unit, and lump-sum), and generally favors per-unit, stating that with per-unit royalties, it doesn’t matter where along the supply chain the owner seeks payment (see p.12).
4. Perhaps most significantly, Judge Schön says that parties are not obligated to agree to interim licenses (responding to the EWHC’s decision from earlier this month (and other English decisions), discussed here); and he reaffirms the authority of the German courts to issue anti-antisuit injunctions when needed. He also takes issue generally with the U.K. practice of establishing global FRAND terms (see p.14), and suggests that each jurisdiction should confine itself to adjudicating patent rights enforceable within its own territory. (See, e.g,, p.13: “That the same facts are handled differently in different countries is an aspect of national sovereignty and to be accepted by the courts of other countries” (my translation)). What a critic would say this potentially overlooks, however, is not only the deviation from the purely territorial approach that may occur in at least some cases following the CJEU’s decision in BSH Hausgeräte, but also that a quick injunction in Germany can have the practical effect of compelling an implementer to agree to a global license on terms favorable to the SEP owner, before other courts have had sufficient time to adjudicate the cases before them.
No comments:
Post a Comment