From a Brussels-based intellectual property lawyer I have received a copy of a Dutch court order obtained by LG against Sony on February 28, 2011. That court order -- which is an additional legal instrument not to be confused with the customs action apparently requested by LG two weeks ago under EC Regulation 1383/2003 -- was issued by the court of Breda, Netherlands, in whose district Sony's European logistics center in the nearby city of Tilburg is based, and enabled LG to request the seizure of any PlayStation 3 units stored there. The first seizure had to take place on March 3, 2011, and up to two more seizures were authorized until March 10, 2011. The quantities seized there may be quite substantial considering that all of Sony's European PlayStation shipments used to go through the Netherlands at least until recently.
Sony had until yesterday afternoon to tell the court whether it wants to appeal this prejudgment seizure order. According to a Reuters report, Sony elected to appeal, so pursuant to the court order there will be a hearing tomorrow, March 10, 2011, in The Hague (where the higher instance court is based) at 2 PM Central European Time.
Sony was not heard before the court issued its order because the judge agreed with LG that any advance notice would have given Sony the opportunity to move its PlayStations out of that warehouse ahead of confiscation.
I have also heard from a credible source that three shipments were seized by Dutch customs officers, apparently at or near Schiphol, Amsterdam's airport. But again, it's important not to mix up the two different legal approaches. Under EU Regulation 1383/2003, products suspected of patent infringement can be seized by customs officer when they are being imported into the EU's Single Market. That's one request LG has made. But the court order I'm discussing here is strictly under Dutch patent law, and it's a preliminary injunction and seizure order, and it's specific to Sony's Tilburg warehouse.
Let me show you the court order (in Dutch) and then explain what it says. There's interesting information in it concerning the failure of negotiations between Sony and LG. This is the 48-page document -- in Dutch and with plenty of pictures:2011 RK 11-0510 LG - Sony
On February 25, 2011, LG's lawyers (led by Armand Killan of the Bird & Bird firm) requested a prejudgment seizure order under the Dutch Patents Act of 1995.
The complaint relates to patents on the Blu-ray Disc standard and specifically asserts the following three patents:
European Patent 1676275 on a "recording medium having data structure for managing reproduction of text subtitle and recording and reproducing methods and apparatuses"; this patent was applied for in the US (publication no. 2005/078948) and various other countries
European Patent 1730730 on a "recording medium and method and apparatus for reproducing text subtitle stream recorded on the recording medium; the corresponding US Patent No. 7,756,398 is one of the four patents asserted by LG in its ITC complaint over the PlayStation 3
European Patent 1884934 on a "recording medium having data structure for managing reproduction of data streams recorded thereon and recording and reproducing methods and apparatuses"; the corresponding US Patent No. 7,701,835 is also among the four patents asserted in LG's ITC complaint over the PS3
LG explains that those patents are essential to the Blu-ray Disc standard, and therefore, in LG's opinion, necessarily infringed by the PlayStation 3 since it comes with a Blu-ray player. LG claims that it was willing to grant Sony a license on FRAND (fair, reasonable and non-discriminatory) terms in accordance with the rules of the Blu-ray Disc Association (BDA), but LG says "Sony wants to [take a license] only if LGE and Sony also reach agreement on royalties in entirely different and unrelated technology areas (such as TVs, monitors and mobile phones)."
LG expresses doubts about whether that position is in line with competition law, but at any rate, LG wants to receive royalties on Sony's PlayStation 3 sales. LG says that negotiations between the parties failed in December (apparently because Sony wanted a broadbased agreement while LG wanted to treat the Blu-ray license separately from everything else), and "almost immediately thereafter" Sony lodged a complaint with the USITC to obtain an import ban against mobile phones sold by LG. LG's request for the Dutch seizure order mentions that there are several lawsuits going on between the two parties in the US.
Under the circumstances, LG believes that Sony should be treated like any other patent infringer and not be allowed to sell the PS3 in the Netherlands until it has taken a license to LG's Blu-ray patents. LG therefore asked the court for a relief that is a specialty of Dutch law: a prejudgment seizure order. LG's complaint stresses that if Sony later proved (in a full-fledged proceeding) that there isn't any infringement of valid LG patents, Sony could still collect damages from LG on the grounds of an "unjustified" seizure. In light of that, LG asked the court not to hear Sony before issuing a decision because if LG is wrong, Sony will be reimbursed later, but by involving Sony in the proceedings there would be a risk of the allegedly infringing goods being moved out of the warehouse before they can be seized.
The judge concluded that LG had substantiated its infringement assertions sufficiently well and agreed that Sony should not be heard before the decision was issued. Then the judge ordered the prejudgment seizure I explained, with LG being responsible for the cost of warehousing the seized goods, and laid out the possibility of an appeal by Sony.
So tomorrow afternoon in The Hague there will be a major showdown between LG's and Sony's lawyers. It's imperative for Sony to fight those infringement assertions because otherwise LG will be in a strong position to obtain additional injunctions in the Netherlands -- through which Sony used to route all of its European PlayStation shipments, although it may now already be going through other countries -- as well as in other countries throughout and beyond Europe.
[Update] Meanwhile the court has ruled and I have reported on the decision. Sony got the prejudgment seizure order overturned, but the case isn't over.If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents.
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