Thursday, March 13, 2014

ZTE recently failed to get an injunction over a standard-essential patent stayed: win for Vringo

I have only this week become aware of a development that is relevant to a subject often discussed on this blog: the availability and enforcement of injunctions over FRAND-pledged standard-essential patents (SEPs) in Germany. About a year ago, the Dusseldorf Regional Court referred various related questions to the Court of Justice of the EU in a Huawei v. ZTE case and stayed its proceedings despite identifying an infringement. As a result, those seeking to enforce SEPs in Germany were concerned that other cases of that kind would also be stayed, while those having to defend themselves frequently invoked the pending CJEU case. It now turns out that, subject to the specifics of a case, injunctive relief over SEPs is still available if you prevail on liability before the Mannheim Regional Court (at least its Second Civil Chamber, which Judge Dr. Kircher presides over) and either face no Orange-Book-Standard defense or manage to overcome it.

Vringo, a non-practicing entity that has already won some interesting court cases, won a German SEP case against ZTE in December 2013 and was granted an injunction. An English translation of the ruling was published by Vringo on its website. Injunctive relief was granted. ZTE appealed and sought an emergency stay from the Karlsruhe Higher Regional Court, which was denied in late February according to a Vringo press release. Therefore, ZTE had to and presumably still has to comply with the injunction, which affects its standards-compliant base stations. (ZTE could make an Orange-Book-Standard licensing offer, or could amend a previously-made one, and then bring a new motion for a stay.)

In November, another panel of the Mannheim court -- the Seventh Civil Chamber, which Judge Voss ("Voß" in German) presides over -- had stayed a Motorola v. Apple FRAND rate-setting case and referred questions so the European Commission. But the circumstances in that case are different. It's not an infringement/injunction matter, and there is an ongoing European Commission investigation of Motorola Mobility's use of SEPs against Apple (and one concerning its SEP assertions against Microsoft) in Europe. There is no ongoing investigation of Vringo's assertions, however.

The Mannheim injunction and the Karlsruhe denial of a motion for stay are notable successes for Vringo's lead counsel in the German litigations against ZTE, Klaus Haft of Reimann Osterrieth Koehler Haft. While I'm personally against injunctions over SEPs, I do recognize that this outcome is no small achievement, under the circumstances, for Vringo and its counsel. Mr. Haft has litigated FRAND matters on multiple occasions. For one example, he represented Nokia in its SEP cases against ViewSonic, and ViewSonic settled the SEP part of its dispute with Nokia last year by taking a royalty-bearing license (the non-SEP part is still ongoing). I have also seen Mr. Haft defend clients vigorously against SEP assertions. His firm also represented Deutsche Telekom against patent licensing firm IPCom (a dispute that was settled in June 2013).

Vringo's headway against ZTE will probably encourage other litigants to continue to seek SEP-based injunctions in Germany, particularly in Mannheim. Any case that would be filed now would realistically be adjudged only after the CJEU has handed down an opinion in Huawei v. ZTE, a decision that may or may not provide clarity concerning SEP-based injunctions in the European Union.

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