Thursday, November 26, 2020

Dusseldorf Regional Court refers component-level licensing of standard-essential patents to Court of Justice of the EU

The Landgericht Düsseldorf (Dusseldorf Regional Court) has indeed, as widely anticipated in light of the inclination the court expressed during the early-September trial, referred to the top EU court a set of legal questions regarding the right of component makers to an exhaustive component-level standard-essential patent (SEP) license. This news was first shared on Twitter by Benjamin Raetz ("Rätz" in German), an intellectual propety lawyer with the firm of Kather Augenstein, whose clients include Volkswagen (in favor of component-level licenses) and Ericsson (opposed). Here's the tweet (this post continues below the tweet):

As a result, a Nokia v. Daimler case as well as a Huawei v. Nokia case (in which Huawei is seeking to obligate Nokia to make a FRAND licensing offer at the component level) will be stayed. Formally, the decision in the Huawei case will likely come down next month or in January. But the court made it clear in September that the two cases are interrelated. In fact, Huawei's case used to be a third-party counterclaim that was severed from the Nokia v. Daimler case. Theoretically, the court could also stay Huawei's case pending the resolution of today's referral, but that would not be a good idea given that there is a risk of Nokia getting leverage over Daimler in some case and coercing the Mercedes maker into a settlement, while Huawei would certainly see this matter through. Whether Nokia will get such leverage is hard to tell. For instance, if the Munich appeals court were to (more or less) uphold the lower Munich court's negligible security amount in a different Nokia v. Daimler case, and if Daimler failed to win a stay, then the Nokia-Daimler dispute could be over as early as next month, in theory.

Two other Nokia v. Daimler cases are due to be heard by the Dusseldorf Regional Court next month. If Nokia loses on the merits, there won't be a need for a stay.

Some major SEP holder opposed to component-level licensing, particularly Nokia (which made an unacceptable new licensing offer to makers of telematics control units) and non-party Qualcomm (which counted on EU internal market commissioner Thierry Breton's support and lobbied the German Federal Ministry of Economic Affairs (where some people saw through the smokescreen while some others were pathetically clueless), tried some maneuvering in hopes of dissuading the Dusseldorf court from this referral. But now that the referral has been made, this matter will be resolved in Luxembourg.

EU competition commissioner Magrethe Vestager said at yesterday's announcement of the Commission's Action Plan on Intellectual Property that the EC wanted the parties to talk to each other and was seeking to keep these case out of the courts. That's easier said than done. Judicial clarification is needed, and it will come.

Nokia could appeal this decision to the Oberlandesgericht Düsseldorf (Dusseldorf Higher Regional Court) by means of the German equivalent to a U.S. interlocutory appeal. However, the judge presiding over one of the two patent-specialized divisions of that appeals court, Presiding Judge Dr. Thomas Kuehnen ("Kühnen" in German), took a clear position on this question last year, and he's known to be in favor of this referral.

The Bundeskartellamt (Federal Cartel Office of Germany) had filed an amicus brief with multiple German courts requesting the referral of component-level SEP licensing questions to the CJEU. Frankly, I liked the Federal Cartel Office's submission to the courts better than what the Dusseldorf court made of this, but that may be subjective.

Meanwhile, the Dusseldorf Regional Court has published the questions to be referred. They go beyond the subject of component-level licensing and also raise general Huawei v. ZTE-related questions. I will publish the original German-language version of each question and provide my own translation below each paragraph (my translation is not exactly literal but uses shorter constructs where I believe doing so does not result in a loss of accuracy, such as by not providing a definition of a term like SEP):

A. Besteht eine Pflicht zur vorrangigen Lizenzierung von Zulieferern?

UNOFFICIAL TRANSLATION: Is there an obligation to license suppliers first?

1. Kann ein Unternehmen einer nachgelagerten Wirtschaftsstufe der auf Unterlassung gerichteten Patentverletzungsklage des Inhabers eines Patents, das für einen von einer Standardisierungsorganisation normierten Standard essentiell ist (SEP) und der sich gegenüber dieser Organisation unwiderruflich verpflichtet hat, jedem Dritten eine Lizenz zu FRAND-Bedingungen zu erteilen, den Einwand des Missbrauchs einer marktbeherrschenden Stellung i.S.v. Art. 102 AEUV entgegenhalten, wenn der Standard, für den das Klagepatent essentiell ist, bzw. Teile desselben bereits in einem von dem Verletzungsbeklagten bezogenen Vorprodukt implementiert wird, dessen lizenzwilligen Lieferanten der Patentinhaber die Erteilung einer eigenen unbeschränkten Lizenz für alle patentrechtlich relevanten Nutzungsarten zu FRAND-Bedingungen für den Standard implementierende Produkte verweigert?

UNOFFICIAL TRANSLATION: 1. Can a downstream company avert injunctive relief over a FRAND-pledged SEP on the grounds of an abuse of a dominant market position in accordance with Art. 102 TFEU if the relevant standard or parts thereof are implemented by an upstream component purchased by the defendant to the infringement claim and the defendant's suppliers are willing licensees but the patentee denies them an independent and unrestricted license on FRAND terms covering all types of use relevant under patent law?

a) Gilt dies insbesondere dann, wenn es in der betreffenden Branche des Endproduktevertreibers den Gepflogenheiten entspricht, dass die Schutzrechtslage für die von dem Zulieferteil benutzten Patente im Wege der Lizenznahme durch die Zulieferer geklärt wird?

UNOFFICIAL TRANSLATION: a) Is this particularly the case if it is common practice in the end product maker's industry to clear patent rights at the component level?

b) Besteht ein Lizenzierungsvorrang gegenüber den Zulieferern auf jeder Stufe der Lieferkette oder nur gegenüber demjenigen Zulieferer, der dem Vertreiber des Endprodukts am Ende der Verwertungskette unmittelbar vorgelagert ist? Entscheiden auch hier die Gepflogenheiten des Geschäftsverkehrs?

UNOFFICIAL TRANSLATION: Are suppliers at each level of a suply chain entitled to a license, or does this apply only to the defendant's direct supplier? Does this depend on industry practice?

2. Erfordert es das kartellrechtliche Missbrauchsverbot, dass dem Zulieferer eine eigene, unbeschränkte Lizenz für alle patentrechtlich relevanten Nutzungsarten zu FRAND-Bedingungen für den Standard implementierende Produkte in dem Sinne erteilt wird, dass die Endvertreiber (und ggf. die vorgelagerten Abnehmer) ihrerseits keine eigene, separate Lizenz vom SEP-Inhaber mehr benötigen, um im Fall einer bestimmungsgemäßen Verwendung des betreffenden Zulieferteils eine Patentverletzung zu vermeiden?

UNOFFICIAL TRANSLATION: 2. Is it required by antitrust law to grant a supplier its own independent and unrestricted license on FRAND terms, for products implementing the standard, to the effect that end-product makers (and, as applicable, intermediate levels of the supply chain) no longer need to take an own, separate license from the SEP holder, thereby providing end-product makers with a defense against a patent infringement claim if the relevant component was incorporated into the end product on a licensed basis?

3. Sofern die Vorlagefrage zu 1. verneint wird: Stellt Art. 102 AEUV besondere qualitative, quantitative und/oder sonstige Anforderungen an diejenigen Kriterien, nach denen der Inhaber eines standardessentiellen Patents darüber entscheidet, welche potenziellen Patentverletzer unterschiedlicher Ebenen der gleichen Produktions- und Verwertungskette er mit einer auf Unterlassung gerichteten Patentverletzungsklage in Anspruch nimmt?

UNOFFICIAL TRANSLATION: 3. In the event the first question were to be answered in the negative: Does Art. 102 TFEU impose particular criteria--qualitative, quantitative, or otherwise--based on which a SEP holder can choose which potential infringers at different levels of the supply and value chain to enjoin?

B. Konkretisierung der Anforderungen aus der Entscheidung des Gerichtshofs in Sachen Huawei ./. ZTE (Urteil vom 16. Juli 2015, C-170/13):

UNOFFICIAL TRANSLATION: B. Clarification of requirements laid out by the CJEU in Huawei v. ZTE (judgment of 16 July 2015, case no. C-170/13):

1. Besteht ungeachtet dessen, dass die vom SEP-Inhaber und vom SEP-Benutzer wechselseitig vorzunehmenden Handlungspflichten (Verletzungsanzeige, Lizenzierungsbitte, FRAND-Lizenzangebot; Lizenzangebot an den vorrangig zu lizenzierenden Zulieferer) orgerichtlich zu erfüllen sind, die Möglichkeit, Verhaltenspflichten, die im vorgerichtlichen Raum versäumt wurden, rechtswahrend im Laufe eines Gerichtsverfahrens nachzuholen?

UNOFFICIAL TRANSLATION: Given that SEP holder and implementer have to meet certain obligations (infringement notice, request for license, FRAND licensing offer; licensing offer to a supplier) prior to litigation, is it still possible to make up, without prejudice, for obligations not previously met while litigation is pending?

2. Kann von einer beachtlichen Lizenzierungsbitte des Patentbenutzers nur dann ausgegangen werden, wenn sich aufgrund einer umfassenden Würdigung aller Begleitumstände klar und eindeutig der Wille und die Bereitschaft des SEP-Benutzers ergibt, mit dem SEP-Inhaber einen Lizenzvertrag zu FRAND-Be-dingungen abzuschließen, wie immer diese (mangels eines zu diesem Zeitpunkt formulierten Lizenzangebotes überhaupt noch nicht absehbaren) FRAND-Bedingungen aussehen mögen?

UNOFFICIAL TRANSLATION: Is a request for a license by an implementer relevant only if, based on an in-depth analysis of all circumstances, the implementer's willingness and readiness to conclude a license agreement on FRAND terms with the patentee is clear and unambiguous, irrespectively of what those terms (which at the time of the offer to take a license were not foreseeable yet) might be?

a) Gibt ein Verletzer, der mehrere Monate auf den Verletzungshinweis schweigt, damit regelmäßig zu erkennen, dass ihm an einer Lizenznahme nicht gelegen ist, so dass es – trotz verbal formulierter Lizenzbitte – an einer solchen fehlt, mit der Folge, dass der Unterlassungsklage des SEP-Inhabers stattzugeben ist?

UNOFFICIAL TRANSLATION: Does an infringer who remains silent over the course of several months upon receipt of an infringement notice give an indication of a nominal request for a license not being made in good faith, which in turn would entitle the SEP holder to injunctive relief?

b) Kann aus Lizenzbedingungen, die der SEP-Benutzer mit einem Gegenangebot eingebracht hat, auf eine mangelnde Lizenzbitte geschlossen werden, mit der Folge, dass der Unterlassungsklage des SEP-Inhabers ohne vorherige Prüfung, ob das eigene Lizenzangebot des SEP-Inhabers (welches dem Gegenangebot des SEP-Benutzers vorausgegangen ist) überhaupt FRAND-Bedingungen entspricht, daraufhin stattgegeben wird?

UNOFFICIAL TRANSLATION: Can the terms of a SEP implementer's counteroffer result in a finding of an unwillingness to take a license and the grant of injunctive relief without prior analysis of whether the SEP holder's licensing offer (which preceded the implementer's counteroffer) was FRAND-compliant in the first place?

c) Verbietet sich ein solcher Schluss jedenfalls dann, wenn diejenigen Lizenzbedingungen des Gegenangebotes, aus denen auf eine mangelnde Lizenzbitte geschlossen werden soll, solche sind, für die weder offensichtlich noch höchstrichterlich geklärt ist, dass sie sich mit FRAND-Bedingungen nicht vereinbaren lassen?

UNOFFICIAL TRANSLATION: c) Is the foregoing conclusion unwarranted at least in a case in which those licensing terms in the implementer's counteroffer that give rise to a finding of an unwillingness to take a license are not clearly out of compliance with FRAND either because it is evident or in accordance with jurisprudence of the highest court? [TRANSLATOR's NOTE: the original text has many shortcomings, one of which is that the term "höchstrichterlich" means a decision by the highest court, without clarifying whether the CJEU or the Federal Court of Justice of Germany is meant; in fact, even the Federal Constitutional Court of Germany could theoretically be the highest court in a given case]

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