Tuesday, December 15, 2020

Nokia's attempt to evade referral of antitrust questions to top EU court faces high hurdles: questionable appealability, deferential standard of review

Nokia dreads Dusseldorf. That wasn't always so. For many years, Nokia filed cases in that city even though its disputes typically got settled on the basis of decisions that came down faster in Mannheim and Munich. But last month's order to refer to the Court of Justice of the EU multiple legal questions related to standard-essential patent (SEP) enforcement has left Nokia, well, disgruntled.

Just a few days before trial, Nokia withdrew two cases against Daimler and one against Lenovo (only to refile in Munich).

But Nokia can't derail the CJEU referral by means of withdrawing the case in which the referral happened. Once a plaintiff has formally (re)stated the prayers for relief at trial time in Germany, any withdrawal would require the defendant's consent. Daimler, however, now has a strong interest in getting the question of component-level licensing clarified. Nokia could solve the problem by getting leverage over Daimler in some other venue (coercing Daimler into a settlement that would result in a stipulated dismissal of the case that would otherwise be decided by the CJEU), but on Thursday Nokia is going to be dealt a serious blow in Munich.

Last Thursday, Nokia filed a 29-page "Sofortige Beschwerde" (the closest thing in Germany to what would be called an interlocutory appeal in the U.S.). Initially, the court that made the decision complained of (here, the Dusseldorf Regional Court) decides whether to grant relief or whether to refer it to the appeals court.

Large parts of Nokia's filing, signed by Arnold & Ruess's Tim Smentkowski, deal with the very first hurdle in front of Nokia's interlocutory appeal of the referral order: appealability. The Higher Regional Court of Cologne--just 30 miles south of Dusseldorf and in the same state, North Rhine-Westphalia--held in a different case that a referral order is not appealable because it does not interrupt a case; much to the contrary, that court held a referral is simply part of the judicial process.

Given that the Dusseldorf court, however, noted in its decision that Nokia may appeal the order, it appears less likely that the appeal will be rejected on that basis.

The most likely outcome is for the appeal to be heard, but for the order to be upheld as the lower court enjoys broad discretion with respect to referrals. The assumption is that the judges below have the right to request clarification from the top EU court. Only if a referral appeared wholly unreasonable--the rather deferential standard of review here is comparable to an abuse of discretion--would the appeals court overturn it. But here, the judge presiding over one of the two patent-specialized divisions of the Dusseldorf appeals court, Judge Dr. Thomas Kuehnen ("K├╝hnen" in German), is known to be in favor of this referral. Even before any major court decision on the question of component-level access to exhaustive SEP licenses came down, he already expressed his views on this topic in an article last year.

That said, Nokia's appeal might succeed with respect to the second set of questions the Dusseldorf court decided to present to the CJEU. That set of questions is not about component-level SEP licensing. It's about how to apply the Huawei v. ZTE framework. Nokia's position that those questions aren't really outcome-determinative in Nokia v. Daimler actually makes sense to me. Now, it would indeed be good if those questions were referred to the CJEU as well, given how things are going awry in Germany, but Nokia v. Daimler may not constitute an appropriate vehicle.

I believe Nokia's interlocutory appeal will be resolved swiftly, but whether it will happen before the Holiday Season is another question. Nokia may have brought that appeal primarily to cause some--even if presumably just limited--delay.

A further appeal to the Federal Court of Justice isn't possible. Otherwise there would be a risk as a presiding judge of the Federal Court of Justice--a judge with a terrible legacy in patent and antitrust law who will thankfully retire (by law, not choice) next year (which is why I don't see a point in even naming the judicial equivalent of a "lame duck" politician here at this stage)--spoke out against this referral.

Share with other professionals via LinkedIn: