Sunday, April 4, 2021

Pursuit or threat of antisuit injunction gives rise to strong presumption of implementer's unwillingness to take FRAND license: Munich I Regional Court

This is a follow-up to yesterday's post, which mentioned that Ericsson is peddling Munich case law on antisuit injunctions in a U.S. appeals court, but even more so to my March 10 post on the recent quadruple-antisuit injunction in InterDigital v. Xiaomi, a judgment in which the Landgericht München I (Munich I Regional Court) laid out a rather inclusive list of criteria entitling standard-essential patent (SEP) holders to A2SIs and A4SIs in Munich (for the AxSI notation, see an earlier post).

The part of the InterDigital v. Xiaomi decision that has the industry even more concerned than the wide availability of (even pre-emptive) A2SIs and A4SIs is a dictum by the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann) according to which someone moving for an ASI or threatening to do so may effectively lose their FRAND defense in Munich. As I've reported in connection with other cases, German SEP case law took a negative turn last year with Sisvel v. Haier, which the Federal Court of Justice reinforced a few months later in Sisvel v. Haier II. At least in Munich and Mannheim (both patent litigation divisions in either case), the Huawei v. ZTE FRAND analysis is practically limited to the question of whether the implementer (i.e., the alleged infringer) is a willing licensee. Practically, that hurdle is presently insurmountable in Munich, and the only safe harbor in Mannheim is an Art. 315 offer, i.e., a binding offer to take a license on FRAND terms subject to judicial determination if the parties can't agree. Thankfully, the Karlsruhe Higher Regional Court's patent litigation division under Presiding Judge Andreas Voss ("Voß" in German) overruled the Mannheim court in that regard.

The second part of the Dusseldorf Regional Court's preliminary reference to the European Court of Justice in Nokia v. Daimler could restore the status quo ante, under which an implementer merely had to express a general willingness to take a license in order to obligate the SEP holder to make a FRAND-compliant offer (which in my view was the correct application of Huawei v. ZTE). There is no guarantee, however, that the second part will be reached in Nokia v. Daimler.

Let's assume that the characterization of licensees as "unwilling" will be the norm in Munich until either the CJEU or the Munich Higher Regional Court (which may very well restore the Art. 315 safe harbor) bring about change. And that's why the unwillingness part of the Huawei v. ZTE analysis will be immensely important at least in the near term. Here's a passage on the bearing the pursuit or threat of an antisuit injunction has on the (un)willingness analysis--first in German, then my unofficial translation:

"Wenn aber diese Patentbenutzer wirklich lizenzwillig sind, so werden sie sich weiterer, über die bereits begangenen und andauernden Benutzungshandlungen hinausgehenden rechtswidriger Eingriffe in die eigentumsähnlich geschützten Rechtspositionen der Patentinhaber enthalten. Oder anders ausgedrückt, ein Patentbenutzer, der einen Antrag auf Erlass einer ASI stellt oder dies androht, kann in der Regel nicht als hinreichend lizenzwillig im Sinne der Rechtsprechung des Gerichtshofs der Europäischen Union und des Bundesgerichtshofs (vgl. EuGH GRUR 2015, 764-Huawei v. ZTE; BGH GRUR 2020, 961 - FRAND-Einwand; Urteil vom 24.11.2020 - KRZ 35/17 - FRAND-Einwand II; z.B. LG München I GRUR-RS 2020, 22577; 21 O 13026/19 bei juris) angesehen werden. Mithin kann von dem Patentbenutzer auch gefordert werden, dass er nach Erhalt des Verletzungshinweises nicht nur seine qualifizierte Lizenzbereitschaft erklärt, sondern auch, dass er keine ASI beantragen wird."

Unofficial translation:

"But if implementers are truly willing licensees, they will refrain from further violations of the property-like rights of SEP holders beyond the committed and ongoing use [of the patented inventions]. Or, to put it differently, a patent infringer bringing or threatening with a motion for an ASI can generally not be considered a sufficiently willing licensee within the meaning of the jurisprudence of the Court of Justice of the European Unoin and the Federal Court of Justice (cf. Huawei v. ZTE, Sisvel v. Haier, and Sisvel v. Haier II; e.g., [citing to a Munich decision]. Therefore, one can expect the implementer not only to respond to the infringement notice by declaring a willingness to take a license, but also to refrain from seeking an ASI."

The wording doesn't make it 100% certain that the pursuit of, or a threat with, an ASI renders an implementer an unwilling licensee. The expression "in der Regel" (meaning "generally" or "normally") leaves room for exceptions. However, the ruling does not indicate under what circumstances the Munich court would make an exception. Unless the regional appeals court revives the Art. 315 safe harbor, it may be practically impossible to be deemed a willing licensee after moving for, or threatening with, an ASI.

While I totally understand the companies who are profoundly concerned about this situation, it's a logical consequence of the German zero-deference approach to antisuit injunctions vis-à-vis courts in countries that are not EU member states. Furthermore, it's consistent with the Munich court's strategy to create a Nash-like equilibrium in which parties would be discouraged from pursuing foreign ASIs against German patent injunctions in the first place. The judges in Munich seek to make it a losing strategy to try this at all. However, there is a risk of escalating contempt sanctions. We need to find another way out of the current mess. German courts aren't peacemakers in the antisuit context: they're part of the problem themselves by requiring implementers to take a global portfolio license (in order to avoid an injunction) as opposed to limiting their jurisdiction to German patents--and by offering pre-emptive A2SIs and A4SIs, which gives the Munich court a "unique (forum-)selling proposition" in marketing lingo, but may lead courts in other countries to look for new ways to protect their own jurisdiction.

The antisuit situation continues to spiral out of control on at least three continents, and I'll keep watching it. This blog has been commenting on antisuit injunctions since Judge Robart's Microsoft v. Motorola ASI (affirmed by the Ninth Circuit), which in my opinion is still the best SEP-related ASI ever.

Finally, I'd like to highlight an academic paper on antisuit injunctions that provides a useful overview of key decisions in different jurisdictions, and discusses some of the issues arising from the proliferation of that type enjoinder: The Use and Abuse of Anti-suit Injunctions in SEP Litigation: Is There a Way Forward? by Professor Damien Geradin and Dimitrios Katsifis.

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