Tuesday, May 4, 2021

CJEU sets August deadline for observations from European Commission, EU member states and parties on standard-essential patent licensing questions in Nokia v. Daimler

In November 2020, the Dusseldorf Regional Court decided to refer to the Luxembourg-based Court of Justice of the European Union (CJEU) two sets of legal questions: one about the component-level licensing of standard-essential patents (SEPs) and another about the application of the Huawei v. ZTE SEP injunction framework. Nokia brought an interlocutory appeal, which was going nowhwere and ultimately withdrawn.

Another procedural milestone was reached on April 29. The CJEU provided translations of the preliminary reference to the European Commission, other EU institutions, the EU member states, the three non-EU member states of the European Economic Area (Iceland, Liechtenstein, Norway), and the parties and intervenors so they can file observations.

Under the court's procedural rules, the parties normally have two months plus an automatic 10-day extension "on account of distance" (which appears a bit anachronistic in the Digital Age, as it would almost be enough for service by stagecoach). Currently, due to the COVID-19 pandemic, there's an additional automatic extension by one month. All in all, this means the filings will be due on August 8 (a Sunday, so this may practically mean August 9).

Unlike in the United States, where a diversity of stakeholders may file amicus curiae briefs, the CJEU will accept submissions only from the types of entities listed further above. Therefore, companies who are not parties to or intervenors to this case must persuade governments to file observations supporting their positions.

Preliminary references by national courts must first be translated into the EU's official languages before the court can formally request observations. In November, I provided a heavily streamlined translation of the questions the Dusseldorf court submitted. I feel for the CJEU's translators, who couldn't just take those liberties. To give you an idea, there's one grammatical sense in the official English translation that spans 13 lines in printed form, "thanks" to an abundance of qualifiers and relative clauses.

Notwithstanding the practical advantages of my streamlined version, let me provide you with the CJEU's canonical translation . You can still read my translation first so you know upfront what they're trying to get to.

I'll follow up soon with further commentary and analysis (in future posts).


A. Is there an obligation to license suppliers on a priority basis?

  1. Can an undertaking at a downstream stage in the economic process rely on the plea of abuse of a dominant position within the meaning of Article 102 TFEU to dismiss a patent infringement action for a prohibitive injunction brought by the proprietor of a patent essential to a standard established by a standardisation body (‘SEP’) who has irrevocably undertaken to that body to grant a licence to any third party on FRAND terms, where the standard for which the patent at issue is essential, or parts thereof, are already implemented in an upstream product procured by the defendant in the patent infringement action, whose suppliers which are willing to obtain a licence are refused, by the patent proprietor, their own unrestricted licence for all [Or. 4] types of use relevant under patent law on FRAND terms in respect of products implementing the standard?

    (a) Is this the case in particular if it is customary practice in the relevant industry of the final product distributor for the intellectual property right situation in respect of the patents used by the supplier part to be clarified by way of licensing through the suppliers?

    (b) Is there licensing priority for suppliers at every stage of the supply chain or only for the supplier immediately upstream of the distributor of the final product at the end of the value chain? Do customary trading practices also play a decisive role in that regard?

  2. Does the prohibition of abuse under antitrust law require that the supplier be granted its own, unrestricted licence for all types of use relevant under patent law on FRAND terms for products implementing the standard in the sense that the end distributors (and, where relevant, the upstream customers) in turn no longer require their own, separate licence from the SEP holder in order to avoid patent infringement in the case of use of the supplier part concerned in accordance with its intended purpose?

  3. If Question 1 is answered in the affirmative [This is an ERROR in the official translation! It should be "in the negative" like in my translation]: Does Article 102 TFEU lay down specific qualitative, quantitative and/or other requirements for the criteria according to which the proprietor of a standard-essential patent decides the potential patent infringers at different levels of the same production and value chain against which it is to bring an action for a prohibitory injunction?

More precise clarification of the requirements established by the decision of the Court of Justice in the Huawei v ZTE case (judgment of 16 July 2015, C-170/13):

  1. Irrespective of the fact that the [Or. 5] obligations to act (notice of infringement, licensing request, FRAND licence offer; licence offer to the supplier to be licensed on a priority basis) to be reciprocally complied with by the SEP holder and the SEP user must be discharged prior to any litigation, is it possible for obligations to act not fulfilled prior to any litigation to be discharged subsequently in the course of court proceedings in a manner that preserves the rights of the party concerned?

  2. Can a meaningful licensing request by the patent user be assumed only if, on the basis of a comprehensive assessment of all the circumstances surrounding the matter, it is clearly and unequivocally apparent that the SEP user is willing and prepared to enter into a licensing agreement with the SEP holder on FRAND terms, irrespective of what form such FRAND terms (which, in the absence of a licence offer drawn up at that time, are not at all foreseeable yet) may take?

    (a) Is it generally the case that an infringer that remains silent on a notice of infringement for several months thereby indicates that it is not interested in obtaining a licence, such that – despite the existence of a licence request expressed orally – there is no such request, with the consequence that the SEP holder’s action for a prohibitory injunction must be allowed?

    (b) Can a lack of a licence request be inferred from licence terms presented by the SEP user by way of a counter-offer, with the result that the action for a prohibitory injunction brought by the SEP holder is subsequently allowed without first assessing whether the SEP holder’s own licence offer (which preceded the SEP user’s counter-offer) complies with FRAND terms in the first place?

    Is such an inference precluded in any event if the licence terms of the counter-offer from which a lack of a licence request is to be inferred are terms in respect of which it is neither manifestly apparent nor established at the highest judicial level that they are incompatible with FRAND terms? [Or. 6]

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