Friday, July 30, 2021

Dusseldorf appeals court narrowly avoids divergent outcomes in Via v. TCL patent cases concerning Sisvel v. Haier FRAND defense, deems TCL unwilling either way

There are two key reasons for which cases with overlapping issues get consolidated in the U.S. (if necessary, this may even involve a venue transfer). The first one is that divergent decisions are highly undesirable. The second is efficiency (for the court and the parties). Not so in Germany, where each patent is litigated separately unless two or more patents are from the same patent family. Inconsistent rulings by German courts are possible for another reason: judges aren't bound by precedent (no stare decisis etc.).

With respect to standard-essential patents (SEPs), there was a period of a few months during which one patent litigation division of the Mannheim Regional Court--the Second Civil Chamber under Presiding Judge Dr. Holger Kircher--applied EU case law (Huawei v. ZTE) differently from the other--the Seventh Civil Chamber under Presiding Judge Dr. Peter Tochtermann. I declared myself in agreement with the latter, but then came the first of two Sisvel v. Haier decisions by the Federal Court of Justice, and Judge Kircher as well as his colleagues in Munich "won."

There still was--and maybe even is--a pocket of resistance to Sisvel v. Haier in Dusseldorf. Judge Dr. Thomas Kuehnen ("Kühnen" in German), who presides over one of two patent-specialized divisions of the Dusseldorf Higher Regional Court (regional appeals court), made no secret of his disagreement with Sisvel v. Haier, and Judge Sabine Klepsch, who presides over one of three patent-specialized divisions of the lower Dusseldorf court, made a preliminary reference to the European Court of Justice in Nokia v. Daimler one part of which effectively called into question the Sisvel v. Haier approach to the FRAND defense. But Nokia and Daimler settled (by now, another car maker has taken taken a vehicle-level license from Nokia, like Daimler but without litigation). The preliminary reference was inevitably withdrawn. And earlier this month, Judge Dr. Daniel Voss ("Voß" in German), who presides over another patent-specialized division of the lower Dusseldorf court, appeared to be speaking on his entire court's behalf when he said at a top-notch Mannheim conference that they wouldn't seek a review of Sisvel v. Haier by the ECJ anymore.

But is there a possibility of the Dusseldorf appeals court at some point challenging Sisvel v. Haier by way of a request for a preliminary ECJ ruling? I'd be extremely surprised if such a preliimnary reference came from the appellate division under Presiding Judge Ulrike Voß ("Voss" in German, and to my knowledge the various "Vosses" in the German patent judiciary are from different families). About Presiding Judge Dr. Kuehnen I'm not so sure. He's always considered himself smarter and more qualified than the patent-specialized division of the Federal Court of Justice. His book on German patent infringement proceedings is cited over and over--it's almost as influential in German patent law as Areeda/Hovenkamp is in U.S. antitrust law.

I may be wrong, but my guess is that Judge Kuehnen will make a preliminary reference if and when the right case along before his retirement in a few years. A set of cases brought by Via Licensing pool contributors against Chinese electronics company TCL (or, more specifically, a TCL subsidiary named TCT), however, would be the wrong vehicle for that purpose because of TCL's dilatory tactics in negotiations with the patent holders.

I already reported on that set of cases two months ago, without knowing the names of the parties. In fact, I had obtained all of my information from a Bardehle Pagenberg article.

Meanwhile, the appeals court has spoken: not in the form an appellate judgment, but TCL's motions to stay the enforcement of Dolby's and Philips's injunctions were denied. That outcome is another victory for Eisenfuhr Speiser's Dr. Tilman Mueller ("Müller" in German), who is an outlier in a purely geographic sense among German patent litigators--he's based in Hamburg--but whose cases sometimes shape the development of German patent case law. The first time I took note of his work was when the Munich I Regional Court referred a question relating to the availability of preliminary injunctions over battle-untested patents to the ECJ.

It's now rather likely that TCL will settle and take a pool license from Via. Therefore, it's doubtful that we'll get to see an appellate opinion in those Via v. TCL cases (just to avoid any misunderstanding, Via Licensing doesn't own those patents, thus can't sue; but Philips and Dolby are Via contributors, so I chose that simplified--albeit slightly imprecise--caption).

That said, the appeals court's decisions denying TCL's motion to stay are interesting, if for no other reason because they show that the Dusseldorf appeals court may be internally divided over Sisvel v. Haier:

  • Judge Kuehnen's panel entered its order on July 14, mentioning Sisvel v. Haier (by its official caption, "FRAND-Einwand" ("FRAND affirmative defense")) only once on a total of seven pages (and not in a particularly important context), while Judge Voss's decision, handed down six days later, cites to both Sisvel v. Haier decisions a total of 19 times (spread out over 16 pages).

  • Judge Kuehnen chose to duck Sisvel v. Haier: he found TCL to be (not his words, but from what I read between the lines) a typical case of an unwilling licensee even under the pre-Sisvel v. Haier standard, where the hurdle was actually low for a defendant to reach the point where the courts would have analyzed a SEP holder's licensing offer from a FRAND angle. The lower court had made the injunction particularly appeal-proof by determining that TCL was an unwilling licensee under Sisvel v. Haier as well as the standard under the previous application of Huawei v. ZTE by the German courts. For the plaintiffs, that's the strongest basis imaginable: it's like having not only a castle, but also a moat around it.

  • Judge Ulrike Voss sort of ducked and embraced Sisvel v. Haier at the same time, which may sound like an impossible combination (like "have your cake and eat it"), but let me tell you how she did it: her panel decided that it cannot possibly have been clearly erroneous for the lower court (Judge Dr. Daniel Voss) to apply Sisvel v. Haier (i.e., Federal Court of Justice case law). In other words, even if one agreed with Judge Kuehnen that Sisvel v. Haier is not a proper application of EU case law, the standard of review for staying an injunction in Germany is that there must be clear reversible error, and following the nation's highest court (with respect to almost every patent case, as it's very rare that any issues reach the Federal Constitutional Court) can't constitute a clear error.

    Without stating on a totally definitive basis that she recognizes Sisvel v. Haier, Judge Voss found that in connection with a motion to stay enforcement, she did not have to reach the question of whether her colleague Judge Kuehnen or the Federal Court of Justice was right. (It would be different situation if TCL kept on holding out and an actual appellate ruling became necessary.)

    On that basis, Judge Voss then rejects a variety of TCL's appellate arguments by citing to the Sisvel v. Haier pair of decisions. One example (of many) is that the Federal Court of Justice had found in Sisvel v. Haier that it's not a get-out-of-jail-free card if a defendant makes a deposit.

The TCL cases didn't force the Dusseldorf appeals court to come clean on Sisvel v. Haier at the motion-to-stay stage, and most likely won't have that effect should there even be full-blown appellate proceedings. But at some point there may be another SEP injunction case that serves as a litmus test: it would have to be a case that clearly has to be decided in defendant's favor under the pre-Sisvel v. Haier standard but similarly clearly must be decided in plaintiff's favor under Sisvel v. Haier I & II. If such a case is assigned to Judge Voss's panel, I guess the decision will be made in accordance with Sisvel v. Haier, though she--while serving on the lower court--made the preliminary reference in Huawei v. ZTE (the only Dusseldorf trial I ever attended). Should a "litmus test" type of case land on Judge Kuehnen's desk, and should he be reasonably confident that the parties won't settle, then a preliminary reference--as maybe his last act of rebellion against the Federal Court of Justice prior to his retirement--is a possibility. How likely it is that such a case is heard by Judge Kuehnen is hard to say. Most SEP holders prefer the Munich and Mannheim courts anyway.

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