Saturday, July 3, 2021

What if a patent injunction impairs the well-being of convertible drivers? German appellate judge raises questions regarding public interest and proportionality

Judging by what some of the participants wrote at the end of the event, yesterday's 13th Mannheim IP Forum, which I had recommended on this blog, went great. That's also my opinion. I attended most of the sessions via Zoom. What limited the event's reach is that attendance wasn't free for most people, and that it was held in German.

In this post I'm going to focus on statements that influential German judges made with respect to the "King of Remedies": injunctive relief.

First, there was a noteworthy endorsement of the § 315 approach to FRAND (i.e., an offer by an implementer to take a portfolio license on FRAND terms, but without quantifying them and keeping the door open to judicial review of the actual numbers).

Professor Peter Meier-Beck, Presiding Judge of the antitrust-focused senate of the Federal Court of Justice, is a patent enforcement hardliner who frequently speaks at events to defend last year's Sisvel v. Haier I & II rulings. What came across as exceedingly defensive is that he repeatedly (I didn't count, but if I recall correctly, it happened about five times) made reference to criticism that the Federal Court of Justice strayed from EU case law. The way I would put it (and have put it on previous occasions) is that the Federal Court of Justice has vitiated Huawei v. ZTE.

Judge Meier-Beck's approach is to simply give standard-essential patent (SEP) holders maximum leverage because, in the alternative, the courts would have to actually assess whether a royalty demand is FRAND or supra-FRAND, a kind of determination that judges in other jurisdictions make all the time.

The fact that he is so patentee-friendly makes it all the more interesting that he had license agreements on a § 315 basis on a list of alternatives he considers superior to patent-by-patent SEP litigation.

I don't want to attribute something to him, not even indirectly, that he didn't say. So let's be clear: he did not say explicitly that a § 315 offer should be a safe harbor for implementers in German SEP litigation. But it's not unreasonable to conclude that his ringing endorsement of § 315 license deals strengthens the position of defendants who make such (counter)offers. The Karlsruhe Higher Regional Court decided so in a recent Nokia v. Daimler case. The appeals court in Munich never addressed the question before Nokia and Daimler settled.

Second, and also related to the Nokia-Daimler settlement, Presiding Judge Dr. Daniel Voss ("Voß" in German) of one of the three patent-specialized divisions of the Dusseldorf Regional Court said that they--apparently speaking for his court, not just his chamber--would no longer seek a review of the Sisvel v. Haier SEP injunction standard by the European Court of Justice.

A different panel of the Dusseldorf Regional Court had raised some questions regarding the Huawei v. ZTE analysis in a preliminary reference to the ECJ on component-level SEP licensing. That preliminary reference dissipated when Nokia and Daimler settled. The Munich I Regional Court and the Second Civil Chamber of the Mannheim Regional Court had basically pioneered the Sisvel v. Haier doctrine, which was then endorsed by the Federal Court of Justice.

No one seriously expected Munich and Mannheim to question their own case law by means of a preliminary reference to the ECJ, and now it appears that Dusseldorf is going to accept the Federal Court of Justice's position as final. As Judge Dr. Voss noted, the Federal Court of Justice has meanwhile made it clear that it does not believe there should be a preliminary reference. Yesterday, Judge Meier-Beck said that it would be a fruitless effort to ask the ECJ what it meant in an earlier decision, as the ECJ would always just reply along the lines of "we meant what we wrote then."

For those hoping to get Sisvel v. Haier overturned, Judge Dr. Voss's statement is bad news. I'm not sure anyone would even bring a SEP case in a German court other than Munich, Mannheim, and Dusseldorf. There is some patent litigation in Hamburg, and very rarely in places like Berlin, Frankfurt, and Nuremberg, but all the cases I've seen there were non-SEPs. So, in practical terms, a preliminary reference would have to come from a court of another EU member state.

Third, there was some discussion of the relevance of third-party interests to the proportionality analysis under the new German patent injunction statute, which according to judges from the three regional courts that hear most patent infringement cases in the country is not really going to result in fewer injunctions.

All in all, I would say that yesterday's conference validated the assumption that prevailing patentees are still going to get their injunctions like before, but that there will be room for debate following the statutory change.

Presiding Judge Andreas Voss ("Voß" in German) of the Karlsruhe Higher Regional Court's patent-specialized senate (which hears all patent appeals from Mannheim) gave two interesting examples of public-interest arguments that defendants might make now. He did not indicate that those arguments would prove outcome-determinative, and I'd be extremely surprised if they did. But counsel for defendants will leave no stone unturned, no matter the prospects of prevailing on such a defense to an injunction request. Here are the two examples Judge Voss gave:

  • The Heat Exchanger opinion by the Federal Court of Justice, which involved proportionality considerations and which the German legislature merely sought to codify by means of this summer's patent reform bill, involved the AIRSCARF neck-level heating feature of Mercedes convertibles (SLK and SL models). As Judge Voss noted, the description of the patent-in-suit explains the adverse impact on the health of convertible drivers when their necks get cold. Therefore, in the next case involving that kind of feature, a defendant might argue that the enforcement of an injunction against such a feature would compromise the well-being of convertible drives.

  • The last question of the day came from me. I asked the panelists for their opinion on whether there would be room for proportionality arguments on top of a FRAND defense to SEP injunction requests. My question connected the topic of the final panel discussion (SEP injunctions post-Sisvel v. Haier) with the topic of previous presentations on the new injunction statute.

    The responses essentially came down to saying what other German judges had said before: the availability of a license on FRAND terms pursuant to Huawei v. ZTE resolves the proportionality part at the same time.

    However, Judge Voss noted that defendants in a smartphone SEP case might argue that low-income customers would be deprived of access to sub-€100 smartphones if an injunction was enforced, and that kind of third-party interest is outside the scope of the Huawei v. ZTE analysis. Judge Meier-Beck, however, said that the availability of a license would also address that concern.

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