Wednesday, May 25, 2022

Implementers must 'promptly' seek standard-essential patent license to avoid being deemed unwilling licensees and enjoined: Munich I Regional Court

Subsequently to this post, I'll report on the latest injunction that standard-essential patent (SEP) licensing firm VoiceAge EVS has obtained against smartphone maker HMD (Nokia trademark licensee). I originally didn't intend to write about today's VoiceAge EVS v. Xiaomi trials, which I attended purely for research purposes, but something was said there that is relevant far beyond that particular dispute as it relates to the willing licensee standard in the world's #1 SEP litigation hotspot, the Landgericht M√ľnchen I (Munich I Regional Court).

A couple of VoiceAge EVS v. Xiaomi cases are pending before the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judge Dr. Hubertus Schacht and Judge Benjamin Kuttenkeuler, the judge rapporteur in the cases heard today). In accordance with the court's new "lead case" program for multi-patent SEP disputes, the Seventh Civil Chamber held a VoiceAge EVS v. Xiaomi FRAND hearing about a month ago. Today, Xiaomi's counsel in that dispute, Noerr's Dr. Ralph Nack, moved for a preliminary reference to the European Court of Justice in order to clarify

  • which party (SEP holder or implementer) has to act first and

  • whether a SEP holder must negotiate with an implementer for a certain period prior to seeking an injunction.

Judge Dr. Zigann gave that motion short shrift because the question is not whether an infringement notice is needed: the Munich court recognizes that the ECJ established that requirement in Huawei v. ZTE. There is only a factual dispute in VoiceAge EVS v. Xiaomi as to whether such notice was properly given. As to the second part, Judge Zigann believes that Huawei v. ZTE and Germany's Sisvel v. Haier I and II decisions provide sufficient clarity.

What's interesting here, however, is how Dr. Nack sought to justify his motion. He quoted Judge Dr. Zigann form the late-April FRAND hearing as having stated that implementers must "promptly" seek a license to the SEPs they implement lest they be deemed unwilling licensees and, as a result, enjoined. The German word Judge Dr. Zigann used (according to Dr. Nack's uncontradicted quote) was "zackig"--it's a colloquial term that means to act swiftly, without hesitation, like lightning.

While Xiaomi's concern over implementers potentially having to move first by seeking a license (which was actually the legal standard in Germany under Orange-Book-Standard, a decision by the Federal Court of Justice that predated Huawei v. ZTE) has been alleviated, it nevertheless sounds like implementers will pay a high price in Munich for not going out of their way to obtain a license on FRAND terms once they've received an infringement notice. And with every new SEP injunction the court enters, such as in IP Bridge v. Ford last week, implementers around the globe (provided they do business in Germany, which most of them do) are reminded of their obligations.

I felt I had a duty to inform you all of this standard.

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