The Munich I Regional Court has recently made three judgments public that provide helpful guidance to litigants concerning the legal standard applied by the world's first and foremost patent injunction venue to
proportionality defenses in standard-essential patent (SEP) and non-SEP cases, and
the implications of the pursuit of foreign antisuit injunctions for the determination of whether a defendant is an unwilling licensee.
I'll start with the second item because it's shorter and simpler than the other items:
In case no. 7 O 13016/21, the Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann (who has since been promoted) adjudicated on September 15, 2022 a SEP assertion by a Japanese licensing firm (probably IP Bridge) against a Chinese implementer (the name is redacted; maybe Xiaomi, but doesn't look like OPPO). I obtained a redacted copy of the judgment from the court.
In the same dispute, the court had entered an anti-antisuit injunction based at least in part on the defendant's prior action of obtaining a Chinese antisuit injunction against a different patent holder, Conversant. The plaintiff then argued in the infringement litigation that the defendant was an unwilling licensee for the same reason. The Munich court clarified that the defendant's prior pursuit of an anti-enforcement injunction against a third party may very well give rise to the entry of a pre-emptive anti-antisuit injunction, but has no bearing on whether the defendant is a willing or unwilling licensee vis-à-vis the relevant plaintiff. In other words, the court bases its (un)willingness determination exclusively on the conduct exhibited in the dealings between the two parties in question. If the defendant had sought an antisuit injunction against this particular patentee, it might have been deemed an unwilling licensee--and its products could have been enjoined--for that reason alone.
Whether or not one agrees with the notion of pre-emptive anti-antisuit injunctions, the distinction between that type of relief and the (un)willingness determination in the infringement action undoubtedly makes a lot of sense.
The court's 21st Civil Chamber (Presiding Judge: Dr. Georg Werner) has meanwhile published (on a website run by the Bavarian state government) two Nokia v. OPPO decisions (see my battlemap). The public redacted versions don't reveal the parties, but the missing bits and pieces can be deduced from the claim language and dates.
On August 5, 2022, the court granted Nokia two SEP injunctions against OPPO. At around that time, the smartphone maker left the German market, presumably due to the enforcement of a 4G SEP injunction that had previously been ordered by the Mannheim Regional Court. Meanwhile it has become known that Nokia had brought a couple of contempt motions that resulted in fines being imposed on OPPO, but the fact that OPPO withdrew from the German market shows an intent to comply. By now the more interesting question is when OPPO will obtain a German patent injunction against Nokia's mobile base stations. Nokia is challenging OPPO's patents-in-suit.
The Munich court's August 5, 2022 SEP ruling (German text) addressed a mix of FRAND and proportionality questions. A March 2022 hearing that mostly took place behind closed doors (JUVE Patent reported) was about the FRAND issues in all Nokia v. OPPO cases pending in Munich at the time. It is not known whether OPPO's proportionality defenses were also discussed on that occasion or only as part of the patent-specific infringement trials.
The August 5, 2022 decision starts with a syllabus that lays out four key principles that I'll summarize below:
The fact that a patent--with no distinction being made here between a SEP or a non-SEP--is being asserted by a non-practicing entity (NPE) does not suffice for a proportionality defense to succeed.
In this case, Nokia argued (as the judgment also notes) that it is not an NPE, but makes network infrastructure and has licensed its smartphone brand to HMD (of which Nokia is a minority shareholder). The Munich court held that even if Nokia were to be deemed an NPE, that finding wouldn't enable a proportionality defense to succeed.
This one actually has two parts that relate to interdependencies between the FRAND defense and the proportionality defense:
The court says it can't be held against Nokia in the proportionality context that it offered a SEP license to OPPO, given that this is part and parcel of Nokia's FRAND obligations. In other words, the fact that this dispute is just about money and not about excluding a competitor is simply attributable to Nokia's FRAND obligation and does not, in and of itself, call into question its entitlement to injunctive relief. I already said during the German patent "reform" process that the reform would prove useless without the equivalent of eBay factor #2 (inadequacy of monetary relief)...
The Munich court also rejects the notion that a SEP injunction is disproportionate because the patentee sued prior to the definitive failure of FRAND licensing negotiations.
The third guideline rejects the notion that an injunction should not be available against a complex product. At first sight, it looks like this would apply to SEP and non-SEP cases alike. The judgment itself suggests that the Munich court may generally view a complexity argument skeptically (i.e., Munich may disagree with the reasoning in Justice Kennedy's eBay concurrence), but focuses specifically on SEP cases and notes that an implementer is entitled to a license on FRAND terms and cannot raise a proportionality defense on top. If an implementer is deemed an unwilling licensee under SEP-specific case law, there is no proportionality defense according to the court.
As I'll show further below, the same court has meanwhile clarified that this reasoning concerning complex products applies to non-SEPs, too.
Finally, Nokia was not faulted for allegedly having failed to explain in detail the calculation of the royalty rate it demanded. the Munich court says that "reasonable parties" do not care about the underlying calculation or a disaggregation of the total royalty.
A few months later, the Munich court granted Nokia a third injunction against OPPO. The patent-in-suit in that case (case no. 21 O 12142/21) was EP1728352 on "secure data transfer" (such as contacts that are already stored in the cloud being downloaded when setting up a new device). That one is a non-SEP as I already noted at the time.
In its November 25 (Black Friday) decision (German text), the court made reference to--and reaffirmed the key takeaways from--its August 5 SEP ruling.
Here's my summary of the guidelines found in the syllabus:
The court reminds everyone of the fact that a proportionality defense will succeed only in rare exceptions (with the infringer having to plead the relevant facts and bearing the burden of proof). That is actually an understatement. Thus far, the proportionality defense has not succeeded in a single German patent case--and the so-called reform entered into force approximately 1.5 years ago. It's a monumental lobbying failure, and the fundamental problem was the lack of ambition: the pro-reform camp thought that a minor legislative change would make an impact. It has not moved the needle and I believe it never will. Near-automatic patent injunctions are alive and kicking. It would have taken a more incisive statutory amendment to bring about change (if such change is desirable, which is a separate question I'm not talking about in this post).
The second guideline reaffirms what the court held in the August 5 SEP decision: a patentee's NPE status does not per se make the pursuit of a patent injunction disproportionate.
The complexity of the enjoined product(s) does not make an injunction disproportionate either.
With a view to OPPO's German countersuits against Nokia, this means that the debate will be all about FRAND and not at all about (dis)proportionality.
