Mannheim Regional Court schedules first three Nokia v. Oppo patent infringement trials for March and May 2022: one patent-in-suit carried the day against Daimler

Just like the previous post, which discussed a key decision in a standard-essential patent (SEP) case, this one relates to proceedings before the Mannheim Regional Court's Second Civil Chamber under Presiding Judge Dr. Holger Kircher.

The court's press office has been able to provide the case numbers, patents-in-suit, and trial dates of three Nokia v. Oppo cases. Nokia is suing Oppo in--if I didn't miss anything--seven countries. The dispute broke out three weeks ago after a multi-year patent license agreement expired.

In Germany, Nokia lodged complaints with three regional courts: Mannheim, Munich, and Dusseldorf. Interestingly, Nokia filed almost as many in Mannheim alone as in the other German venues combined. For three of those eleven cases, I've now been able to obtain the following data points:

• Case no. 2 O 73/21 over EP1700183 on a "method for secure operation of a computing device" (apparently non-standard-essential), trial scheduled for May 3, 2022;

• case no. 2 O 73/21 over EP1704731 on a "method and apparatus for indicating service set identifiers to probe for" (a WiFi patent, potentially standard-essential), trial scheduled for May 31, 2022; and

• case no. 2 O 75/21 over cellular standard-essential patents EP2981103 and EP3220562 on an "allocation of preamble sequences", trial scheduled for March 29, 2022.

The '103 patent--one of the two patents-in-suit in the third case listed above--won Nokia an injunction against Daimler last August. Daimler, Continental, and TomTom challenged the validity of that patent. While Daimler--as one would have thought--withdrew all of its challenges to Nokia patents after the recent settlement, Continental and TomTom are still active nullity complainants against many Nokia patents. Together with other suppliers, they're also pursuing EPO opposition proceedings against some other Nokia patents. But very shortly before the Federal Patent Court's nullity hearing on the '103 patent, Continental and TomTom withdrew their complaints. Also, there were some interesting developments regarding the Nokia v. Daimler case over the '103 patent in the Karlsruhe Higher Regional Court, and I plan to take a look at the "remnants" of Nokia v. Daimler in the near term. For now, suffice it to say that the proceedings involving the '103 patent deserve some further analysis.

Early first hearings in at least some--if not all--of the seven cases Nokia brought against Oppo in Munich will likely be held before those Mannheim trials. The Mannheim court typically decides after one trial, while according to the Munich court's Patent Local Rules there is an early first hearing (remotely comparable to a U.S. Markman hearing on claim construction), subsequently to which both parties get the chance to further develop their argument, and judgments normally come down only after the second hearing, which is the actual trial.

In other Oppo-related news, patent licensing firm Sisvel today announced the settlement of a SEP dispute with Oppo. The parties agreed on a 3G/4G license. Another Chinese smartphone maker, Xiaomi (which is now selling more phones per year than Apple according to Bloomberg), took a license from Sisvel last month.

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Flimsy patent exhaustion argument weighs against willingness to take standard-essential patent license, and § 315 still no safe harbor: Mannheim court

German patent prosecution and litigation firm Bardehle Pagenberg published an article last week on a landmark Mannheim FRAND judgment that came down in early March, but the redacted version of which apparently wasn't published until a couple of months later. In that case, LG Electronics won an injunction against TCL over a standard-essential patent (SEP). The redacted judgment doesn't name the parties, but LG issued a press release a week after its first-instance victory.

I strongly recommend the summary and the analysis provided by Bardehle's Professor Tilman Mueller-Stoy and Jan Boesing. After reading the Mannheim ruling, I don't have much to add, but I do wish to address two of the key holdings (one of them is actually just a dictum) because they are so very relevant to aspects of SEP litigation that this blog has addressed and will continue to discuss. Maybe my way of putting it will even encourage some more people to dig deeper by reading the aforementioned article.

Patent exhaustion clause in implementer's counteroffer needs to be timely and stand on solid ground, or will contribute to finding of unwillingness

In some patent--not only but also SEP--cases, patent exhaustion has saved the day for defendants. It's been almost ten years that I attended a French Samsung v. Apple preliminary injunction hearing that resulted in a victory for the iPhone maker because of the exhaustive impact of a license agreement between Qualcomm and Samsung. In that Mannheim case that was decided in March, TCL sought to benefit from a license agreement between LG and the same San Diego chipmaker: Qualcomm. Not all of the accused products in LG v. TCL came with a Qualcomm chip (unlike the particular iPhone model at issue in that French case), but some, and TCL wanted to benefit from patent exhaustion in two ways:

1. TCL's counteroffer excluded Qualcomm-powered devices from the computation of the "release payment" (i.e., back-royalties) that would compensate LG for past infringement.

2. TCL also reserved the right to dispute its obligation to pay license fees on future product sales if and when its SEPs might be exhausted under a Qualcomm-LG agreement.

The way I understand the Mannheim Regional Court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher), the judges would have considered at least the first part--and possibly even the second part--acceptable if TCL had raised the question of patent exhaustion early in the negotiations and if it had a strong case for exhaustion. However, the court notes that it was a very late stage of the infringement proceedings at which TCL brought this up for the first time, and dilatory tactics are often fatal to a FRAND defense in Germany under the Federal Court of Justice's two Sisvel v. Haier decisions clarifying the application of the European Court of Justice's Huawei v. ZTE guidance. But the court also looked at the clause of the Qualcomm-LG agreement TCL's exhaustion theory was based upon, and found TCL's argument unavailing as a matter of contract law. The ruling also mentions the territorial nature of patent exhaustion.

SEP holders can insist on back-royalties as an indispensable contractual condition. The court was also concerned that TCL might relitigate the exhaustion-related merits in the future by withholding payments.

The ruling doesn't explicitly say that TCL lost the case just because of the shortcomings of the exhaustion-related parts of its counteroffer. It's one of of those multifactorial findings, and TCL did other things that the court deemed to call into question TCL's willingness to take a license on FRAND terms. Also, to be on the safe side, the court also found that LG's offer and negotiating conduct were exemplary (without using that particular term), making TCL look even worse by comparison. Still, my subjective understanding of the decision is that the exhaustion part in and of itself would have been sufficient for TCL to lose the case. Of course, it remains to be seen what the appeals court will say (unless the case gets settled).

Given that the court found TCL's patent exhaustion theory not only belated but also legally deficient, I wouldn't want to jump to conclusions as to what would happen in a case where the patent exhaustion argument is substantially stronger, and made early on, though there still is an argument over whether exhaustion occurred. When products are sold in a different jurisdiction than the one in which they or the relevant components are made, patent exhaustion is rarely a slum dunk for defendants. And a conservative defendant really has to tread carefully in Mannheim now when it comes to exhaustion-related clauses in a proposed license agreement.

§ 315 FRAND licensing offer no safe harbor despite appellate decision

The LG v. TCL decision came down shortly after a ruling by the Karlsruhe Higher Regional Court--to which all Mannheim patent decisions are appealed--that breathed new life into the § 315 safe harbor. § 315 German Civil Code enables contract clauses that leave the determination of an exact amount to a court of law if the parties cannot agree. It's like a placeholer for an actual number, enabling a binding agreement to be concluded even though what is often the single most important question may be left open.

Even the arguably patentee-friendliest judge ever to have served on the Federal Court of Justice of Germany, Professor Peter Meier-Beck, declared himself sympathetic to the § 315 approach to SEP licensing at a Mannheim conference earlier this month.

In LG v. TCL, § 315 came up only in an obiter dictum. That is so because TCL merely brought it up as an analogy when seeking to defend its approach to patent exhaustion against criticism that a licensing offer is unacceptable to the patentee if it leaves open such a fundamental question of exhaustion, which has the potential to give rise to subsequent litigation. TCL apparently told the court that a § 315 offer doesn't totally resolve everything either, but a license agreement comes into being and an injunction may not issue.

Interestingly, the Mannheim court once again rejected the suggestion that a § 315 offer was sufficient. It didn't say that no § 315 offer would ever be acceptable from an implementer in a SEP case, but took a rather negative position.

That would have been inconceivable in a comparable U.S. case. If the Federal Circuit had addressed a question like this in another patent case and had said pretty clearly that a particular type of approach to the royalty amount is FRAND, a court below wouldn't dare to deviate from it. But the U.S. is a common law jurisdiction, while Germany is a civil law jurisdiction ("civil law" meaning in this case that it is in the tradition of the sixth-century Corpus Juris Civilis and the Napeolonic Code Civil).

What the Mannheim court does here is intransigent: it acts as if it had not been overruled (in the form of an order to stay the enforcement of an injunction due to the defendant likely prevailing, as opposed to an actual appellate opinion) over a § 315 clause in Nokia v. Daimler. But it's not a miscarriage of justice or whatever. They can do it, though they will likely be overruled again and again. In LG v. TCL it's just a dictum, so there can't be a formal reversal. Maybe the appeals court will assert its authority again and also issue a dictum. It might also just ignore this part as it's not outcome-determinative.

As a SEP holder I'd definitely be encouraged by that Mannheim LG v. TCL ruling. Nokia probably knew about it already when it decided to bring 11 (eleven!) patent cases against OPPO in Mannheim this month. Nokia is also suing OPPO in Munich and Dusseldorf, but Mannheim is the center of gravity of the German part of that dispute. At least initially.

LG will even more aggressively enforce its patents now, so I guess we'll see LG in action in Mannheim again in no time. And TCL is a frequent defendant to patent infringement complaints. What we won't see too soon, however, is an Ericsson v. TCL case: they've settled their long-running dispute according to Reuters.

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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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Upcoming conference: Mannheim IP Forum on July 2 -- top-notch roster of speakers from judiciary and academia

For those interested in the world's most popular patent jurisdiction, I have a warm recommendation: on next week's Friday (July 2, 2021), the Interdisciplinary Center for Intellectual Property (in German "Interdisziplinäres Zentrum für Geistiges Eigentum" (IZG)) will hold its annual conference at Mannheim Castle, just across the street from the Mannheim Regional Court--one of the courts that almost everyone involved with patent litigation has already been to.

You can find the conference program on the IZG's homepage. If you don't want to settle for a simple HTML layout, a flashier option exists: the conference program flyer (PDF).

You can attend physically or over the Internet, and the registration form is here, but be aware that the conference will be held in German. I'm going to report on parts of it.

The primary organizer is Professor Lea Tochtermann. The first speaker--sort of a keynoter--will be Professor Peter Meier-Beeck, the Presiding Judge of an antitrust-specialized "senate" (division) of the Federal Court of Justice and previously a patent judge. He'll discuss his court's Sisvel v. Haier case law, which was the final one of the topics addressed by the podcast I published on Monday. One of my podcast panelists, patent litigator Dr. Christof Augenstein of Kather Augenstein, is also going to be among the Mannheim speakers next week. He'll discuss the protection of confidential business information with a particular focus on standard-essential patent (SEP) enforcement.

After Professor Meier-Beck, Judge Dr. Georg Werner will discuss the lower courts' current FRAND case law. Judge Dr. Werner is currently presiding over a commercial law division of the Munich I Regional Court but widely expected to succeed Judge Dr. Matthias Zigann as presiding judge of the same court's Seventh Civil Chamber, while Judge Dr. Zigann is going to preside over the patent-specialized division of the Munich Higher Regional Court as of next year. Judge Dr. Werner is also a part-time lecturer at a German university.

The final conference session will be a panel discussion moderated by Professor Tochtermann. The panelists include Judge Professor Meier-Beck, Judge Andreas Voss ("Voß" in German; the presiding judge of the patent-specialized division of the Karlsruhe Higher Regional Court, which hears all appeals from Mannheim), Judge Dr. Daniel Voß ("Voss" in German; presiding judge of one of the three patent-specialized divisions of the Dusseldorf Regional Court and arguably the most patentee-friendly Dusseldorf judge at the moment), and Judge Dr. Werner. The four judges will be joined by a fifth panelist: the aforementioned Dr. Augenstein.

The topic of the panel discussion is broadly defined as "the impact of current Federal Court of Justice case law on the lower courts' judicial practice."

In the conference program you can find several more presentations, but in this blog post I mostly wanted to focus on the speakers who had recently been mentioned on my blog.

This promises to be one of the most interesting German patent law conferences in quite a while--probably the most significant event of its kind since sometime prior to the pandemic.

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German legislature just voted to amend patent injunction statute -- jurisdiction as attractive as ever to patent holders bringing infringement lawsuits

A few hours ago, at midnight local time, the German Bundestag (Federal Parliament) voted to amend the country's Patentgesetz (Patent Act). The plenary rubberstamped the version of the bill (PDF, in German) that came out of the legislature's Legal Affairs Committee on Wednesday.

Munich and Mannheim will remain the world's top venues for patent injunctions. If you're not worried about the new bill, you can also sue in Dusseldorf, where the appeals court likes to take extreme outlier positions (including public statements on this legislative measure) that are at odds with any other German court; if you don't want to take any risks that you can avoid taking, go to Munich or Mannheim (your "Swiss francs" of patent enforcement in Germany).

As I announced last week, FOSS Patents will offer a premium subscription service with a focus on those two venues and access to injunctions over standard-essential patents (SEPs) and non-SEPs alike. I'm going to monitor developments closely for my paying subscribers. There will be some new questions coming up in those cases; my prediction about the answers is known, but litigants will need to be prepared, and I'll help my customers in that regard. For SEPs, the legislature changed nothing in the opinion of some of the most prominent judges. My first (and free) advice to non-SEP enforcers is not to forget to make a formal licensing offer (almost as if you were asserting a SEP) in time for the trial. That's going to weigh against any claims of "hardship" on the defendant(s) or on third parties. Unlike eBay, a licensing offer won't be held against you: inadequacy of monetary relief is not, and after last night's vote still won't be, a requirement in Germany.

With a view to my future premium service, I've already had some good initial conversations with parties on both sides of the patent enforcement debate, and some more calls and video conferences have been scheduled. In a jurisdiction where there are no transcripts (and as one of my counterparts accurately noted, even transcripts of U.S. court proceedings sometimes miss important information such as demonstratives), and where there is no PACER for downloading the pleadings, one simply has to send someone to a courtroom to find out what happens. In addition to systematic coverage of the injunction-related aspects of each and every Munich and Mannheim case, I may also offer special reports for individual clients. Those special reports might also address the technical aspects of a case, provided that I receive the information I need to properly prepare. Law firms have asked me to do this on some occasions (as early as 2012).

Also, I will very soon produce a one-off podcast to discuss this amendment to the Patent Act, the evolution of SEP injunction case law in the wake of two Sisvel v. Haier cases, and the Munich I Regional Court's preliminary reference to the European Court of Justice concerning preliminary injunctions over battle-untested patents. I've invited three panelists who would represent a wide spectrum of opinions particularly on the amended Patent Act. I will merely be the facilitator and steer clear of voicing my own opinions on that occasion.

My perspective on this "patentDEform" bill is no secret. Rather than reiterate it, I'd like to just add a few observations here:

1. A few years ago, Volkswagen's chief patent counsel Uwe Wiesner brought up the problems his organization experienced with patent holders' unfettered access to injunctions in Germany. That presentation started the whole debate. Without Mr. Wiesner's initiative, it's doubtful anything would have been undertaken by now. At the time, it was the next best thing to heresy by the standards of the German patent law community to call into question the #1 feature that makes Germany such a popular litigation venue: the ability to shut down an infringer's sales in such a large market.

   Seen in that light, it's very significant--and back then it would have been considered a dream or a miracle--that § 139 (the injunction statute) was touched at all.

2. On the bottom line, however, defendants to patent infringement claims are even worse off now (even after that legislative measure) than they were when the process started. A couple of years ago, it still seemed that SEP injunctions were under control thanks to Huawei v. ZTE, and that companies could afford the luxury of addressing non-SEP issues. Now there is a bill that changes nothing about SEPs and, I predict, non-SEP injunctions will continue to be granted, just that there'll be some additional discussion with an outcome that is a foregone conclusion unless a patent holder makes a terrible mistake. SEP injunction case law, however, has gotten out of hand with the two Sisvel v. Haier rulings (the lower courts are simply doing what the Federal Court of Justice fully intended). And the Munich court's preliminary reference may very well lower the bar for preliminary patent injunctions.

3. In § 83 of the Patent Act, the Federal Patent Court is now asked to hand down preliminary opinions after six months. Theoretically, that could lead to more stays. But it's merely an objective, not a hard requirement. If the court can't deliver, it can't--and that it takes more time won't be a defense to an infringement complaint.

   Even if that goal is met (which it may or may not be in any given case), it will come at the expense of thorough prior art search. Defendants will have to identify their prior art references and define their invalidity contentions extremely early. If a patent is ridiculously weak, that won't be an issue. But sometimes it takes a lot of work, and there have been patents (such as one of Microsoft's File Allocation Table patents) against which it was not easy to field suitable prior art (in the end, an email posted by Linux inventor Linus Torvalds to a mailing list turned out to be the strongest one, but by the time someone unearthed that prior art reference, the patent was already on the verge of expiration).

4. There is some unfinished business here: the six-month goal applies to nullity actions before the Federal Patent Court, but "fresh" patents will firstly be challenged in opposition (revocation) proceedings before the European Patent Office (EPO) or the German Patent and Trademark Office (DPMA). That's going to be a big issue in, for example, 5G litigation, where patents will be asserted pretty shortly after they issue. The non-binding six-month target is then simply not going to come to bear.

   The incoming government after the September elections will be informed by the Federal Ministry of Justice that this problem still needs to be addressed. And the moment they touch the Patent Act again, it's likely that at least one "camp" will seek a further amendment to the injunction statute. My prediction is that net licensees are going to conclude that this a case of "plus ça change" and that something more is needed. In that scenario, they will try to build on the ultrafine crack in the shell that last night's modification of § 139 (which is officially meant to endorse the case law of the Federal Court of Justice) represents.

5. When the rubber hits the road is what matters. We'll get there shortly, as the formal publication of the amended law is going to happen in a matter of days, weeks, or a couple of months at the most. It must be signed by the Federal President, but unlike the President of the United States, he merely notarizes laws unless they raise clear constitutional issues, which won't be the case here.

6. In this new phase, my focus is not on what I believe went wrong last time, but on what exactly the courts and the lawyers make of it. I'm open-minded. I have no problem with concluding that this here does help defendants should it actually happen. I don't have a crystal ball. I can't imagine it today, simply because I can't see how non-SEP holders--who have neither an antitrust duty to deal nor a FRAND licensing pledge to honor--would be treated worse by the courts (if they make a licensing offer) than SEP holders. It was far harder for some German courts (and took them a few years) to vitiate Huawei v. ZTE than it will be to continue to grant injunctions under the new § 139, also considering that the official rationale for the bill (and the indisputable legislative intent, as documented by speeches given and press releases issued throughout the process) has more to do with continuity than with anything else.

7. Let's come full circle back to Volkswagen, the company that started this. In a Handelsblatt article earlier this week (when it was clear what lawmakers were going to do), Volkswagen is quoted as welcoming this "clear signal" to patent trolls and important step toward a German patent law less prone to abuse, but very realistically notes that judicial practice will have to show whether the courts "seize this opportunity" to deny injunctions in certain cases.

   Of all the statements I've read in recent days, that one appears most balanced to me. A wait-and-see approach. I'm going to wait and see very actively. I'll track the developments for my future customers so they can get the best result under whatever the circumstances will be.

[Update] Heise online, Germany's leading information & communications technology news website, has a great headline: it translates literally as "Federal Parliament puts pebbles [using the diminutive of "stones"] in patent trolls' way." [/Update]

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Nokia's losing streak in appeals courts continues: injunction gets lifted after Daimler's licensing offer is considered FRAND-compliant

Nokia launched its standard-essential patent (SEP) assertion campaign against Daimler almost two years ago in hopes of gaining so much leverage that it could force Daimler to take a costly license either from Nokia itself or from the Avanci group. It took almost a year and a half before Nokia obtained its first injunction against Daimler, which was in fact its first German SEP injunction ever. On Friday, that one imploded as the Karlsruhe Higher Regional Court's Sixth Civil Senate (Presiding Judge: Andreas Voss, "Voß" in German) allowed Daimler to prevent the enforcement by providing security to the amount of 75 million euros. The injunction was not enforced for even one day.

This blog has mentioned Judge Voss many times, but that was almost a decade ago, when he was the presiding judge of the Mannheim Regional Court's Seventh Civil Chamber. A few years ago he became an appellate judge, and with so many disputes being settled relatively early on, I haven't been to that appeals court even once. But Judge Voss's order to stay the enforcement of that Nokia v. Daimler injunction from Mannheim is an extremely important one, not only with a view to that particular dispute but also with a view to many other SEP cases.

Those German appeals courts have generally given Nokia a hard time. The former handset maker was about to lose an interlocutory appeal in Dusseldorf and just withdrew its meritless appeal. That was apparently after Friday's Karlsruhe decision that is the main focus of this post. Previously, the Munich Higher Regional Court raised the security amount in another Nokia v. Daimler case, making any enforcement less likely. And in a Nokia v. Lenovo case (also in Munich), the patent-in-suit turned out to be likely invalid.

Some of those decisions, such as the one in the Lenovo case, are disappointing only for Nokia. But Friday's Karlsruhe ruling is of transcendental importance as it re-enables what used to be a reliable safe-harbor defense strategy in German SEP cases for a long time: a FRAND licensing offer (by the implementer) that does not specify a particular royalty amount, leaving its determination--unless the parties reach an agreement anyway--to a court of law. That approach is often referred to as an "Art. 315 offer" as Art. 315 of the German Civil Code provides this kind of mechanism, which is found in many contexts and not just SEP litigation.

For a long time, an Art. 315 offer used to be a surefire way for an implementer to avoid being enjoined. But more recently, some German courts, particularly the Munich I Regional Court and Mannheim Regional Court, have found each and every implementer of a standard to be an unwilling licensee, allegedly in line with the Federal Court of Justice's Sisvel v. Haier SEP ruling, which could actually be interpreted more narrowly given the special circumstances of that case.

Until the European Court of Justice handed down its Huawei v. ZTE decision, Germany had a more SEP holder-friendly doctrine named Orange-Book-Standard in place. But even under Orange-Book-Standard, an Art. 315 offer was sufficient (unless some terms were attached to it that a court would have found to be too disadvantageous for the patentee to have to accept).

So, more recently, implementers were actually worse off under Huawei v. ZTE, due to Sivel v. Haier, than they used to be, for example, a decade ago under Orange-Book-Standard. That's what I call a setback!

At least some judges in Dusseldorf have continued to apply Huawei v. ZTE the wayo the German courts used to in the first few years after the ECJ ruling. But in Mannhein and Munich, the SEP litigation situation has recently been a mess of unbelievable proportions. Just so there's no misunderstanding, it's one thing that I disagree with the positions taken by the judges on FRAND questions and another that they're very good at what they're doing (case in point, the Munich court's preliminary reference to the ECJ is clear, concise, and compelling, though its effects could be disastrous)--they're just too patentee-friendly.

The Munich Higher Regional Court has a motion for an enforcement stay in a Nokia v. Daimler case pending, and is aware of where the key issues in that case are. It hasn't decided on the merits of the case yet; so far it has merely ruled on the security amount. I'm somewhat optimistic that the Munich appeals court, too, will conclude that defendants to SEP assertions shouldn't be in a fundamentally weaker position post-Sisvel v. Haier than they used to be pre-Huawei v. ZTE. At least in Karlsruhe, and therefore in Mannheim (the patent infringement court below), the problem has now been solved, not only for Daimler, but for everyone else as well.

Judge Voss's decision spans 23 pages because it summarizes the case and addresses a number of questions that could potentially have given rise to a stay. Clearly, the court below can't complain that Judge Voss wasn't deferential. He didn't want to just substitute his opinion for that of the lower court--a court on which he himself served so many years. At this stage, it's about a motion for a stay, not yet about a final appellate opinion. After the appellate hearing (in a year or so), Judge Voss may very well conclude that multiple aspects of the Mannheim Nokia v. Daimler judgment need to be overruled. But for now, Judge Voss wanted to order a stay only if he identified clear legal error, and the Mannheim court's determination that even an Art. 315 offer didn't establish Daimler's willingness to take a FRAND license was categorized as clearly erroneous. On that basis, the court granted Daimler a stay.

While the injunction is stayed, Nokia is still allowed to enforce its claim for an accounting. If Nokia does so, Daimler has to provide a whole lot of documentation enabling Nokia to quantify its damages claim. That's a major administrative burden on Daimler, yet better than not being able to sell its Mercedes cars.

I may very well talk about this Karlsruhe decision again in the near term, and possibly translate some passages. One tidbit is worth sharing: when calculating the collateral Daimler as to provide, the appeals court mentions the possibility that it could take five years until a final decision--and in that context, the possibility of having to await the ECJ's decision on component-level licensing (as a result of the preliminary reference from Dusseldorf) is mentioned. I found that part very interesting. Nokia will not be amused.

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Nokia sought to enforce shaky patent against Daimler just prior to expiration, but Mannheim Regional Court said no

Nokia is part of a coalition of companies with a strong interest in patent monetization, and that group is at least 100 times better at IP policy than the entire German automotive industry and Deutsche Telekom combined. Nokia and its friends have lobbied the German legislature to the effect that from the far left to the far right, there's stiff resistance to anything that would significantly limit patentees' access to injunctive relief.

Lately, however, Nokia's litigation results are clearly not at a level with its lobbying sucess stories. Chinese computer maker Lenovo, supported by an intervening supplier (Nvidia), has defended itself so successfully against what Nokia apparently thought were its best H.264 video codec patents that the FRAND royalty for that particular portfolio might even amount to zero. And even in Nokia's primary domain, cellular standard-essential patents (SEPs), enforcement efforts are about as "successful" as Nokia's handset business (which some of us remember, but today's teenagers know only from hearsay) was eight or nine years ago.

Yesterday (February 3, 2021), Presiding Judge Dr. Holger Kircher of the Second Civil Chamber of the Mannheim Regional Court entered a scheduling order: the trial in Nokia v. Daimler case no. 2 O 37/19 over EP1273199 on a "method and arrangement for maintaining synchronization in association with resetting a communication connection" will take place on June 22, 2021--more than two months after the patent's expiration date (the priority date according to Google Patents was April 10, 2000, so the 20-year-term will end in about two months).

Last summer, that case got stayed pending a nullity proceeding before the Federal Patent Court. The court indicated its strong inclination to stay the case (forcibly if need be) and urged Nokia to stipulate to a stay. Nokia's counsel obliged, but filled several more pages arguing why the patent was novel or at least inventive over some prior art references Daimler had added to its list.

At that time, Nokia told the court that it expected the Federal Patent Court to issue its preliminary non-binding opinion ("qualifizierter Hinweis") before the end of the year, but the patent would expire not long thereafter, so Nokia already asked the court to schedule a trial as soon as possible after the preliminary opinion.

It took the Federal Patent Court a little longer than Nokia thought, but on Friday (January 29, 2021), it sent its preliminary opinion to counsel. Those preliminary opinions reflect some inclination on the court's part, but unless the picture is very clear (such as the court saying that each of three prior art references independently renders the claimed invention non-novel), the outcome at the conclusion of the nullity trial could still differ significantly.

In the case of EP'199, the court appears presently considers the claimed invention novel and inventive. The Federal Patent Court is also unconvinced of another invalidity theory--impermissible broadening of scope--but writes that "this is to be discussed" at the nullity trial on March 17. When a preliminary opinion contains a wording like that, it's more of an invitation to provide further briefing than anything else.

With the patent set to expire shortly, Nokia won't get to enforce an injunction over it. It can still seek damages, but that's the only remedy post-expiration. It's interesting that Nokia urged the Mannheim court to decide the case in time for Nokia to still be able to enforce the patent for a month or two. The collateral that Nokia would have had to post in that hypothetical scenario wouldn't have amounted to billions of euros (as it did in some other cases where there would have been more time left to enforce). So Nokia could have afforded it, and could have sent out a signal to Daimler and others that it's a merciless enforcer of injunctions. It's doubtful, however, that Daimler would have had to settle in order to avoid a short-lived enforcement. With the scheduling order from Mannheim, there's no such risk anymore.

The most important legal issue in those Nokia v. Daimler cases is the entitlement of automotive suppliers to an exhaustive component-level license on FRAND terms. The Dusseldorf Regional Court's referred to the Court of Justice of the EU certain component-licensing questions, which Nokia appealed. The Dusseldorf Higher Regional Court will almost certainly uphold that referral later this month, and seize this opportunity to provide input to the top EU court of the kind Nokia won't welcome.

There's recently been only one piece of good news for Nokia on the litigation front: the European Patent Office affirmed a Nokia SEP in an opposition proceeding. That case will go to trial in Munich in the summer. But in the meantime, some key decisions addressing FRAND issues (including, but not limited to, component-level licensing) will be handed down by the appeals courts in Karlsruhe (where all Mannheim appeals go) and Munich (which could effectively render that next Nokia v. Daimler trial inconsequential).

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Germany's most prominent patent judge disagrees with Mannheim court's Mercedes sales ban on three out of four counts

Last month's Germany-wide Mercedes sales ban--a final (though appealable and actually being appealed as we speak) judgment by the Mannheim Regional Court in a Nokia v. Daimler case--is already the most controversial German patent ruling since a December 2018 iPhone injunction that was later reversed on multiple independent grounds. It may even have contributed to a surprising change of mind on the part of the Federal Ministry of Justice of Germany regarding the injunction part of a patent reform bill. While the rationale provided by the ministry is still the same as in January, the statute--and that's what really matters, as the commentary will only be adduced if there's a lack of clarity--would definitely do away with automatic patent injunctions. The way it's written, injunctions would still come down in most cases, but no longer in all of them--and certainly not without a fair amount of analysis if a defendant demonstrates harm to itself and/or third parties.

At this point, Nokia is not enforcing that Mannheim injunction. German patent injunctions are not self-executing, so it takes action on Nokia's part in order to take effect.

It has meanwhile been confirmed to me by the spokesman (himself also a judge) of the Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court) that the panel of judges hearing the appeal (Presiding Judge: Andreas Voss, "Voß" in German) proposed that Nokia agree to refrain from enforcement while the appeals court is weighing Daimler's motion for an enforcement stay.

Germany's most prominent patent judge is Dr. Thomas Kuehnen ("Kühnen" in German) of the Dusseldorf Higher Regional Court, as he's the author of the leading reference work on patent infringement litigation in Germany (which other German judges cite to all the time), and a frequent public speaker. While I disagree with his generally very patentee-friendly stance (such as on the standard for stays pending parallel nullity actions), he's been amazingly receptive in recent years to the concerns of implementers of industry standards.

Judge Dr. Kuehnen regularly organizes webinars at which he discusses landmark decisions with attorneys and other experts. Very recently, he briefed and commented on the Mannheim Regional Court's Nokia v. Daimler injunction.

In the second part of his presentation, Judge Dr. Kuehnen expressed his views on four different "theses" found in the Mannheim ruling. All four of those "theses" are about the application of antitrust law to the enforcement and licensing of standard-essential patents (SEPs), and Judge Dr. Kuehnen agrees with the Mannheim court's Second Civil Chamber (note that the same court's Seventh Civil Chamber has its own perspective) on only one of them:

1. Unlike the Mannheim court's Second Civil Chamber, Judge Dr. Kuehnen reads the CJEU's Huawei v. ZTE opinion as merely requiring an implementer to indicate a willingness in principle to take a license on FRAND terms in response to a patentee's mere notice of infringement.

   The Mannheim panel held, however, that an implementer--like under the German Orange-Book-Standard doctrine that is no longer good law (and never really was)--needs to make an offer to the patentee to take a license on terms, and that offer only helps to avert an injunction if a court later finds that its terms were FRAND. (Here, the court deemed neither Nokia's demands nor Daimler's counterproposal to be FRAND.)

   According to Judge Dr. Kuehnen, the Mannheim decision turns the CJEU case law (Huawei v. ZTE) on its head.

2. Closely related to the first issue is that the Mannheim panel then deemed it irrelevant that Nokia's proposed licensing terms weren't FRAND. Judge Dr. Kuehnen, however, begs to differ. His reading of the CJEU case law is that the focus must be on the patentee's licensing offer. If the implementer requested such an offer, then that's all the implementer had to do that stage. Therefore, according to Judge Dr. Kuehnen, an implementer's offer only needs to be analyzed by a court if the SEP holder's demand was FRAND. If it was FRAND, then the implementer must either accept that offer or may make a counterproposal, but the counterproposal would have to be within the FRAND range, too.

3. The only item on which Judge Dr. Kuehnen agrees with the Mannheim ruling is that the amount of license fee should be based on the value a patented invention adds to the end product as opposed to the purchasing price of the smallest salable patent-practicing component. On this one, I don't generally agree with Judge Dr. Kuehnen: the market for a particular type of component has its own supply-and-demand dynamics, and if an invention is particularly useful downstream, that fact will drive demand. I would agree with Judge Dr. Kuehnen if he argued that the manufacturing cost of the component (without any intellectual property being licensed) isn't relevant.

4. Finally, Judge Dr. Kuehnen disagrees with the Mannheim court's holding that SEP holders can just sue end-product makers even if that one's suppliers are willing and able to take a license, barring exceptional circumstances under which it would not be reasonable to expect a SEP holder to deal with a hypothetical multitude of suppliers.

   In all likelihood, that part is now going to be put before the Court of Justice of the EU, as the Dusseldorf Regional Court (below Judge Dr. Kuehnen's appeals court) appears determined to refer the component-level licensing questions in both a Nokia v. Daimler patent infringement case as well as in a Huawei v. Nokia antitrust case to the Luxembourg-based top EU court.

Judge Dr. Kuehnen can merely discuss--but not reverse--the Mannheim ruling. We'll see what the Karlsruhe Higher Regional Court is going to do. At this stage, the Karlsruhe appeals court has not yet scheduled a decision on Daimler's motion to stay enforcement. I guess that will happen this year, but the actual appellate hearing will presumably be held in mid-2021.

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German patent judges turn legality on its head: limited patent term justifies antitrust violations and other types of injustice (Nokia v. Daimler)

These days the FOSS Patents blog is more of a "FOSS Antitrust" blog, but when I chose the name more than ten years ago, I had no idea. So at the moment I'm primarily following the FRAND issues in key automotive cases (with Germany being the patent litigation hotspot it's traditionally known for, while falling behind in innovation) and the app store cases in the Northern District of California.

The most outrageous part of yesterday's Nokia v. Daimler decision by the Mannheim Regional Court involves antitrust law, too. The court's press release already said that the "relatively short remainder of the term of the patent-in-suit led the three-judge panel to exercise its discretion to the effect of denying a stay of the case for the purpose of referring to the Court of Justice of the EU certain questions of competition law raised by the Federal Cartel Office of Germany.

Actually, the European Patent Office's Espacenet search delivers an October 2007 priority date, meaning the patent is still going to be valid for more than seven years .

What was--to my dismay--unsurprising is that German patent judges would deem the limited term of a patent to weigh in a patentee's favor with respect to pretty much any question that has a bearing on access to injunctive relief. It's the exact opposite of what I typically see when eBay v. MercExchange is applied in the United States.

Before bashing the Mannheim court's Second Civil Chamber for this line of reasoning, I firstly wanted to obtain the exact wording of the relevant passage, as opposed to relying exclusively on the court's press release. Meanwhile I've been able to take a look at it, and it's every bit as outrageous as I feared.

Here's how the Mannheim court's Second Civil Chamber justified its denial of the request for a referral and a stay:

• The judgment notes that a majority of the proposed questions to be referred have been rendered irrelevant by the court's holding that Daimler and its suppliers weren't willing licensees. (Not only do I disagree with that conclusion, but under Huawei v. ZTE it doesn't matter anyway as the court didn't consider Nokia's proposed terms to be FRAND-compliant either.)

• Even against the background of that (legally erroneous) conclusion, the court acknowledges that two of the questions proposed by the Federal Cartel Office for referral to the CJEU remain outcome-determinative:

  1. whether a SEP holder is free to choose whether and at what level of a supply chain it grants a license, and

  2. whether Art. 102 TFEU establishes qualitative, quantitative or other criteria for offering a FRAND license to the supply chain.

• The court then stresses its discretion with respect to granting or denying a stay, and notes that an injunction is only available during the patent term, which in the court's opinion poses a risk that injunctive relief might not be able to be enforced anymore.

The CJEU would just need a couple of years to decide, so there would have been plenty of time for a referral anyway. But that's not even the point I'm most concerned about.

The structural problem is that German patent judges generally hold the limited term of a patent against defendants, not against patentees. They often do the same in connection with stays pending a validity determination.

I do understand the difference between "law" and "justice," but I am concerned when judges knowingly and willingly favor, promote and create injustice.

Even if the patent expired in a matter of months, or in 2021 or 2022, that wouldn't give Nokia the right to breach the antitrust laws. If the CJEU answered the Federal Cartel Office's question regarding supply chain-level SEP licenses in Daimler's and its suppliers' favor, Nokia would simply have no case. Its infringement litigation campaign against Daimler would--as it in my opinion does--constitute a highly abusive act. The Mannheim Regional Court's Second Civil Chamber is fine with that possibility. All that matters is to rule in the patentee's favor.

That said, I do give the Mannheim court credit for having stayed two other Nokia cases because the patents were so extremely likely to be invalid that it appeared to be the right choice. Also, Nokia lost one Mannheim cases on the grounds of non-essentiality. But those are technical questions--which is the category of issues German patent judges are comfortable dealing with. Once antitrust law comes into play, they pretty consistently--with a few notable exceptions--prioritize the interests of patent holders over the public interest, and over other fields of law, especially antitrust law.

It would take meaningful legislative reform to bring about change, but the German automotive industry is at the bottom of the IP policy learning curve and getting over it at a snail's pace (to put it mildly). I actually expect patent injunctions to be even more readily available in Germany when the reform process is over than when it began, simply because the modified statute won't help defendants except in a "one in a million" type of exceptional case, while case law is clearly going downhill in the meantime. Contrary to misconceptions and political lies, that's not just a problem with case law at the lower levels: the Federal Court of Justice of Germany is no more balanced than any of the lower courts. Even a patent extremist like Judge Dr. Thomas Kuehnen of the Dusseldorf appeals court is a "moderate" at this stage compared to the country's top court (in practical terms) for patent cases...

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Mannheim Regional Court orders Germany-wide Mercedes sales ban over Nokia patent despite Nokia having violated EU competition law

The Mannheim Regional Court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher) has just ordered a Germany-wide sales ban against Daimler over a standard-essential patent (SEP) held by Nokia. The court issued a press release (in German) to announce this decision in case no. 2 O 34/19 over EP2981103 on an "allocation of preamble sequences").

What I'm still trying to find out is the amount of the security Nokia will have to give in the form of a deposit or a bond. According to Bloomberg, the court set the amount at €7 billion.

Unless this has changed since last time I checked, Nokia's litigation campaign against the Mercedes maker does not target cars that come with telematics control units (TCUs) supplied by Samsung subsidiary Harman. However, in parallel cases before the Munich I Regional Court, Daimler argued that a sales ban would still affect roughly half of its German sales during the relevant period.

The shocking part of the court's announcement is that the injunction came down despite both Nokia and Daimler having failed to make fair, reasonable and non-discriminatory (FRAND) licensing offers in the court's opinion. But the Court of Justice of the EU laid out a SEP injunction roadmap in Huawei v. ZTE five years ago under which the patentee firstly has the obligation to make a FRAND offer. For several years, German courts declined to enjoin an implementer of a standard in that situation without even looking at the implementer's counteroffer. However, very recently the positions of the Mannheim and Munich courts have changed in this regard by practically reverting to the old German Orange-Book-Standard approach of looking at the implementer's (counter)offer first--an approach they seek to justify by misreading EU case law.

From what I heard, the other patent-specialized division of the Mannheim Regional Court--the 7th Civil Chamber under Presiding Judge Dr. Peter Tochtermann--is still in line with CJEU case law.

Daimler will now have to petition the appeals court (Oberlandesgericht Karlsruhe = Karlsruhe Higher Regional Court) for a stay of the enforcement of the injunction Nokia just obtained. Nokia will certainly seek an adjustment of the security amount.

The Mannheim court also declined to refer certain component-level SEP licensing questions to the CJEU, a referral that Germany's antitrust authority (Bundeskartellamt, Federal Cartel Office) had recommended in a written submission. It's a disgrace that Nokia sues Daimler despite Daimler's suppliers all being interested in taking a license to Nokia's cellular SEP portfolio on FRAND terms. By contrast, Sharp, another major SEP holder and--like Nokia--a contributor to the Avanci pool, recently granted an exhaustive component-level license to Huawei, which indirectly covers Daimler.

Apart from having to give security, and besides the possibility of the Karlsruhe-based appeals court staying the injunction pending its appeal, Nokia faces significant risks on the antitrust front. Both the European Commission's Directorate-General for Competition (DG COMP) and the German Federal Cartel Office will now have to give serious consideration to taking immediate action against Nokia so as to prevent the enforcement of the injunction. They can slap Nokia with fines that would really hurt. If the EU Commission doesn't act, it becomes all the more obvious (as if it wasn't already) that EU competition commissioner Margrethe Vestager is merely a political opportunist and shameless protectionist who will go after any U.S. tech company even over absurd theories that the EU's own court disagrees with (such as the Apple tax case) while letting Nokia get away with clearly anticompetitive behavior.

So far, Nokia's patent infringement campaign against Daimler has been largely unsuccessful. Some patents were not infringed while various other cases got stayed pending validity determinations by the Federal Patent Court. Theoretically, a single successful enforcement effort could coerce Daimler into a settlement, but for the reasons outlined above, it's probably "too little, too late" for Nokia to get its way now--unless some antitrust watchdogs want to make themselves completely ridiculous, of course.

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BREAKING NEWS: Federal Cartel Office of Germany asks regional courts to refer component-level standard-essential patent licensing questions to CJEU, disagrees with Nokia

BREAKING NEWS

One of the most well-respected competition enforcement agencies in the world, the German Bundeskartellamt (Federal Cartel Office), has dealt a major blow to Nokia's abusive standard-essential patent assertion campaign against Daimler and, by extension, Daimler's global suppliers. As a result, the Mannheim Regional Court has already postponed the ruling it was slated to announce tomorrow (June 23) to August 4, 2020.

On June 18, Joerg Nothdurft, one of the highest-ranking officials of the Federal Cartel Office, sent a 24-page fax to the Mannheim and Munich courts, outlining the antitrust agency's perspective on the question of component-level licensing. In what is comparable to a Statement of Interest by the DOJ in U.S. cases or an amicus curiae brief, the Federal Cartel Office moves to stay Nokia's SEP infringement cases against Daimler and to refer multiple outcome-determinative legal questions to the Court of Justice of the EU (CJEU) in Luxembourg.

The letter notes that two of Daimler's suppliers--Continental and Valeo--drew the office's attention to certain issues.

The Federal Cartel Office proposes to request the CJEU to opine on a set of specific legal questions:

1. The first question is whether it constitutes an abuse of a dominant position under EU competition law to pursue injunctive relief against an end-product maker while refusing to fully license its suppliers.

2. The second question relates to whether a SEP holder is "entirely free" to choose the target of an infringement action regardless of its position in the supply chain.

3. The third question outlines specific cases in which the Federal Cartel Office is inclined to believe that suppliers are entitled to a license.

4. The fourth and final question raises the issue of whether SEP holders are free to offer a license only to a particular level of the supply chain.

The Federal Cartel Office notes that the European Commission's Directory-General for Competition (DG COMP) has not yet decided whether to open formal investigations, but that its failure to do so does not suggest that Nokia's course of action is in compliance with EU antitrust law.

I interpret the Mannheim Regional Court's postponement of tomorrow's decision on very short notice as a sign that the court originally intended to order a Germany-wide sales ban, but is now forced to give this further thought. I cannot imagine that Judge Dr. Kircher is still going to enjoin Daimler. And if he did so, his injunction would be stayed by the appeals court in no time.

This development is the worst news ever for Nokia and its partners-in-crime (mostly the Avanci gang) in the automotive patent wars. Nokia's and its trolls' (as well as Sharp's) infringement campaign is going to grind to a halt now. The Court of Justice of the EU will decide. DG COMP may or may not launch formal investigations now, but in the event of a referral of those legal questions to Luxembourg, the Commission would most likely await the outcome before taking specific action against Nokia. I suspect that the Federal Cartel Office filed its amicus curiae brief with DG COMP's unofficial blessings.

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Dusseldorf Regional Court reinforces position on access to standard-essential patent injunctions: analysis starts with SEP holder's licensing offer

On Monday, the press office of the Landgericht Düsseldorf (Dusseldorf Regional Court) issued a press release on six Conversant v. Huawei and ZTE cases scheduled to go to trial tomorrow (Thursday, June 18, 2020). Of note, the court that adjudicates more patent infringement cases than any other European court (though most smartphone cases, including cases over cellular connectivity in cars, go to the rocket dockets in Mannheim and Munich) reiterates its position on the availability ofcinjunctions over standard-essential patents:

"Nach der Rechtsprechung des EuGH darf ein Unterlassungsanspruch aus einem standardessentiellen Patent, für das eine FRAND-Erklärung abgegeben wurde, nur geltend gemacht[] werden, wenn der Patentinhaber dem lizenzwilligen Benutzer zuvor eine Lizenz zu fairen, angemessenen und nicht diskriminierenden Bedingungen (FRAND) angeboten hatte."

My unofficial translation:

"According to CJEU case law [i.e., Huawei v. ZTE], injunctive relief over a FRAND-pledged standard-essential patent may only be sought if the patentee previously offered to the willing licensee a license on fair, reasonable, and non-discriminatory (FRAND) terms."

The above sentence reaffirms that the starting point of the FRAND analysis will be what the SEP holder demanded. Should the SEP holder have failed to discharge its FRAND duties, no injunction will issue.

The three leading German patent litigation venues continue to approach and adjudge this legal question inconsistently:

• The Dusseldorf court is internally consistent, and in my opinion properly interprets what the CJEU said.

• The Munich I Regional Court takes the contrary position.

• Mannheim is internally divided--but a court divided can stand, at least in a non-Common Law jurisdiction like Germany. The Mannheim Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Peter Tochtermann) is still aligned with Dusseldorf, while the same court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher), which used to be in the mainstream, has recently decided to turn south in this regard, though there is still a glimmer of hope for Daimler in a pending Nokia case (scheduled to be decided next week) based on an adjustment made by that judiciary panel.

The legal test is extremely important, but let's not forget that a lot depends on how a test is applied. If the analysis begins with the SEP holder's offer, but even the most egregious of royalty demands are deemed to be FRAND-compliant, it won't really help. Conversely, if a court approaches a case like the Mannheim Regional Court's Second Civil Chamber in Nokia v. Daimler, but doesn't set the bar unreasonably high for the implementer of the standard, then the outcome may still be pro-competitive. That's why next week's Mannheim ruling will be a particularly interesting one to analyze.

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Sharp's blunt swords: two patents-in-suit against Daimler likely invalid, infringement cases got stayed

Last summer, five Sharp v. Daimler patent infringement cases (two of which were filed in Mannheim, the other three in Munich) became known through a filing in a U.S. Continental v. Avanci case. When the Munich I Regional Corut scheduled a couple of first hearings, I provided an update in September. Now it's time for a catch-up, as a couple of cases have been stayed and the other three are going to trial soon:

• In its first-filed case against Daimler, Sharp is asserting EP2154903 on a "mobile communication system, base station device, and mobile station device" in Mannheim (case no. 2 O 46/19; complaint filed on 12 April 2019). As per a May 26, 2020 decision, that case has been stayed pending the resolution of a nullity action the infringement court deemed meritorious.

• In the second Mannheim case (over EP2129181 on a "mobile communication system, base station apparatus and mobile station apparatus"; case no. 2 O 87/19), Sharp had no reasonable alternative to a stipulation to stay. Otherwise the case would have gone to trial later this month.

  So the current score is "two down, three to go."

• The first Sharp v. Daimler Munich trial has been scheduled for July 23, 2020 (Seventh Civil Chamber; Presiding Judge: Dr. Matthias Zigann). The patent-in-suit is EP2667676 on a "base station device, mobile station device, and uplink synchronization requesting method," and the case no. is 7 O 8818/19. The complaint was brought on June 28, 2019.

  On the same day, the same court will also hold an additional trial in a Nokia v. Daimler case.

• A couple more Sharp v. Daimler cases will be tried in Munich on November 3, 2020 and the following day (case no. 21 O 8609/19 over EP2854324 on a "communication system and mobile station apparatus" and case no. 21 O 9918/19 over EP2312896 on a "base station device, mobile station device and corresponding communication methods using carrier aggregation").

Sharp is a contributor to the abusive Avanci patent pool that makes supra-FRAND royalty demands and declines to license component makers. It's more of a gang than a pool, and its level of coverage (of the cellular SEP landscape) is far lower than Avanci likes to pretend, as I'll discuss in another post very soon.

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Mannheim Regional Court's Second Civil Chamber updates position on standard-essential patent injunctions -- FRAND-compliant defendants in the clear

Access to standard-essential patent (SEP) injunctions in Germany remains in flux. This is the third post in a row to share news regarding the situation in Mannheim, the "diversity venue" du jour.

One week ago, I reported on the position taken by the Mannheim Regional Court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher) in a Nokia v. Daimler trial earlier that week. Effectively, Judge Dr. Kircher's panel told the parties (behind closed doors, but without insisting on confidential treatment of that part of the conversation) that the judges were going to reverse their Huawei v. ZTE-related approach of several years: they were going to start their analysis with the implementer's counteroffer.

Toward the end of yesterday's post on Conversant's quartet of patent infringement complaints against Daimler in Munich, I mentioned that in a Nokia v. Lenovo trial on Friday, the Mannheim court's other patent-specialized division--Presiding Judge Dr. Peter Tochtermann's Seventh Civil Chamber--had distanced itself from the other panel's stance.

Meanwhile I've obtained a copy of a clarifying order by Judge Dr. Kircher and his side judges Sender and Dr. Seibel, dated Monday, May 26, 2020, in that Nokia v. Daimler case. With a view to the defendant's leave to file a post-trial brief on FRAND, the Second Civil Chamber explains its current position on the legal framework as follows:

• They still stand by the sequence of analysis they outlined last week and will focus on the defendant's (here, Daimler's) counteroffer first, unless Germany's top court for civil litigation, the Federal Court of Justice, were to decide otherwise at some point. (This makes it a possibility that they might not even follow such guidance by their direct appeals court, the Karlsruhe Higher Regional Court--with case law being weak in Germany, they wouldn't have to.)

• But--and I can hardly overstate the extent to which I welcome this latest development--they have thought again about what the practical impact of a scenario in which both the SEP holder's initial offer and the implementer's counteroffer are deemed FRAND-compliant should be. In last week's trial, they indicated that even in the "FRAND vs. FRAND" case, an injunction would issue (which is the position of the Munich I Regional Court). Now, however, Judge Dr. Kircher's panel has stated in writing that the pursuit of an injunction by a SEP holder despite a FRAND counteroffer by the implementer might constitute abusive behavior under EU antitrust law and, therefore, be rejected by the court.

I have updated my chart accordingly (click on the image to enlarge; this post continues below the image):

This means that, apart from the procedural approach (which offer to analyze first), the only difference from the court's previous legal position is the bottom-right cell of the matrix: previously, non-FRAND behavior by the SEP holder would have resulted in a denial of injunctive relief without even having to look at the implementer's counteroffer; now, however, the SEP holder might get away with a FRAND violation, which would be practically "cured" by the implementer's failure to submit a FRAND counteroffer.

For the Nokia v. Daimler case at hand, this adjustment--it wouldn't be grossly unfair to say they backtracked a bit, but it's more appropriate to recognize and respect their diligence in having furthered their thinking--means that Daimler now has to convince the court that its offer was FRAND-compliant. Should the post-trial brief make a compelling case to that effect, Nokia will come out on the losing end as it (statistically speaking) almost always does in litigation.

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Mannheim court reverses position on FRAND defense: standard-essential patent injunctions become readily available again

On Tuesday, the Mannheim Regional Court held a trial in a Nokia v. Daimler case (case no. 2 O 34/19 over EP2981103 on an "allocation of preamble sequences") and announced the most colossal about-face I've seen from a court so far on a key question of patent law:

Presiding Judge Dr. Holger Kircher of the Mannheim court's 2nd Civil Chamber explained to the parties and intervenors that he and his side judges had concluded their court's application of the Court of Justice of the EU's Huawei v. ZTE standard-essential patent (SEP) injunction decision had been erroneous for several years. They were now going to interpret the CJEU opinion differently, with severe implications for those defending themselves against SEP injunction requests in that court.

For the time being, I'm not going to comment on the technical merits, though a Tier 2 (= indirect) supplier to Daimler disclosed to the court its implementation of the relevant part of the cellular standard in question and it appears to be clearly non-infringing, given that patent law is all about using specific means to achieve a result, as opposed to the result viewed in isolation. Also there appears to be a very strong case for impermissibly-added subject matter, which would render the patent invalid. But let's focus on FRAND.

In Huawei v. ZTE, a case referred to the CJEU by the Dusseldorf Regional Court, the EU's top court wanted to prevent both holdup (SEP holders obtaining supra-FRAND royalties against the backdrop of an injunction) and holdout (implementers using delaying tactics as opposed to negotiating license terms with SEP holders in good faith). Therefore, injunctions shouldn't be available as long as good-faith negotiations are ongoing, but mere lip service to negotiation wouldn't suffice. The key paragraph that sums up the CJEU's position on both parties having to act in good faith (with the initial obligation of making a FRAND-compliant licensing offer falling upon the SEP holder) is paragraph 71 (click on the image to enlarge; this post continues below the image):

That one is the final paragraph of the relevant part of the CJEU's ruling. It's the answer to the most important parts of the questions the Dusseldorf court had raised. It states clearly that, for (chrono)logical reasons, the SEP holder must make a FRAND offer "prior to bringing that action," and the implementer is expected to respond diligently and without delaying tactics to that offer, which means it has to make a FRAND counteroffer. FRAND is a range, so both the SEP holder's offer and the implementer's counteroffer can be FRAND at the same time.

There are 2x2=4 possible combinations of FRAND and non-FRAND positions taken by the parties on the licensing terms they would accept (click on the image to enlarge; this post continues below the image):

What the CJEU meant was that only one of the four combinations would lead to an injunction. The SEP holder would not get one if it failed to discharge its FRAND licensing duty, and if both parties made offers within the FRAND range, the SEP holder wouldn't be entitled to an injunction either as it could simply accept the implementer's counteroffer (or negotiate further to find some common ground in between).

What the Mannheim court explained on Tuesday is that the test would, from now on, focus on the implementer's counteroffer. Judge Dr. Kircher and his colleagues have recently decided to interpret para. 66 of the CJEU's decision to that effect:

66. Should the alleged infringer not accept the offer made to it, it may rely on the abusive nature of an action for a prohibitory injunction or for the recall of products only if it has submitted to the proprietor of the SEP in question, promptly and in writing, a specific counter-offer that corresponds to FRAND terms.

We'll get to the interpretation of that paragraph in a moment. The net effect is that a SEP holder could get away with a FRAND violation if the court isn't convinced that the counteroffer is FRAND. Instead of one of the four FRAND/non-FRAND combinations resulting in an injunction, all but one would (click on the image to enlarge; this post continues below the image):

That approach is materially consistent with, and may very well have been inspired by, the Munich I Regional Court's recently-published SEP guidelines.

But is that really a correct interpretation of Huawei v. ZTE?

It's a highly problematic approach to say the least.

Paragraph 71 is the one that really matters. It refers to all previous paragraphs, such as para. 66, as "the foregoing considerations" and then states a rule.

It's not just about whether para. 66 would be considered way too important. It also takes para. 66 out of context in another way: para. 66 discussed a scenario in which "the alleged infringer [does] not accept the offer made to it." It says "the offer", not just "any offer." And "the" offer is previously defined as an offer on FRAND terms.

Focusing on the implementer's (counter)offer turns the CJEU's case law on its head. It used to be the German Orange-Book-Standard approach to place all the burden on the implementer. But then came the CJEU (in Huawei v. ZTE and basically said (in other words): "No, firstly the SEP holder has an obligation under the antitrust laws, but if it discharges its FRAND duties, then we're not going to tolerate holdout tactics by the implementer. The implementer can keep negotiating, but within reason."

Arguably, the new (but actually not so new) Mannheim stance on SEPs is even worse than Orange-Book-Standard was, given that in the old days defendants were at least able to avert an injunction by making a licensing offer that relegated the determination of royalty amounts to a future judicial proceeding (they still had to post a bond or make a deposit).

The problem is clear. The impact can be disastrous. But how can this be fixed?

If an injunction comes down (the decision will be announced on June 23), Daimler can appeal it to the Karlsruhe Higher Regional Court. That appeals court could stay the enforcement of the injunction rather swiftly and set the record straight.

Regulatory authorities such as the European Commission and Germany's Federal Cartel Office could make filings with the Mannheim court, or with the appeals court in Karlsruhe. The courts would be free to disagree, but less likely to disagree with, say, DG COMP than with Daimler.

Theoretically, a solution could also come from the legislature. However, the German patent reform process is much ado about (pretty much) nothing due to the ineptitude of those pushing for injunction reform to make lawmakers understand what benefits an economic majority. They've foolishly wasted time and energy within existing industry organizations instead of just simply forging a strong cross-sectoral alliance and taking matters into their own hands while the window of opportunity to influence the political opinion-forming process was open. Now that window is closed, not in formal but in practical terms.

The new un-FRAND-ly development in Mannheim is shocking, and I believe there will be some resistance by industry. For the sake of innovation, and in the ultimate interest of consumers, I can only hope that it will be forceful, intelligent, timely, and effective.

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