In its decision dated 31 March 2016, docket number 4a O 73/14, the Düsseldorf Regional Court granted Saint Lawrence Communications (“SLC”) an injunction against Vodafone due to offering/selling of smartphones on the ground of the German part of the European Patent EP 1 125 276 found to be a standard essential patent (SEP) for the Adaptive Multi-Rate-Wideband Standard (AMR-WB-Standard). Five further parallel decisions were rendered the same day (docket numbers 4a O 126/14, 4a O 127/14, 4a O 128/14, 4a O 129/14 and 4a O 130/14). HTC, because of its delivery of smartphones to Vodafone, was third party intervener participating in the proceedings. The judgement is of particular interest since it further clarifies the Düsseldorf Regional Court’s notion of the specific obligations set out by the ECJ in Huawei vs. ZTE (C-170/13). The court considered the initial offer of SLC to be FRAND and dismissed Vodafone’s and HTC’s FRAND-defence.

FRAND-obligations of the SEP-proprietor

The court first dealt with the question how a case has to be handled in which the defendant has not been notified of the SEP-use prior to bringing the infringement action. The court set out that Huawei vs. ZTE in fact requires a notification of the defendant prior to lodging the action. This can in principle either be achieved by notification prior to lodging or, alternatively, by lodging the action and subsequently delaying the advance payment of court fees (which is required under German law for the service of the action) in order to render the notification in the meantime. In the case at hand neither of both alternatives had been abided by. However, since the patent action was started already in 2014 SLC could not foresee that Huawei vs. ZTE(rendered in 2015) would require a prior notification unknown under the previous German Orange-Book-regime. In such “transitional cases” the notification can be made good by way of service of the action brief that contains all information the defendant requires.

In turn the court dealt with the substance of the claimant’s offer and held it to be FRAND. The offer would be in line with an established licensing practice. Asking for a worldwide portfolio license binding also the parties’ affiliates was held admissible. According to the court, the defendant also received sufficient information in terms of the way in which the royalty rate was calculated.

As regards the established licensing practice the court inter alia brought forward that the claimant had presented to the court the (anonymised) licensing agreements of six mobile telecommunication companies with a comparable royalty. Therefore, in the Court’s view there was no sufficient indication that the claimed royalty is not in line with the commercial practice in the mobile communication sector. Also a comparison between the claimed royalty and the lower (per patent) royalty of the SIPRO-pool also offering SEPs to the AMR-WB-standard could not convince the court that the claimed royalty is not FRAND.

The court further set out that offering of a worldwide portfolio license is in principle admissible under FRAND-obligations. Licensing agreements are usually concluded on a worldwide basis, cover whole portfolios of patents and are concluded between groups of companies. The court brought forward that SLC holds parallel patents in all relevant jurisdictions worldwide in its own name or by way of affiliated companies. It is in principle FRAND to claim the licensing of foreign national patents also via affiliates in this scenario.

In terms of the disclosure of the way the royalty is calculated as required under Huawei vs. ZTE(C-170/13, para. 63), the court held that this requirement should not be interpreted too strictly. In particular, the SEP-proprietor does not have to present a mathematical calculation of the royalty rate. It is, therefore, in principle sufficient to disclose the basic considerations that led to the amount of the claimed royalty. SLC fulfilled this obligation by referring to a standard licensing royalty and its acceptance in the market.

FRAND-obligations of the SEP-user

Vodafone itself neither presented a counter-offer nor provided a security. The Court, therefore and due to the fact that it held SLC’s initial licensing offer to be FRAND, left open whether the defendant also has to react with a counter-offer if it cannot be determined that the SEP-proprietor’s initial offer was actually FRAND (in favour of a duty to react see Mannheim Regional Court, docket number 2 O 106/14 and docket number 7 O 66/15: no duty to react only if the initial licensing offer was obviously not FRAND).

The Court then dealt with the counter-offer provided by HTC that was held to be relevant for those smartphones which were provided by HTC to Vodafone. The Court first set out that the requirements of the ECJ decision as regards the relationship between SEP-proprietor and a third party (supplier) do not apply directly. In particular, the SEP-proprietor is not required to send a notification prior to bringing the action also to the supplier. However, the SEP-proprietor has to make a licensing offer if a respective request from the supplier is made which was done in the case at hand. Further, the court held SLC’s initial licensing offer to HTC to beFRAND and pointed out that the offer did foresee that the royalty could be made subject to a separate court’s review after conclusion of the licensing agreement. If such a stipulation was present it is unlikely that the initial offer is considered to be not FRAND.

In turn, the Court criticized HTC’s altogether three counter-offers in several respects to be notFRAND. The first two counter-offers were criticized on the ground of lack of substance and geographical limitation to Germany. The third counter-offer was held to be delayed and also criticized on the ground of geographical limitation to Germany. In addition, the court criticized that HTC did not provide security in time. Moreover, the amount of security was too low since the security covered only claims limited to Germany. In the case at hand SLC could claim a worldwide license. Thus, the security, as it has to match this geographical scope, was considered to be not in line with FRAND-requirements.