In three decisions dated 19 January 2016 (docket number 4b O 120/14, 4b O 122/14 and 4b O 123/14) the Düsseldorf Regional Court held for infringement of the German parts of the European patents EP 1 230 818, EP 2 485 514 and EP 2 119 287 owned by the plaintiff Unwired Planet (in the following: the Patents) and ordered the defendant Samsung to provide information and to render account of past sales in Germany. The Patents were held essential for the GSM and the LTE-standard, respectively. Unwired Planet had not asked for an injunction or a recall and destruction of infringing products, so there was no ruling on these issues. Ericsson, who was the original owner of the Patents and had assigned them together with claims for past damages to Unwired Planet, joined the proceedings as a third-party intervener.
The judgements are of particular interest since they address the admissibility of “portfolio splitting” in the context of a FRAND-determination. “Portfolio splitting” refers to the assignment of only parts of an SEP-portfolio so that it is eventually split up between different licensors, who can negotiate license agreements separately. This was presently the case, because the Patents assigned to Unwired Planet are only a part of Ericsson’s substantial SEP-portfolio.
The agreements governing the assignment of the Patents from Ericsson to Unwired Planet set out that the assignor’s FRAND-obligations have to be adopted by the new proprietor. Therefore, Unwired Planet issued a separate FRAND-declaration to ETSI. Samsung, however, alleged that the assignments were invalid inter alia under Art. 101/102 TFEU since Ericsson together with Unwired Planet, would seek to unduly increase the royalty rates by way of “splitting” Ericsson’s SEP-portfolio. Such behaviour would, therefore, be tantamount to a breach of FRAND-obligations.
The Düsseldorf Regional Court rejected this argument and held that the assignment to Unwired Planet was not invalid under Art 101 and 102 TFEU. The SEP-proprietor has basically no constraints under antitrust law in terms of the assignment of SEPs. The court denied that the assignment was intended to establish excessive pricing in the market, in particular pricing that exceeds the FRAND-benchmark. The court considered it to be legitimate if the SEP-proprietor seeks to acquire a better position in the negotiation process by splitting up its SEP-portfolio. Although cross-licensing is impossible in such a scenario, the (partial) assignment ofSEPs to a non-practising entity such as Unwired Planet, does not lead to an imbalance of theFRAND-negotiation process.
Moreover, the SEP-proprietor is not obliged to continue a certain licensing practice that the former SEP-proprietor had implemented prior to the assignment. Therefore, as long as the overall royalty rate payable for the use of the respective standard is fair and reasonable, the “splitting” of a SEP-portfolio remains legitimate, even if licensees of the new SEP-proprietor have to pay higher royalties than licensees of the previous SEP-proprietor.
With this recent decision the Düsseldorf Regional Court rejected arguments against “portfolio splitting” and found the partial assignment of SEP-portfolios generally admissible underFRAND-aspects. This even applies if the assignment is made in order to acquire a better market position and eventually generate an increased royalty rate as long as there is no clear indication that the claimed overall royalty rate exceeds the FRAND-level.