The Karlsruhe Appeals Court partially granted a defendant`s request for abatement of preliminary enforcement of a first instance judgment. It held that the practice of the Mannheim Regional Court, which – upon dispute – only reviewed the alleged FRAND offer of the plaintiff on a superficial basis for evident non-FRAND compliance could not be maintained in view of the findings of the CJEU in the Huawei v. ZTE (CJEU, GRUR 2015, 764) case.

The facts of the case – as far as relevant – were in short as follows: The plaintiff filed a complaint for alleged infringement of a DVD-pool patent against the defendant before the decision in the Huawei v. ZTE case was pronounced. In out-of-court discussions, the asserted patent and its alleged infringement was not pointed out to the defendant; this information was only included in the filed complaint. In the course of the proceedings, the defendant indicated willingness to discuss aFRAND license. The plaintiff provided an offer it considered FRAND, which the defendant disputed before bringing an own offer.

The Mannheim Regional Court awarded the complaint and held that the FRAND defence could not be successfully raised. In its decision, it reviewed the disputed FRAND offer of the plaintiff only on a summary basis, checking for evident non-FRAND compliance without going into details of the actual calculation.

In its present decision, the Karlsruhe Appeals Court, upon request of the defendant, had to – in advance of the full appeal proceedings – decide if it would order an abatement of preliminary enforcement of the first instance decision. The threshold of success of such a request is high, as it requires an evident legal error of the first instance court that will likely lead to a reversal of the judgment on appeal, as well as a balance of convenience in favour of the defendant.

The Appeals Court took issue with the fact that the Mannheim Regional Court had not – upon this being disputed by the defendant – comprehensively reviewed the plaintiff`s offer for compliance with FRAND requirements. The Mannheim Regional Court followed an understanding of the Huawei v. ZTE decision, according to which infringement proceedings should not shift into mere FRANDcalculation proceedings, as this endeavour is complex and time consuming. Based on this – in view of the appeals court erroneous – understanding, the Mannheim Regional Court applied only a superficial standard of review which only examines the offer on a summary basis for evident non-FRAND compliance. The Karlsruhe Appeals Court held that this understanding cannot be justified and reconciled with the Huawei v. ZTE findings. Rather, a full and comprehensive review would be required to determine if the offer was in fact FRAND. As an aside, the Karlsruhe Appeals Court indicated (it did not have to decide this) that the plaintiff may have some discretion as to what it considers FRAND-terms.

Another issue raised in the request for abatement of preliminary enforcement was that the plaintiff – contrary to the Huawei v. ZTE obligations – had not provided an out-of-court explanation of alleged infringement before filing the complaint. The Karlsruhe Appeals Court did not take issue with this; although finding that there was no protection of confidence in the German law approach prior to Huawei v. ZTE (in particular as violations of Art. 102 TFEU are only assessed on an objective basis when they take place without requiring default), it held that anticompetitive behaviour could be given up in the course of proceedings. In particular with regard to cases started before the Huawei v. ZTE judgment provided guidance, the Appeals Court took the position that a not too formalistic approach should be taken with a view to potential shortcomings regarding the CJEU-requirements, as long as these are cured in the pending proceedings. It remains to be seen in how far this approach also applies to cases filed after the CJEU decision.

With its present decision, the Karlsruhe Appeals Court awarded the request for abatement of preliminary enforcement of the first instance judgment, however with the limitation that this applies only to the claims for recall and destruction. With regard to the injunction, the Karlsruhe Appeals Court found that the balance of convenience would not be in favour of the defendant, as it had argued to have a design around in place so that it would not be apparent, why an abatement of preliminary enforcement of the forward-going injunction would be required.

TW Comment

This decision makes it clear that – if in dispute – the infringement court has to comprehensively review the plaintiff`s (FRAND) offer. Accordingly, a plaintiff will have to provide proof and evidence to enable the court to make such an assessment, which may inter alia include having to submit former license contracts. This, in turn, improves the defendant`s position and sharpens theFRAND-defence.