In a landmark decision on 13 February 2007 in an action conducted by Bird & Bird's German office, the Regional Court of Düsseldorf, Germany's leading court in patent infringement matters, rejected four claims of patent infringement relating to patents declared to the European Telecommunications Standardisation Institute ("ETSI") as being "Essential" patents for the implementation of the GSM telecommunication standard on the ground that the patentee did not offer the defendant a licence on fair, reasonable and non-discriminatory ("FRAND") terms.
The court held that where an "Essential" patent is in dispute, the defendant can object to the grant of an injunction on the basis of anti-trust law. The ETSI intellectual property rules bind all members of ETSI and affect the interests of third parties because all members declaring their patents as "Essential" to the operation of ETSI technical standards commit themselves to grant licences to all other parties on FRAND terms. The court left open the question whether the third party must request a FRAND licence but stated that once such an offer was made it had to conform with anti-trust requirements.
In its decision dated 13 February, 2007, the court decided on two specific issues that rendered invalid the patentee's offer of a licence.
First, the patentee had demanded that the defendant grant a cross-licence for all of the defendant's non-essential patents. The court held that though a patentee is in principle entitled to request a cross-licence, a demand in these circumstances for a licence under non-essential patents violated anti-trust law.
Second, the court held that a licence offer from a patentee must include a cap on the total amount of cumulative licence fees in order to provide for circumstances where owners of other "Essential" patents demanded licence fees from the defendant. Such a cap should act to prevent demands from a number of patent owners building up into an unreasonable cumulative licence fee. Because the licence offered in the present case did not include a cap clause, the court found that the defendant had a further reason to resist the grant of an injunction for infringement.
Although the decision mainly focuses on the two specific issues referred to above, its legal impact will be much wider because it is the first decision of a court in Europe to deny the owner of a patent "Essential" to the operation of an industry standard the right to claim an injunction for patent infringement because the patentee did not offer a fair, reasonable and nondiscriminatory licence to the defendant.