In the aftermath of the Court of Justice of the European Union’s (the “CJEU”) decision in Huawei Technologies v ZTE, the Higher Regional Court of Düsseldorf has ruled on the obligations of a standard essential patent (“SEP”) owner, in the telecommunication sector (GPRS and UMTS standard), before seeking an injunction against an alleged infringer.
The CJEU decision in the Huawei case outlines various steps the parties must comply with in order to seek or avoid an injunction for an alleged SEP-infringement:
- First, the patent owner must inform the alleged infringer, in detail, about the alleged infringement.
- The patent owner must then make an offer to grant a license under fair, reasonable and non-discriminatory (“FRAND”) terms, including the amount of royalties he seeks and the respective calculation method. The alleged infringer must be willing to accept a license agreement under FRAND terms.
- If the alleged infringer does not accept the offer, make a counter offer or negotiate in good faith, the patent owner is free to seek an injunction.
Any deviation from this process by the patent owner constitutes an abuse of a dominant position and thus violates Article 102 of the TFEU resulting in dismissal of the action.
In the case at hand the District Court of Düsseldorf as first instance had decided in favor of the plaintiff. The court held that even if the plaintiff's offer was not compliant with FRAND terms, the defendant had to respond in good faith and start negotiations with a counter offer in due time.
The Higher Regional Court of Düsseldorf stopped in an earlier decision the enforcement of the District Court's decision because it would not correctly interpret the CJEU judgment. The defendant was only to react to an offer compliant with FRAND terms. Any other offer he might ignore without taking the burden of article 102 TFEU from the plaintiff's shoulders. In its recent decision, the Higher Regional Court of Düsseldorf confirmed its opinion from the earlier decision that stopped enforcement and dismissed the claim.
The grounds of the decision have not yet been published. As far as we know, the court determined that the patent owner failed to show that the terms in its offer were non-discriminatory compared to other license agreements for the same patents. The case may go on to the Federal Court of Justice, giving the 10th senate its first opportunity to decide a FRAND case after the CJEU’s decision in Huawei. Experts remain curious if the Federal Court of Justice might even have the occasion to give the first guidelines on the amount of royalties compliant with FRAND terms.