In a second landmark decision regarding FRAND-licensing the Düsseldorf Regional Court (Landgericht Düsseldorf) on 13 July 2017 rejected Sisvel’s motion for injunctive relief brought forward against ZTE as “currently unfounded”. (docket nos. 4a O 154/15, 4a O 16/16, 4a O 27/16, 4a O 35/16). The dispute between Sisvel and ZTE concerns the “Wireless-Portfolio” offered by Sisvel for licencing.
ZTE*, thereby, defended itself successfully against the injunction sought by Sisvel for infringement of European Patents EP 1 264 504 and EP 0 852 885. Although the Düsseldorf Court found infringement of both patents, which are declared essential to the UMTS and the GPRS-standards, respectively, the judgment only gives Sisvel the authority to enforce a (limited) right to information and rendering of accounts and determines ZTE’s (principle) liability for damages limited to the FRAND licence fee. The Düsseldorf Court said in this regard that as long as the patent proprietor is not FRAND-compliant (in other words: has not presented a FRAND-compliant licensing offer) the licence fee must be limited in accordance with the promise given in the ETSI-declaration regarding the standard-essential patent, namely to grant a licence to every (potential) patent user on FRAND-terms.
ZTE’s objection was successful against Sisvel’s request for an injunction and recall and destruction. The Düsseldorf Court said that the licensing offers rendered by Sisvel had not been FRAND and had been presented too late, respectively. Furthermore, the Court held that the patent proprietor does not have the “unlimited possibility” to improve/alter its licensing-offer after having filed the patent action. Such a possibility would not be in line with FRAND principles and the basic ruling of the Court of Justice of the EU (C-170/13) which provides that FRAND-licensing offers must be rendered “prior to … (Court) proceedings” (ECJ 170/13, para. 61).
The Düsseldorf Court also said that the patent user must be allowed sufficient time to react to a FRAND-offer made by the patent proprietor in order to negotiate on a “level playing field”. The patent user must have the possibility to review the licensing offer and must be able to provide a counter-offer within “an adequate time frame” prior to the oral hearing in Court proceedings.
Additionally, according to the Düsseldorf Regional Court, Sisvel stretched its interest in maintaining confidentiality in the proceedings too far and did not sufficiently submit to the Court e.g. its contentions in terms of its (overall) licencing practice and the way of calculation of the royalty. The patent user has the obligation to promote the licensing negotiations and therefore in principle has the obligation to conclude an “adequate confidentiality agreement” with the patent proprietor in order to enable the patent proprietor to make its (confidential) pleadings which are necessary in order to meet FRAND-requirements, e.g. pleadings with regard to a non-discriminatory licensing practice. If, however, such an adequate confidentiality agreement is not concluded between the patent proprietor and the user at all, or too late, the patent proprietor nevertheless must do “its best”. Thus, for example, the patent proprietor’s explanation of the calculation of the royalty (ECJ 170/13, para. 63) ought to be as comprehensive as it can provide. Sisvel’s pleadings in this regard were not sufficient.
* ZTE was represented by Taylor Wessing in these proceedings.