After the long-awaited and highly regarded decision of the Federal Court of Justice in the lawsuit Sisvel v Haier some questions are answered but some questions are still open. However, the decision is the first FRAND judgement of the highest German Court and therefore very much important for all parties dealing with SEP.
We kindly invite you to join our Kather Augenstein Webinar on 20th August. Our partner Dr. Christof Augenstein will guide you through the decision and clarifies what the decision means in practice. We have prepared an English translation of the decision.
The webinar is scheduled for about 45 minutes. You will have the possibility to ask questions during the webinar via chat function. Please reserve 15-30 minutes before the start of the webinar so that you can join in at your leisure and we can check the technology with you in advance.
As the topic is of high interest arond the globe, we have decided to hold our webinar at two different time slots.
1. Thursday, 20th August – 9:00 am CEST >>> REGISTER HERE <<<
2. Thursday, 20th August – 6:00 pm CEST >>> REGISTER HERE <<<
Overview of the reasons of the judgement
In the case of Sisvel v. Haier (File No. KZR 36/17), the Antitrust Senate of the Federal Court of Justice (FCJ) ruled in favour of the plaintiff Sisvel at the oral hearing on May 5, 2020. This result was not surprising after the course of the oral hearing, as the senate already expressed its position clearly there (we reported). Finally, the FCJ published the reasons for its decision.
The FCJ initially confirmed the infringement of the patent in suit. Far more interesting, however, are the comments of the FCJ on the FRAND-objection. The decision in the Sisvel v. Haier case is the first FCJ decision on this issue since the ECJ’s landmark ” Huawei v. ZTE ” decision.
In contrast to the Court of Appeal, the FCJ is of the opinion that the patent owner did not abuse its market dominance and now sets higher requirements for the declaration of the patent user’s willingness to license.
I. Market dominance
According to the FCJ, Sisvel holds a dominant position. On this point, the FCJ confirmed the previous case law of the lower courts. The mere fact that the patent owner could exclude any third party from using the technical teaching of the patent at issue does not lead to a dominant position. It must be rather impossible for the user to switch to another technology.
The FCJ did not follow Sisvels arguments, that the license seeker can use the disclosed teaching without a license. Market dominance results from the legal possibility to claim from third parties that no products in accordance with the invention are placed or remain on the market. How the patentee enforces his/her SEP is then a question of abuse of the dominant position, but not of whether a dominant position exists.
However, unlike the Court of Appeal, the Cartel Senate of the Federal Court of Justice denied an abuse of this dominant position.
1. On the dogmatic
The FCJ already refers to the efforts of the parties in its guiding principle. A claim by the SEP holder is abusive if he/she has not made sufficient efforts to enable the user of the patent, who in principle is willing to take a license, to conclude a license agreement on reasonable terms.
Consequently, the patentee must first point out the infringement and give the user of the patent the opportunity to assert his/her claim to conclude a license agreement on reasonable terms. Since the license seeker is not easily able to formulate conditions of his/her own accord which the FRAND-compliant patentee has to grant him/her, the patentee is obliged to substantiate his/her license claim in detail in order to enable the licensee to verify a possible abuse of the dominant position. The degree of detail and the point in time at which the patentee has to provide information about his/her licensing program is a question of the individual case and also depends on the reaction of the user of the technical teaching.
The patentee is not obliged to grant licenses at a “uniform tariff”. Rather, it is sufficient that the prohibition of discrimination according to antitrust law will be observed. However, since the appropriate conditions, such as an appropriate price, are not objectively determined but can only be determined as the result of (possibly similar) negotiated market processes, the serious and purposeful participation of the company seeking a license in the negotiations is of decisive importance.
The obligations of the patentee are not an end in itself, but should make it easier for the license seeker to negotiate reasonable conditions. Therefore, it is not sufficient – after an initial notification by the licensee – that the licensee is only willing to consider the conclusion of a license agreement or to enter into negotiations. The willing party must clearly and unequivocally declare its willingness to conclude a license agreement with the patentee on reasonable and non-discriminatory terms and must subsequently participate in the negotiations in a targeted manner. In this context, the Senate quotes from the decision Unwired Planet v. Huawei of the High Court of England and Wales with the words “a willing licensee must be one willing to take a FRAND license on whatever terms are in fact FRAND”.
2. The present case
The FCJ agreed with the Court of Appeal that the plaintiff’s infringement notice was sufficient in the present case. No detailed technical and legal explanations were required, the user of the patent-approved teaching only had to be enabled to get an idea of the patent owner’s entitlement, if necessary with expert assistance. The plaintiff met these requirements by naming the patent and the relevant standard and offering a license on FRAND terms. The FCJ and the Court of Appeal considered a notification to the parent companies of the defendant to be sufficient.
Unlike the Court of Appeal, however, the FCJ did not see any abuse in claiming injunctive relief. According to the FCJ, the findings of the Court of Appeal do not support the assumption that the plaintiff was obliged to make a concrete offer to enter into a agreement because the defendants allegedly indicated their willingness to license.
The Senate did not specify whether a declaration of willingness to license was still possible after the expiry of the reaction period, but clarified that an allegedly willing licensee who remains silent for several months on an infringement notice regularly indicates that he/she is not interested in concluding a license.
The decisive factor for the decision of the FCJ was rather that the defendants did not declare a sufficient willingness to license. None of the defendants’ notifications met the requirements that had to be met for a serious and unconditional willingness to take out a license on FRAND terms. The Defendants only expressed the hope that a formal negotiation would be entered into and asked for information about a potential discount. By doing so, the Defendants did not clearly and unambiguously indicate that they were prepared to enter into a FRAND license agreement.
Further letters, in which the defendants indicated that they would be prepared to enter into a FRAND license once German courts in the present and parallel proceedings finally confirm the infringement and the validity of the patent in suit, did not meet these requirements either. This is particularly remarkable because the FCJ agrees with the ECJ that a license seeker can attack the validity and essentiality of the patents in suit. Nevertheless, the FCJ considered Haier’s statement to be an inadmissible condition.
The defendant’s insistence on its own counter-offer and the statement that the offer would not be improved as long as the plaintiff is not willing to demonstrate the infringement of the other patents in the portfolio suggests to the objective recipient a delaying tactic. The defendants also could not expect the plaintiff to provide claim charts for all 450 patents in a portfolio. A simple information such as for the notification of infringement is sufficient. Thus, the FCJ considers Haier’s behaviour as indication that the defendants want to delay the negotiations until the patent expires.
Whether the defendant’s last counter-offer – four weeks before the date of the appeal hearing – was sufficient is not relevant, since the term of protection of the patent in suit had expired at that time. At this point in time, the plaintiff’s dominant position in the market had already ceased to exist and the plaintiff was entitled to deny a license to the defendants for the future.
Even though the question of whether the plaintiff’s offer was abusive was no longer relevant thereafter, the Cartel Senate clarified at the end of its decision that state pressure could also justify unequal treatment. In the opinion of the FCJ, however, it could be economically reasonable to accept an offer that is in itself inadequate in the absence of other possibilities to respond to personal or other economic disadvantages in order to receive any compensation at all for the use of the property rights and to avoid threats from state organs.