Connected cars lawsuits: referral to CJEU increasingly likely

Can an SEP holder like Nokia freely decide, without breaching its FRAND obligations, to whom in the supply chain it offers a licence? That is the key question in the current connected cars lawsuits. After the oral hearing yesterday in the dispute between Nokia and Daimler and its supplier of connectivity modules (case ID: 4c O 17/19) it seems increasingly likely that the Regional Court Düsseldorf will refer this issue to the CJEU for clarification.

Nokia has offered a licence to Daimler but not to the latter’s suppliers. Daimler wants the suppliers rather than the OEM to take the licence. The suppliers have always emphasised their willingness to take a licence. Huawei, an important supplier of connectivity module preamplifiers, for example, asked the Düsseldorf court to order a FRAND licence. There was also an oral hearing for this case in Düsseldorf yesterday (case ID: 4c O 53/20).

At the beginning of yesterday’s hearing, the Düsseldorf judges expressed doubts as to whether Nokia’s offer to Daimler was in line with FRAND conditions. They discussed with the parties whether a licence with Ford, which the US car manufacturer according to public sources has since cancelled, had come about under the same pressure as licences concluded between the patent pool Avanci and other car manufacturers from the BMW and VW groups.

The main issue of the case, however, according to presiding judge Sabine Klepsch, is upstream of the question of whether the parties have acted in conformity with FRAND. It was still up in the air as to whether the CJEU ought to clarify the question concerning the production chain. The Federal Cartel Office had recommended this in June.

Four questions to Luxembourg

In an opinion provided to the Regional Court Mannheim in the parallel proceedings between Nokia and Daimler (case ID 2 O 34/19), the Federal Cartel Office called on the court to suspend the lawsuit and allow the CJEU to clarify the details. The office recommended the court send four key questions to the CJEU in Luxembourg.

Firstly, is it an abuse of a dominant position if an SEP holder, such as Nokia, refuses to license a supplier, but sues the end-product manufacturer (in this case Daimler) for patent infringement and injunction? Can Daimler plead that Nokia’s conduct towards a supplier contravenes antitrust law?

Secondly, is an SEP holder free to choose which company in a supply chain to sue for patent infringement, or are there fixed criteria?

Thirdly, the CJEU should define clear cases in which companies at certain stages of the supply chain can be excluded from a licensing offer.

And fourthly, are SEP holders free to decide to offer a FRAND licence only to companies at a certain stage in the production chain?

Mannheim Regional Court did not follow the recommendation. Instead the judges declared on 18 August that Daimler had infringed one of Nokia’s mobile phone patents. The court imposed a security deposit of €7 billion for enforcing the judgment and declared Daimler an unwilling licensee (case ID 2 O 34/19).

Ten-hour-long hearing

In the first half of the ten-hour-long oral hearing in Düsseldorf the judges discussed validity and infringement issues. However, the judges seem to have no doubt that Daimler is infringing Nokia’s patent EP2087629 on “a method of transmitting data within a telecommunication system”. Whether they consider the patent valid is unclear, however, as they discussed technical issues very intensively with the parties.

An infringement of the patent is a mandatory requirement for a referral to the CJEU. Should the judges have doubts about the validity of the patent, however, they could still refer their questions to the CJEU. In the German bifurcation system, it is not the infringement judges who decide on validity, but the Federal Patent Court. Although nullity suits filed by Daimler and its co-litigants are pending here, there is no decision in sight.

At the Regional Court Düsseldorf yesterday, representatives of Nokia, Daimler and many suppliers discussed intensively whether a submission to the CJEU is necessary.

Support from higher courts

According to well-informed sources, the Düsseldorf patent courts have a strong interest in quickly submitting the issue concerning the production chain to the CJEU. Well-known presiding judge at Düsseldorf Higher Regional Court Thomas Kühnen has already indicated this. He has stated on several occasions that a referral to the CJEU would be sensible.

At an academic conference at the Heidelberg Academy the day before the oral hearing, Thomas Kühnen explained, “The FRAND commitment also includes the obligation to license the patented invention appropriately. This also requires that existing licensing practices in the relevant product market be taken into account, unless there are special circumstances which would allow the patent holder to deviate from this.”

Thomas Kühnen

In his presentation, which JUVE Patent has seen, he discussed the €7 billion security bond set by the Regional Court Mannheim. Although the Mannheim judges have not ruled on this problem, their verdict suggests that Nokia has the right to freely choose to which company in the production chain they offer a licence. Thomas Kühnen strongly contradicted this.

Judgment in November

The judges at Düsseldorf Regional Court now want to take until 12 November to decide. Until then, the patent community will still be speculating heavily about the prospects of a referral to the CJEU.

Should the Düsseldorf judges decide on a referral to Luxembourg in mid-November, this would have a considerable impact on the connected cars lawsuits of Nokia, Conversant and Sharp against Daimler. All three companies are members of the patent pool Avanci.

What is certain is that the Düsseldorf judges will suspend the current proceedings until the CJEU has reached a decision. However, it would not have to suspend two further lawsuits by Nokia if they do not concern the question surrounding the production chain.

In the event of a referral, many experts assume that the courts in Düsseldorf, Mannheim and Munich will not rule on any connected cars cases but will wait for the CJEU’s verdict.

In contrast, experts say a referral should not affect regular SEP claims with no connection to the automotive industry. These should continue to run normally. (Co-author: Konstanze Richter)