Haier files constitutional complaint over FRAND judgment

Haier’s lawyers have confirmed to JUVE Patent that the Chinese mobile phone manufacturer filed a constitutional complaint with the German Constitutional Court three days ago. The highest German court finally has its first FRAND case.

At the beginning of May, the Federal Court of Justice ruled that Haier had infringed Sisvel’s SEP EP 08 52 885, thus overturning the ruling of the Higher Regional Court Düsseldorf. Sisvel appealed against the judgment. Effectively, the decision means the reinstatement of the previous ruling by the Regional Court Düsseldorf.

The company wants the Constitutional Court to review whether the decision of the Federal Court of Justice (case ID: K ZR 36/17) is compatible with European law.

Disputed decision

The judges of the antitrust senate at the Federal Court of Justice ruled Haier was an unwilling licensee because the company had not submitted a FRAND offer quickly and concretely enough.

Special rules apply to standard essential patents. The patent holder must grant a FRAND licence to an implementer. If the holder seeks an injunction over the SEP, it must meet certain conditions. Otherwise, it runs the risk of acting in breach of antitrust law.

However, the implementer must also observe certain rules in licence negotiations to avoid being regarded as an unwilling licensee.

No uniform line

The Court of Justice of the European Union had set specific guidelines for SEP licensing, in doing so overturning the Federal Court of Justice’s so-called Orange Book ruling. According to this ruling, the implementer in particular was obliged to submit a FRAND-compliant licence offer.

On the other hand, the CJEU considered that both parties should make a FRAND-compliant licence offer. The CJEU consolidated this obligation in 2015 in its decision in the case between Huawei and ZTE (case ID: (C-170/13).

As a result, the patent courts in Europe have endeavoured to achieve a uniform interpretation of the CJEU’s FRAND rules. However, the various German courts have long held differing interpretations. Thus, patent law experts hoped that the Federal Court of Justice would harmonise German FRAND case law in the case between Sisvel and Haier.

But this never happened. The Federal Court of Justice failed to comment on many details. To Haier’s detriment, the court largely reverted to its Orange Book decision. This means the onus is on the implementer to make a sound licence offer.

Legal judge wanted

Haier now wants the Constitutional Court to review whether the Federal Court of Justice, free from arbitrariness, applied the CJEU’s rules in assessing the FRAND terms in the case. According to Haier, the court had interpreted the CJEU’s requirements too narrowly. Therefore, the court should have submitted essential questions to the CJEU for clarification.

However, in not submitting the questions, the Federal Court of Justice disregarded European law. Haier claims this means the court violated Haier’s right to a legal judge.

Unique event

According to JUVE Patent’s information, this is a one-off event. A company calling on the Constitutional Court to have its constitutional rights reviewed during an ongoing patent dispute is unprecedented.

But the case could have consequences for European SEP jurisdiction. If the Constitutional Court was to follow Haier’s arguments, it would probably refer the case back to the Federal Court with the proviso that the open questions be referred to the CJEU for a decision.

Experts suspect this could lead to long delays for SEP claims and impact ongoing SEP cases, such as the current lawsuits by Nokia against Daimler, as well as many other lawsuits by NPEs against mobile phone companies. Many SEP holders would hesitate to file new lawsuits until the CJEU has once again provided clarity.

But the Constitutional Court must first accept Haier’s complaint. It is also unclear how quickly the court would rule on the case. This could take six months, but for some complaints the court can take two years or more.

Federal Court criticism

Haier’s constitutional complaint may find some supporters among German lawyers and judges. Some have expressed disappointment in recent weeks about the Federal Court of Justice’s ruling. Others believe the court has not answered many important questions, while others say it disregarded European law.

Marco Scheffler

On 24 November, the court heard a second lawsuit filed by NPE Sisvel against Haier (case ID: K ZR 36/17). Haier’s constitutional complaint is likely to increase the pressure on the Federal Court of Justice to take a more solid stance on the FRAND rules in this case.

Unlike the first case, the patent is still valid.

Mixed IP law firm Gulde & Partner represents Haier in the lawsuit, as well as in the preparation of the constitutional complaint. The law firm has advised the company since the beginning of the dispute. For the constitutional complaint, Haier has called in constitutional lawyer Christian Kirchberg of Deubner & Kirchberg.

Read more background on the conflict between Sisvel and Haier.

For Haier
Dres. Deubner & Kirchberg (Karlsruhe): Christian Kirchberg (lawyer admitted to the Constitutional Court)
Gulde & Partner (Berlin): Marco Scheffler, Jörg Grzam

Update on events

On 24 November, the Federal Court of Justice ruled in Sisvel’s second claim against Haier. It found that the Chinese mobile communication company infringes a second patent EP 1 264 504 B2 and behaved as an unwilling licencee (case ID: KZR 35/17).

In 2017, Sisvel claimed the infringement of two of its patents in two separate cases. The Federal Court of Justice decided the first case in May. Similar to its first ruling, the court once again overturned the Higher Regional Court Düsseldorf’s ruling. Sisvel had appealed against this. Effectively, the decision means the reinstatement of the previous ruling by the Regional Court Düsseldorf.

The parties expect the detailed reasons behind the judgment in a few weeks. It will be interesting to see if the Federal Court of Justice comments more specifically on the interpretation of FRAND in German patent disputes. In view of the referral of the Regional Court Düsseldorf to the CJEU on 26 November, patent experts assume that the Federal Court of Justice will not comment too extensively on the obligations of the parties in the so-called FRAND dance.

This article was updated on 30 November 2020 to reflect the latest developments in the case between Sisvel and Haier