Landmark FRAND guidelines invoked in Sisvel SEP case

Düsseldorf Regional Court last week upheld non-practicing entity Sisvel’s infringement claim against Chinese device manufacturer Haier, ruling it has invoked a so-called FRAND defence. This is the first time a German court of instance has ruled on standard essential patents proceedings according to the principles developed by the European Court of Justice.

9 November 2015 by Mathieu Klos

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In its July ruling, the CJEU held that a defendant invoking a FRAND defence in an SEP lawsuit must fulfil specific obligations. Sisvel had sued Haier Germany and Haier Europe Trading, which manufacture and sell mobile phones and tablet computers, over two patents for the GPRS and UMTS standards (case IDs: 4a O 93/14 and 4a O 144/14).

Cordula Schumacher

Cordula Schumacher

Düsseldorf Regional Court has now ordered Haier to cease and desist, render account and pay damages.

This is the first time that the principles of the high-profile CJEU ruling on SEP injunctions have been applied. SEPs are essential for mobile communications and, as such, must be made available to all market participants in exchange for an appropriate licence fee. However, the fees are often controversial. There has recently been an increase in actions for injunctive relief.

In its judgement in the dispute between telecommunications technology providers Huawei and ZTE (C-170/13), the CJEU clarified when an owner of an SEP is abusing its market dominance by bringing an injunction, and when a defendant can invoke the FRAND defence in such proceedings. The CJEU ruling was generally considered to have weakened the position of SEP owners.

According to the CJEU, defendants must declare their willingness to take a licence. The patent holder must then submit a specific written licence offer, including the fees. If the defendant objects, it must submit a counter-offer under so-called FRAND conditions and provide a bond to the court for the payment of royalties. The fact that Haier was sued despite having submitted a counter-offer shows the wide-reaching implications for defendants.

The judges in Düsseldorf held that Haier had infringed Sisvel’s patents and did not submit its counter-offer in a timely manner. Haier may now appeal the decision. Both parties had already battled it out with varying success in injunction proceedings before the Düsseldorf Regional and Higher Regional Courts. In addition, Haier had also filed nullity suits against the plaintiff’s two patents.

Legal counsel

On the patent attorney side, Sisvel has long trusted the Bremen experts at Eisenführ. However, for litigators, the NPE relies on an alternating team. Around two years ago, Sisvel added the Düsseldorf law firm Arnold & Ruess to its panel. The latter recently led a dispute against Hisense, for example, which both parties ended for unknown reasons. Sisvel also retains Quinn Emanuel Urquhart & Sullivan, and Hengeler Mueller, for litigation.

The mixed Berlin IP law firm Gulde has good relations to China, especially concerning patent applications. However, Haier has not retained the firm for patent applications as yet but retained it directly to represent the firm in court.

For Sisvel
Arnold Ruess (Düsseldorf): Cordula Schumacher, Arno Riße, Marina Wehler
Eisenführ Speiser (Hamburg): Jochen Ehlers (patent attorney)

For Haier
Gulde & Partner (Berlin): Sönke Lorenz, Marco Scheffler (patent attorneys), Jörg Grzam

Regional Court Düsseldorf, 4a. Civil Chamber
Tim Crummenerl (presiding judge)