Audio technology

Thomson Licensing resists royalty repayment appeal

Thomson Licensing (TLS) does not have to refund any royalties to Japanese electronics group, Pioneer. Yesterday, the Munich Higher Regional Court dismissed an appeal by Pioneer (case-ID: 6 U 1354/18) concerning the overpaying of millions in licence fees to Thomson for its MP3 patent pool since 2013. This ruling follows the decision of the court in the first instance from March 2018.

5 March 2019 by Konstanze Richter

Thomson Licensing, Pioneer, MP3 ©

The dispute concerns patents for decoding the MP3 standard. The Technicolor subsidiary TLS manages the world’s most important MP3 patent pool, which includes key patents of the applied research organisation, the Fraunhofer Institute. Pioneer had taken licences from TLS at different rates. The controversial intellectual property rights have now expired.

At the end of 2016, Pioneer took legal action in an attempt to force TLS to reimburse fees of approximately US$20 million, considered by the claimant to be overpaid. Pioneer argued that none of the patents had been used in its products.

However, Munich Regional Court (case ID: 7 O 23064/16) dismissed Pioneer’s claim for repayment of overpaid royalties. The judges assessed the continued payment of royalties to TLS as an abstract acknowledgement of debt. With its current ruling, the appellate court follows the decision of the first instance. The Munich Higher Regional Court stated that with the freedom to operate, Pioneer received a service in return, whether they made use of it or not.

As part of this complex dispute, possible patent infringements had to be examined in a number of jurisdictions. Highly complicated antitrust, licencing and European law issues played a role, although these were not further examined by the court. Parallel proceedings are pending in the US.

Change of counsel

Partners from the Munich firm Noerr, Ralph Nack and Thomas Gniadek, advised Thomson in the first instance. The proceedings against Pioneer were the firm’s first major instruction from the NPE. In other cases, Thomson retains Bird & Bird.

Ralph Nack, Noerr

Ralph Nack

The original contact between Noerr and TLS came about through Technicolor’s head of IP, Deirdre Leane. However, the firm already has experience with patent litigation on behalf of NPEs. Nack regularly advises Marathon, but also works for industrial companies. In the current case, the Dresden partner Wündisch, who specialises in licencing law, supported Nack.

Pioneer, on the other hand, was represented by a team from Hogan Lovells in the first instance. Litigation partner Andreas von Falck had previously advised the company in a number of disputes.

For the appeal, Pioneer retained Baker McKenzie. Munich partner Ulf Wauschkuhn, head of practice group Commercial & Trade, took the lead due to the overlaps with commercial law. According to market information, Wauschkuhn was supported by patent attorney Jochen Herr, who is dual-qualified as a lawyer and patent attorney.

For Thomson Licensing
Noerr (Munich): Ralph Nack (lead), Thomas Gniadek, Sebastian Wündisch (Dresden), associate: Armin Kühne
In-house legal (Dallas): Deirdre Leane (head of IP Technicolor)

Ulf Wauschkuhn, Baker McKenzie

Ulf Wauschkuhn

For Pioneer
Baker McKenzie (Munich): Ulf Wauschkuhn (commercial law, lead), Jochen Herr (patent attorney); associate: Alexander Ritter (both patent law)

Higher Regional Court Munich; 6th Civil Senate
Konrad Retzer (presiding judge), Robert Lehner, Dr. Stefanie Ruhwinkel