Standard essential patents

Unwired Planet and Huawei appeal Düsseldorf judgment

It's the next round in Huawei vs. Unwired Planet and Ericsson. Today it became public that all parties have appealed the latest FRAND judgment from the Higher Regional Court Düsseldorf (case ID: 10 ZR 33/19). The Federal Court of Justice finally has its FRAND case.

9 May 2019 by Mathieu Klos

Sisvel and Haier Next exit FRAND: the Federal Court of Justice in Karlsruhe will hear the case between Sisvel and Haier in March ©Wegweiser/ADOBE STOCK

In the ongoing dispute regarding patents for the mobile radio standard, all parties confirmed that they have appealed the surprising judgment from the 2nd Civil Senate (case ID: I-2 U 31/16).

The appeals were submitted only recently, so dates for the oral hearing have not yet been set. As yet, there are also no written pleadings.

All parties were expected to appeal to the Federal Court of Justice in Karlsruhe after the Higher Regional Court Düsseldorf called for clear FRAND rules to ensure licensees are not discriminated against by the transfer of SEPs.

The Düsseldorf court found that the licensing behaviour of Unwired Planet and its co-litigant Ericsson during the transfer of the patent might not comply with FRAND. According to the court, Unwired Planet does not have the full right to claim damages.

To achieve this, the NPE would have had to submit a FRAND-compliant licence offer. This would have required both Unwired Planet and Ericsson to disclose all licence agreements, what they did not do. This is even when the court gave both parties the opportunity to do so in the oral hearing.

Unwired Planet had sued Huawei for patent infringement. The NPE claimed damages but did not apply for an injunction. The Düsseldorf judges found in favour of Unwired Planet on the point of infringement.

New FRAND rules

In the oral hearing at the end of February, Kühnen clearly and severely criticised the transfer of SEPs when used to achieve higher licence rates and revenues. He stated, “It is crystal clear to us that this is a flagrant violation of the ban on discrimination under the FRAND rules.”

A holder that brings its patent into a standard such as ETSI undertakes to licence the SEP on equal terms. Companies that sell SEPs must comply with specific requirements. They not only have to grant access to the buyer but also to licensees. Licensees should be able to see active licence agreements in order to assess whether they are discriminated against or not.

According to the court, the measure of everything is the licence agreement of the legal predecessor, which must be presented in full.

Whether Unwired Planet and Ericsson conform to the guidelines drafted by the senate is unlikely to be clarified. Neither disclosed any licence agreements with other companies during the course of the proceedings.

But not all went well for Huawei. The court rejected large parts of the Chinese company’s appeal. Previously, the Regional Court Düsseldorf found Huawei guilty of infringement. The Higher Regional Court also had no doubt as to Huawei’s infringement, and considered the patent valid.

Long-awaited case

The Federal Court of Justice should be particularly pleased about the case. It is only the second FRAND case to reach the 2nd Civil Senate after the landmark decision of the European Court of Justice on FRAND.

In 2015, the CJEU clarified European FRAND law in its ruling on Huawei vs. ZTE. So far, the only case to go to the German Federal Court of Justice is Sisvel vs. Haier. But before it can decide on the FRAND issues, the court needs to decide on revocation. And that is unlikely to happen before 2020.

Whether the 2nd Civil Senate will now prioritise the Unwired Planet vs. Huawei case is unclear. But there is repeated speculation that the judges are eager for a chance to interpret the CJEU judgment for the German courts. That said, the Unwired Planet case is probably not suitable for clarifying all FRAND issues.

If the Federal Court of Justice follows the Düsseldorf Higher Regional Court’s new doctrine, then selling standard essential patents to boost licence revenues could become very difficult in Germany.

Setting standards

With the appeal to the German Federal Court of Justice, it is clear that the dispute between Unwired Planet and Huawei will set new standards in European SEP and FRAND law.

In the parallel UK proceedings, Huawei has permission to appeal to the Supreme Court. Both the High Court and the Court of Appeal found that the China-based company infringed Unwired Planet’s patent.

In this case, the High Court had granted Unwired Planet a global licence on the basis of a British patent. It was the first court ever to set a global licence fee. The Court of Appeal largely upheld the ruling last October.

We updated this article on 24.05.2019