Dolby and Philips, both members of patent pool Via Licensing, have sued Chinese electronics company TCL in Düsseldorf. Now the Higher Regional Court Düsseldorf has rejected TCL's objection to two first-instance judgments, confirming their preliminary enforcement. The decision is notable in that the Düsseldorf judges followed the reasoning of the German Federal Court of Justice in the recent Sisvel vs. Haier case.
28 July 2021 by Amy Sandys
In urgent preliminary proceedings, the Higher Regional Court Düsseldorf has upheld two injunctions against TCL, handed down by the city’s first-instance Regional Court (case numbers: 4b O 83/19, 4b O 23/20, and 4b 49/20). The Higher Regional Court rejected two objections by the European and German distributors of Chinese company TCL against the judgment, as well as its FRAND defence, after Via Licensing members claimed infringement by the company.
TCL disputed the validity of the first judgment. However, the Higher Regional Court corroborates the first instance decision of TCL being what the court deems an unwilling licensee (case ID: I-15 U 39/21 and I-15 U 40/21).
Previously, the Düsseldorf court had a relatively low threshold regarding the alleged infringer’s willingness to take a licence. However, in upholding the two latest judgments, the Higher Regional Court shadows the Federal Court of Justice’s recently-developed approach to licence holders. The Karlsruhe court recently heightened its standard for implementers in the case between Sisvel vs. Haier.
At the end of October 2019, Dolby and Philips filed three cases against TCL in Düsseldorf, heard by the Regional Court in March 2021 and April 2021 respectively. The standard essential patents subject to the most recent order are EP 1 410 687 and EP 1 342 230. Dolby owns both patents; both cover the standard MPEG-4 AAC (advanced audio coding). Another Dolby patent has since expired.
A third decision, regarding Via Licensing pool member Philips, is also pending before judge Thomas Kühnen (court ID: I-2 U 13/21).
The current judgments pertain to TCL’s distribution of mobile phones and tablets containing the AAC technology. However, the preliminary proceedings are just the beginning of the main appeal proceedings between Dolby, Philips and TCL. It will likely be a year before the main proceedings take place.
Via Licensing distributes licences on behalf of its members’ SEPs. In 2005, TCL had taken a licence for Dolby and Philips’ SEPs through Via Licensing. The pool terminated the licences in 2007; subsequent years of unsuccessful negotiating licensing agreements then followed.
In May 2021, the first instance Düsseldorf court decreed that the two Dolby and one Philips patents are all SEPs. It then issued an injunction against TCL in all three cases. A week before the hearing, the Chinese electronics company had submitted a FRAND licensing counter-offer, but the court found TCL an unwilling licensee. It also rejected the FRAND defence.
TCL then filed an appeal, requesting a stay of enforcement of the judgments for the appeal term. However, the Higher Regional Court Düsseldorf rejected the offer in a preliminary hearing. In doing so, the court has followed the approach of the Federal Court of Justice in Sisvel vs. Haier – namely, that implementers must demonstrate willingness to actively seek a licence.
According to the Higher Regional Court Düsseldorf, it is no longer enough to simply submit a licence offer when it may have already by-passed several previous opportunities to do so. This broadly follows the reasoning from Karlsruhe, whose judges noted that it is insufficient for a party to express the will to conclude a licence with the SEP holder only once. Implementers, say the court, must act in a way that avoids the so-called ‘patent hold-out’.
In 2020, the German Federal Court of Justice in Karlsruhe ruled that Haier had infringed two Sisvel SEPs: EP 08 52 885 and EP 12 64 504. Furthermore, the court decided that the Chinese mobile phone manufacturer did not make sufficient efforts to obtain a FRAND licence (case ID: K ZR 35/17).
While the court ruled that Haier infringed both patents, antitrust senate judges also ruled that Haier was an unwilling licensee. This is because the company did not submit FRAND offers quickly and concretely enough.
In handing down its decisions, the judges gave implementers more obligations than many experts expected. Thus, implementers must not only actively seek a licence; according to the Federal Court judges, they must also react in good time. The patent user must also examine the patent portfolio at relatively short notice.
According to the judges, implementers must act in a way that avoids the so-called ‘patent hold-out’, in other words using a delaying tactic to avoid paying a licence fee for as long as possible. For example, the implementers can do this by declaring their interest in a licence. However, the party might then not work towards the conclusion of a licence.
Interestingly, while the senate of Ulrike Voß followed the Sisvel vs. Haier reasoning in the two Dolby judgments, the Philips judgment remains pending at the senate of Thomas Kühnen. The latter judge is notoriously outspoken against the Karlsruhe court’s approach to FRAND licensing.
In the Sisvel vs. Haier case, trial observers saw the ruling as a strong contrast to case law from the Düsseldorf patent courts, and more in line with the Mannheim and Munich patent courts. Now the Düsseldorf courts are more aligned with Munich. Observers suggest that this ruling is another step along the path of appealing to patentees to file cases in Germany.
Furthermore, proceedings at the Mannheim Regional Court between Fraunhofer and TCL have now concluded, with one case pending in the first instance and stayed. In the other case, the judges rendered a negative first instance decision. Klaka, on behalf of TCL, have filed an appeal before the Karlsruhe court.
Two further cases are pending in Düsseldorf at the first instance. One is another Dolby patent against TCL, with the other filed by Japanese IT corporation NEC against TCL.
In the three cases against Philips, Dolby and Fraunhofer, TCL has different German legal representation. Vossius, led by partner Andreas Kramer, represents TCL in the cases against Dolby. Patent attorney Christian Sandweg also worked on the nullity aspects of the case.
For the Philips case, the Düsseldorf office of CMS Hasche Sigle represented TCL. Although the team has frequently changed for TCL against Fraunhofer, the latest firm to lead proceedings for TCL is Klaka. The IP boutique represented the company in both Mannheim and Karlsruhe, taking over the two cases in 2018 for its first instruction for the company.
The Hamburg-based mixed IP firm Eisenführ Speiser is representing both Dolby and Philips. The firm has worked with Philips since around 2010, with its relationship to Via Licensing and other members such as Dolby going back to 2014.
The firm also represents Fraunhofer in the now-concluded Mannheim proceedings.
Eisenführ Speiser (Hamburg): Tilman Müller, Volkmar Henke (partners); Stefan Wiethoff (partner, patent attorney)
For TCL against Dolby
Vossius & Partner (Munich): Andreas Kramer (partner, lead); associates: Hannes Obex, Philipp Widera; Christian Sandweg (partner, patent attorney)
For TCL against Philips
CMS Hasche Sigle (Düsseldorf): Markus Deck; associate: Sven Krause
Higher Regional Court Düsseldorf, Düsseldorf