Peter Meier-Beck is one of the most renowned patent judges in Europe. In October, the long-time presiding judge at the German Federal Court of Justice went into retirement. In an exclusive interview with JUVE Patent, he talks about the current problems in international FRAND law, solutions to the crisis of the German bifurcation system and the prospects of success for the Unified Patent Court.
8 December 2021 by Mathieu Klos
JUVE Patent: Peter Meier-Beck, you have been presiding judge of the Antitrust Senate for the last two years. Has the increased focus on antitrust issues changed your view of patent law?
Peter Meier-Beck: By and large, no. I have never considered patent and antitrust law to be antagonists. Rather, patent law has always played a role in controlling competition. However, the senate had to decide on two FRAND cases that were on the borderline of antitrust and patent law. These changed my view on the antitrust aspects of such cases.
“Patent law has always played a role in controlling competition”
To what extent has your perspective changed in FRAND cases?
By focusing more on antitrust issues, one aspect in particular has become much clearer. That is, if companies abuse their dominant position by refusing a licence, the legal answers must be sought in antitrust law alone. The so-called FRAND defence cannot simply be seen as an antitrust-related objection in patent law. Rather, it is an original antitrust claim that is asserted in patent proceedings.
What other insights did it lead you to in the Haier vs. Sisvel case?
The focus on the patent-in-suit, its infringement and its validity, which arises from the patent-law part of the suit, is contrary to the proper focus in the antitrust-law part of the suit. The licensing claim is typically not about the patent-in-suit, but about the totality of those IP rights needed to make standard-compatible products. I like to call this the standard essential patent infrastructure, or SEPI, instead of the common SEP.
SEP and FRAND cases in particular have dominated the patent scene in Europe over the last two years. Are you disappointed not to see a CJEU decision in Nokia vs. Daimler, now that the companies have settled?
No. I was not very happy about the referral. In the very complex connected cars claims with a multitude of different interests, one cannot really expect any further answer from the CJEU. Of course, the judges would have given an answer of some sort.
“I was not happy about the FRAND referral to the CJEU”
But if there were any doubts, the answer would have been very vague. Then all the experts would have stopped thinking about an appropriate solution to the current problem. Instead, they would have rushed to interpret the cryptic new CJEU ruling. That’s what we saw with the 2015 CJEU ruling in the Huawei vs. ZTE case.
In 2020, you played a key role in shaping German FRAND case law together with the antitrust senate. What remaining key FRAND issues need to be resolved at the European level?
I have noticed in discussions on the interpretation of the Huawei vs. ZTE judgment shows a lot of common ground between German, Dutch and UK judges. In this respect, I am optimistic that the Federal Court of Justice, with its two Sisvel vs. Haier decisions in 2020 and 2021, has made a Europe-compatible contribution that can move the FRAND discussion forward.
In my view, the current dispute surrounding supply chains that was referred to the CJEU with Nokia vs. Daimler, namely the questions of how to deal with supply chains, which party is entitled to a FRAND licence in the first place, and what it covers, is at its core nothing more than the usual dispute about the appropriate licence fee. This commercial dispute is often conducted covertly on a legal level, rather than in negotiations between companies. But that doesn’t really get you anywhere.
“The Federal Court of Justice has contributed to moving the FRAND discussion forward”
But how does one determine the value of a FRAND licence?
I firmly believe that, ultimately, it is up to the companies to find an answer. And if they are unable to do that, then they must use other mechanisms that facilitate a good outcome.
Such as mediation, an arbitrator’s report, perhaps also arbitration or contractual post-claim or clawback clauses. If the conditions for resolution are more favourable than they might be in a patent infringement lawsuit, you just enter into a licence agreement first. Parties can then resolve any remaining issues later. We know from patent damages law that once the court decides on the question of patent infringement, the parties can usually agree on the amount of damages.
Nevertheless, many market participants would like to see a German court finally rule on a FRAND rate. For example, as London judge Colin Birss did in Unwired Planet vs. Huawei. What are the chances of this happening?
I am rather sceptical about this. I am often met with incredulity, especially in the US, when I say that the courts are badly-placed to determine the right price for a FRAND licence. For me, this is where antitrust comes into play again. When you’re talking about abuse of market power, one of the hardest things to do is simply determine the appropriate price. That can really only be done with comparative market considerations.
But such a thing is imperfect and difficult, especially when you’re talking about a global plurality of markets. After all, there is no more ‘right’ price than that which the market produces.
“There is no more ‘right’ price than that which the market produces”
What requirements would an SEP case need to meet for a German judge to even dare to set a FRAND rate?
An SEP user would have to sue for the conclusion of a licence agreement on certain terms that the SEP holder does not want to grant. Then we can rule on that as well. But that is not what we can or should do in the normal patent process. It’s apparently easier to do in the UK.
Colin Birss says, here is a company unwilling to take a licence and which refuses to cooperate with the patent holder. As a result, he rules on patent infringement, but also sets a licence rate. A German court lacks the procedural basis for this. In Germany, patent owners sue for injunctive relief due to patent infringement. If the infringer is not willing to take licence, they will be ordered to do just that.
Recently, Chinese courts have also set FRAND rates and issued anti-suit injunctions in advance. The Munich Regional Court in particular reacted to this with anti-anti-suit injunctions. What is your view on this development?
For me, the decision simply confirms that the parties should negotiate the fee. To make matters worse, the courts are now getting involved in this global contest of competence as to which party has the power to set the licence. From a German perspective, these unspeakable anti-suit injunctions should not even exist.
“AASIs are a question of which country has greater leverage”
They provoke the anti-anti-suit injunctions and then it is only a question of which country has greater leverage on the market participants. And of course, China has a lot of options.
But the Munich Regional Court also used leverage when it suggested, in a ruling, that companies applying for an ASI might be unwilling to take a licence.
I have a certain amount of understanding for the fact that Germany is also trying to use the greatest possible leverage. But the whole thing is not pretty.
Should standardisation organisations, such as ETSI, regulate FRAND rates?
The licence fee issue must remain separate from the standardisation process. The task of standardisation organisations is to create the technical basis for the best possible standard that everyone can use. The property right holders and users must themselves balance the interests of who pays how much for the use of the standard. However, more pooling would be more helpful. But it could also be helpful to have a neutral institution that suggests a price in situations where the companies cannot agree. The courts, in turn, could then be guided by this.
“The licence fee issue must remain separate from the standardisation process”
FRAND is keeping the patent world on its toes, but so is patent law reform with new rules on automatic injunctions. The discussion involved you. Has the German government’s compromise been successful?
This is a difficult subject, because there was intensive wrangling over the formulation of a standard and a great many different interests played a role. In the end, it was hard to discern what was a genuine proposal for an appropriate solution and what was just an attempt by certain companies to push through the solution that was most economically advantageous for them.
I have always thought that the Federal Court of Justice’s heat exchanger decision created a sufficient basis for limiting the right to injunctive relief in exceptional cases. The German government simply wanted to enshrine this in law. But then the discussion developed further. I am sceptical as to whether the result is progress. In any case, companies can never be sure that injunctive relief will be excluded in certain cases.
So in practice the new regulation will not change much?
That would be my guess.
“I am sceptical that the qualified opinion at six months will change very much”
The intensive discussions about automatic injunctions has pushed the so-called injunction gap into the background. Most experts see this as the real problem of the German patent system. Do you?
This is indeed a failing that has become worse over the years. The duration of proceedings at the Federal Patent Court has continued to increase and, of course, the Regional Courts and the Higher Regional Courts strive to conduct proceedings speedily. I am sceptical as to whether the new legal requirement for the Federal Patent Court to issue a qualified opinion at six months will change very much.
As things stand, the Federal Patent Court would only be able to fulfil this requirement if it massively increased its staff. I do not expect this to happen.
What other measures could be helpful?
One could make the enforceability of a non-final first instance judgment more flexible. For example, so that the plaintiff can only enforce an injunction after the Federal Patent Court has positively examined the validity of the patent-in-suit. If there is no particular interest for the plaintiff to enforce immediately, they would have to wait until the Federal Patent Court has at least provisionally issued its qualified opinion on the patent’s validity.
But legislators have not yet taken up this suggestion, which I made some time ago. Now we must wait and see whether the requirement for an early opinion can maintain the system, especially if the Unified Patent Court exerts further pressure. Because the UPC will very likely examine validity and infringement simultaneously in many cases.
Speaking of the UPC, would you have liked to become a UPC judge?
Yes, I would have loved to work with my European colleagues on common rules for the court. But now the court is simply too late for me for personal reasons.
“I would have loved to become a UPC judge”
What qualities do you think a good UPC judge should have?
They should, of course, bring some experience from their national infringement or national or European validity proceedings. But above all, judges need to be open-minded. They must not stick to national legal traditions. They have to find out what suits the European level as a whole.
Can the UPC be a success without the UK?
I do think so, although it is a considerable loss for the Unified Patent Court that it will have to take place without its British colleagues. They are all very smart and pleasant partners with whom one can have good discussions and find common solutions, despite differences between the legal systems.
Beyond the UPC, bifurcation and FRAND, where do you see the future challenges in German patent law?
I think we always come up against the same challenges over time. The patent system provides for certain conditions in order to protect inventions and this means it is relatively rigid. These conditions are essentially novelty, inventive step, and disclosure, as well as certain procedural requirements for exclusive rights and enforcement. Occasionally, the patent community considers these unsuitable. This is evident in the current discussion about the release of patents on Covid vaccines. During the pandemic, the system has actually proven to be impressively efficient.
“The system proved impressively efficient during the pandemic”
We have found excellent technical solutions to this problem with the vaccines in an incredibly short time. But then the immediate reflex response is to delve deeply into the system in order to give the whole world a vaccine more quickly and easily. In my view, this is an illusion. As with the discussion on the automatic injunction, it is a question of balancing interests within the existing patent system.
However, there are always recurring discussions about patent law. Economic interests are constantly changing and this has real consequences for patent law. In the case of automatic injunctions, this is compounded by how digitalisation has brought about technical changes, for example in the automotive industry, which suddenly has to deal with completely different players.
Do you have any other examples of this?
A similar discussion could be observed ten years ago, when certain companies were labelled as trolls for buying up patents and trying to exploit them. Of course, some companies can use this practice to make mischief. But discrediting these companies attacks a fundamental principle of patent law, namely that a patent is a freely-tradable legal asset. This must remain the case if the system is to function. That is why I am always cautious when people want to fundamentally interfere with the system in the interests of certain players.
“A patent is a freely-tradable legal asset. This must remain the case”
Are there any cases remaining before the courts of instance which you would like to have decided as a Federal Court of Justice judge?
Actually, no. I was happy to be involved in the FRAND cases between Sisvel and Haier because the Federal Court of Justice had not handed down a FRAND ruling for many years. It would have been nice, given the current discussion, if we could have decided on the issue of proportionality, for example, in addition to the heat exchanger case.
The interview with Peter Meier-Beck was conducted by Mathieu Klos.