Huawei vs. ZTE taking effect in Germany

The CJEU's Huwei vs. ZTE judgement came out in the midst of several SEP-related court proceedings in German courts, and indeed as a consequence of one of them. In all these cases, regional courts have typically been faced with requests for injunctive relief based on SEP infringement, and a FRAND defense raised by the infringers.  

In NTT DoCoMo vs. HTC, the Mannheim regional court denied the FRAND defense and allowed an injunction. This was largely based on the infringer's behaviour, including unacceptable delays and non-FRAND counter-offers. 

In Sisvel vs. Haier, the Dusseldorf regional court on very similar grounds also denied the FRAND defense and allowed an injunction. However, in this case the higher regional court of Dusseldorf stayed the injunction due to the lower court not having sufficiently analyzed whether the SEP-holders original offer was FRAND-compliant.

The appeal in Sisvel vs. Haier relates to the exact interpretation of the sequence of "steps" described by the CJEU, including whether the SEP-holder made a FRAND-compliant offer. It seems like the higher regional court of Dusseldorf may have a more strict interpretation than the lower court. But the injunction may very well still be implemented in the end; it depends on the ongoing analysis.

Another interesting case is Saint Lawrence Communications ("SLC") vs Deutsche Telekom where the regional court of Mannheim as in the cases above denied the FRAND defense and granted injunctive relief. However, in this case the infringer is a mobile network operator, which acts as a distributor of ready-to-use phones.  Deutsche Telekom appealed to the higher regional court of Karlsruhe, arguing that if the OEMs were willing to take FRAND licenses, then the downstream distributor can not be subject to an injunction. The appelate court stayed the injunction pending the resolution of that particular question.

There's also a more recent case of interest. In its March 31, 2016 decision in SLC vs. Vodafone, the Dusseldorf regional court again denied the FRAND defense and allowed an injunction against mobile network operator Vodafone and its intervening OEM partner HTC. The grounds were again similar as the other cases. What the CJEU found was the presence of "delay tactics", including late responses to first offers, late counter-offers, counter-offers that did not include a "determined nor determinable" royalty, and counter-offers that were limited to Germany in spite of global product sales and a global offer from the SEP-holder.

It appears as if the court has taken some cues from Sisvel vs. Haier with respect to whether the SEP-holder made a FRAND-compliant original offer.  The court clearly endorsed SLC's other existing license agreements with significant companies in the field as being highly relevant FRAND references illustrating FRAND-compliance. And on the CJEU's "manner of calculation" of royalties, the court stated that there's no requirement to provide a "mathematical derivation" of demanded royalties. It would suffice if the SEP-holder "names the material considerations which establish the FRAND conformity of the license fee being demanded." This could be interpreted as lending further weight to existing relevant agreements and how they can demonstrate royalty rates accepted by competent market participants. 

The fact that the OEM according to the court did not behave in line with the CJEU's requirements as an infringer could indicate that the appeal path used by Deutsche Telekom might be less obvious for Vodafone. And the fact that the court appears to have analyzed SLC's offer quite thoroughly in light of the same court having been corrected on this very point in the Sisvel vs. Haier case indicates that the same could be said about the appeal path used by Haier.

In Huawei vs. ZTE, the CJEU set a standard for what specific behaviour motivates a FRAND defense in the face of a request for injunctive relief for SEP-infringement. It can be seen as an attempt to strike a reasonable balance between SEP-owners and OEMs in light of increasing reverse patent hold-up behaviour by SEP-infringers. The current cases in Germany, and quite possibly the recent SLC vs. Vodafone ruling in particular, have begun to demonstrate the German courts' interpretation of CJEU to this effect, which in turn could also be relevant input for other courts in the EU.