Published: 11/27/15
Case No. 2 O 106/14, Regional Court of Mannheim (2015)
Case No. 6 U 220/15, Higher Regional Court of Karlsruhe (pending)
In late 2015, the Regional Court of Mannheim granted Saint Lawrence Communications’ (“SLC”) motion to enjoin Deutsche Telekom and HTC from selling in Germany mobile phones that infringe a FRAND-encumbered SEP owned by SLC. The Regional Court of Mannheim based its decision on the European Court of Justice’s ruling in Huawei v. ZTE, which had held that a holder of a FRAND-encumbered SEP may not seek injunctive relief unless it first informs the alleged infringer in writing of the specific infringement, offers to license the SEP on FRAND terms, and negotiates with the potential licensee if the latter rejects the initial terms in good faith. (See case summary for Huawei v. ZTE posted at http://www.allthingsfrand.com/).
In their defense, Deutsche Telekom and HTC argued that SLC had not met the requirements of Huawei v. ZTE because SLC had not provided written notice of the alleged infringement before bringing an action for injunctive relief, and because SLC’s offer did not constitute a bona fide FRAND licensing offer. The Regional Court of Mannheim rejected both arguments. As to Deutsche Telekom, the court held that Deutsche Telekom had never evinced any intention to take a license for the SEP on FRAND terms, instead relying on the willingness of its handset supplier, HTC, to take a license. With respect to HTC, the court held that HTC’s offer to have the FRAND royalty rate determined by the High Court of England and Wales was inadequate because it did not specify a royalty amount.
The court refused to determine whether SLC’s initial offer was FRAND-compliant, holding that any offer that specifies both a royalty amount and method for calculating the royalty is sufficient to shift the burden to the alleged infringers. The court held that the burden is shifted even where the SEP-holder insists on licensing only on a worldwide basis.
The SLC decision appears to be inconsistent with the earlier decision of the Regional Court of Düsseldorf in Sisvel v. Haier on how to implement several of the steps set forth in Huawei. In contrast to SLC, the German court in Sisvel required SEP holders to adhere strictly to the requirements of Huawei v. ZTE (see case summary for Sisvel posted on this web site). The SLC case is now before the Higher Regional Court of Karlsruhe, and we will watch it closely on appeal for resolution of this apparent conflict.