On November 20, 2020, at the request of Sisvel International Group (“Sisvel”), the Federal Court of Justice (“FCJ”) granted a preliminary injunction against Chinese mobile phone manufacturer Haier Corporation Group (“Haier”).[1] The injunction is another victory for Sisvel in its patent disputes with Haier following a preliminary injunction issued in May 2020.[2] The FCJ used the recent decision as an opportunity to further elaborate on the obligations of patent holders and potential patentees under the Huawei/ZTE jurisprudence of the Court of Justice of the European Union (“CJEU”).[3]

Holders of standard-essential patents (“SEP”), i.e., patents that protect technology that is essential for a set standard, may be required to grant licenses to those SEPs under competition law. In its Huawei/ZTE judgment, the CJEU detailed that such an obligation prevents a patent holder from obtaining an injunction against users of the patent (i) who are willing to license, unless (ii) the patent holder has made a fair, reasonable and non-discriminatory (“FRAND”) offer, and (iii) the patent user has not diligently responded to the offer.[4] In patent injunction proceedings, the defendant may rely on the failure to follow these steps (the so-called FRAND defense).

Haier used several of Sisvel’s SEPs relating to mobile telecommunications in the manufacture of mobile phones and tablets sold in Germany. The present case concerns a patent relating to the re-establishment of mobile radio connections. Sisvel contacted Haier about the patent in late 2012, but Haier did not show a willingness to negotiate a license until late 2013. After inconclusive negotiations, Sisvel sued Haier for infringement of the patent. The companies continued to negotiate in parallel with the court proceedings. In particular, Sisvel made several offers, to which Haier made counteroffers subject to the condition that the patent be declared valid and infringed in a court ruling.

As in the parallel proceedings, the Düsseldorf Regional Court had found Haier in breach of the patent,[5] but was largely overturned by the Düsseldorf Court of Appeal (“DCA”).[6] The DCA found that Sisvel had abused its dominant position on the market for the licensing of the patent by not complying with the Huawei/ZTE process and by offering discriminatory contract terms.

On appeal, the FCJ reversed the DCA’s ruling and, in most respects, reinstated the decision of the Düsseldorf Regional Court. As in its judgment of May (which related to a different patent), the FCJ held that a patent user must clearly and unambiguously declare its willingness to enter into a licensing agreement, and that Haier’s initial response—which came a year after Haier was contacted about the patent—was insufficient, as Haier only stated that it would consider entering into negotiations. In the present case, the FCJ further clarified that the willingness to license does not have to exist only when the patent user first contacts the patent holder, but is a longer- term condition. According to the FCJ, a definitive refusal by the patent user to enter into a license agreement does not have to be proven, since a party using tortious delaying tactics typically does not refuse to enter into an agreement, but rather pretends to be interested in an agreement. The inconclusive negotiations did not indicate a willingness to license, but rather were elements of Haier’s delaying tactics. Since Haier had at no time shown its willingness to conclude a license agreement, the FCJ considered it irrelevant whether Sisvel’s various offers to license were actually FRAND.

[1]      FRAND-Einwand II (KZR 35/17), FCJ judgement of November 24, 2020, available in German here.

[2]      FRAND-Einwand I (KZR 36/17) FCJ judgement of May 5, 2020, for a commentary please see Cleary’s Alert Memorandum of July 23, 2020, available here.

[3]      Huawei/ZTE (C-170/13), CJEU judgment of July 16, 2015, available in English here.

[4]      A more detailed description of the process can be found in Cleary’s Alert Memorandum of July 23, 2020, p. 2.

[5]      Düsseldorf Regional Court judgment (4a O 93/14) of November 3, 2015, only available in German here.

[6]      DCA judgment (I-15 U 66/15) of March 30, 2017, only available in German here.