A multitude of unresolved questions on the interpretation of the European Court of Justice’s decision Huawei vs. ZTE, however, were not addressed in the Supreme Court’s oral hearing. The discussion virtually only referred to the requirements of “declaration of willingness” and (related to that) “delaying tactics” and discussed one aspect with regard to discrimination only. The Cartel Senate appeared to be very certain in its adjudication of the FRAND-defense from the very beginning and rendered a decision in favor of Sisvel already in the evening of 5 May 2020.
Presiding Judge Meier-Beck first emphasized in the oral hearing that the Cartel Senate considers the FRAND-defense to constitute a defense that all SEP-users basically have, provided that there is a dominant position conferred by the respective SEP. The (already expired) standard essential patent (SEP) in suit (German part of EP 0 852 885 that expired in September 2016) was considered to be essential to the GPRS-standard and Meier-Beck emphasized in this regard that the Cartel Senate has no doubt that a GPRS-essential patent confers a dominant position in the market.
Meier-Beck further emphasized that one has to keep in mind that Art. 102 TFEU only requires that the SEP-proprietor has to grant a license on FRAND-terms and that this duty to grant a license ends when it becomes obvious that the SEP-user is in fact not willing to conclude such a licensing agreement.
As a side remark, however, Meier-Beck also mentioned that the abuse of a dominant position may be given if the SEP-proprietor does not disclose certain information required by the SEP-user in order to ascertain the licensing offer’s FRAND-conformity. The Senate would be inclined to impose a “secondary burden of proof” (sekundäre Beweislast) on the SEP-proprietor in this regard.
Meier-Beck then started elaborating on the, according to the Senate, decisive aspect of the case. Meier-Beck set out that the SEP-user has to clearly demonstrate willingness to conclude a “licensing agreement on FRAND-terms”. In this regard he inter alia referred to Judge Birss’ remark in the UK High Court decision Unwired Planet vs. Huawei [2017] EWHC 711 (Pat) quoting: “ready to take a license on whatever terms are in fact FRAND”.
In the case at hand, however, the Senate indicated that Haier fell short of this requirement. The first email in which Haier responded to Sisvel’s initial licensing request was sent by Haier with considerable delay. Further, Haier’s first e-mail did not emphasize that Haier was prepared to take a “license on FRAND terms”. Such a behavior triggers a “critical glance” on the SEP-user’s subsequent behavior in terms of “delaying tactics”. When applying this “critical glance”, Haier’s overall conduct in the negotiation process, however, could not be regarded to fulfill the appropriate (high) standard of a willing licensee.
Haier (quite vigorously) contested the accuracy of the Senate’s view, pointing to cultural differences in terms of communication style as well as the fact that Haier provided for FRAND counter-offers in the negotiation process.
The subsequent discussion on the discrimination aspects of the case focused on one single agreement that Sisvel concluded with another Chinese group of companies with regard to Sisvel’s Wireless portfolio (the Wireless portfolio was subject to Sisvel’s licensing offer). Sisvel had alleged in second instance at the Düsseldorf Court of Appeal that pressure was exercised by the Chinese Government in order to force Sisvel to conclude a licensing agreement with the Chinese group of companies with royalty fees far below adequate (FRAND) royalty fees. The Düsseldorf Court of Appeal had ruled in this regard in first instance that because of this prior concluded licensing agreement (that Sisvel had to disclose within the FRAND-litigation proceedings in second instance) Sisvel discriminates against Haier. In consequence the Court of Appeal rejected Sisvel’s allegation that the Chinese Government exerted pressure on Sisvel to be “unsubstantiated”.
It appeared that the Cartel Senate did not really want to finally position itself with regard to the implications of such an (alleged) exercise of pressure by a foreign government. Meier-Beck, however, remarked that if it is true that pressure was exercised, the Senate would be inclined to disregard such an agreement when considering the FRAND-discrimination aspect.
The Supreme Court decision’s reasoning will be published in several weeks. It remains to be seen whether the German Supreme Court considers this case to be exceptional or whether it in fact wants to significantly raise the bar in terms of a SEP-implementer’s pre-trial communication. A take-away message already at this stage is that an SEP-implementer should apply extra-caution in the communication/negotiation process and always specifically indicate that the implementer is ready to take a license on whatever terms are in fact FRAND.
