2 leading decisions of the German OLG Karlsruhe on market abuse SEP data packet processing: these are essential guidelines on the content of a license offer of the SEP holder, on the response time of the patent user and his duty to cooperate – and on the possibility to “catch up” for missed duties.
Two leading decisions of the OLG Karlsruhe on the market abuse SEP Datenpaketverarbeitung involve a complex case with fundamental considerations and specifications with regard to SEP and license negotiations under FRAND conditions. The OLG considers the case constellation around SEP Datenpaketverarbeitung to be one in which the infringer engages in delaying tactics which would result in the enforcement of the antitrust bound claims being a market abuse.
What is at issue?
The plaintiff, an electronics company operating worldwide and holding a large number of patents in the field of mobile communications technology, among other things, is registered as the sole owner of the German part of the patent in suit in the register kept at the German Patent and Trademark Office – for UMTS/LTE standard.
The defendant (the A group of companies) sells LTE-capable cell phones in Germany. Quasi inevitably, therefore, the defendant used the patent-pending teaching for data packet processing in mobile traffic and the LTE network.
Nevertheless, no license agreement was concluded between the plaintiff and the A group of companies.
Rather, the licensing efforts made so far led to a very extensive and interesting legal process for patent damages for standard-essential patents (SEP), which contributes important legal guiding principles for SEP and the negotiation obligations for a license agreement for SEP under FRAND conditions by the OLG Karlsruhe with 2 judgments in this legal dispute.
The plaintiff and SEP patent owner asserted a patent infringement by the defendant, with claims for injunction, recall and destruction; the defendant denied this.
Actual contact was again made by both parties: in July 2015, the plaintiff again notified Group A of a patent infringement and offered a draft “license agreement” relating to UMTS/LTE patents. As the defendant did not respond to this by October 19, 2015, the plaintiff filed suit for patent infringement. Immediately thereupon, the defendant assured its willingness to enter into a license agreement, but it was not until almost a year later, in August 2016, that defendant A then submitted its own offer for a license agreement to the plaintiff and, for its part, also filed a counterclaim (Art. 7 No. 2, 8 No. 3 Brussels Ia Regulation) against the patent proprietor. The accusation against the patent proprietor was that it had abused a dominant position achieved by means of an SEP patent, and the defendant therefore filed a claim for production of the license agreements of the plaintiff with others.
However, the LG Karlsruhe Regional Court (7 O 115/16) dismissed this claim. The required willingness to license on the part of group A (licensing request) had not been expressed in time, therefore the patent holder had rightly reacted with a lawsuit, this was not to be seen as an abuse of its position.
OLG Karlsruhe with 2 leading judgements: Market abuse SEP data package processing
The defendant brought an appeal against this decision before the next instance, the OLG Karlsruhe, on which the court ruled at the end of 2019 (6 U 183/16). An appeal was also filed against this ruling again, which was recently decided (6 U 103/19). From these two rulings, the OLG Karlsruhe contributes with important guiding principles for SEP and for license agreements under FRAND terms, which we summarize here.
License offer by the SEP Holder: to whom and with what content
In principle, the obligation to negotiate a license agreement for SEPs is therefore deemed to have been fulfilled when the SEP holder approaches the group company responsible for such license negotiations. In terms of content, the SEP holder must also include in its license offer explanations of the objective circumstances why the submitted offer meets FRAND criteria. In this context, it is sufficient if the license offer complies with FRAND conditions for the average licensee and this is also comprehensible for the SEP patent user from the pre-existing license agreement. For this purpose, the SEP holder itself would have to make clear why it considers its license offer to be non-discriminatory.
If license agreements have already been concluded with third companies on different terms, the SEP holder must regularly at least present and explain the content of the essential license agreement terms of those agreements in such a way that the patent user can see from this whether and – if so – how he is presented with economically unequal terms. This does not mean, however, that there is a claim to the submission of third-party license agreements (see GRUR 2020, 166 marginal no. 146 et seq. – Datenpaketverarbeitung), such a claim does not exist under any legal aspect.
Patent User/Infringer: Limited Time to Respond and Cooperate in License Agreement
According to the opinion of the OLG, a patent user has only limited time to respond to a license offer of the SEP owner: Accordingly, the review and consideration period to be granted to the patent user for the licensing request will regularly not exceed two months.
In turn, according to the OLG Karlsruhe, a patent user is already obliged to submit a counter-offer to the SEP holder if the SEP holder’s license offer is clearly contrary to FRAND and the SEP holder has enabled the infringer to submit a counter-offer on FRAND terms by explaining its license offer. Even without making a counter-offer, a patent user must cooperate purposefully; if he does not do so, he cannot in principle successfully counter the SEP holder’s claims with a FRAND objection.
This “purposeful cooperation” of the patent user was further elaborated by the OLG Karlsruhe as a leading decision. Accordingly, a patent user must take advantage of information opportunities offered by the SEP proprietor and inform him of any objections in the course of the negotiations; in particular, no objections may be withheld for a later legal defense.
Duties not fulfilled – nevertheless “chatch up”
Also as part of the OLG’s leading sentence decision, it is also stated that unfulfilled obligations regarding the license agreement can still be “made up for” – during a pending infringement dispute. Accordingly, the (first-time) fulfillment of the negotiation obligations after the lawsuit has been filed requires that the plaintiff ensures a pressure-free negotiation situation through a corresponding litigation situation.
Moreover, the recognition of the “catch-up” of duties and obligations fits into the national understanding of procedural law and corresponds with the legal situation when assessing the requirements of a compulsory license under patent law according to §. 24 Patent Act (see BGH, judgment of June 4, 2019 – X ZB 2/19, Alirocumab).
The decisive point in time for the assessment of the existence of the substantive requirements and the merits of an action for performance / injunction – and thus the unfoundedness of objections – is in this respect solely the conclusion of the last oral proceedings.
Finally: Overall judgment
In the overall judgment, the judgment of the Mannheim Regional Court of September 4, 2019, Case No. 7 O 115/16, was set aside in part by the latest judgment of the Karlsruhe Higher Regional Court (6 U 103/19) and amended to the effect that both the court’s order to cease and desist and the court’s order to provide information/invoices were dropped. In addition, its obligation to pay damages (item 3 of the operative part of the Regional Court ruling) is limited in each case to actions up to September 18, 2018.
OLG expressly allows appeal: Fundamental importance for SEP
The OLG Karlsruhe itself also emphasizes the fundamental importance of the legal issues discussed here, which go far beyond an individual case. Above all, the decision decisively concerns the correct implementation of the principles established by the ECJ in the “Huawei/ZTE” case, especially with regard to the question: when does delaying tactics exist?
In particular, the OLG concluded its remarks by asking whether there are obligations of the license seeker to cooperate below the threshold of the submission of a counter-offer, the non-observance of which does not allow the license seeker to successfully invoke an antitrust FRAND objection and which exist even if the SEP holder submits an offer that does not comply with FRAND conditions.
Therefore, the OLG Karlsruhe expressly allows an appeal.
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