Panasonic’s win in its dispute with Oppo shows the Unified Patent Court Mannheim Local Division's commitment to the framework set by the EU Court of Justice for standard essential patent, or SEP, licensing negotiations. But in its first judgment of its kind, the UPC distanced itself from the more "formalistic” elements of Huawei v ZTE and the European Commission’s approach. Implementers now look to the court's next SEP decision, expected next week, to see whether its approach will continue.
The Unified Patent Court Mannheim Local Division's landmark judgment last month in favor of Panasonic Holdings Corporation in its dispute with Guangdong OPPO Mobile Telecommunications Corp. shows a commitment to European case law and the European Commission framework, along with a willingness to chart its own course, in some areas.This decision is the first by the 18-month-old UPC to address fair, reasonable, and non-discriminatory, or Frand, licensing obligations for a standard essential patent, or SEP.
In the 104-page ruling, the panel of judges led by Presiding Judge Peter Tochtermann leaned on the framework set in 2015 by the EU Court of Justice in Huawei v ZTE*, which delineates a step-by-step negotiation process to ensure compliance with antitrust laws in standard essential patent licensing disputes.
According to the Huawei framework, the availability of an antitrust defense depends on several factors, including whether an SEP owner gives appropriate notice of infringement, whether an implementer expresses a willingness to license the SEP, and whether the SEP owner makes a Frand offer in response.
—Frand offer—
The judges ultimately concluded that Panasonic’s final licensing offer to OPPO was Frand (see here).
Along the way, they made several Huawei-specific findings in relation to OPPO's conduct during pre-suit negotiations with Panasonic.
The Huawei precedent requires a license seeker to provide sufficient sales data in order to allow the SEP holder to assess the plausibility of a counter-offer but the UPC said OPPO failed to supply that data when it was required, undermining its claim to have negotiated constructively. Attempts to justify its position later, through expert analyses, were unpersuasive, with the UPC finding instead that OPPO's objections came too late.
The UPC agreed with Panasonic that OPPO needed to provide the data earlier in order to allow Panasonic time to evaluate whether the proposed security was sufficient, especially for insolvency risks. After-the-fact justifications by OPPO can’t replace constructive negotiation under the EU Court of Justice's precedent, the UPC ruled.
—Infringement notice—
Elsewhere in their decision, however, the UPC appeared to stray from not just Huawei but also the interpretation of that decision articulated by the European Commission in an amicus brief filed earlier this year in VoiceAge EVS v. HMD Global, a Frand dispute in the Munich Higher Regional Court.
The UPC Mannheim judges showed they aren't afraid to diverge from European Commission's strict interpretation that infringement notices include detailed documentation.
The commission’s amicus brief does not explicitly refer to claim charts, however, but suggests that it is the patent holder’s responsibility to clearly express its complaint: The infringement notice should thoroughly cover the patent concerned and manner of infringement.
The Mannheim panel found instead that providing claim charts when informing the alleged patent user of infringement is sufficient and rejected suggestions by the Commission that, per Huawei, such references must be provided at the outset of negotiations.
The court found Panasonic’s notice to OPPO was adequate even though the claim chart referenced a related Chinese patent rather than the patent in dispute. Arguments to the contrary by OPPO were rejected by the UPC as "not convincing."
Observing that the inclusion of claim charts for numerous SEPs could cause confusion rather than improve transparency, the UPC said that “insofar as the European Commission takes the view . . . that this reference must be made in the letter itself, such a formalistic understanding cannot be accepted.”**
Some have argued that that interpretation of Huawei’s notice guidelines favors patent holders, in a reflection of German courts’ patentee-friendly reputation, but others, like Panasonic’s legal representative, disagree.
“Panasonic followed the Huawei v ZTE case law meticulously and that is confirmed by the decision. Panasonic was not handled softly or given any preferential treatment at all,” Christopher Weber, lawyer at Kather Augenstein wrote on LinkedIn.
Ultimately in its central argument, the court decided that OPPO failed to share sufficient data on its sales, making it an unwilling licensee.
With more SEP rulings anticipated at the UPC – such as Huawei v Netgear (see here) expected on Dec. 18 from the Munich Local Division – the Mannheim Local Division’s flexible approach to the EU’s decisive SEP caselaw has set the tone for judgments to come.
—Ongoing negotiation—
There are still settlement negotiations between Panasonic and OPPO taking place outside of the court. They are expected to be finalized soon to cover both past and future uses of the disputed patent, MLex understands.
OPPO had sought a court-determined Frand license to cover Panasonic’s global SEP portfolio for 3G and 4G standards. It proposed regional determinations of rates, with the UPC addressing Europe, the US and Japan, while a Chinese court would decide rates for other regions.
But the parties agreed that they would settle in October. Proceedings in the UK High Court were stayed in the end of October in a knock-on effect from the Panasonic v Xiaomi dispute after Xiaomi gained an interim license (see here).
OPPO had requested that the UPC announce the judgment at a later date, but the court went ahead and published its decision.
The UPC may have been keen to establish its jurisprudence when it comes to Frand issues, experts have said.
Ultimately, the four-judge Mannheim panel declared certain smartphones and smartwatches products infringed on Panasonic’s European Patent 2,568,724 related to 4G connectivity standards.
As a result, OPPO is obliged to disclose sales data, pay provisional damages of €250,000 and cease sales of infringing products across EU countries including Germany, France, Italy, the Netherlands and Sweden.
Panasonic initiated legal proceedings in July 2023 against OPPO and Xiaomi in multiple jurisdictions, including the US, UK, China, Germany, and UPC covering most of the EU.
The Munich Regional Court ruled in September that Oppo had infringed Panasonic’s European Patent 2,019,559, and ordered Oppo to cease and desist.
* Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH, C 170/13.
** The court ruling was translated from German.
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