Landmark judgement in German FRAND case Sisvel vs. Haier

On May 5, 2020, the Cartel Senate of the German Federal Supreme Court (BGH) held the oral hearing in the FRAND patent infringement case Sisvel/Haier (Case No. KZR 36/17).

As one outcome of the proceedings, it was expected that the Senate would provide further guidance on the interpretation of the ECJ's Huawei/ZTE decision in Germany. While many questions on interpretation remained untouched however, at least the requirement of the "willing licensee" as well as the issue of “discrimination” of different implementers due to different license terms was discussed.

A key aspect for the court's decision was that the SEP user had to make clear the willingness to conclude a license agreement under FRAND terms. This willingness to license must be declared clearly and unambiguously. In this context, the senate agreed with Judge Birss in the UK High Court decision Unwired Planet vs. Huawei that a willing licensee must make clear be ready to take a license on whatever terms are in fact FRAND.

However, the Senate felt that this requirement was violated by an extensive delaying tactic on the part of Haier, who did not respond for several months to Sisvel's various inquiries. Instead, the absence of any response was assumed to be the equivalent of a refusal to negotiate. When Haier finally responded, the FRAND license was also not requested unconditionally, but only conditionally, for the case that the validity of the patent is affirmed in invalidity proceedings. According to the Senate, this circumstance also does not express the unconditional will to take a license, as required by Huawei/ZTE. Effectively, this behaviour was the reason why the BGH dismissed the compulsory license defence under antitrust law.

With regard to the "non-discriminatory" aspect of a FRAND license, it was made clear that there may well be different licensing terms for different licensees, depending on the situation, without this contradicting the FRAND idea, and being always discriminatory. In the present case, Sisvel had argued that the Chinese government had exerted influence on a previously concluded different licence agreement.

Conclusion

Contrary to the previous case law of the German courts of instance, the BGH clarifies that a high standard has to be met by an alleged patent infringer to sufficiently show the willingness to license. A future implementer must therefore consider very carefully how to behave in FRAND negotiations with a patent owner, in order to avoid being accused of lacking the actual will to negotiate.

Furthermore, it was clarified that different licensing terms for different implementers do not necessarily contradict the FRAND idea.

UPDATE AS OF 8 AUGUST 2020: The Sisvel ./. Haier FRAND dispute has entered the next round.

Haier has now filed a constitutional complaint with the German Constitutional Court to have it check whether the ruling of the German Federal Supreme Court complies with CJEUs judgement in Huawei ./. ZTE (C-170/13) and is compatible with European Law.

Christoph has been quoted on this topic in Law360. You can view this article here.