[BREAKING] Düsseldorf court refers questions on component-level SEP licensing to CJEU in Nokia/Daimler

While our American cousins were waking up early to put their turkeys in the oven this morning, the Düsseldorf court announced that it will be referring questions to the Court of Justice of the European Union (CJEU) in the high-stakes patent battle between Nokia and Daimler [Katposts here and here]. The text of the decision is not yet available, but a press release issued by the court can be found here [in German].

The decision is likely to be the CJEU's most important decision on the law of Standard Essential Patents [SEPs] since its landmark ruling in C-170/13 Huawei v. ZTE. Among other things, the CJEU will likely resolve whether holders of SEPs must grant licenses on Fair, Reasonable and Non-Discriminatory (FRAND) terms to any company that asks, or whether they may choose to selectively license end-device manufacturers to maximize profits.

This issue has received a lot of attention lately and the European Commission is investigating Nokia's refusal to license Daimler's suppliers separately in a pending investigation [here]. In a previous post [here], this Kat reviewed a recent article on the issue and tentatively supported Daimler's position that holders of SEP's should be required to make available licenses to all interested parties, unless the text of the FRAND-commitment gives rise to a limitation.

Well, it seems that we will know the answer in a little while.

The Düsseldorf press release cites the highly detailed questions referred to the CJEU. They are paraphrased below in English:

A. Is there a priority obligation to license suppliers?
  1. Can a company that is situated downstream in the production cycle accuse the holder of a SEP of abuse of a dominant market position within the meaning of Article 102 Treaty on the Functioning of the EU (TFEU) when the components that incorporate the relevant standard are sourced from third parties, those third parties are willing to take out a license on FRAND-conditions for all relevant uses of the component, but the SEP-holder refuses to grant them this license?

    1. Is this particularly the case, if it is customary in the relevant industry that the suppliers perform all necessary patent clearance through taking out all relevant licenses?

    2. Is there a priority for licensing suppliers at all levels of the supply chain, or only at the level directly above the Original Equipment Manufacturer (OEM)? Are industry customs decisive here as well?

  2. Does Article 102 TFEU require that where suppliers are granted their own license to the SEP on FRAND-conditions, a separate license for the OEM is no longer necessary in order to defend against an infringement suit where its products incorporate the relevant standard? 

  3. If the question under 1 is answered in the negative, does Article 102 TFEU set any qualitative, quantitative or other conditions according to which the SEP-holder may decide, which potential patent infringers at different levels of the same production chain it brings an infringement action against with the purpose of obtaining an injunction? 
Further specification of the findings in Huawei v. ZTE
  1. Regardless of the fact that before initiating infringement proceedings, the SEP holder and the implementer are under certain duties vis-à-vis one another, is there a possibility to belatedly perform the required actions after proceedings are initiated, if this was not done before?

  2. Can an implementer be considered a willing licensee only when, on the basis of all relevant circumstances of the case, there is a clear willingness on the part of the implementer to enter into a license on FRAND-terms, regardless of what the terms of that license end up being (which, at that stage of the negotiations, is not yet foreseeable)?

    1. Does an infringer that fails to respond for several months after receipt of a notice of infringement thereby indicate that it is not interested in taking out a license, so that absent a verbal license request, the SEP-holder may pursue injunctive relief against them? 

    2. Can the unwillingness of an implementer be derived from the license terms in its counteroffer, so that the SEP-holder's claim for injunctive relief is allowable without having to first ascertain whether the FRAND-offer made by the SEP-holder (done prior to the counteroffer) is in fact FRAND?

    3. Is that finding precluded where the license conditions of the counteroffer, that provide the basis for a finding of unwillingness, are neither evidently non-FRAND, nor decided by a court of highest instance to be irreconcilable with FRAND-obligations?
Say hello to my little FRAND

[BREAKING] Düsseldorf court refers questions on component-level SEP licensing to CJEU in Nokia/Daimler [BREAKING] Düsseldorf court refers questions on component-level SEP licensing to CJEU in Nokia/Daimler Reviewed by Léon Dijkman on Thursday, November 26, 2020 Rating: 5

1 comment:

  1. What Nokia wants is quite see-through, i.e. to force Daimler to take a license, whereby the licence should be calculated over the price of a car and not merely the price of the component supplied to the car manufacturer, whether we have a SEP or not.

    The car manufacturer is the end user and should at best only be held liable if the component supplier has failed to get a licence before selling the component to Daimler and the latter was fully aware of it.

    A reasonable way to look at the problem is that the licence should be, in case of a SEP, FRAND compatible, for the component supplier and not the end user. It cannot be that Nokia wants to cash in at the component level and at the car level.

    One of the question which occurs is whether or not the exhaustion of the patent rights is achieved at component manufacturer level or at end user level.

    If the component manufacturer has taken a license, be it FRAND or not, then the rights stemming from the patent are exhausted and the car manufacturer should not be taken to court.

    Nokia, like Conversant and co, has become a troll. Patents might be monopolies, but misuse of monopolies should be curtailed.

    Let’s hope that the CJEU will clarify the situation in a not too distant future.


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