1. Injunctions in SEP cases: current practice and innovative models
LMU Munich, 5 April 2019
Prof. Dr. Peter Georg Picht, LL.M. (Yale)
University of Zurich, Max Planck Institute for Innovation and Competition

2. Digitalization, standard setting, and patent injunctions
General:
Innovation and digital transformation  growing importance of intangibles and IPRs; production & distribution increasingly complex, international, and collaborative
Transactional use of IPRs
 General debate about patent protection, infringement and injunctions
Standard setting ICT sector
Growing significance of digital communication infrastructure for most sectors of the economy
Access to standardized technology while adequate protection of IPRs
Balancing exercise: legitimate interests of the stakeholders, static and dynamic efficiency in the markets
 Injunction as a focal point
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

3. Overview FRAND injunctions in Germany FRAND injunctions in the UK
Achievements and shortcomings of the current practice
Impact of the general patent law discourse on more flexible injunctions
Ways forward?
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

4. I. FRAND injunctions in Germany
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

5. Germany: Facts and figures 2017 – 2019
Unlimited injunctions by court:
2017 – 2019
Granted [including] / [excluding parallel proceedings]
Denied [including] / [excluding parallel proceedings]
Unlimited injunction
8 / 2
10 / 6
Preliminary injunction against implementer 2
Preliminary injunction against patentee 1 -
Total number of FRAND rulings considering injunctive relief: 23 / 12
caveat: ongoing research, cf. Picht, SEP/FRAND – Update (forthcoming)
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

6. SEP/FRAND injunction requirements
General injunction requirements
Content requirements: FRAND-compliant license offer(s)
Process requirements: Conduct as per Huawei/ZTE
If FRAND defense successful, neither the claim for an injunction nor the claims for recall of products or destruction of products can have success, they are temporarily unfounded (ANsprüche auf Unterlassung, Rückruf und Vernichtung derzeit unbegründet). Claim for destruction subject to FRAND defense because has similar impact as injunction. P 53, Landgericht Düsseldorf, , 4a O 16/16, ECLI:DE:LGD:2017:0713.4A.O
claim to damages granted even though FRAND defense against claims injunction, recall, destruction granted as well. No different standard of culpability/fault (Verschulden) because infringed patent is SEP. However damages claim limited to amount of FRAND license if patentee acted in a non-FRAND manner, at least where the patentee has made a FRAND declaration and the FRAND-conformity of his conduct is to be assessed in the proceedings anyway. Amount of FRAND damages to be assessed in amount proceedings (Betrags-/Höheverfahren) P 55, Landgericht Düsseldorf, , 4a O 16/16, ECLI:DE:LGD:2017:0713.4A.O
Where damages are limited to FRAND level because of a FRAND violation of the patentee, the patentee’s claim to information is not affected but its claim to the rendering of an account is limited to the extent necessary for the FRAND damages. In particular, it does not encompass the costs and profits of the infringer (Kosten- und Gewinnangaben)
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

7. The Huawei / ZTE mechanism for SEP/FRAND licensing
FRAND declaration
Notification of infringement
Declaration of willingness to license
FRAND offer by patentee
Acceptance or counter-offer by implementer
Consensus on license or
Third party determination
Duty to act timely, esp. timely communication by patentee & no delaying tactics by implementer
- Very negotiation centred  room for misconduct and need for guidance an sanctioning
UnFRANDliness patentee: no injunction
UnFRANDliness implementer: no FRAND defense against injunction
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

8. Catching-up before German courts
Shortcomings in pre-litigation conduct may be made up for
Admissible time frame depends on the circumstances of the individual case
General rules on delayed submissions apply
There must be sufficient time before conclusion of the oral hearing to carry out the Huawei/ZTE procedure
Even in case of delay/catching-up by the implementer, SEP-owner remains obliged to license the SEP under FRAND conditions
Late declaration of willingness to license  SEP holder may (initially) assert a cease-and-desist claim, without exposing himself to any allegations of abuse
Cf. Regional Court Düsseldorf, 13 July 2017 – 4a O 16/16, para. 396, 407; 31 March 2016 – 4a O 73/14, para. 219
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

9. Rejection as currently unfounded in Germany
As long as the SEP-owner does not comply with its FRAND obligations, its injunction claim is subject to a dilatory objection, comparable to a claim that is not due
If the SEP-owner does not fulfil its duties until the end of the last oral hearing, the action is to be dismissed as currently unfounded (“derzeit unbegründet”)
 Possibility of out-of-court healing and subsequent re-filing of the injunction
Cf. Higher Regional Court Düsseldorf, 30 March 2017 – I-15 U 66/15, para. 263; Regional Court Düsseldorf, 13 July 2017 – 4a O 16/16, para. 396
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

10. II. FRAND injunctions in the UK
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

11. UK FRAND injunction cases: overview
Unwired Planet v. Huawei
[2018] EWCA Civ 2344; [2017] EWHC 1304 (Pat); [2017] EWHC 2831 (Pat); [2017] EWHC 711 (Pat)
TQ Delta v. ZyXEL
[2018] EWHC 1515 (Ch); [2018] EWHC 2577 (Pat); [2019] EWHC 353 (Pat); [2019] EWHC 562 (ChD); [2019] EWHC 745 (Pat)
Conversant v. Huawei & ZTE
[2018] EWHC 808 (Pat); [2018] EWHC 2549 (Ch)
Injunction related issues:
Timelines of claim for infringement injunction  “conditional injunction”
Grant of “FRAND injunction” instead of acceptance of undertakings
Stay of “FRAND injunction” pending appeal
Anti-suit injunction against foreign proceedings based - inter alia - on claim to enjoin from enforcing UK judgement
Confidentiality matters
At least one patent found to be valid and infringed  goes to F/RAND trial now
“Anti hold-out injunction”, even though patent about to expire and F/RAND trial yet to come
Jurisdiction/forum non conveniens/serving out of jurisdiction
Determination of world-wide FRAND license conditions in spite of tenuous ties to the UK
But also SEP validity and infringement  potential injunction for patent infringement
Anti-suit injunction against claim for an injunction regarding patent enforcement conduct
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

12. “Conditional injunctions” in the UK: Unwired Planet v. Huawei
[2017] EWHC 711 (Pat), para. 806 – upheld on appeal
Unwired Planet have established that Huawei have infringed valid patents, Huawei have not been prepared to take a license on the terms found to be FRAND
Unwired Planet are not in breach of competition law because of its filing for an injunction:
“The position of Unwired Planet in these proceedings involves trying to insist on certain terms (a worldwide licence) but that insistence is not of the same kind as Huawei’s insistence on a UK portfolio licence because Unwired Planet’s approach takes account of the possibility that they may not be entitled to demand what they ask for, whereas Huawei’s stance does not. Unlike Unwired Planet, Huawei’s approach had no fall-back position. So this is an action for a prohibitory injunction, but it is not one in which the patentee has persisted in seeking such an injunction when the defendant has given an unqualified commitment to take whatever licence is FRAND. Any prejudice to Huawei from the commencement of the proceedings has been outweighed by time and by Huawei’s stance in relation to a FRAND licence.”
In this sense conditional: UWP seeks an injunction only if Huawei refuses to take license
Court takes this to remove concerns due to untimely litigation. However, apparently not automatically so, as it also mentions time and Huawei‘s stance
Similar to what has been said on German decisions:
you can get rid of everything.
And squares well with general flexibility of UK courts
However: what does it do to the patentee‘s incentives
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

13. “FRAND injunctions” in the UK: Unwired Planet v. Huawei
[2017] EWHC 711 (Pat), para. 806 – upheld on appeal
Injunction to restrain infringement, but including a proviso if implementer enters into FRAND license
If FRAND license for a limited time shorter than the lifetime of the relevant patents, the injunction will be subject to the liberty to return to court in the future at the end of the term of the FRAND license
Injunction is subject to express liberty to apply if FRAND license ceases to have effect for any other reason
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

14. “Anti-hold-out injunction” in the UK: TQ Delta v. ZyXEL
[2019] EWHC 745 (Pat)
ZyXEL have refused to agree to submit to the outcome of an appropriate RAND determination
No more than three months of the life of the patent remaining, and ZyXEL argued a grant of injunction at this stage would be disproportionate
ZyXEL’s argument was rejected by Carr J, since this would amount to a compulsory license and unjustly deprive the patentee of injunctive relief in these circumstances
Carr J refused to grant a stay or carve-out permitting ZyXEL to fulfil its contracts
Carr J refused permission to appeal, since to grant an injunction according to the principles of Unwired Planet in these circumstances was a question of discretion, from which it is difficult to appeal
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

15. III. Achievements and shortcomings of the current practice
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

16. Achievements and shortcomings of the current practice
Relatively moderate and flexible Injunction case-law: Courts contribute to keeping the system afloat
Rigidity of injunctions is moderated through the second layer of SEP/FRAND injunction requirements
Acquirers of SEP portfolios are bound by FRAND declarations made by the previous patent owners (Higher Regional Court Düsseldorf, 22 March 2019 – I-2 U 31/16)
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

17. Achievements and shortcomings of the current practice
Case-by-case framing of SEP/FRAND system ineffective
Catching-up & rejection as currently unfounded  incentive to litigate first and fulfil conduct obligations later
Implementers under the Sword of Damocles of injunction claims
Patentees forced to file countless injunction actions to ensure FRAND royalties against implementers that are holding out
Exacerbated by cross-jurisdictional portfolio problem and the evolutionary nature of case-law which does not provide sufficient guidance yet
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

18. Achievements and shortcomings of the current practice
Underlying dysfunction: single-patent litigation a “proxy war”
Hold-up and hold-out do occur, but many stakeholders prefer to license effectually and consensually
Reasons for “proxy wars”
Design of traditional patent litigation systems
Validity gap between declared SEPs and truly valid, standard-essential patents
Lack of reliable grid of FRAND condition sets for different use cases
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

19. IV. Impact of the general patent law discourse on more flexible injunctions
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

20. Normative setting for injunctions
Art. 11 Enforcement Directive, Art. 44 TRIPS guarantee availability of injunctions
Art. 3 para. 2 Enforcement Directive and fundamental rights
Art. 12 Enforcement Directive
Art. 101, 102 TFEU
Sec. 275 para. 2 and Sec. 242 German Civil Code
Current debate about changing Sec. 139 para. 1 GPatA
Normative framework applies in principle to SEP/FRAND injunctions as well
FRAND system strongly shaped by competition law and contract law element
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

21. Potential criteria for tempering injunctions
Importance of the protected technology
Complexity of the infringing product
Overall number of patents relating to this product
Follow-on development efforts by the infringer
Practicing or non-practicing business model of patentee
Infringers willingness and efforts to take a license
[...]
Interest of the patentee
Level of fault on part of the infringer
Economic consequences of the injunction
FRAND
2nd layer of requirements
Relevance / adaption for use-by permissions in FRAND cases?
General criteria
Specifications of general criteria
SEP/FRAND context
Presumptions weighs in favor of an unrestricted injunction
Burden of showing grounds for use-by period lies with the infringer
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

22. V. Ways forward?
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

23. Ways forward? 1. Alternative procedural arrangements
Patentee: option to directly request determination of FRAND license conditions + declaratory decision that implementer uses SEP(s)
Implementer: duty to pay damages for the past and royalties for the future at an estimated FRAND level into escrow during litigation
Damages: cases of severe infringement sanctioned by moderately enhanced damages
Injunctions if implementer failed to take a license within a reasonable time period after license conditions are set
2. Cross-jurisdictional portfolio problem
TRIPS FRAND tribunal? 
More active cooperation
3. Alternative Dispute Resolution in appropriate settings
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

24. Ways forward?
4. Even the most elaborate set of injunction rules is not the solution
Better quality of awarded patents
Reliable determination of true validity and standard-essentiality
Better interlock between infringement and validity determination
Appropriate sets of FRAND license conditions for typical use cases
5. Increased impact of collective players (SSOs, pools, agency/collecting society in cooperation with existing collective players)
Prof. Dr. Peter Georg Picht, LL.M. (Yale)

25. Thank you for your attention! peter.picht@rwi.uzh.ch
Prof. Dr. Peter Georg Picht, LL.M. (Yale)