On 27 November 2015, the Mannheim Regional Court (case 2 O
106/14) granted an injunction against Deutsche Telekom based on
European patent EP 1 125 284, which was found to be essential for
the AMR-WB standard relevant for wideband audio coding used in
HD-Voice transmission. The patentee was Saint Lawrence
Communications GmbH ("SLC"), a European subsidiary of
Acacia Research Group LLC.
Deutsche Telekom raised a FRAND defence, based on a licence
offer made by its supplier HTC that was (discussed below)
The facts of this case are interesting for two reasons. Firstly,
even though the CJEU's judgment in Huawei requires SEP holders
to put alleged infringers on notice prior to bringing an action
(para. 61), SLC first filed the action and then
put Deutsche Telekom on notice. A copy of the already filed action
was attached to the notice of infringement, which arrived at
Deutsche Telekom before the action was formally served. HTC was put
on notice indirectly via its counsel for Deutsche Telekom shortly
thereafter. Therefore, when Deutsche Telekom and HTC were first
made aware of the infringement, they were effectively already under
pressure due to the filed court action. Secondly, the FRAND offer
was not made by Deutsche Telekom as defendant, but by HTC as
supplier of the accused devices. As a mere distributor of the
accused devices, Deutsche Telekom refused to take a license
The Mannheim Court found the late notice by the plaintiff
irrelevant. Deutsche Telekom was unwilling to take a licence and
HTC waited over three months to indicate its willingness to take a
licence. According to the court, three months would have been
sufficient notice of infringement. Therefore Deutsche Telekom and
HTC had had enough time and could not make the argument that notice
of infringement was too late. As SLC had presented an initial
licence offer, it was now up to the defendant to accept it or
provide a counter-offer. Whether it was open to Deutsche Telekom to
refuse to take a licence itself, and instead point to its suppliers
as the usual licensees in the industry, was left undecided by the
court. In a parallel case the Karlsruhe Court of Appeal (case 6 U
44/15 of 23 April 2015) had indicated that the suppliers'
willingness to take a licence might be sufficient to avoid an
injunction being granted against the downstream distributor.
HTC did not accept SLC's offer either, but made a
counter-offer which was found to be insufficient by the court. When
assessing whether the mutual offers by SLC and HTC were FRAND, the
court reversed the order of the assessment. According to the
Mannheim Regional Court, the defendant has to make a counter-offer
which is FRAND, even if the patentee's initial offer was not
FRAND. The court was satisfied that the initial offer was
sufficiently specific so that it enabled HTC to make a
HTC's counter-offer was decided not to be FRAND and
therefore the FRAND defence was bound to fail. Consequently, the
initial offer by plaintiff SLC was not reviewed for FRAND
compliance by the court. With the approach of reviewing the
counter-offer first, the burden of FRAND compliance effectively
shifts to the defendant. The patentee can only be sanctioned for
demanding unfair, unreasonable or discriminatory licence terms if
the defendant's counter-offer passes the FRAND test.
The court criticised HTC for not specifying the royalty rate in
the counter-offer, even though it referred to a determination of
the royalty in separate proceedings before the High Court of
England and Wales. According to the court, this was not a
"specific" counter-offer as required by the CJEU
(C-170/13 para. 66). Moreover, a counter-offer without defined
royalty rates does not allow the determination of the
defendant's security (C-170/13 para. 67). For this reason
alone, HTC's counter-offer failed.
SLC requested a worldwide licence to its entire portfolio
whereas HTC only offered a licence for Germany. Even though this
was not relevant in this case, the court said that a worldwide
portfolio licence may seem reasonable. The court also left open
whether a licence can be requested not only from the defendant in
the German case, but as a group licence also from the
defendant's affiliates regarding other countries. The court
even accepted that the licensed patents may not be owned by the
plaintiff, but a group of companies holding different counterparts
of the licensed patent families in different countries. This latter
issue arose because the plaintiff SLC did not hold worldwide
rights, but appeared to be a subsidiary specifically for the
enforcement of the European patents in the portfolio.
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