LD Munich, December 18, 2024, withdrawal of opt-out, exhaustion, and FRAND defense, UPC_CFI_9/2023

The Court held that Claimant’s withdrawal of the opt-out was effective as Claimant used the online workflow in the Case Management System (CMS) according to Rule 5.7 RoP. It is not mandatory to use the provided template which is merely a non-binding support tool. The withdrawal was deemed effective from the date of registration in the register (Rule 5.7 RoP).

The Court held that Claimant was not contractually barred from bringing the infringement action due to a Letter of Assurance (LOA) submitted to the IEEE. The LOA only incorporated the 2007 IEEE Bylaws, which lacked a no-suit clause. Furthermore, the Court found no evidence of a contractual mechanism for dynamic adaptation of the LOA to later IEEE Bylaw versions.

The Court followed Defendant’s exhaustion defense (Art. 29 UPCA) in view of products incorporating Qualcomm modems based on an agreement between Claimant and Qualcomm (“QC 2020 PLA”). As a result, the court held that Claimant’s patent rights were exhausted for products with Qualcomm modems sold within the EU during the period defined in the QC 2020 PLA.

Furthermore, the Court held that the exhaustion defense also applies to method claims concerning products which are directly obtained by a method carried out with patentee’s consent as well as products using a method claim to the extent that they are protected by a product claim as well. Moreover, the Court found that exhaustion must (only) be assessed in the infringement proceedings on the merits if it concerns all attacked embodiments. Otherwise, it should be decided on a case-by-case basis whether exhaustion is to be dealt with in the proceedings on the merits or later, in enforcement proceedings. Since exhaustion applies to individualized products and specific actions, a final review will usually only be possible during the enforcement proceedings. However, the Court can prepare such review by answering preliminary questions, and in the case at hand, the Court did so by finding that exhaustion applied to Access Points equipped with a Qualcomm modem placed on the EU market in a certain period due to a license agreement (PLA) between Huawei and Qualcomm.

The court rejected Defendant’s FRAND defense, finding that Defendant failed to demonstrate a willingness to take a FRAND license, delayed negotiations, and did not provide sufficient information and a security as required by the case law of the CJEU (Huawei vs. ZTE). The Court also held that Claimant complied with its FRAND obligations by offering a pool license through SISVEL.

The Court analyzed the parties’ conduct during licensing negotiations in detail, applying the framework established by the CJEU in Huawei v. ZTE and held that Defendant’s conduct did not meet the requirements for a successful FRAND defense. Particularly, the Court stated that not only the SEP owner’s first offer must be reviewed regarding its “FRANDness”, but all offers which are still open for acceptance by the implementer. On the implementer’s side, they must make a counter-offer under FRAND terms and, in case such counter-offer is declined, provide sufficient security and render accounts.

The Court found that Defendant’s Access Points infringed the patent-in-suit, both directly and indirectly, and granted Claimant an injunction (Art. 25(a), Art. 63(1) UPCA), excluding products with Qualcomm modems due to the successful exhaustion defense. The Court also ordered Defendant to provide information and account for past infringement (Art. 67(1) UPCA, Rule 191 RoP), remove infringing products from the market (Art. 64(2) UPCA), and pay damages (Art. 68(1) UPCA).