Context: According to media reports, InterDigital is enforcing a Germany-wide 4G/5G standard-essential patent (SEP) injunction against Lenovo, which is seeking an enforcement stay from the appeals court (May 14, 2024 LinkedIn post by ip fray). The Munich I Regional Court rendered that judgment two weeks ago and set a low security amount (May 2, 2024 ip fray article). In the UK, Lenovo is seeking an injunction that would force SEP holders like InterDigital to make not only one FRAND licensing offer, but practically two, as the one that Lenovo insists on would likely breach many jurisdiction’s antitrust laws without there being a second option (May 5, 2024 ip fray article). InterDigital’s appeal of a UK FRAND determination that was widely regarded as a win for Lenovo will be heard by the England & Wales Court of Appeal the week of June 10, 2024.
What’s new: InterDigital’s chief licensing executive Eeva Hakoranta yesterday published a corporate blog post in which she quoted some of the Munich court’s key holdings and stated some other views and facts concerning the dispute (May 14, 2024 InterDigital corporate blog post). According to the post, the court identified “hold-out tactics” on Lenovo’s part while InterDigital’s stance was viewed as constructive and principled. That is an unwilling licensee/willing licensor pair of findings. Interestingly, the German court declined to attach much relevance to the England & Wales High Court’s FRAND determination (based on which Lenovo declared a willingness to take a license).
Direct impact: The lower court’s harsh words up the ante for Lenovo’s quest for an order by the appeals court to stay the enforcement of the injunction. Furthermore, the German court’s decision to deem the lower UK court’s FRAND determination unreliable may be taken note of by the appeals court in London.
Wider ramifications: Lenovo is very much betting on the UK as a supposedly implementer-friendly jurisdiction in its dispute with Ericsson, too (May 5, 2024 ip fray article).
Once the Munich ruling became known (because of an announcement by InterDigital), ip fray requested a redacted version, but that can take time in Germany. But based on InterDigital’s corporate blog post, the following passages about Lenovo’s conduct are now known:
“[T]hey are not interested in finding a solution that is fair to both sides. Rather, their behavior shows that even in situations in which, from an economic point of view, an agreement is obvious, they continue to negotiate in order to strengthen their own position by further delaying an agreement.”
“hold-out tactics … not in line with the legal system”
By contrast, the court credited InterDigital for being “interested in a final solution to the disputes that existed between the parties for many years.”
In Ericsson v. Lenovo, the latter argues that it actually has been licensed for some time, or least used to be licensed during a certain period, as a result of its acquisition of Motorola Mobility (from Google, which bought it because it needed patents at the height of the “Smartphone Patent Wars”). According to Ericsson, Lenovo has made unlicensed use of some of its patents for over a decade. And InterDigital’s corporate blog post now mentions “more than 15 years of negotiation.” Things take time with Lenovo.
InterDigital continues to disagree with the England & Wales High Court’s FRAND determination, arguing that it was based on a 2017 4G license while it’s now about 5G. Also, it is known that the London court largely based its determination on a single comparable license agreement.
The corporate blog post also recalls that a recent press release by InterDigital look forward to the next phase of the litigation,” which is a wording that Lenovo will probably avoid next time as it does indeed sound like they prefer litigation over licensing.
It appears that the Munich judgment is a very thoughtful one, which doesn’t mean that reasonable people couldn’t reach all sorts of different conclusions based on the same fact pattern. From ip fray‘s perspective, the UK court had a point that SEP holders can’t rely primarily on license agreements accepted by very small companies facing resource constraints that make it more economic for them to pay a higher per-unit royalty on low volume than to go to court, but there are also serious questions about the reliability of the “comparable(s)” that the UK decision is based on. Therefore, ip fray wants SEP holders to avoid huge discrepancies between the per-unit royalties paid by high-volume licensees versus small companies (as there would be serious market distortions and anticompetitive effects if all SEP holders did that), yet remains unconvinced of the accuracy of last year’s UK FRAND determination. That skepticism regarding the reliability of the UK FRAND judgment is apparently shared by the Munich I Regional Court.