Context: The European Commission’s services (where most of the staff works) consist of different Directorates-General (DGs). DG GROW (Internal Market) drafted the proposed regulation on standard-essential patents (SEPs) that has come out of the European Parliament and is now in the hands of the EU Council (March 15, 2024 ip fray article). DG TRADE filed a complaint with the World Trade Organization (WTO) over Chinese antisuit injunctions, taking positions contrary to those of DG GROW (March 17, 2024 ip fray article).
What’s new: A third DG is now actively seeking to influence SEP jurisprudence: the Directorate-General for Competition (DG COMP). The Munich Higher Regional Court has confirmed that the European Commission has formally appeared as an amicus curiae (pursuant to Regulation 1/2003) in a VoiceAge EVS v. HMD case. The EC, represented by a German law firm, has requested access to the file, has announced an amicus curiae brief, and has requested permission to actively participate in the appeals court’s oral hearing. As ip fray has furthermore found out, the EC’s position has declared itself in disagreement with the Munich I Regional Court’s SEP case law and would like the Munich appeals court to adopt the line of the Mannheim Regional Court. However, post-Sisvel v. Haier there is no discernible circuit split anymore, and HMD’s FRAND defenses against VoiceAge EVS have failed in multiple cases in Munich as well as Mannheim, and in Brazil.
Direct impact: The EC’s position on the application of the Huawei v. ZTE by the Munich and Mannheim courts is not grounded in reality, and every court has so far held HMD to be an unwilling licensee vis-à-vis VoiceAge EVS, a patent holder that has licensed the vast majority of smartphones. Those circumstances make it unlikely that the EC’s arguments will dissuade the Munich appeals court from affirmance.
Wider ramifications: DG COMP was only secondarily involved with the SEP Regulation initiative, but its support of an implementer is consistent with DG GROW’s policy positions. Several aspects of this amicus curiae intervention raise serious questions about the EC’s understanding of SEP issues: the imaginary circuit split, the choice of a law firm with zero SEP expertise, and the support for a company that has not only lost a number of infringement rulings in front of several judicial panels but has also been sanctioned for contempt of court. If a case involving such an unrepentant infringer is the best vehicle the EC can identify for raising issues with SEP jurisprudence, there may simply not be a need for a SEP Regulation in the first place.
Procedural details and abstract description of EU Commission’s position: they disagree with the Munich I Regional Court’s SEP case law
From the Oberlandesgericht München (Munich Higher Regional Court), ip fray obtained the case numbers (appeals court: 6 U 3824/22 Kart: lower court: 7 O 14091/19), as well as confirmation of the EC’s procedural requests. Originally, the appellate hearing was scheduled for April 18, but due to a judge’s retirement, the hearing date has been vacated and a new scheduling order will be entered in the near term.
The EC’s counsel of record is Professor Moritz Lorenz of the Berlin office of a firm named Arnecke Sibeth Dabelstein. To the best of ip fray‘s knowledge, neither that lawyer nor that firm have ever been involved in any SEP dispute. The reason for this choice must be some kind of contact between the firm and the EC’s Legal Services. The application of EU antitrust law to SEP cases is a highly specialized field. Patent litigators are in a better position to understand it than antitrust-specialized lawyers.
On March 1, Professor Lorenz entered his appearance on the EC’s behalf and requested, among other things, access to the record. On March 14, he told the court that the amicus brief would be filed approximately two weeks prior to the appellate hearing (which has since been postponed to a new date yet to be determined). That filing says the brief is being drafted in coordination with the relevant divisions of the EC, which makes it a possibility that not only DG COMP but also DG GROW is involved with this amicus curiae intervention.
After reiterating the request for access to the record, the EC’s outside counsel says the EC believes the Munich I Regional Court and the Mannheim Regional Court interpreted Huawei v. ZTE differently and, in any event, the Munich I Regional Court’s ruling is also divergent from the EC’s legal position. The EC seeks to promote a consistent application of EU antitrust law.
What’s the best way for the EC to influence SEP jurisprudence?
By coincidence, on the same day that the EC’s outside counsel gave the Munich appeals court notice of appearance, ip fray questioned the wisdom of an EU-wide law if the policy concern effectively comes down to a few German rulings.
The EC has different ways of influencing national court decisions involving EU competition rules. It can make soft law in the form of guidelines, and it can intervene as an amicus curiae as per Art. 15 (3) of EU Regulation 1/2003 when the application of Articles 101 and 102 of the EU Treaty is at stake.
Compared to a legislative initiative of EU-wide effect, an appearance in a German court proceeding is definitely the more targeted and proportionate approach.
The Commission may have a political preference for appearing on behalf of EU-based companies. HMD is, relatively speaking, the largest smartphone maker left in the EU. HMD’s shareholders include Qualcomm, Google and Nokia, though HMD takes positions in SEP disputes that are rather different from those of Qualcomm and Nokia.
HMD filed an EU antitrust complaint against VoiceAge EVS in 2002 (MLex article). The EC has not announced any formal investigations of the complaint, and ip fray‘s research shows that no measure has been taken by DG COMP further to the complaint (other than a routine request for a response) to date, other than the amicus curiae intervention in the Munich case.
The Commission’s choice of this case as a vehicle for its first-ever intervention as an amicus curiae in a SEP dispute raises serious questions:
- VoiceAge EVS has licensed major smartphone makers like Apple, Samsung and Xiaomi. No company has been less prepared to enter into a license agreement with VoiceAge EVS than HMD.
- There have been numerous infringement rulings against HMD over multiple VoiceAge EVS patents by multiple judicial panels in Mannheim, Munich and Brazil. Now that the European Commission’s intervention is official, ip fray will conduct further research and provide in the near term a complete and specific list of cases and decisions.
- The Mannheim Regional Court (with which the EC apparently agrees to a greater extent than with the Munich court, though the outcomes of the Munich and Mannheim cases were identical) has twice held HMD in contempt of injunctions. Both contempt rulings were affirmed by the Karlsruhe Higher Regional Court.
- In Brazil, a court ordered a per diem sanction, subject to the outcome of the appeal, but things apparently didn’t go well for HMD there (ip fray will find out more).
- Interestingly, the EC has not sought to intervene in any of the appeals before the Karlsruhe Higher Regional Court, though the related Mannheim decisions also went against HMD. And by reviewing the record in those cases, the EC would quickly see that there isn’t presently a significant difference between Munich and Mannheim in terms of how to adjudicate SEP cases.
What kind of case would then be a suitable vehicle for the EC to convince German courts of a different interpretation of Huawei v. ZTE?
Generally speaking, the defendant should be a willing licensee in the opinion of at least one other court. But a serial loser of SEP cases in front of multiple judicial panels is unlikely to be a willing licensee.
As a minimum requirement, such a defendant should not engage in contempt of court. That’s the kind of behavior that institutions like the EC should not support.
The defendant does not have to be EU-based. U.S. government agencies have also made submissions in favor of foreign litigants in order to influence the evolution of case law in their own economy’s interest.
What does this mean for the EU SEP Regulation?
There are many SEP implementers in Europe, as the EC noted in its SEP Regulation proposal. Companies like Nokia, Ericsson, Siemens and Bosch don’t make smartphones anymore (though the first two still make network infrastructure products). But there still are a couple, and above all, there are various automakers, IoT device makers, and other companies.
If there isn’t a significant amount of SEP litigation in the EU, the SEP Regulation isn’t needed in the first place (as its critics argue).
So if the premises of the proposed EU SEP Regulation were right, it shouldn’t be hard to find a willing licensee (even one from the EU) facing German court injunctions. That’s the country in which most EU SEP cases are brought.
If HMD’s appeal of a VoiceAge EVS injunction is the best case the EC can identify for the purpose of communicating its interpretation of Huawei v. ZTE to a German court, then there can’t be a widespread problem.