Context: On November 10, 2023, the Munich I Regional Court entered judgment in favor of Huawei against German router maker AVM over a WiFi 6 standard-essential patent (SEP) (case no. 21 O 2576/22). On December 14, 2023, Huawei prevailed over Amazon on a different Wifi 6 SEP in the same court (case no. 7 O 10988/22).
What’s new: The decision in the AVM case still hasn’t been officially confirmed by the court, but AVM talked to different media about it (Heise online (in German), TechBook (in German), Deskmodder (in German), picked up by GamingDeputy (in English)). AVM’s lawyers have also filed a redacted version of the judgment with the Federal Patent Court of Germany. The Amazon decision has been confirmed by the Munich court, which provided ip fray with a PDF document containing a redacted version of the dispositive part (award of injunctive and declaratory relief as well as fees).
Direct impact: Both injunctions are enforceable during the appellate proceedings, unless a stay is granted, for which there is no indication and the hurdle is high under German law, though no actual removal of products from the market has been reported either. ip fray is monitoring the situation from abroad. The defendants could resolve the situation by taking either a bilateral license from Huawei or a pool license from Sisvel.
Wider ramifications: Huawei and, by extension, Sisvel see their licensing programs validated while AVM definitely has been deemed an unwilling licensee and Amazon, too (in all likelihood given judicial practice). The situation surrounding WiFi 6 licensing suggests that patent hold-out is not uncommon in that field of technology. Apart from FRAND-related questions, it is also significant that Huawei now has certain “match winner” WiFi 6 patents that it could assert against other infringers.
AVM has a market share of approximately 70% in the German router market, which means its revenues place it far outside the EU’s legal definition of small and medium-sized enterprises (SMEs). The company is now engaging in a publicity campaign apparently designed to assuage concerns by customers and potential acquirers.
ip fray has been trying for weeks to find out more, and has been able to obtain at least some information on both WiFi 6 judgments.
In the Amazon case, the patent-in-suit is EP3334112 on a “method and apparatus for transmitting he-ltf sequence.” The document provided by the court shows that an injunction was ordered over indirect infringement of claims 1 and 3 as well as direct infringement of claims 5 and 7. Amazon owes Huawei an accounting that will enable the calculation of a damages claim for the period starting in early 2020. Provisional enforcement (i.e., during the appellate proceedings) requires collateral of approximately 4 million euros. The court’s 7th Civil Chamber (Presiding Judge: Dr. Oliver Schoen (“Schön” in German)) imposed 100% of the costs on the defending Amazon entities. One can safely infer from this that Huawei also won the FRAND part of the case.
In the AVM case, the patent-in-suit is EP3337077 on a “wireless local area network information transmission method and apparatus” (described by the court as cvering two high-efficiency signal fields A and B).
As a result of AVM’s publicity efforts, a redacted version of the document is circulating in Germany. ip fray has seen it and believes it is authentic, especially in light of the fact that it reflects unfavorably on AVM, which provided it to the press prior to the court’s official confirmation of the outcome.
On page 31, the Munich court rejects the FRAND-based affirmative defense “for lack of the willingness of the defending corporate group to take a license.” In German:
“[Der Zwangslizenzeinwand (FRAND)] greift mangels Lizenzwilligkeit der Unternehmensgruppe der Beklagten nicht durch.”
The judgment goes on to hold that Huawei has discharged the FRAND licensing obligations that presumably result from its possession of a dominant market position under EU antitrust law. But should it have such a market position, Huawei has not abused it. Based on the facts in this specific case, AVM was “not a (sufficiently) willing licensee.”
The judgment does not contain a numerical FRAND determination, but AVM failed to make a case for Huawei’s rates being supra-FRAND. Comparable license agreements apparently supported Huawei’s position and called AVM’s conduct into question. The version of the judgment that ip fray has seen does not state specific numbers, but Huawei’s WiFi 6 licensing rates are public. Given that Sisvel’s WiFi 6 pool rates are consistent with Huawei’s policies (though a pool can offer transactional efficiencies that bring down the aggregate cost of licensing multiple portfolios), it is fair to say that the Munich court’s adjudication of AVM’s FRAND defense also supports, by extension, Sisvel’s pool rates.
The judgment notes that it would take a long time to determine a rate with the help of subject matter experts, and it would be unbearable for Huawei to have to live with an ongoing infringement by an unwilling licensee.
The Munich court’s 21st Civil Chamber (Presiding Judge: Dr. Georg Werner) went beyond the call of duty by means of a comprehensive, diligent and thoughtful analysis of numerous facets of AVM’s FRAND defense and Huawei’s counterarguments. Apparently AVM’s conduct met the definition of an unwilling licensee so clearly that the court could have cut the FRAND analysis short.
The Munich court told ip fray that an official public version of the judgment would become available. However, AVM’s decision to share information on the judgment with German reporters has indirectly enabled ip fray to find out about the court’s reasoning at this stage. Should any additional information become available when the court finally releases its official public version, ip fray will follow up with another report.
The upcoming official public version of the judgment may be instructive in connection with the European Union’s legislative process concerning the envisioned EU SEP Regulation as it appears to contain a smoking gun concerning patent hold-out. In this particular case, the EU SEP Regulation would merely have extended the multi-year hold-out period by approximately another year, depriving the court of the ability to enjoin AVM on the basis of a clear finding of unwillingness.