Author
Bram Nijhof

Bram Nijhof

Counsel

Read More
Author
Bram Nijhof

Bram Nijhof

Counsel

Read More

15 November 2018

Dutch Court considers FRAND to be a bandwidth, unclear whether prior licenses need to be disclosed

Multiple (bandwidth) or single set of FRAND terms

The only aspect of the Unwired Planet judgment which was already explicitly ruled upon by Dutch courts, coincidentally also is the only aspect where the Court of Appeal disagrees with Justice Birss: the question whether there can be one or multiple sets of terms which are FRAND for a certain implementer. The UK Court of Appeal does not consider it realistic that in every negotiation between a SEP owner and SEP implementer, each negotiation would arrive at exactly the same set of conditions. At first glance this was the aspect in the Unwired Planet judgment in first instance which seemed most at odds with the approach of the Dutch District Court of The Hague, considering that the District Court ruled in the Philips / Archos case (8 February 2018, ECLI:NL:RBDHA:2017:1025) that FRAND is a bandwidth. However, when read carefully Justice Birss’ judgment could already be reconciled with said bandwidth approach.

After all, Justice Birss accepted that the first offers and counteroffers made by SEP owners and implementers may not necessarily be the exact set of conditions that would be considered FRAND. As long as such offers do not deviate too strongly from what Justice Birss described as a "general FRAND approach" then he did not consider said offers in violation of the negotiation protocol described by the CJEU in Huawei/ZTE. This very much resembles the FRAND bandwidth described by the District Court in The Hague. In the end, the Court of Appeal's disagreement with Justice Birss did not lead to the Court of Appeal reaching a different material outcome, which also shows that the bandwidth approach and Justice Birss' "single set" approach do not deviate that strongly from one another.

The Huawei v ZTE protocol

The Dutch District Court of The Hague might seem to have adapted a slightly stricter interpretation of the Huawei v ZTE ruling of the CJEU. The UK courts are of the opinion that a violation of one of the obligations of the Huawei v ZTE protocol by either the SEP owner or SEP implementer does not lead automatically to an abuse of a dominant position or the grant of an injunction respectively, with the exception of the obligation for the SEP owner to notify a SEP implementer of the alleged infringement, which should be complied with or the SEP owner will be barred from an injunction. If the SEP owner has notified in accordance with Huawei v ZTE, then all circumstances of the individual case are relevant in order to assess if there is abuse of a dominant position by the SEP owner.

In the Philips v Archos case the court considered Archos' lack of willingness to take a license enough to dismiss Archos’ claims, which is only one of the circumstances mentioned as relevant in the Huawei v ZTE protocol. However, Archos in its claims did not ask the District Court to establish an abuse of a dominant position by Philips, but rather to rule on the "FRANDness" of both Philips' and Archos' offers. In our view, Dutch courts have yet to hand out a ruling in which they interpret the protocol of Huawei v ZTE for Dutch patent infringement proceedings explicitly.

Global or local license

The Dutch courts did not rule explicitly yet on the question whether a global license is FRAND. In the Philips / Archos case the license offer in question was on a global basis. That did not seem to prevent the court from rejecting Archos' claims that the license was not FRAND, but Archos did not dispute the global scope of the license as such. However it should be noted that the judgment of Justice Birss on this aspect (and the confirmation thereof by the Court of Appeal) was based on the individual market positions of Unwired Planet and Huawei respectively. Huawei is a player who is active globally on the relevant product market and is an owner of various SEPs in that market as well.

Non-discrimination

It is not yet possible to assess how a Dutch court would deal with a discussion on the aspect of "hard-edged non-discrimination", ie do the license conditions to be granted to an implementer always have to be the same as the most favourable set of conditions already granted to an existing licensee of the same portfolio? Thus far, the Dutch courts have not yet ordered a SEP-owner to disclose its license agreements with other SEP implementers, so there has not been an opportunity yet for a Dutch court to compare the offers made by SEP owners and SEP implementers with other licenses already concluded by the SEP owner with other parties. Both UK and German courts seem in agreement that a (limited) disclosure of such license agreements is necessary to determine which conditions are FRAND.

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