Sisvel v Xiaomi et al – District Court, The Hague

Sisvel had attempted to negotiate a FRAND licence for its Mobile Communication program portfolio with Archos, Wiko, Oppo and Xiaomi et al, it recently felt compelled to initiate legal proceedings against these parties before (amongst others) the District Court in The Hague. Shortly after the proceedings against Archos had been initiated, Archos agreed on a FRAND licence and the proceedings were withdrawn. The proceedings against the other parties are still pending.

Not only did Sisvel initiate proceedings on the merits against Xiaomi et al, but also two preliminary injunction proceedings in an apparent attempt to obtain a ban on infringement from the court. The two preliminary injunction proceedings relate to EP 1 129 536 (a European patent titled “Data Transmission in Radio System') and EP 1 119 997 (a European patent titled 'Identifying a mobile station in a packet radio network').

In the preliminary injunction proceedings, Sisvel requested the court to issue unconditional bans on infringement of both patents with ancillary claims such as recall and destruction. Alternatively, these prohibitions and orders as long as Xiaomi et al would not accept Sivel’s offer of arbitration, and as a second alternative an order to disable specific functions protected by the patents.

Xiaomi et al, in their defence, contested not only the validity of the patents, the alleged infringement thereof and a FRAND defence. They also argued that Sisvel’s claims were not urgent and these issues were too complex to decide in preliminary injunction proceedings.

The court agreed with Xiaomi et al that this dispute, given the complex nature and balancing of (urgent) interests was not suitable for preliminary injunction proceedings; for in essence, this dispute revolves around the fact that a FRAND licence should be agreed upon by the parties. Failure to issue a FRAND licence and non-payment of a FRAND licence fee, not involuntary loss of its monopoly position, therefore cause the patent owner’s losses. As a result, this dispute most resembles an outstanding monetary claim rather than a regular IP infringement matter. According to the court, even if the owner of a standard essential patent is entitled to a prohibition on the basis of European Court of Justice case law, the criterion for an urgent interest in obtaining an injunction is substantially higher than a regular IP infringement case.

The interests of Xiaomi et al are considerable. If a prohibition was imposed, specific functions would have to be disabled or the mobile phones might even have to be withdrawn from the Dutch market.

During the hearing the judge asked whether it would also be acceptable for Sisvel if Xiaomi et al would pay the FRAND licence fee requested for mobile phones marketed in the Netherlands. Sisvel felt this was not acceptable as it only entered into an obligation to conclude a worldwide FRAND licence with a willing licensee, instead of Xioami et al paying per country at will.

On this basis the court ruled that the international context should be taken into account when assessing the alleged urgent interest of Sisvel. In this respect, the court considers it a relevant factor that Sisvel informed Xiaomi et al as early as in October 2013 that it could take a FRAND licence. Given this period of almost six years, a slightly longer wait for the outcome of the proceedings on the merits in the Netherlands would hardly make a difference.

In April 2019 the English court was petitioned to determine the amount of a worldwide FRAND licence fee and Sisvel stated it would follow that ruling. The court wished to ensure they would not act in anticipation of these proceedings.

The court finally remarked that the very short terms in preliminary injunction proceedings also played a role, in view of the very complicated issues involved. While these proceedings relate to two patents only, if the court agreed with the validity and/or infringement defence of Xiaomi et al, Sisvel would have a multitude of other patents in its portfolio that it could use.

As it was not clear in any way why Sisvel felt it was necessary to anticipate the UK proceedings or proceedings on the merits to be conducted in the Netherlands, the interests of Xiaomi et al in a proper determination in proceedings with longer terms were a strong determining factor, according to the court.

Sisvel’s claims were thus denied and Sisvel is ordered to compensate the legal costs of Xiaomi et al, amounting to EUR 307,747.30 for both preliminary proceedings.

A copy of the judgment can be found here (in Dutch).