Sisvel v Wiko: Injunction based on a SEP in the Mannheim Regional Court

Sisvel had failed to obtain injunctions against Haier before the Düsseldorf Court of Appeal (see Sisvel v Haier) and against ZTE before the Düsseldorf Regional Court (see Sisvel v ZTE). Due to its incoherent licensing practice, held to be discriminatory and lack of transparency by the courts, Sisvel started a new attempt to enforce one of its LTE patents against Wiko in Mannheim Regional Court. This time Sisvel was successful and with a judgement on 4 September 4 2019, the Mannheim Regional Court granted an injunction based on patent EP 1 119 997, which is allegedly essential for LTE (case ref: 7 O 115/16). Discrimination and lack of transparency were not an issue this time, due to different facts and Sisvel’s adapted licensing practice.

The patents asserted in the previous cases in Dusseldorf were part of Sisvel’s 'Wireless' portfolio to which Sisvel had previously granted licences, for considerably lower royalty rates than the rates requested from the defendants. After injunctions were denied in Dusseldorf, Sisvel repackaged its 'Wireless' patents with additional mobile communication patents acquired from third parties in a patent pool called MCP, where Sisvel acted as pool administrator and offered a pool licence. According to the findings of the Mannheim Regional Court, Sisvel had offered the standard licence for the MCP pool to a substantial number of market participants, who had accepted this license without substantial deviations.

This MCP license was offered to Wiko as defendant in the Mannheim case, with information on the acceptance of the license in the market and the consistency of Sisvel’s licensing practice as far as the MCP pool is concerned. The names of the licensees were not disclosed to Wiko, as Wiko refused to sign an NDA offered by Sisvel. Wiko did not respond to Sisvel’s offer over several months and applied delaying tactics throughout the later discussions, it was held to be an unwilling licensee.

The Mannheim Regional Court held that Sisvel made a sufficiently transparent offer to Wiko and had not been under an obligation to disclose every agreement to the MCP patents. Since the royalty rates in Sisvel’s MCP license agreement had already been accepted by a significant number of licensees without deviations, the court was satisfied that Sisvel’s royalty rates are prima FRAND. Since Sisvel’s initial offer satisfied the Huawei v ZTE criteria established by the CJEU, it would have been Wiko’s obligation to react with a counter offer and financial security for accrued royalties. Wiko’s excuses for failing to make a timely counter-offer were not accepted. Wiko had argued inter alia that due to the long summer holidays in France, where its European headquarters are located and due to staff shortage, it was not possible to respond to Sisvel’s license offer in a timely manner.

The court dismissed these arguments and held that a company, active in the mobile telecommunications sector on a worldwide basis, has to provide the infrastructure and manpower to deal with licensing requests from third parties in accordance with the standards defined by the CJEU in Huawei v ZTE. Understaffing is not an excuse for failure to respond to licensing requests in a timely manner. The fact that Wiko had refused to sign an NDA with Sisvel to allow a more detailed discussion, was viewed as a sign that Wiko was not willing to negotiate a license agreement with Sisvel at all.

In its legal reasoning the Mannheim Regional Court cites a list of its prior decisions including the cases Philips v Archos (7 O 209/16), Philips v Asus (7 O 28/16) and IP Bridge v HTC (7 O 165/16) in which injunctions were denied due to the patentees' discriminatory or in transparent licensing practice. The court emphasises that these cases represent the court’s established case law and that the new decision in Sisvel v Wiko is no deviation from established principles. The facts were simply different since Sisvel acted for a patent pool and could point to a widely accepted and consistent licensing practice for the pool patents. In this situation, Wiko as implementer had sufficient information to assess the offer and there was no reason why Sisvel would have to disclose all prior licence agreements before applying for an injunction. This is in line with Düsseldorf Regional Court’s recent decisions in cases

MPEG LA v Huawei and MPEG LA v ZTE, where the reference to a consistent licensing practice, in the widely accepted MPEG LA AVC patent pool, was also held to be sufficient as explanation of royalty calculation.

On the procedural side the case was special, as when Sisvel filed the case, the asserted patent was still part of the 'Wireless' portfolio and Sisvel had offered its 'Wireless' license to Wiko, which was held in breach with FRAND requirements in the Dusseldorf cases. After a first oral hearing the case in Mannheim had been stayed to wait for the outcome of co-pending nullity proceedings. During the stay, Sisvel had formed the MCP patent pool and made the new offer to Wiko based on its MCP pool license. Therefore, the court regarded the initial 'Wireless' license offer as obsolete and focussed only on the 'MCP' license. Despite the already pending infringement case the new offer for the MCP pool was considered as having been made prior to bringing the action for an injunction as required by the CJEU in Huawei v ZTE. Since the infringement case had been stayed unanimously following a proposal by Sisvel, Wiko was no longer under the threat of an injunction.

While the outcome of the case is predominantly owed to the circumstances of the individual case, specifically Wiko’s failure to adequately respond to Sisvel’s license offer, it is still a useful reminder that despite stricter requirements regarding non-discrimination and transparency for SEP holders, injunctions are still available to plaintiffs in SEP cases before German courts. Implementers should keep this in mind when faced with third party requests to take a license to SEPs and respond in a timely manner.