The Mannheim local division of the Unified Patent Court (“UPC”) handed down a decision at the end of November 2024 on the issue of infringement of a Standard Essential Patent EP 2 568 724 B1 (“SEP”), held by Panasonic Holdings Corporation (“Panasonic”). Panasonic alleged that the SEP was being infringed by Guangdong OPPO Mobile Telecommunications Corp. Ltd (“Oppo”)’s sale of its smartphones and smartwatches (“Devices”). This summary is based upon a machine translation of the case, as the decision is not yet available on the UPC site in English.
BACKGROUND AND CLAIMS
Panasonic alleged that the Devices infringed the SEP, and accordingly were seeking an injunction and damages from Oppo for such infringement.
In its defence, Oppo argued that the SEP itself was not essential to the standard and that their Devices did not infringe the SEP. Oppo also counterclaimed for a declaration of non-infringement, and in the alternative, to obtain a licence under FRAND terms.
SEP STATUS
The UPC determined that the SEP met the requirements for standard essential patent status having assessed the technical requirements of the 4G standard, including the use of Sounding Reference Signal technology. The UPC found that the SEP claims covered specific methods of configuration of the device and transmission of reference signals which are directly implemented in the 4G standard (LTE).
INFRINGEMENT AND DEFENCE
The UPC did not accept Oppo’s arguments of non-infringement, and did not accept that the Devices had been withdrawn from the German market such that no infringement was taking place in the relevant territory. The UPC considered that Devices were still available for purchase in Germany through various online platforms.
In particular, the UPC considered that on the evidence available, the Devices’ signals maintained an unchanged and narrow bandwidth despite transmission bandwidth variations. As such, the UPC considered that the Devices infringed the claims of the SEP.
FRAND OFFER AND CONDUCT
Whilst the UPC held that Panasonic’s licence offer to Oppo was indeed fair, reasonable and non-discriminatory (“FRAND”) in nature, the court determined that Oppo had not acted in the manner of a willing licensee. Key considerations in this determination included “inadequate” (in the eyes of the court) counter-offers by Oppo to Panasonic’s offers during negotiations, and the use of IDC data rather than Oppo’s own usage data was seen to be insufficient to allow meaningful negotiations.
Panasonic, on the other hand, had apparently offered sensible, robust and justified economic analysis for its licensing fees, in line with industry standards. Moreover, a “top-down” analysis was used to explain the fees and structures and also included a comparison with other licences to attempt to show a non-discriminatory approach. The court appeared to acknowledge the transparency as being key for FRAND status.
In this context, the UPC rejected Oppo’s request for a FRAND licence to be granted. It was notable that Oppo was seeking a limited licence across specific territories (Europe, USA and Japan), whereas the court believed that a global licence was necessary to resolve this dispute. Further, the court held that Oppo’s offer for security was substantially lower than the likely losses which would be suffered by Panasonic in the event infringement of the SEP was found.
FINAL DECISION AND INJUNCTION
For the reasons set out above, the UPC granted Panasonic injunctive relief against Oppo in respect of the Devices and awarded provisional damages in Panasonic’s favour of €250,000. The injunction is contingent upon the provision of a payment of security by Panasonic into court, but such injunction would cover Germany, France, Italy, the Netherlands and Sweden.
It is welcome to see that the provisions for a cross-undertaking by way of security remains an imposed condition for injunctive relief being granted (at least in this case), but it also appears there are arguments that the UPC remains a relatively claimant-friendly forum. Indeed, this decision of the UPC should be considered in the context of the separate UK Court of Appeal decision where it held that Panasonic was an “unwilling licensor” and required that Panasonic accepted an interim licence until a FRAND determination could be made on the appropriate rate.
The UPC appears to have taken a positive view of Panasonic’s negotiation strategy and has therefore ruled in favour of injunctive relief. This decision, whilst perhaps overshadowed by the settlement agreed between the parties, may give standard essential patent holders some additional guidance on how to approach negotiations before seeking to take formal action in the UPC, building on the Huawei v ZTE precedent, with a view to obtaining a favourable enforcement decision.
