It has been a busy opening year for the UPC, and standard essential patent cases are no exception.
Before June 2023, while it was expected that the UPC would have jurisdiction to deal with fair, reasonable and non-discriminatory (FRAND) issues this had not been confirmed.
It is now clear that these can be raised as a defence to infringement proceedings and a number of interim decisions have hinted at the approach the UPC is likely to take.
SEP owner Panasonic has filed 12 UPC proceedings against Oppo and Xiaomi in the Munich and Mannheim local divisions (LDs) of the UPC related to the 3G and 4G standards. There is parallel litigation in the UK, Germany, and China.
We explore some interim decisions from these cases below.
Approach to FRAND
From a Mannheim LD decision involving Panasonic and Oppo from June 2024 it looks like, perhaps not unsurprisingly, the German LDs will take a similar approach to the German national courts in the determination of FRAND licence terms.
The court examined Oppo's FRAND defence and noted that Oppo had stated it would attempt to obtain a FRAND licence and had requested that the FRAND rate be determined by the court.
However, the court said that it was not clear that Oppo would accept a FRAND offer set by the court (i.e. might not be a willing licensee of a court-determined licence) and therefore there may be "no need for legal protection".
Oppo had also requested that the court explain what the essential FRAND terms of a FRAND licence are, including the European Patent territory rates. The court did not accede to the request; its view was that "[c]omprehensive legal advice is probably not the task of the court, especially since multiple arrangements are conceivable when drafting the contract, all of which could be FRAND-compliant".
German national courts have never set a global FRAND rate and, although the request was for the EP territories, it appears that the Mannheim LD is not eager to set the rates either.
This contrasts with the approach of the UK courts, which have proven very willing to engage on detailed rate-setting analysis.
Timing
Another, earlier, set of decisions of the Mannheim LD sheds some light on the issue of timetabling FRAND proceedings in the UPC. In February 2024 in six cases launched by Panasonic against both Oppo and Xiaomi (three against Oppo and three against Xiaomi respectively), the court ordered the infringement, validity and FRAND proceedings to be heard jointly in each case.
This is an interesting development considering the bifurcated nature of German national patent proceedings and also contrasts with the UK's approach of separating the FRAND trial from the technical trials (dealing with essentiality/infringement and validity).
However, by June 2024 due to delays to confidentiality provisions around comparable licences in one of the cases of Panasonic against Xiaomi, the court reserved the right to push the FRAND issues that had originally been scheduled for an October hearing back to a hearing in December 2024.
It's not surprising given their complexity and evidence-heavy nature, that the UPC is struggling to accommodate complex FRAND issues within its goal to have cases heard within one year of being commenced.
Comparable licences
On the issue of disclosing comparable licences to allow the court to determine whether the rates offered by the parties are FRAND, the Mannheim and Munich LDs have taken different approaches.
In April 2024 in one of the Panasonic v Oppo cases before the court, the Munich LD part-granted a disclosure request giving Oppo access to 4G SEP licences for mobile devices that were 1) concluded by Panasonic with third parties, and 2) concluded by third parties but "are within Panasonic's control" for owned or previously owned Panasonic patents.
However, in May 2024 in another of the Panasonic v Oppo cases the Mannheim LD rejected a similar request by Oppo. Panasonic had submitted two comparable licences and the court felt this was sufficient to discharge the burden on Panasonic as a SEP owner.
These contrasting disclosure approaches will need to be resolved in future, perhaps via an appeal to the UPC Court of Appeal in Luxembourg.
One risk with the narrower scope of disclosure is that parties will simply disclose their most favourable licences, without providing a view of the wider licensing picture. It is hard to see how this approach will advance matters, but equally it seems clear that the UPC wants to place some restrictions on disclosure and to avoid having to review huge volumes of licensing materials.
It will be interesting to see whether the Munich and Mannheim proceedings involving Panasonic provide different outcomes to the FRAND defence.
Confidentiality
April 2024 saw the Mannheim LD provide guidance to assist parties with third-party confidentiality restrictions in licences. In the three Panasonic v Xiaomi cases at the Mannheim LD, Panasonic had requested an order from the court requiring it to disclose certain licences, as otherwise it would have been restricted from doing so by confidentiality provisions in the licences.
The fact that the counterparties to the licences had ignored or opposed a request from Panasonic to present the licences to the court did not prevent their disclosure – this demonstrates a practical approach from the court to allow FRAND cases to proceed with the relevant material before the court.
The role of patent pools
In November 2023, Dolby brought proceedings in the Düsseldorf LD against HP for infringement of one SEP in its HEVC-essential patent portfolio.
The SEP is part of a patent pool managed by Access Advance. Dolby asked HP to include Access Advance within the confidentiality club in relation to correspondence between HP and Access Advance and the discussion of respective licence offers for the patent pool. HP objected as Access Advance were not participants in the proceedings but did not object to Access Advance formally applying to intervene in the proceedings.
Access Advance did apply to intervene, and in June 2024 the Düsseldorf LD granted Access Advance's application, providing guidance that an intervention is admissible if the intervener has a "direct and present interest in the issuance of the order or decision requested by the supported party".
This lays down a path for how patent pool administrators can play a role in future UPC FRAND proceedings. In July 2024 the court also clarified in the same case that an intervener is treated as a party and is entitled to access to confidential information for at least one natural person.
Conclusion
Much legal uncertainty continues to surround FRAND proceedings at the UPC. However, cases are proceeding, notably in German LDs, with the German LDs so far appearing to be adopting a largely German national court approach to the resolution of FRAND disputes.
It will be interesting to see whether parties seek to explore the approaches of other LDs within the UPC to test how judges with different national experience may treat FRAND issues.
Differences in approach have been emerging even within the German LDs in important areas such as comparable licence disclosure and it is likely to take more time for a consistent practice to emerge within the UPC.
It also appears that there is a risk, due to the complexity of FRAND litigation and the issues that surround it (particularly confidentiality), that the UPC's timeline from issuance of proceedings to trial will not be met. This may encourage courts to set the FRAND issues to one side in some cases, as there is significant emphasis on dealing with cases within a year in the UPC.
As the UPC proceeds through its second year with the first substantive SEP/FRAND trials being heard, it is an exciting time to see whether it will become an attractive venue for such disputes in Europe.
