13 May 2021

FRAND II – Federal Court of Justice strengthens the enforcement of Standard Essential Patents

In November 2020, the Federal Court of Justice (Bundesgerichtshof – BGH) issued another landmark decision on FRAND in Standard Essential Patent (SEP) disputes in the Sisvel v Haier case. While the result of the decision – i.e. that the BGH would overturn the decision of the OLG Düsseldorf (which went against the first instance decision) – was announced last year, the legal reasoning of the BGH was not published until March 2021.

In summary, the BGH has strengthened the rights of SEP holders by clearly defining and raising the requirements for SEP users’ willingness to license, which must be complied with in the context of the FRAND conditions:

  • The user must actively avoid a ‘patent hold out’ and work towards doing everything necessary on his part to reach a licence agreement. This applies in particular to the obligation to respond to an SEP holder’s offers in terms of time and content.
  • The BGH particularly emphasised the content-related part of the user’s reaction. Thus, targeted communication is required, e.g. with active participation in the negotiation with the aim of bringing the process to a successful conclusion.
  • The active and targeted negotiation participation is not a one-off, but, according to the BGH’s reasoning, an ongoing obligation, especially for the SEP user.
  • In the event that a user of an SEP has delayed the negotiations in the course of the negotiations, he may remedy such delay by making additional efforts towards the conclusion of a licence agreement.

In addition to the above clarifications on the requirements for a licensee in the context of an SEP dispute, the BGH also commented on a potential review of FRAND conditions in the amount of the licence fee. It states that there is no single FRAND rate, but depending on the course of the negotiation and the relationship of the negotiating parties, these can lead to different results. A judicial determination of a FRAND licence contradicts the BGH’s understanding that FRAND means that both parties are willing to reach a compromise, whereby this compromise automatically constitutes FRAND.

In summary, the present case law of the BGH further strengthens the position of the SEP holder. In connection with the latest decisions of the regional courts on the assessment of anti-suit injunctions, the court location in Germany for the enforcement of SEPs is further strengthened.