Panasonic Holdings Corporation (Panasonic) brought an infringement action against Guangdong OPPO Mobile Telecommunications Corp Ltd and OROPE Germany GmBH (OPPO), accusing OPPO of infringing Panasonic’s patent EP 2 568 724 in their 4G-capable products including smartphones and smartwatches. OPPO counterclaimed that they were not given a fair opportunity to obtain a FRAND license, and also counterclaimed for the invalidity of the patent. [1]
EP 2 568 724 is directed to the mapping of signals in a radio communications device. Both OPPO and the UPC consider this a standard essential patent (SEP) for implementing the 4G standard. Whilst Panasonic did contact OPPO to negotiate a FRAND license, these negotiations were ultimately unsuccessful.
The Mannheim Local Division asserted that they have jurisdiction for both the infringement decision and the FRAND counterclaim, marking the first time the UPC has made a FRAND ruling.
With regard to the infringement action, the Court interpreted the claim features (in particular the meaning of ‘transmission bandwidth’ in claim 1) contrary to Panasonic’s view, confirming their understanding using the description [2]. The Court also referred to both the claim wording and functional context when interpreting the claim, as well as the document as a whole.
The Court dismissed OPPO’s revocation counterclaim, ruling that the patent is valid. Notably, OPPO cited a new prior art document in its reply to the defence to the revocation counterclaim, which had been cited in parallel proceedings [3] concerning the same patent.
Despite the document being raised in the parallel proceedings, the Court noted the general principle that the revocation counterclaimant is required to raise all of its attacks with the revocation counterclaim, and any later-filed documents need a substantiated submission as to why they were submitted late to be permitted by the Court. Generally, it is not allowable for a counterclaimant to introduce newly searched prior art in response to the patentee’s amendment. However, the present case is different in that Panasonic was aware of OPPO’s newly introduced document via the parallel proceedings. Whether the late-filed document could be admitted or not in this situation was side-stepped by the Court as it considered the document to not be novelty-destroying.
With regard to the FRAND counterclaim, OPPO argued that, based on EU antitrust law, they are excluded from the assertion of injunctive relief for infringement. Furthermore, they argued that Panasonic did not engage properly with the process for obtaining a FRAND licence, asserting that there was no specific written licenceoffer before the infringement action was brought, thus accusing Panasonic of abusing its dominant market position.
Panasonic argued that they complied with the EU regulations regarding FRAND license negotiations for SEP holders, and further that they notified OPPO of the infringement before bringing the claim to the UPC. The Court ruled in favour of Panasonic, stating that Panasonic acted in accordance with the European Court of Justice’s (CJEU) programme of obligations for a SEP holder (laid out in Huawei v ZTE [4], but OPPO did not meaningfully participate in the negotiations for the license in good faith. The decision states that ‘[OPPO’s] behaviour provides an example of how an implementer seriously interested in a FRAND license should not behave’, based on OPPO’s delaying of negotiations and failure to provide sufficient information about their products including sales figures.
OPPO further requested that the Court order Panasonic, as the owner of the SEP, to submit a specific license offer, or that the Court issue a declaratory ruling confirming that OPPO has the right to a license. The Court refused OPPO’s auxiliary requests for various FRAND license terms, for either being non-FRAND compliant (for not being based on the actual use of the patent), or merely because OPPO did not behave within the CJEU framework. Thus, the FRAND counterclaim was dismissed. As OPPO was deemed an unwilling party, the UPC did not determine a FRAND license itself.
Based on the valid patent, the Court found OPPO’s products to directly infringe claim 1, and indirectly infringe claim 13 of the patent, in Germany, France, Italy, the Netherlands and Sweden. The Court ordered that OPPO pay 100% of the costs and damages, and for the recall and destruction of all of the offending products.
To conclude, this case forms the UPC’s first foray in to FRAND matters, setting out some useful guidelines for how parties should approach FRAND negotiations and opening itself up to arguments based on competition law. It also puts the UPC in line with the approach of European courts to SEPs, defining itself against the approach taken in the UK.
References
[1] https://www.unified-patent-court.org/en/node/1267
[2] UPC_CoA_1/2024 para 35
[3] UPC_CFI_219/2023
[4] CJEU July 16 2015, ECLI:EU:C:2015:477 (Huawei v. ZTE) C-170/13
[5] Panasonic Holdings Corporation v Xiaomi Technology UK Limited & Ors [2024] EWCA Civ 1143