UPC – the Court of Appeal denies requests for more comparable licenses for FRAND defence

After the UPC recently issued its first decision concerning a SEP case on 13 September 2024, see our post on this here, the UPC Court of Appeal issued another SEP-related decision on the 24 September 2024.

Panasonic sued OPPO and Xiaomi for infringement of multiple patents and is seeking injunctions.  In response, OPPO filed a so-called FRAND defence and as part of this requested that Panasonic be ordered to provide OPPO with additional comparable licences.  The Mannheim LD had refused these requests and OPPO filed an appeal.  

The Court of Appeal held that the Mannheim LD had been correct in refusing the requests at this stage. They agreed that this was not appropriate at the current stage of the proceedings, as no decision has yet been made on the question of willingness.

We now wait for the oral hearing on the full dispute, which is set for 7-9 October 2024 in Mannheim.  It will be the first time that a FRAND defence is considered by the UPC.

Background

There are currently only a few SEP-related proceedings before the UPC.  One of these is the Panasonic vs. OPPO and Xiaomi dispute.  Panasonic filed infringement actions in July 2023 relating to multiple patents relevant to the 3G and 4G cellular standards. The value of the claim is given as over 50m EUROS.  

At least six infringement actions, against Xiaomi and OPPO, were filed before the Munich LD, and at least three injunction claims against Xiaomi and Oppo were filed before the Mannheim LD. In response the defendants counterclaimed for revocation.  OPPO also filed a FRAND rate determination counterclaim.  

OPPO raised a FRAND defence and filed requests (under R.190 RoP) for an order for Panasonic to produce evidence regarding comparable licences and divestment transactions and also requested permission to introduce its own licence agreements.  In May 2024 Mannheim LD rejected the requests (ORD_598191/2023, ORD_3980/2024 and ORD_6152/2024) and gave the reason as, at the current stage of the proceedings, no decision had yet been made on the question of OPPO's fundamental willingness to licence and whether Panasonic had made a (substantiated) FRAND offer. 

Subsequently Panasonic had provided the three licence agreements referred to in the claim and OPPO had provided two. According to the Mannheim LD "it appears to be sufficient, at least at present, that the parties mutually deal with the licence agreements now submitted in the proceedings and the expert opinions obtained and submitted by the parties".

Court of Appeal decision 

The UPC Court of Appeal (UPC_CoA_298 & 299 & 300/2024 - 24 Sept 2024) agreed that this stage of proceedings did not warrant the grant of OPPO's requests, for the reasons as given by the LD, given that the LD has not yet determined whether the parties are willing. The Court of Appeal said “a balance must be struck between the defendant’s interest in obtaining evidence which may be useful for its FRAND-defence, and the interest of the other party and its contracting parties in protecting confidential information".

The assessment of a request for an order to produce evidence may depend on the stage of the proceedings, and so may be granted at a later stage of the proceedings.

Next steps

It appears that all the dispute is being heard by the Mannheim LD, before a panel comprising Tochtermann (DE), Böttcher (DE), Brinkman (NL) and Loibner (AT) (Technically Qualified Judge).

The oral hearing (7-9 October 2024) will proceed as follows: 

• The first day is for consideration of interpretation of the patent claims for validity and infringement (it appears of EP 2 568 724 only).  
  
• The second day is for consideration of FRAND with respect to OPPO and to OPPO’s FRAND counterclaim. 
  
• The third day is for consideration of FRAND with respect to Xiaomi. 
  
• Thursday 10 October 2024 has been kept in reserve just in case. 

This will be the first time that a FRAND defence is considered by the UPC and so we wait with anticipation for the outcome of this oral hearing.