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How do U.S. and German approaches to FRAND-committed SEPs differ, particularly on injunctive relief and antitrust law, and what does this reveal about global patent dispute resolution?

Image courtesy of interviewee. December 10, 2024

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The speaker discusses a collaborative project detailing the publication of an edited volume titled "Fran German Case Law and German and Global Perspectives," which focuses on FRAND (Fair, Reasonable, and Non-Discriminatory) standards in patent law. The first half of the book includes translations of German case law regarding FRAND disputes, while the second half comprises various chapters by the editors and other contributors, comparing FRAND litigation across different jurisdictions, including Germany, the US, the UK, and China.

A significant topic covered is the operation of Standard Setting Organizations (SSOs) and the importance of declaring essential patents. The speaker explains the roadblocks in defining FRAND and how negotiations often lead to litigation due to differing interpretations of what constitutes fair licensing terms. This video highlights critical distinctions in patent litigation procedures between the US and Germany, notably the reliance on jury trials in the US, the different approaches to injunctions, and how antitrust law influences cases in Germany more than in the US.

The speaker elaborates on the examination process for determining FRAND royalties, contrasting methodologies like the "comparable licenses" approach with a "top-down" approach, which assesses the overall royalty burden of a device. The differences in handling injunctions are emphasized, with US courts being more discretionary, while German courts typically grant them as a standard entitlement when patent infringement is established.

Overall, the speaker suggests a need for a more standardized and efficient approach in resolving FRAND disputes, potentially through clearer guidelines from SSOs or an international arbitration system, as current practices can lead to confusion and increased costs due to varying jurisdictional interpretations.

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Here are five key points from the video:

1. **Edited Volume on FRAND and Global Perspectives**: The video discusses a recently published edited volume titled "Fran German Case Law and German Per and Global Perspectives," which includes translations of German case law on FRAND (Fair, Reasonable, and Non-Discriminatory) disputes and contributions from academics and judges from various countries comparing litigation practices.

2. **Differences in Patent Litigation**: The author contrasts the approaches to resolving FRAND disputes in the U.S. and Germany, highlighting differences in legal processes, such as the use of juries in the U.S., extensive pretrial discovery, and bifurcation of patent validity and infringement issues, while noting that German courts typically resolve cases quickly with judges specialized in patent law.

3. **Injunctive Relief and Antitrust Concerns**: The video emphasizes the differing views on injunctive relief between the U.S. and Germany. In the U.S., injunctive relief is not automatically granted and requires a balancing of various factors, whereas in Germany, it is more common, and courts often favor patent owners due to antitrust considerations laid out in the Huawei v. ZTE case, which stipulates conditions under which injunctive relief can be sought.

4. **Complexities of FRAND Licensing**: The author explains the complexities of determining FRAND royalties through methods like comparable licenses and top-down approaches. The unpredictability of jury trials in the U.S. further complicates these cases, while German courts typically do not set specific FRAND licensing terms, leaving parties to negotiate.

5. **Need for Standardization in Dispute Resolution**: The video highlights the ongoing challenges in resolving FRAND disputes across different jurisdictions, including forum shopping and inconsistent rulings. There is a call for a more standardized approach to dispute resolution, potentially through mandatory arbitration or clearer guidelines from standard-setting organizations, to reduce costs and confusion in FRAND litigation.

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Here are some key quotes and concepts extracted from the video you :

1. **Project Overview**: "The project we were working on was this edited volume... titled Fran German Case Law and German Per and Global Perspectives."

2. **Content Structure**: "The volume consists of translations of the German case law on Fran disputes, arranged thematically."

3. **Involvement of Contributors**: "Noted, academics and judges from Germany, the uk, the US and China, discussing Fran litigation and how litigation in their own countries compares to the German experience."

4. **Metaphor for Disputes**: "I use the metaphor of ship's passing in the night... US and Germany do have very different perspectives on how to resolve Fran disputes."

5. **Differences in Legal Systems**: "The US for example, still makes extensive use of juries, even in patent disputes, which I don't think anybody else in the world does any longer."

6. **Patent Litigation Convideo**: "Patents usually are territorial rights... litigation involving these patents sometimes will be occurring simultaneously throughout the world."

7. **Fair, Reasonable, and Non-Discriminatory Terms (FRAND)**: "The difficulty comes in that the standard setting organizations typically do not... agree on FRAND terms."

8. **Methods for Determining Royalties**: "The most common method employed in the US and the uk... involves looking at comparable licenses if they exist."

9. **Top-Down Approach**: "The court will estimate what the aggregate royalty burden is for a particular device... and then try to figure out from there what the applicable percentage is for this particular patent owner."

10. **Injunctions and Their Variability**: "In the 2006 US Supreme Court decision, eBay versus Merck Exchange... it is not an automatic entitlement."

11. **Judicial Discretion in Injunctive Relief**: "Courts have to evaluate four factors... irreparable harm, adequate remedy in law, balance of hardship, and public interest."

12. **German Court Perspective on Injunctions**: "In Germany, you would have no jury trial... injunctive relief is largely the norm in the German cases involving these FRAND disputes."

13. **Proposed Solutions for Resolving Disputes**: "A more rational system would be to have either some standardized body... or require mandatory arbitration of these matters."

14. **Current State of Standard-Setting Organizations**: "The standard setting organizations themselves have largely avoided doing that... this is still something of a work in progress."

15. **Calls for Regulation**: "The European Commission has a pending regulation that would try to require mandatory but non-binding arbitration of SEP disputes pertaining to the EU."

These quotes encapsulate significant ideas and themes from the video, including the complexities of international patent law, the FRAND commitments, differences in judicial processes between jurisdictions, and suggestions for resolving disputes more effectively.

X-TIMESTAMP-MAP=LOCAL:00:00:00.000,MPEGTS:90000

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Have been working for the past couple of years with,

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two co-editors, professor Peter Pick at the University

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of Zurich, and Dr.

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Eric Hoick. Uh,

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and so, the,

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project we were working on was this edited volume

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that was published just within the last month

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by Elgar Publishing in the uk,

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titled Fran German Case Law and German Per

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and Global Perspectives.

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And so the volume consists of the first half consists

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of translations of the German

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case law on Fran disputes, arranged thematically.

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And the second half consists of chapters by the three of us

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and by other contributors including, noted,

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academics and judges from Germany, the uk, the US

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and China, discussing Fran litigation

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and how, litigation in their own countries, compares

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to the German experience.

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And so my chapter about US

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and German Fran, cases like ships, the passing

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of the night is one of the chapters, in the book.

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It's helpful to know something about,

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standard setting organizations and how they operate

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and how Fran relates to that.

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So in various industries, member corp corporations

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that are involved in various industries, will be members

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of these standard setting organizations, SSOs, such

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as the European Telecommunications Standard Institute,

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or the IEE.

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And so, the members

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of these organizations will meet from time to time

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to develop and promulgate standards that will enable,

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for example, devices to be interoperable

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so your smartphone can communicate with mine so

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that our devices have certain functionality,

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a standardized functionality that we would all come

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to, expect.

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So as we move from, you know, two G to 3G to 4G to 5G,

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these standards are constantly updated.

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So the members of the organizations will vote on the

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adoption of new standards,

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but they also are typically obligated

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or at least not be encouraged, one,

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to declare any patents they own that may be essential

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to the practice of these standards, so people know

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that these patents exist.

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And then also to, license those patents,

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those standard essential patents.

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On Fran terms, Fran meaning fair, reasonable,

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and non-discriminatory.

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The difficulty comes in

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that the standard setting organizations typically do not

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define what Fran means.

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And so if the owner of a portfolio

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of standard essential patents

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and an implementer of those patents, a company

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that produces smartphones or tablets

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or whatever, if they cannot

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Agree to terms, then litigation will often ensue

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and sometimes litigation will be taking place

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throughout the world.

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So one other just little background piece of information

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that's helpful to know is

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that patents usually are territorial rights.

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So a US patent will be enforceable in the US

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but not elsewhere.

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The UK patent would be enforceable in the

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UK but not elsewhere.

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And so the owners of these portfolios

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of patents typically will have, say,

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a US patent relating to a particular method or system

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or apparatus, and then corresponding patents in all

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of the other major jurisdictions.

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So litigation involving these patents sometimes will be

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occurring simultaneously throughout the world.

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That means that different courts have sometimes different

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approaches to,

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resolving these disputes over the meaning of Fran.

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I use the metaphor of ship's passing in the night

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to mean things that have no significant connection

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or commonality,

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which is perhaps a little bit of an overstatement.

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Certainly there are some commonalities, but the US

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and Germany do have very different, perspectives on how

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to resolve Fran disputes.

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So part of that is simply, a result

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of differences in the way we resolve civil disputes

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generally, very different ways of looking at things.

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The US for example, still makes, extensive use

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of juries, even in patent disputes,

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which I don't think anybody else in the world

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does any longer.

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The us has very extensive pretrial discovery

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and also makes extensive use of party witnesses.

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You have some of that potentially in Germany,

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but not,

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to Germany anywhere near the extent we would have in the us.

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Um, another difference is

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that in patent disputes generally there are

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often two key issues.

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Did the defendant infringe, but is the patent valid?

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And so a large number of issued patents turn out

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to be invalid in whole or in part, maybe up to 40%

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or more in many countries,

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including the us the defendant will argue, one,

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I'm not infringing, but also the patent ensued is not valid.

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Germany and also China

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and a few other jurisdictions have

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what is called a bifurcated system, meaning

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that the patent infringement action will

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proceed in one court.

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And then if the defendant wishes to argue

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that the patent claims are invalid, they go

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to a separate court, have a separate proceeding.

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And in Germany, at least the infringement trial typically is

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resolved long before the,

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invalidation proceeding is resolved.

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And so that sometimes may give the patent owner more

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leverage to negotiate a settlement even though invalidity

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has yet to be determined.

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So that's, those are all major differences.

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But then beyond those, something that is specific

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to Fran disputes, two things.

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One relates to injunctive relief,

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which is less common in the United States than in Germany.

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And the other relates to the, relevance

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of antitrust law, competition law,

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which is relatively minimal in relation

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to Fran disputes in the us,

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but a very important aspect of German litigation.

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These Fran disputes can make their way to court in a,

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in a variety of ways.

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One way is to have, a, just a,

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a normal patent infringement action.

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The owner of one or more

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of these standard essential patents may sue an implementer,

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claiming infringement.

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And then the question is, if the owner

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proves infringement

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and if the patents are valid, what is the remedy?

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And so in the United States, also in the United Kingdom,

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China, a few other jurisdictions, courts will, is as needed,

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actually determine what a Fran royalty is.

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And there are different methodologies for doing that.

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But normally it is some variation over the way you would

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calculate reasonable royalties in any patent

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infringement dispute.

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And so often that involves looking at comparable licenses if

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they exist, if there are other Fran licenses

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that the owner has granted to other implementers

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or other patent licenses that would shed some light on

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what the fair market value

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of a license would be in this dispute.

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That's the most common method employed in the US and the uk.

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Uh, another approach,

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however, sometimes used in tandem with comparables is

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what is referred to as the top down approach.

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And so that means that the court will estimate

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what the aggregate royalty burden is

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for particular device.

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Is it 20% of the sales price of the device?

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Is it 10%? Whatever it is.

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And you try to find evidence of what

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that aggregate royalty burden is

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and then, determine, what percentage

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of the standard essential patents that would comprise

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that aggregate royalty burden are owned by the plaintiff.

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What percentage of those standard essential patents

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actually are infringed actually are

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essential, actually are valid.

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Uh, and then try to figure out from there what the,

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what the portion of the aggregate royalty burden is

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that is applicable to this particular patent owner.

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So that's called the top down approach, sometimes used

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as a check on the comparables

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to see if the two numbers largely match up.

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So that's the way it's done when these cases have

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been resolved in the us.

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But one other thing just to note is that, as I said,

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juries sometimes resolve these issues in the US

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and that adds a bit more uncertainty to the mix.

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Uh, since you, would, would not have,

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a judge writing a lengthy opinion explaining the judge's

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reasoning, you might just have a jury determination.

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So in the us some of these cases

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employing this methodology are judge decided.

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Some are jury decided in the US

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and other common law jurisdictions such

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as the uk injunctive relief is viewed as being equitable,

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as being discretionary.

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Uh, but in, the 2006 US Supreme Court decision,

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eBay versus Merck Exchange, the US Supreme Court emphasized

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that in US law,

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discretionary really means discretionary.

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And so it is not an automatic entitlement the patent owner

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may prevail, but

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that doesn't necessarily mean the patent owner will

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obtain an injunction.

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Uh, the patent owner might be limited

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to recovering monetary damages built for past infringement

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and for future infringement.

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And so a court is supposed to evaluate four factors.

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Does the plaintiff, face the prospect

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of irreparable harm?

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If an injunction is not granted,

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will there be an adequate remedy in at law?

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Meaning would monetary damages suffice?

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What is the balance of hardship between the plaintiff

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and the defendant if an injunction is not granted?

211
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And, would the public interest be disserved

212
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by not granting an injunction?

213
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So the court has to evaluate those four factors.

214
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So there's no bright line rule

215
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that you always get an injunction

216
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or you never get an injunction.

217
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But applying those four factors, most

218
00:10:48.175 --> 00:10:51.575
of the time common sense would suggest since the owner

219
00:10:51.595 --> 00:10:54.095
of a standard essential patent has committed

220
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to licensing those patents for money,

221
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that a monetary remedy would suffice

222
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that there is no irreparable harm, et cetera.

223
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So in the US cases in which this issue has gone

224
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before the courts, so far,

225
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at least the courts have concluded that injunctive relief

226
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for the infringement of standard essential patents has

227
00:11:15.995 --> 00:11:17.055
not been appropriate.

228
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That doesn't mean it would never be appropriate.

229
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There might be cases where, for example,

230
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the defendant is engaging in so-called holdout, refusing

231
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to negotiate, trying to delay matters to obtain some kind

232
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of strategic advantage.

233
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But so far, at least the US courts have largely avoided

234
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or have entirely avoided,

235
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granting injunctive relief in these brand disputes in

236
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Germany and in most other civil law jurisdictions.

237
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The view about injunctive relief is

238
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that injunctions are largely an entitlement that,

239
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once the patent owner prevails improving infringement,

240
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the patent owner is going to get an injunction.

241
00:11:59.985 --> 00:12:02.325
That's the general default principle.

242
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Injunctive relief is not viewed

243
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as being discretionary in nature.

244
00:12:07.865 --> 00:12:09.885
Now, the di the, the problem of course,

245
00:12:09.885 --> 00:12:12.325
with standard essential patents is

246
00:12:12.675 --> 00:12:15.125
that the patent owner has made this commitment

247
00:12:15.125 --> 00:12:16.485
to license the patents.

248
00:12:16.825 --> 00:12:20.785
And if the patent owner wanted to exercise its right

249
00:12:20.845 --> 00:12:24.065
to an injunction, it would have enormous leverage

250
00:12:24.205 --> 00:12:28.265
to extract a royalty that would be above the Fran level.

251
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So to constrain that the court of justice

252
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for the European Union in a 2015 decision,

253
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Huawei versus ZTE held that antitrust law.

254
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European Union antitrust

255
00:12:42.745 --> 00:12:46.865
or competition law has a role to play here that, the,

256
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the owner of a standard essential patent,

257
00:12:49.585 --> 00:12:51.665
a FFR committed standard essential patent,

258
00:12:52.475 --> 00:12:56.745
would be engaging in an unlawful abuse

259
00:12:56.965 --> 00:13:01.665
of dominant position if it were to seek injunctive relief

260
00:13:01.965 --> 00:13:05.305
for the infringement of a Fran committed standard essential

261
00:13:05.305 --> 00:13:08.745
patent, unless certain steps are followed.

262
00:13:08.885 --> 00:13:12.785
And so the Huawei decision lays out these steps, the owner

263
00:13:12.845 --> 00:13:16.745
of the Fran committed step has to notify the implementer

264
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of its possible infringement.

265
00:13:19.125 --> 00:13:21.665
The implementer is supposed to respond by showing

266
00:13:21.665 --> 00:13:25.545
that it is willing to obtain a license to pay for a license.

267
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On Fran terms, the owner is then supposed to respond

268
00:13:29.345 --> 00:13:30.345
with a fr offer.

269
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The implementer can respond with a counter offer,

270
00:13:33.945 --> 00:13:37.985
all the steps, and the implementer is not willing.

271
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Then you can get an injunction.

272
00:13:40.155 --> 00:13:42.415
But otherwise, if the implementer is willing,

273
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then the court should avoid entering the injunction.

274
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So the way the German courts have interpreted the Huawei

275
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decision, and in particular over the last four years since a

276
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couple of, German, federal Supreme Court decisions,

277
00:13:57.235 --> 00:13:59.735
the, the F einon cases,

278
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the parties were sissel versus ha the German courts,

279
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have, I think it's fair to say, largely taken the view

280
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that the licensee, the implementer,

281
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must be very explicit about its willingness

282
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to take a license on Fran terms.

283
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And so, in most of the recent decisions,

284
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the German courts have expressed the view

285
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that the implementer was not a willing licensee,

286
00:14:28.635 --> 00:14:32.405
therefore, antitrust law does not preclude the entry

287
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of injunctive relief.

288
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And so injunctive relief is largely the norm in the German

289
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cases, involving these Fran disputes.

290
00:14:43.745 --> 00:14:45.445
And so very, that's a very different,

291
00:14:45.475 --> 00:14:47.125
fundamentally different,

292
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perspective than the way we do in the us.

293
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And and related to that, what that means is

294
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that the German court's perspective is

295
00:14:55.325 --> 00:14:57.725
that the parties really ought to work things out

296
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for themselves, that it's not really the role of the court

297
00:15:01.505 --> 00:15:04.285
to establish the terms of a Fran license.

298
00:15:04.545 --> 00:15:06.725
And so we've actually no German cases

299
00:15:07.945 --> 00:15:10.575
in which a court has said, here's

300
00:15:10.575 --> 00:15:13.695
what a Fran license should be in this particular case.

301
00:15:14.355 --> 00:15:16.615
Um, either the court enters an injunction,

302
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in which case the defendant

303
00:15:18.035 --> 00:15:21.015
and the plaintiff then work things out on terms

304
00:15:21.045 --> 00:15:22.455
that would favor the plaintiff.

305
00:15:23.155 --> 00:15:26.295
Uh, or in the few cases in which they have denied injunctive

306
00:15:26.295 --> 00:15:30.135
relief, again, the parties have wound up working things out,

307
00:15:30.455 --> 00:15:32.895
entering a settlement without the court having to determine

308
00:15:32.925 --> 00:15:34.335
what a Fran royalty is.

309
00:15:34.335 --> 00:15:36.975
Germany, you would have no jury trial.

310
00:15:37.595 --> 00:15:41.815
Um, the judges are specialists in a sense.

311
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So in the US we don't really have specialized trial courts,

312
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although some judges tend

313
00:15:48.095 --> 00:15:49.775
to get more patent cases than others.

314
00:15:49.925 --> 00:15:53.135
Some develop a a, an an a fill in affinity

315
00:15:53.195 --> 00:15:54.215
for this body of law.

316
00:15:54.355 --> 00:15:56.215
But we have no specialized trial courts,

317
00:15:56.215 --> 00:15:58.455
and we have jury trials in Germany,

318
00:15:58.515 --> 00:15:59.775
as in many countries.

319
00:15:59.995 --> 00:16:02.575
Um, not exactly specialized trial courts,

320
00:16:02.835 --> 00:16:06.175
but we have specialized chambers within courts

321
00:16:06.175 --> 00:16:07.455
of general jurisdiction.

322
00:16:07.715 --> 00:16:10.695
And so the judges hearing patent cases,

323
00:16:10.695 --> 00:16:15.215
including these Fran cases, will hear, those cases

324
00:16:15.515 --> 00:16:17.455
and maybe a few other types of cases,

325
00:16:17.635 --> 00:16:19.095
but that's what they specialize in.

326
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So the judges bring a great deal of legal expertise

327
00:16:22.875 --> 00:16:24.055
to these matters.

328
00:16:24.755 --> 00:16:27.775
Um, again, there are no juries generally,

329
00:16:28.035 --> 00:16:30.535
German courts don't make much use

330
00:16:30.555 --> 00:16:33.015
of party expert witnesses either.

331
00:16:33.435 --> 00:16:34.975
And so,

332
00:16:34.975 --> 00:16:37.415
those are just some fundamental differences in the way

333
00:16:37.415 --> 00:16:38.695
litigation proceeds.

334
00:16:38.715 --> 00:16:40.135
The German cases also tend

335
00:16:40.135 --> 00:16:42.255
to be resolved relatively quickly.

336
00:16:42.745 --> 00:16:46.575
Again, since invalidity will not be an issue,

337
00:16:46.575 --> 00:16:49.575
you're talking about maybe 12 months from start to finish,

338
00:16:49.625 --> 00:16:52.815
which is much, much faster than we would resolve these

339
00:16:52.815 --> 00:16:54.335
matters in the United States.

340
00:16:54.915 --> 00:16:56.375
So the, at the end of the day, the,

341
00:16:56.375 --> 00:16:59.895
the patent owners have certain advantages in the German

342
00:16:59.955 --> 00:17:03.015
system as compared to the US system.

343
00:17:03.355 --> 00:17:07.695
One possibility that has been floated by many academics

344
00:17:07.695 --> 00:17:11.135
and some judges including Lord Justice Arnold, of the,

345
00:17:11.135 --> 00:17:12.215
court of appeal for England

346
00:17:12.215 --> 00:17:14.975
and Wales, is that maybe it would make more sense

347
00:17:15.515 --> 00:17:18.415
to have some standardized way

348
00:17:18.415 --> 00:17:21.335
of resolving these Fran disputes rather than having

349
00:17:21.345 --> 00:17:25.615
litigation proceeding in multiple countries simultaneously,

350
00:17:26.105 --> 00:17:30.575
which creates certain opportunities for forum shopping

351
00:17:31.595 --> 00:17:33.855
for tensions among the jurisdictions.

352
00:17:34.915 --> 00:17:39.145
One of the side issues in some of these cases is

353
00:17:39.145 --> 00:17:41.225
that sometimes a party will ask a court

354
00:17:41.685 --> 00:17:45.345
to enjoin the other party from litigating in another

355
00:17:45.345 --> 00:17:48.765
jurisdiction called an anti suit injunction.

356
00:17:49.465 --> 00:17:52.525
And that obviously does not sit well with the

357
00:17:52.985 --> 00:17:55.605
or, that is then being deprived of the opportunity

358
00:17:55.665 --> 00:17:57.365
of resolving the case that is pending

359
00:17:57.465 --> 00:18:01.405
before it give rise to anti anti suit injunction.

360
00:18:01.585 --> 00:18:05.165
So it creates a lot of confusion, a lot of cost.

361
00:18:05.905 --> 00:18:09.005
And so maybe one way of addressing that

362
00:18:09.955 --> 00:18:12.325
more rational system would be

363
00:18:13.025 --> 00:18:15.685
to have either some standardized body,

364
00:18:15.685 --> 00:18:17.165
maybe an international body

365
00:18:17.275 --> 00:18:19.285
that would resolve these disputes,

366
00:18:20.005 --> 00:18:23.025
or alternatively, if that's not really a realistic option,

367
00:18:23.605 --> 00:18:27.265
maybe the standard setting organizations themselves

368
00:18:27.885 --> 00:18:31.185
should be encouraged to one,

369
00:18:31.455 --> 00:18:34.665
require mandatory arbitration of these matters.

370
00:18:35.485 --> 00:18:37.065
Or alternatively,

371
00:18:37.155 --> 00:18:40.625
maybe the standard setting organizations themselves should

372
00:18:41.285 --> 00:18:44.025
be more clear about what the Fran commitment means.

373
00:18:44.395 --> 00:18:47.985
Maybe they could explain what the methodology is, what some

374
00:18:47.985 --> 00:18:50.185
of the ground rules are so far.

375
00:18:50.185 --> 00:18:53.465
However, the standard setting organizations themselves have

376
00:18:53.465 --> 00:18:55.265
largely avoided doing that.

377
00:18:55.805 --> 00:18:58.905
Uh, the IEE experimented with that for a while,

378
00:18:58.905 --> 00:19:01.745
but then wound up withdrawing what the policy

379
00:19:01.815 --> 00:19:03.065
that it had implemented.

380
00:19:03.245 --> 00:19:06.145
And, and the difficulty is in just getting commitment,

381
00:19:06.335 --> 00:19:10.105
getting consensus on the part of all of the members

382
00:19:10.365 --> 00:19:11.505
of the SSO.

383
00:19:11.805 --> 00:19:15.225
So, this is still something of a work in progress.

384
00:19:15.965 --> 00:19:20.305
The European Commission has a pending regulation that would

385
00:19:21.045 --> 00:19:23.385
try to require mandatory,

386
00:19:23.525 --> 00:19:25.665
but non-binding arbitration

387
00:19:25.685 --> 00:19:28.345
of SEP disputes pertaining to the eu.

388
00:19:28.485 --> 00:19:31.945
But it's not clear that that's going to go forward or not.

389
00:19:32.525 --> 00:19:36.065
Um, so right now there's a lot of discussion about how best

390
00:19:36.165 --> 00:19:39.545
to address these issues in a way that would reduce the cost,

391
00:19:39.845 --> 00:19:43.105
reduce the inconsistency among jurisdictions.

392
00:19:43.165 --> 00:19:44.625
But we are not quite there yet.

Exploring the Global Perspectives on FRAND and Patent Litigation

00:00:00 - Have been working for the past couple of years with, two co-editors, professor Peter Pick at the University of Zurich, and Dr. Eric Hoick. and so, the, project we were working on was this edited volume that was published just within the last month by Elgar Publishing in the uk, titled Fran German Case Law and German Per and Global Perspectives. And so the volume consists of the first half consists of translations of the German case law on Fran disputes, arranged thematically.

00:00:41 - and by other contributors including, noted, academics and judges from Germany, the uk, the US and China, discussing Fran litigation and how, litigation in their own countries, compares to the German experience. And so my chapter about US and German Fran, cases like ships, the passing of the night is one of the chapters, in the book.

00:01:10 - standard setting organizations and how they operate and how Fran relates to that. So in various industries, member corp corporations that are involved in various industries, will be members of these standard setting organizations, SSOs, such as the European Telecommunications Standard Institute, or the IEE. And so, the members of these organizations will meet from time to time

Interoperability and Standard Essential Patents

00:01:43 - for example, devices to be interoperable so your smartphone can communicate with mine so that our devices have certain functionality, a standardized functionality that we would all come to, expect. So as we move from, you know, two G to 3G to 4G to 5G, these standards are constantly updated. So the members of the organizations will vote on the adoption of new standards, but they also are typically obligated

00:02:14 - to declare any patents they own that may be essential to the practice of these standards, so people know that these patents exist. And then also to, license those patents, those standard essential patents. On Fran terms, Fran meaning fair, reasonable, and non-discriminatory. The difficulty comes in that the standard setting organizations typically do not

00:02:46 - And so if the owner of a portfolio of standard essential patents and an implementer of those patents, a company that produces smartphones or tablets or whatever, if they cannot Agree to terms, then litigation will often ensue and sometimes litigation will be taking place throughout the world. So one other just little background piece of information that's helpful to know is that patents usually are territorial rights.

Global Patent Disputes: Jurisdictional Challenges and Varied Legal Perspectives

00:03:19 - but not elsewhere. The UK patent would be enforceable in the UK but not elsewhere. And so the owners of these portfolios of patents typically will have, say, a US patent relating to a particular method or system or apparatus, and then corresponding patents in all of the other major jurisdictions. So litigation involving these patents sometimes will be occurring simultaneously throughout the world.

00:03:50 - approaches to, resolving these disputes over the meaning of Fran. I use the metaphor of ship's passing in the night to mean things that have no significant connection or commonality, which is perhaps a little bit of an overstatement. Certainly there are some commonalities, but the US and Germany do have very different, perspectives on how to resolve Fran disputes. So part of that is simply, a result

00:04:23 - generally, very different ways of looking at things. The US for example, still makes, extensive use of juries, even in patent disputes, which I don't think anybody else in the world does any longer. The us has very extensive pretrial discovery and also makes extensive use of party witnesses. You have some of that potentially in Germany,

Key Differences in Patent Dispute Resolution: US vs. Germany

00:04:50 - to Germany anywhere near the extent we would have in the us. another difference is that in patent disputes generally there are often two key issues. Did the defendant infringe, but is the patent valid? And so a large number of issued patents turn out to be invalid in whole or in part, maybe up to 40% or more in many countries, including the us the defendant will argue, one, I'm not infringing, but also the patent ensued is not valid.

00:05:25 - and a few other jurisdictions have what is called a bifurcated system, meaning that the patent infringement action will proceed in one court. And then if the defendant wishes to argue that the patent claims are invalid, they go to a separate court, have a separate proceeding. And in Germany, at least the infringement trial typically is resolved long before the, invalidation proceeding is resolved. And so that sometimes may give the patent owner more

00:06:01 - has yet to be determined. So that's, those are all major differences. But then beyond those, something that is specific to Fran disputes, two things. One relates to injunctive relief, which is less common in the United States than in Germany. And the other relates to the, relevance of antitrust law, competition law, which is relatively minimal in relation to Fran disputes in the us,

Resolving Fran Disputes: Litigation and Royalty Methodologies

00:06:32 - These Fran disputes can make their way to court in a, in a variety of ways. One way is to have, a, just a, a normal patent infringement action. The owner of one or more of these standard essential patents may sue an implementer, claiming infringement. And then the question is, if the owner proves infringement and if the patents are valid, what is the remedy? And so in the United States, also in the United Kingdom,

00:07:05 - actually determine what a Fran royalty is. And there are different methodologies for doing that. But normally it is some variation over the way you would calculate reasonable royalties in any patent infringement dispute. And so often that involves looking at comparable licenses if they exist, if there are other Fran licenses that the owner has granted to other implementers

00:07:34 - what the fair market value of a license would be in this dispute. That's the most common method employed in the US and the uk. another approach, however, sometimes used in tandem with comparables is what is referred to as the top down approach. And so that means that the court will estimate what the aggregate royalty burden is for particular device. Is it 20% of the sales price of the device?

Evaluating Aggregate Royalty Burdens in Patent Disputes

00:08:06 - And you try to find evidence of what that aggregate royalty burden is and then, determine, what percentage of the standard essential patents that would comprise that aggregate royalty burden are owned by the plaintiff. What percentage of those standard essential patents actually are infringed actually are essential, actually are valid. and then try to figure out from there what the,

00:08:38 - that is applicable to this particular patent owner. So that's called the top down approach, sometimes used as a check on the comparables to see if the two numbers largely match up. So that's the way it's done when these cases have been resolved in the us. But one other thing just to note is that, as I said, juries sometimes resolve these issues in the US and that adds a bit more uncertainty to the mix. since you, would, would not have,

00:09:09 - reasoning, you might just have a jury determination. So in the us some of these cases employing this methodology are judge decided. Some are jury decided in the US and other common law jurisdictions such as the uk injunctive relief is viewed as being equitable, as being discretionary. but in, the 2006 US Supreme Court decision, eBay versus Merck Exchange, the US Supreme Court emphasized

Injunctions and Discretionary Relief in Patent Law

00:09:42 - discretionary really means discretionary. And so it is not an automatic entitlement the patent owner may prevail, but that doesn't necessarily mean the patent owner will obtain an injunction. the patent owner might be limited to recovering monetary damages built for past infringement and for future infringement. And so a court is supposed to evaluate four factors.

00:10:12 - of irreparable harm? If an injunction is not granted, will there be an adequate remedy in at law? Meaning would monetary damages suffice? What is the balance of hardship between the plaintiff and the defendant if an injunction is not granted? And, would the public interest be disserved by not granting an injunction? So the court has to evaluate those four factors. So there's no bright line rule

00:10:42 - or you never get an injunction. But applying those four factors, most of the time common sense would suggest since the owner of a standard essential patent has committed to licensing those patents for money, that a monetary remedy would suffice that there is no irreparable harm, et cetera. So in the US cases in which this issue has gone before the courts, so far, at least the courts have concluded that injunctive relief

Challenges of Injunctive Relief in Patent Disputes

00:11:15 - not been appropriate. That doesn't mean it would never be appropriate. There might be cases where, for example, the defendant is engaging in so-called holdout, refusing to negotiate, trying to delay matters to obtain some kind of strategic advantage. But so far, at least the US courts have largely avoided or have entirely avoided, granting injunctive relief in these brand disputes in

00:11:47 - The view about injunctive relief is that injunctions are largely an entitlement that, once the patent owner prevails improving infringement, the patent owner is going to get an injunction. That's the general default principle. Injunctive relief is not viewed as being discretionary in nature. Now, the di the, the problem of course, with standard essential patents is that the patent owner has made this commitment

00:12:16 - And if the patent owner wanted to exercise its right to an injunction, it would have enormous leverage to extract a royalty that would be above the Fran level. So to constrain that the court of justice for the European Union in a 2015 decision, Huawei versus ZTE held that antitrust law. European Union antitrust or competition law has a role to play here that, the,

FRAND Commitment and Injunctions: Legal Framework and Interpretations

00:12:49 - a FFR committed standard essential patent, would be engaging in an unlawful abuse of dominant position if it were to seek injunctive relief for the infringement of a Fran committed standard essential patent, unless certain steps are followed. And so the Huawei decision lays out these steps, the owner of the Fran committed step has to notify the implementer of its possible infringement.

00:13:21 - that it is willing to obtain a license to pay for a license. On Fran terms, the owner is then supposed to respond with a fr offer. The implementer can respond with a counter offer, all the steps, and the implementer is not willing. Then you can get an injunction. But otherwise, if the implementer is willing, then the court should avoid entering the injunction. So the way the German courts have interpreted the Huawei

00:13:53 - couple of, German, federal Supreme Court decisions, the, the F einon cases, the parties were sissel versus ha the German courts, have, I think it's fair to say, largely taken the view that the licensee, the implementer, must be very explicit about its willingness to take a license on Fran terms. And so, in most of the recent decisions,

Contrasting Approaches to Injunctive Relief in FRAND Disputes: Germany vs. the US

00:14:24 - that the implementer was not a willing licensee, therefore, antitrust law does not preclude the entry of injunctive relief. And so injunctive relief is largely the norm in the German cases, involving these Fran disputes. And so very, that's a very different, fundamentally different, perspective than the way we do in the us. And and related to that, what that means is

00:14:55 - that the parties really ought to work things out for themselves, that it's not really the role of the court to establish the terms of a Fran license. And so we've actually no German cases in which a court has said, here's what a Fran license should be in this particular case. either the court enters an injunction, in which case the defendant and the plaintiff then work things out on terms that would favor the plaintiff. or in the few cases in which they have denied injunctive

00:15:30 - entering a settlement without the court having to determine what a Fran royalty is. Germany, you would have no jury trial. the judges are specialists in a sense. So in the US we don't really have specialized trial courts, although some judges tend to get more patent cases than others. Some develop a a, an an a fill in affinity for this body of law. But we have no specialized trial courts, and we have jury trials in Germany,

Comparative Advantages of Patent Litigation in Germany

00:15:59 - not exactly specialized trial courts, but we have specialized chambers within courts of general jurisdiction. And so the judges hearing patent cases, including these Fran cases, will hear, those cases and maybe a few other types of cases, but that's what they specialize in. So the judges bring a great deal of legal expertise to these matters. again, there are no juries generally, German courts don't make much use

00:16:33 - And so, those are just some fundamental differences in the way litigation proceeds. The German cases also tend to be resolved relatively quickly. Again, since invalidity will not be an issue, you're talking about maybe 12 months from start to finish, which is much, much faster than we would resolve these matters in the United States. So the, at the end of the day, the, the patent owners have certain advantages in the German system as compared to the US system.

00:17:07 - and some judges including Lord Justice Arnold, of the, court of appeal for England and Wales, is that maybe it would make more sense to have some standardized way of resolving these Fran disputes rather than having litigation proceeding in multiple countries simultaneously, which creates certain opportunities for forum shopping for tensions among the jurisdictions.

Challenges of Anti-Suit Injunctions and Standardization in International Dispute Resolution

00:17:39 - that sometimes a party will ask a court to enjoin the other party from litigating in another jurisdiction called an anti suit injunction. And that obviously does not sit well with the or, that is then being deprived of the opportunity of resolving the case that is pending before it give rise to anti anti suit injunction. So it creates a lot of confusion, a lot of cost.

00:18:09 - more rational system would be to have either some standardized body, maybe an international body that would resolve these disputes, or alternatively, if that's not really a realistic option, maybe the standard setting organizations themselves should be encouraged to one, require mandatory arbitration of these matters. Or alternatively,

00:18:41 - be more clear about what the Fran commitment means. Maybe they could explain what the methodology is, what some of the ground rules are so far. However, the standard setting organizations themselves have largely avoided doing that. the IEE experimented with that for a while, but then wound up withdrawing what the policy that it had implemented. And, and the difficulty is in just getting commitment, getting consensus on the part of all of the members

Progress on SEP Dispute Resolution in the EU

00:19:11 - So, this is still something of a work in progress. The European Commission has a pending regulation that would try to require mandatory, but non-binding arbitration of SEP disputes pertaining to the eu. But it's not clear that that's going to go forward or not. so right now there's a lot of discussion about how best to address these issues in a way that would reduce the cost, reduce the inconsistency among jurisdictions.

00:19:43 -

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