Panasonic v Oppo (UPC_CFI_210/2023)

• Panasonic alleged that Oppo had infringed its patent that was declared essential to the 4G standard by the sale of their 4G-capable devices, including smartphones and smartwatches. Oppo pleaded a FRAND defence and a FRAND counterclaim. The FRAND counterclaim requested various things in the alternative,  such as ordering Panasonic to accept Oppo's licence agreement offer, ordering Panasonic to submit a licence offer to Oppo, issuing declaratory relief confirming Oppo's right to a licence, and obliging Panasonic to obtain a FRAND licence on terms that the court determines.
• The Mannheim LD ordered an injunction following the finding that Panasonic's patent was valid, infringed and essential to the 4G standard because there was a risk of recurrence of Oppo's infringing acts.
• As for Oppo's FRAND defence, the Mannheim LD applied the CJEU's decision in Huawei v ZTE. The court emphasised that the infringement notice (step 1 in Huawei v ZTE) should not be assessed in a formalistic way. Here, although Panasonic had not provided a claim chart for the patent in issue but instead for a Chinese counterpart, this was found to be sufficient as any misunderstanding should have been raised promptly by Oppo.
• As for the implementer's expression of willingness to licence (step 2), the court said that this must be assessed on the overall evaluation of the circumstances and not in a strict sequential or formalistic manner. Here Oppo's statements at the beginning of the negotiations were held to be sufficient to show serious willingness to enter into serious negotiations. This is in contrast to the UK position as the implementer does not have to commit to be bound by a court-determined FRAND licence.
• In respect of Panasonic's initial offer (step 3), the court held this to be FRAND-compliant. Importantly, Panasonic "tried to clarify its position as to why it consider[ed] the prices to be reasonable". Oppo raised an objection about the offer during the course of these proceedings and this was held against it. The court noted that objections should be raised in "close temporal connection" to the offer during the course of the negotiations to give an opportunity for any issues to be overcome without judicial assistance.
• Oppo's counteroffer (step 4) was assessed and found not to be FRAND-compliant. Oppo was found not to have behaved in good faith as required by someone who is seriously interested in taking a licence. Moreover the security offered by Oppo in case its counteroffer was rejected was also found to be insufficient. Overall, Oppo's procedural conduct was found not to be good faith as it was characterised by "self contradictory conduct". Oppo had tried to both challenge the jurisdiction of the UPC in general and also apply for the determination of a FRAND rate by way of its FRAND counterclaim. They had delayed negotiations and their initial requests in their FRAND counterclaim were directed at having the panel determine a territorially limited licence rate (EPC contracting states, the USA and Japan), which the Mannheim LD said contradicted its own arguments that only the determination of a global FRAND rate would be FRAND.
• The Mannheim LD also dismissed Oppo's FRAND counterclaim. Although the counterclaim was admissible, with the court deriving its jurisdiction from Article 32(1)(a) UPCA, it was not well founded because Oppo's offer was not FRAND-compliant and Panasonic could not be obliged to accept it. Notably, Oppo's offer had not been calculated based on its own acts of use.
• The UPC applied a similar approach to German courts, emphasising implementers' obligations to act as a willing licensee and to make serious efforts to conclude a licence. It is clear that the UPC is willing to injunct implementers if they fail to meet their FRAND obligations (as per EU law) and a SEP is held to be valid and infringed.
• After reviewing confidential information, a less redacted version of the judgment is available here.

This analysis is based on a machine translation of a decision not available in English.