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4a O 73/14

delivered on 31 March 2016 Brassel, Court Clerk as Registrary of the Court Office

REGIONAL COURT DÜSSELDORF IN THE NAME OF THE PEOPLE PARTIAL WAIVER AND FINAL JUDGMENT In the legal dispute […], Plaintiff, versus […], Defendant, and […], Intervenor (of the Defendant), the Chamber of Civil Matters 4a of the Regional Court, represented by Presiding Regional Court Judge Dr. Crummenerl, the Regional Court Judge dr. Büttner, and the Judge Reich upon oral hearing on 26 January 2016 ruled that: the Defendant is ordered [to cease and desist, destroy and recall] [claims for information and damages as well as claims for destruction and recall before 28 August 2014 are dismissed] Free distribution permitted. For questions please refer to [email protected].

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FACTS […] GROUNDS The complaint is admissible and justified to the extend requested in the oral hearing on 26 January 2016. A. [Admissibility of complaint] B. The complaint is justified. Plaintiff is entitled to the asserted cease-and-desist claim, the claim to destruction and recall according to Art. 64 EPO, Sec. 9, 10 para. 1,, 139 para. 1, 140a para. 1 and 3 within the now asserted scope. Plaintiff has a standing to sue (refer to I. in this regard). The challenged embodiments literally infringe the patent in suit (refer in this regard to II. and III.). Plaintiff is furthermore entitled to assert its claims against Defendant, because neither Defendants' compulsory license objection under the antitrust law nor its objections based on Sec. 242 BGB apply here (more in this regard under IV and V.). A stay of the proceedings is not necessary (refer in this regard to VII). I. Plaintiff is both entitled to conduct proceedings and has standing to sue. […] II. The patent in suit concerns […] III. Based thereupon, the challenged embodiments make direct and literal use of the technical teaching of the patent in suit, i.e. the product claims 1, 19 and 37, as well as indirectly and literally of process claim 10. […]

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IV. Neither Defendant and Intervenor can successfully raise the compulsory license objection on the basis of antitrust law. 1. It can remain undecided whether the patent in suit conveys a dominant market position, thus making Plaintiff the addressee of the standard of Art. 102 TFEU. Even if one assumes this, Plaintiff may enforce the asserted claims. Accordingly, it also does not need to be discussed whether such an obligation to grant licenses at fair, reasonable and non-discriminatory terms (hereinafter: FRAND terms) could potentially follow as an alternative from Art. 101 TFEU without a dominant market position being decisive, or whether this must already be rejected on grounds of law (cf. in this regard: Kühnen, Hdb. der Patentverletzung [Manual of patent infringement], 8th Ed. 2016 margin no. E.272 et seqq.). 2. The European Court of Justice provided guidelines in its judgment of 16 July 2015, Case C-170/13 in the matter Huawei Technologies/ZTE (GRUR 2015, 764, hereinafter in short: (the) CJEU judgment) as to when bringing an action for a prohibitory injunction under a standard-essential patent standardized by a standardization organization (hereinafter also referred to as: "SEP") whose holder has undertaken to this organization to grant FRAND licenses to any third party does not constitute an abuse of a dominant position within the meaning of Art. 102 TFEU. The criteria set forth by the CJEU are applicable to the present case. Accordingly, the holder of an SEP must inform the alleged infringer of the patent infringement before bringing an action for a prohibitory injunction (para. 61 of the CJEU judgment). To the extent the infringer is willing to conclude a licensing agreement, the SEP holder must offer the infringer a specific, written license offer for the SEP at fair, reasonable, and non-discriminatory terms (para. 63 CJEU judgment). The infringer must respond to this offer in good faith and in particular without any delaying tactics (para. 65 CJEU judgment). If it does not accept the offer by the SEP holder, the infringer must make a counteroffer within a short period of time which complies with FRAND requirements (para. 66 CJEU judgment). If the SEP holder rejects this counteroffer, the infringer must, from this time on, render account about the use of the SEP and provide security for the payment of the licensing fees, which also applies to past acts of use (para. 67 CJEU judgment). The patent user cannot be criticized either for challenging, in parallel to the negotiations relating to the grant of

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licenses, the validity of those patents or the essential nature of the SEP, or for reserving the right to do so in the future (para. 69 CJEU judgment). These antitrust restrictions apply not only to the claim for injunctive relief but also for the recall claim, because actions brought seeking a recall are also liable to prevent products complying with the standard in question manufactured by competitors from appearing or remaining on the market (para. 73 CJEU judgment). The same applies to the claim for destruction of infringing goods, since its effect on the market access of such products is similar to a claim for injunctive relief or a claim for recall (Chamber, judgment of 3 November 2015 – 4a O 144/14 – margin no. 138 in Juris; Kühnen, Hdb. der Patentverletzung, 8th Ed. 2016 margin no. E.284; in the following, the claims to destruction and recall are not always (also) mentioned, but solely the claim for injunctive relief). The CJEU is clearly proceeding on the basis of the ideal of the patent user willing to enter into a licensing agreement, who – as soon as he is notified of the use of the patent in suit – aspires to quickly attain a license on FRAND terms (cf. Kühnen, op. cit., margin no. E.300). Vis-à-vis such a patent user, there is no justifiable interest under antitrust law in bringing an action for a prohibitory injunction under an SEP. Instead, the two parties must endeavor to enter into a FRAND-compliant license agreement through negotiations, and in particular by means of offer and counteroffer. If this does not take place, because the patent user ultimately refuses FRAND-compliant terms, pursues delaying tactics, or does not provide necessary security for the proprietor of the SEP, the patentee may (again) bringing the action for a prohibitory injunction. To avoid delays, the patent user may reserve the right to challenge the essential nature of the standard and/or the validity of the SEP. Nevertheless, the agreement entered into must be without conditions. These requirements apply regardless of the identity of the proprietor of the SEP, i.e. whether the proprietor of the SEP is itself for instance an undertaking active on the product market or a pure patent licensing company. There is no reason to treat a patent licensing company any differently per se to a competitive undertaking (Düsseldorf Higher Regional Court, decision of 13 January 2016 – 1-15 U 65/15 – margin no. 11 et seq. at Juris with further references). The CJEU judgment does not comment on any restrictions for certain SEP proprietors. In principle, each patentee has the same rights and obligations conferred by a patent, independently of its other activities. It is not apparent that a differentiation is necessary here on antitrust grounds.

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3. The antitrust compulsory license objection of Defendant against the action for a prohibitory injunction of Plaintiff cannot be upheld. Plaintiff has complied with its antitrust obligations, while Defendant has not. a) According to the CJEU judgment, it is for the patentee, "prior to such proceedings," "to alert the alleged infringer of the infringement complained about by designating that SEP and specifying the way in which it has allegedly been infringed." Plaintiff must accordingly give notice of the action for a prohibitory injunction and hold prior consultation with the patent user (para. 60 CJEU judgment). Thus, as a condition for the enforcement of the prohibitory injunction, the CJEU requires the proprietor of the SEP to give "notice of infringement" to the patent user. In this respect, Plaintiff has fulfilled its antitrust obligations by the statement of claim, and Defendant cannot rely on prior information being too late (notice of infringement). aa) The notice of infringement must alert "the alleged infringer of the infringement," designating the SEP in question and specifying the way in which it is supposed to have been infringed (para. 61 CJEU judgment). According to this, at a minimum the publication number of the patent in suit, the challenged embodiment, and the alleged act of use (within the meaning of Sections 9 et seq. of the German Patent Act (PatG)) must be notified to the infringer. Whether further information is required – in particular on the interpretation of the patent claim or the specification of standard citations etc. to prove the infringement – may remain undecided (see Kühnen, op. cit., margin no. E.291; going further Mannheim Regional Court, judgment of 29 January 2016 – 7 O 66/15 – page 25 et seq.), they are certainly not harmful. Substantively sufficient information was contained in the statement of claim, which was served on Defendant and which it also received from Plaintiff via email. It contains all of the information one could ask for, even given a broad interpretation of the substantive requirements for prior information. bb) In temporal terms, the notice of infringement by Plaintiff can ultimately not be criticized, either.

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To the extent the CJEU requires a notice of infringement "prior to such proceedings," however, this is generally to be understood to mean that the notice of infringement must be given before filing the complaint, at the latest before payment of the advance on costs (see (1)). In this particular case, though, the notice together with the statement of claim was sufficient (see (2)). (1) The notice of infringement in Plaintiff's letter of 31 July 2014 to Defendant (Exhibit A-K58) was out of time per se, since the complaint had already been filed at that time and the payment of the advance on costs had already been made (on 29 July 2014). In non-transitional cases, notice after filing the action (for a prohibitory injunction) but before service of the action is out of time if the advance on costs has already been paid (cf. Kühnen, op. cit., according to which no "action has been brought" at least until the payment of the advance on costs; left open by Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 – margin no. 207 et seq. in Juris). Based on the intent and purpose of the requested advance notice, "bringing an action" for a prohibitory injunction must take place at the latest before payment of the advance on costs. The notice of infringement is intended to enable the conclusion of a licensing agreement and the necessary negotiations without the pressure of a court case in which an order of injunctive relief is threatened. But such a pressure situation already arises upon bringing an action for a prohibitory injunction and payment of the advance on costs, as the deadline is counted from the service of the complaint – this is then only a matter of time. Notice of infringement only after payment of the advance on costs does not appear to be reconcilable with the concept of the CJEU. If the advance on costs is paid, then it is not at all clear at this time whether an agreement on a licensing agreement will be reached. Permitting patentees in such a situation to already "kick off" an action contradicts the idea of negotiations on an equal footing. To the extent Plaintiff seeks to equate "service" with "enforcement," it is already not apparent that the CJEU considered the differentiation undertaken in German law between filing the complaint/pendency and service of the complaint/lis pendens. The formulation used by the CJEU of "bringing an action" does not belong to either of the two dual concepts. Nor is the Brussels I Regulation relevant; rather, the timeliness of the notice of infringement is determined according to the possibility of negotiations without the pressure of a claim for injunctive relief. Similarly, the "torpedo risk," alleged by Plaintiff, i.e. the possibility of an infringer bringing a negative declaratory action in another EU country that also affects a

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domestic patent, leads to no other assessment. Plaintiff can reduce this risk by delaying the bringing of the action and payment of the requested advance on costs (Kühnen, op. cit., margin no. E.297). Moreover, the torpedo risk plays no role in the considerations of the CJEU. To the extent Plaintiff refers to parallel proceedings in Munich, it has put forward no reasons why the court there deemed a submission of the complaint after pendency but before service as timely. Accordingly, the arguments put forward there need not be discussed. (2) Although a notice of infringement after payment of the advance on costs is out of time in general, this does not preclude the bringing of an action for a prohibitory injunction in this case, as it constitutes a transitional case in which the action was brought prior to the CJEU judgment announced on 16 July 2015 and the Opinion of the Advocate General Wathelet in this case of 20 November 2014. In that regard, the notice of infringement, which was delayed per se, remains inconsequential here. (a) At the time the complaint was filed, the case law of the highest courts (BGH, GRUR 2009, 694 — Orange Book Standard) did not require the holder of a patent granting a dominant position to inform the infringer of the patent and to make a license offer. Rather, it was up to the infringer to make a license offer. The patent holder is only acting abusively by enforcing a claim for injunctive relief under patent law under such a patent if the infringer has made the holder an unconditional offer for the conclusion of a licensing agreement that it adhered to and that the patent holder was not permitted to reject without violating the prohibition of discrimination or obstruction. Furthermore, as long as it is already using the subject matter of the patent, the infringer had to comply with the terms that the licensing agreement to be concluded links to the use of the licensed subject matter (BGH, GRUR 2009, 694 — Orange Book Standard). It is correct that the Orange Book Standard decision was issued with regard to a patent that was essential for a de facto standard and for which therefore no FRAND declaration existed. In the case law of the court of first instance, however, these conditions were also applied to those essential patents for which the standard was agreed upon within the context of a standardization process between the companies involved and the patent holder had made FRAND commitments (cf. Regional Court Düsseldorf, judgment of 24 April 2012 — 4b O 274/12 — margin no. 227 et seqq. in Juris).

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The Orange Book Standard ruling of the BGH (German Federal Court of Justice) was, however, contested, and in particular the EU Commission placed different requirements on the actions of the holder of an SEP under antitrust law. This divergence ultimately led to the decision by the Regional Court Düsseldorf to refer the matter (GRUR-RR 2013, 196 — LTE Standard) to the CJEU. Nevertheless, it can be stated that there was no compelling reason for Plaintiff at the time the action was brought to first notify Defendant of the infringement. (b) Defendant may, however, be concurred with in principle that the CJEU judgments represent the legal situation ex tunc, i.e. the interpretation of the CJEU also applies for any period prior to the delivery of its judgment (CJEU, C-309/85 para. 13 – Barra; CJEU, C-24/86 para. 28 – Blaizot; CJEU, C163/90 para. 30 – Legros). It follows from the power of decision of the CJEU under Art. 267 TFEU that in principle, national courts can and must also apply a provision of Union law as interpreted by the CJEU to such legal relationships which arose prior to a ruling on interpretation of the CJEU (German Federal Constitutional Court (BVerfG), decision of 10 December 2014 – 2 BvR 1549/07 with further references). To this end, exceptions may be made for reasons of legal certainty and legitimate expectations, where such a temporal limitation must be contained in the judgment of the CJEU itself that rules upon the petition for interpretation (CJEU Case C-163/90 para. 30 – Legros). That is, it is for the CJEU to decide whether the validity of the interpretation of a standard that it adopts in terms of time – contrary to the general ex tunc effect of decisions under Art. 267 TFEU – should be restricted by way of exception, for example because of Union law principles of legal certainty and legitimate expectations (BVerfG, ruling of 10 December 2014 – 2 BvR 1549/07 – with further references). Given the primacy of Union law, national law and national jurisprudence cannot justify any legitimate expectation as to their substance (ErfK/Wissmann, TFEU Art. 267 margin no. 45a) (c) The ex tunc effect of the CJEU's interpretation thus first means that the principles laid down by the CJEU also apply to "old cases" (where an action was brought before the CJEU judgment) and that the Orange Book case law of the German Federal Court of Justice (BGH) could not still be applied. However, this principle does not prohibit the particularities of the individual case from being taken into account in the examination according to the CJEU's scheme. In its judgment, the CJEU did not rule on a disputed interpretation of a standard, but introduced an elaborate system of different steps. Ultimately, these steps serve first to create a sequence model for the conclusion of a license agreement and, secondly, Free distribution permitted. For questions please refer to [email protected].

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to establish criteria to determine when a proprietor of an SEP is willing to grant a FRAND license or when a patent user is not willing to take a license. Having regard to this objective, the particularities of the individual case must always be considered, thus precluding a rigid, purely schematic or formalistic application of the law. Hence, the requirement imposed by the CJEU of a notice of infringement should be able to be dispensed with if it has been established that the patent user has already acquired the relevant knowledge by other means. The notice of infringement may thus be omitted as a pointless formality under certain circumstances, such as where the infringer already possessed the information to be provided (Kühnen, op. cit., margin no. E.292). If the notice of infringement by the patentee may be dispensed with entirely in a manner that is permissible under antitrust law, though, the assertion of the claim for injunctive relief may be permitted to the patentee in exceptional cases even where notice of infringement was simply late. Furthermore, it cannot be inferred from the CJEU judgment that a notice of infringement made only after bringing an action automatically means that the claim for injunctive relief becomes unenforceable. In particular, the CJEU did not rule on whether making up for the notice of infringement is possible without first withdrawing the pending infringement action. Although there is some indication that the answer is no in new cases – i.e. remedying the delayed notice of infringement is only permitted by withdrawing the complaint (thus Kühnen, op. cit., margin no. E.296), the decision of the CJEU does not prohibit allowing subsequent notice during ongoing injunction proceedings in individual cases. This is the case here. It would be inconsistent with good faith to require a proprietor of an SEP who complies with the Orange Book case law and other relevant provisions of the CJEU judgment to withdraw a pending action, give notice of infringement, and then potentially again bring an action, such as if the patent user (still) proves not to be willing to take a license. Due to the limited term of a patent, this would mean an unreasonable interference with the rights of the patentee, which are protected by Art. 14 of the German Basic Law (GG) and Art. 17 para. 2 of the EU Charter of Fundamental Rights. At the very least, a patent user (unwilling to take a license) would be prohibited in good faith from relying on the delay of the notice of infringement and thus to force the withdrawal of the action. This is especially true if in spite of bringing an action, there is no willingness of the patent user to take a license on FRAND terms. In this case, namely, it can be assumed that the patent user will a fortiori be unwilling to take a license after the withdrawal of the action. To that extent, a notice of infringement solely through the statement of claim may be permissible in cases where the statement of claim was already made before the publication of the CJEU judgment and the Opinion of the Advocate General, and

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Defendant, unlike Plaintiff (the proprietor of the SEP), ultimately does not comply with its obligations under antitrust law. This is the case here. (3) Plaintiff has fulfilled its obligation to inform. As stated above, Defendant was sufficiently informed of the substance of the patent in suit and the alleged patent infringement by the statement of claim. The provision of this information together with the complaint was sufficient in terms of time. Although the advance on costs for the action received by the court on 23 July 2014 had already been paid on 29 July 2014 and thus before the notice of infringement, this is of no relevance. The filing and service of the action were unquestionably carried out before the CJEU judgment and the associated Opinion. Incidentally, it should be noted that Defendant received the notice of infringement even before the service of the statement of claim. (4) It can therefore be left open whether the delay in notice of infringement is remedied by the fact that Defendant in turn did not declare its willingness to take a license quickly enough (cf. Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/15 para. 208 and 215 in Juris, according to which a late notice of infringement has no consequences in any case if the alleged infringer does not declare its willingness to take a license in a timely manner in response, as the fundamental decision to take a license or not could also be taken under the pressure of a lawsuit). d) Defendant did not declare in good time that it intends to take a FRAND license to the patent in suit. aa) In response to the notice of infringement of the proprietor of an SEP, the patent user, if it wants to rely on the FRAND objection, must declare its willingness to enter into a licensing agreement (para. 63 CJEU judgment). In substance, only the willingness to conclude a FRAND-compliant license agreement must be expressed. Additional details or conditions are not necessary. In fact, it can be detrimental to the patent user if it imposes conditions regarding the proposed licensing where this indicates that the patent user is ultimately unwilling after all to take a license under fair, reasonable, and non-discriminatory conditions (Kühnen, op. cit., margin no. E.294; in this sense also Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 para. 214 in Juris).

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The patent user must declare its willingness to enter into a license agreement without delaying tactics. As mentioned, the CJEU presumes the ideal of a patent user that seeks the earliest possible licensing upon gaining knowledge of the use. The proprietor of the SEP has a legitimate interest in this, since a delay makes it more difficult for it to obtain an order for injunctive relief within the limited term of the patent, should this become necessary. The CJEU further stipulates that the patent user may reserve the right to examine the validity and essential nature of the patent to the standard (CJEU judgment margin no. 69), which minimizes the risk of miscalculation of the patent user and therefore makes a rapid examination seem appropriate (thus also Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 – margin no. 214 in Juris). The reasonable period for the declaration of willingness to take a license depends on the circumstances of the individual case, taking into account what information the patent user has received from the proprietor of an SEP within the framework of the notice of infringement. A more detailed notice of infringement will shorten the period of examination, and thus the period for the declaration of willingness to take a license. bb) Defendant, conversely, declared its willingness to take a license late. From the advance notice by letter of Plaintiff dated 31 July 2014, it had knowledge of the action at the latest in early August, which was served upon it on 15 August 2014. It was only after a reminder from Plaintiff on 9 December 2014 that Defendant replied by letter dated 12 January 2015. Such a response time of about 5 months is clearly too long, even taking into account that Defendant is a network operator and therefore is to be allowed a certain period for consultation with the manufacturers of the challenged mobile phones. Another indication that Defendant is not cooperating in a swift FRAND licensing is that it first asked for an explanation of the allegation of infringement in the letter of 12 January 2015 (Exhibit A-K60), despite the fact that it was sufficiently informed by the statement of claim. cc) At any rate, the delay that has occurred in the present case could no longer be effectively remedied by a subsequent declaration of willingness to take a license. The delayed willingness to take a license always has the consequence that a (FRAND) license agreement may only be concluded at a later point in time or – if the conclusion of a license agreement does not come about – Plaintiff must wait longer before it can bring an action for a prohibitory injunction in court. The delay restricts the enforcement of the time-limited exclusive right conferred by the patent. Free distribution permitted. For questions please refer to [email protected].

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Furthermore, this would mean that any necessary security of Defendant (cf. para. 67 CJEU judgment) would be provided later, so that the patentee would have to bear its risk of insolvency for a longer period. Consequently, Defendant is violating the model of the patent user that strives for swift licensing. Despite the delayed declaration of willingness to take a license, the patentee does in fact remain further obliged to license the SEP on FRAND terms. The belated declaration of willingness to take a license only means that the proprietor of the SEP may (initially) bring a legal action for a prohibitory injunction against Defendant without being exposed to the accusation of abusive conduct. dd) It can therefore be left open whether the letter of Defendant even contains a sufficient declaration of willingness to take a license at all. This seems doubtful, since Defendant primarily refers to the responsibility of the manufacturers of the challenged embodiments and requests an explanation of the allegation of infringement. In the event of an infringement, moreover, it only offers negotiations to "settle your claims," but does not expressly offer to take a license. On top of this, there are additional reasons why Defendant cannot invoke the antitrust compulsory license objection. e) Plaintiff has made a FRAND-compliant license agreement offer. aa) The offer of Plaintiff was in good time, despite the fact that it was only made in the course of the ongoing proceedings. To the extent Defendant argues in its letter of 15 January 2016 that a proprietor of an SEP must have made a FRAND license offer before bringing an action for a prohibitory injunction, this cannot be upheld in the present case. The obligation to make a FRAND license agreement offer is only incumbent upon the proprietor of the SEP after the declaration of willingness to take a license ("after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms," as stated in the operative part of the CJEU judgment). If the willingness to take a license – as here – is belatedly declared, the patent user cannot object that Plaintiff's license offer was not made until after the action was brought. This is the case at least in transitional cases such as the present one, even if notice of infringement and action coincide, i.e. the patent user had no way to declare its willingness to take a license after the notice of infringement but before the bringing Free distribution permitted. For questions please refer to [email protected].

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of the action. In this situation, Defendant would have been able to declare its willingness to take a license in good time, but only did so after five months. The fact that in the present case, this declaration was issued under the pressure of a legal action (and would have occurred even with timely declaration) must ultimately be accepted, at least in transitional cases. Although the CJEU established the principle that notice of infringement, declaration of willingness to take a license, and FRAND offer of the proprietor of an SEP must be made before the action was brought, in the present (transitional case) constellation, the notice of infringement after payment of the advance on costs was still acceptable (cf. above). It is similarly acceptable here – also due to the transitional nature – that Defendant's decision concerning its willingness to take a license was made in the course of the ongoing proceedings. That negotiations should not take place during proceedings for a prohibitory injunction is intended according to the concept of the CJEU to ensure that the patent user does not accept exploitative license terms due to the pressure of the action for a prohibitory injunction. However, there is no such risk, at least not immediately, insofar as it concerns the mere question of whether there will be licensing at all (thus also Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 – para. 208 in Juris). This is because with the mere declaration of intent to take a license on FRAND terms, a patentee has not yet accepted abusive contractual terms. Improper pressure in terms of time (in the sense of increased pressure to make a quick decision) does not arise due to the ongoing proceedings, as the patented user is already required to declare its willingness to take a license without delay. bb) In substance, the offer of the proprietor of the SEP should be fair, reasonable, and non-discriminatory (i.e. FRAND) (para. 63 CJEU judgment). There is no abuse of a dominant position if the patentee offers contractual terms that would also have come about without its dominant position. Hence, comparable licensing agreements represent an important indicator of the adequacy of the license terms offered, provided it is not found that these have been concluded only under the pressure of a claim for injunctive relief. The more license agreements concluded with similar license conditions the proprietor of the SEP can present, the stronger the presumption that the royalties demanded are FRAND (Kühnen, op. cit., margin no. E.340). In contrast, a patent user may only demand deviating royalties if it can demonstrate objective grounds for the unequal treatment. The same applies to the scope of the license: If the patentee has already granted licenses to the SEP offered or the SEP portfolio offered for similar products, this suggests that this collection of protective rights is equitable and therefore also to be accepted by patent users (Kühnen, op. cit., margin no. E.328). For the question of whether a – possibly global – portfolio license complies with FRAND requirements, Free distribution permitted. For questions please refer to [email protected].

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the industry practice is particularly relevant. If consolidated and worldwide license agreements for entire intellectual property portfolios are generally concluded in the relevant market, a corresponding contract offer does not violate FRAND, unless the circumstances of the individual case cause a deviation to be necessary, such as when a patentee operates only in a single geographic market. If this is not the case, the patentee has a legitimate interest to settle all acts of use of a corporation by a single license agreement, rather than having to take action under individual property rights or in individual countries in order to bring about a corresponding license agreement. In addition, the proprietor of the SEP will incur higher costs if it would be forced to license its entire portfolio in diverse license agreements (for a plurality of patents and a plurality of countries). Furthermore, the monitoring of compliance with contracts and the prosecution of violations involving a plurality of contracts are frequently more difficult. Finally, it seems questionable from the viewpoint of non-discrimination to require an offer for a single license prior to bringing an action for a prohibitory injunction if the patentee has otherwise only concluded portfolio license agreements with other licensees. A separate issue from the fundamental FRAND admissibility of global portfolio licenses is the question of the protective rights contained in the offered portfolio, i.e. in particular whether all patents offered for licensing in a portfolio are actually standard essential (cf. Kühnen, op. cit., margin no. E.330 et seqq.). But that is not the issue presently. Defendant and Intervenor have not sufficiently substantiated, nor is it otherwise apparent, that Plaintiff is bundling standard essential and (unused) non-standard essential patents in a single portfolio license in an inadmissible manner and is thereby attempting to force the licensing of protective rights that are not required per se via the enforcement of standard essential patents. cc) The offer of Plaintiff corresponds substantively to FRAND requirements. (1) Plaintiff's offer corresponds to a well-established licensing practice. Plaintiff is offering Defendant and Intervenor each a license to its entire AMR-WB patent portfolio, which provides for a quota license fee of USD 0.26 per mobile phone that implements the AMR-WB standard and is manufactured or sold in a country where a licensed patent is in force.

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(a) According to its unchallenged submission, the license offers of Plaintiff (including to Intervenor) are based on standard royalty rates of Plaintiff and its parent company available on the Internet (Exhibit A-K62), where the specific royalty rates being offered are even slightly lower than the standard rates specified. The latter were in turn based on royalty rates that were demanded by [Y] in the licensing of the portfolio containing the patent in suit before it was transferred to Plaintiff (cf. Exhibit A-K63 for the royalties demanded by [Y]). Plaintiff has submitted an anonymized list of licensees (Exhibit A-K65) and offered to submit the complete anonymized license agreements as well upon judicial notice. The list contains a total of 12 licensees, which is a relatively high number that gives rise to a correspondingly strong indication as to the adequacy of the license terms. Six of the licensees are software or service providers and/or hardware manufacturers. According to the table, these should all pay the standard royalties according to the table of Plaintiff (Exhibit A-K62). These license agreements have a comparatively lower indicative value, as it is unclear whether royalties were (also) paid here for mobile phones. The remaining six licensees are mobile phone manufacturers, which pay between USD 0.20 and USD 0.40 per piece (manufactured mobile phone), partly in the form of a lump sum, partly as ongoing royalties. The licensees of the patent in suit indisputably include the companies [B], [I], [G], [D], [C] und [E]. Furthermore, the company [GG] possessed a license via the SIPRO pool. This is not precluded by the fact that [BB (O)] is currently taking action against [GG] under the parallel protective rights to the present patent in suit, as pointed out by Defendant in the disallowed pleading of 4 February 2016. This does not allow the conclusion that a license did not exist in the past; rather, it seems plausible that a previous license agreement has now ended – such as due to the passage of time or termination. (b) To the extent Defendant and Intervenor object that the license agreements had arisen only under the pressure of claim for injunctive relief, this ultimately cannot be upheld here. In principle, though, the objection is admissible that a license agreement submitted as evidence of licensing practice is irrelevant, because it itself is merely the result of an antitrust abuse. Accordingly, a certain degree of skepticism is indicated for license agreements that have been concluded during (injunction) proceedings as to whether these are truly the result of free licensing negotiations and therefore can be viewed

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as a model. On the other hand, not every license fee that is agreed upon in a contract under the threat of an action for a prohibitory injunction is necessarily abusively excessive. Firstly, the assertion of the claim for injunctive relief may have been admissible. As confirmed by the CJEU judgment, the assertion of the claim for injunctive relief under a SEP does not give rise to antitrust concerns under certain circumstances. Secondly, there are conceivable scenarios where, although the proprietor of the SEP has exercised undue pressure on the later licensee through the action for a prohibitory injunction, the agreed license fee is nonetheless not abusively excessive. Nor can an excessive license fee in the mentioned license agreements be established solely by the fact that some of these licensing agreements were concluded shortly after the upholding judgment in the parallel proceedings before the Mannheim Regional Court, where a situation of pressure was given due to the order for injunctive relief. Grounds for the conclusion of the contract at this time may include – in addition to the pressure situation – the fact that there is now a court decision on the infringement and validity of the respective patent in suit. Intervenor itself specifically linked its willingness to negotiate to such a judicial finding in its letter of 9 December 2014. Such conduct does not seem improbable in light of the license agreements cited by Plaintiff. It is far more likely that the conclusion of the contract was (co-) influenced to a certain extent by the judicial assessment of infringement and validity. Thus, an abusively excessive license fee in the mentioned license agreements cannot be found here without further information. Instead, it is an argument against an anti-competitive effect on the royalty rates submitted that the licensees are large companies that have sufficient financial means to defend themselves against anti-competitive demands. Moreover, it is questionable in principle how much the threat of a claim for injunctive relief can (inadmissibly) affect license agreement negotiations, since the Orange Book case law of the BGH (German Federal Court of Justice), the Motorola decision of the European Commission, and now the CJEU judgment in the Huawei Technologies/ZTE Case could be and can be invoked against inappropriate demands that are in breach of antitrust law. Due to the aforementioned decisions, a patent user is aware that it is not defenseless against an action for a prohibitory injunction that is not permitted under antitrust law, but can at best be forced to license under FRAND terms. Despite the pressure of the present proceedings, Defendant was not moved to take out a license (in the case of Intervenor, despite the added pressure of the Mannheim judgments). It is not clear why this would not be have been an option for other companies that ultimately took out licenses. In this case, though, the indicative effect of the agreed royalties cannot be denied. This is certainly the case when – as here – Free distribution permitted. For questions please refer to [email protected].

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not just a single, other company, but in fact a significant number of other large market participants that represent a large part of the mobile devices market took a license. Consequently, it cannot be established in conclusion that the license agreements concluded are unsuited to justify the FRAND conformity with the license agreement presently being offered. Furthermore, Defendant and Intervenor have not specifically set forth what royalty rates would have resulted from free license negotiations and the extent to which the licensing terms concluded by Plaintiff with other companies and offered to them deviate from these. (c) In addition, according to Plaintiff's submission, at least [B] in the United States was not threatened with an order for injunctive relief from the outset because of the eBay case law, but only with claims for damages. Proceedings in Germany were not pending, either. Intervenor solely countered this with the argument that proceedings in the United States entailed a significant risk even without an impending order for injunctive relief. However, the risk of claims for damages (which are potentially high in the U.S.) must be accepted under antitrust law (see para. 72-76 CJEU judgment) and thus ultimately does not call the appropriateness of the license agreement with [B] into question. (d) To the extent Plaintiff argues that the license agreements concluded by [Y] were not made under the threat of a claim for injunctive relief, this is not sufficiently specific, however. There is no specification to which or how many license agreements this statement is supposed to apply to. (e) The objection of Defendant that the license fees demanded are much higher than industry-standard royalty rates cannot be accepted. The reference of Defendants to allegedly excessive royalties is overly simplistic. Defendant already fails to state which royalty rates are customary in the industry. It should be noted that not every deviation from industry practice indicates an abuse. When comparing royalties, the technology to be licensed in each case must also always be considered. Against this background, Defendant and Intervenor have not presented sufficient facts that would allow the expert evidence offered for the fact that "the license fee offered by Plaintiff in the amount of USD 0.26 per mobile phone cannot be viewed as FRAND" to be taken.

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(2) The patent in suit and the other property rights contained in the portfolio offered by Plaintiff were part of a W-CDMA patent pool, which was administered by the company [CC] (hereinafter in brief: SIPRO pool (license)). The comparison with the SIPRO pool does not argue against the fact that Plaintiff is demanding unreasonably high royalties. (a) Although the comparison with a pool license can be used as an indication of FRAND conformity, its significance is nevertheless limited. In licensing over a larger pool with the property rights of several companies, lower royalties per patent will be paid as a rule than in licensing of the portfolio of only one company and a lower total number of property rights. One additional protective right in a pool license does not lead to a proportional increase in royalties; rather, there is a clear degression of royalties for patents that have been added to the pool. Therefore, it is not compelling evidence of the inappropriateness of the license fees being demanded, if lower royalties are paid for the same patent in a larger pool of licenses than in a license pool with a smaller total number of property rights. (b) Intervenor has argued that the SIPRO pool currently contains 361 patent families that have been declared as essential for the AMR-WB standard. This results in an amount of USD 0.0054 per patent (on the basis of the maximum demanded royalty rate of USD 2.00 per device), which is thus significantly below the amount demanded by Plaintiff (the license fee now being demanded per patent would in fact be 18 times higher). Here, Intervenor is proceeding from the maximum standard royalty rates of USD 0.60 overall (= USD 0.10 per patent); however, Plaintiff's actual offer is unquestionably at USD 0.26 overall, resulting in a smaller increase compared to the calculation of Intervenor. In contrast, Plaintiff has submitted without being contradicted that only two additional patent families from this pool not contained in the current portfolio offer have been identified as essential for the AMR-WB standard. The royalties for the SIPRO pool were also incurred for all mobile phones, regardless of an actual implementation of the AMR-WB standard. Ultimately, [Y] had received USD 0.25 for each AMR-WB-capable mobile phone according to the calculations. This was not sufficiently countered by Defendant and Intervenor. It is true that the fact that [Y] received USD 0.25 more than the SIPRO pool for the licensing of the patent in suit and the other license patents is a clear indication of the Free distribution permitted. For questions please refer to [email protected].

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adequacy of the USD 0.26 now being demanded. However, it should be noted that with the increasing spread of the AMR-WB standard, the SIPRO pool license fee decreases when calculated per standard-compliant mobile phone. With today's proliferation, then, a license fee for the offered protective rights from the SIPRO pool will be paid which is below the value of USD 0.25 for 2013. On the other hand, market conditions in the past may also have been a reason that a lower license fee was initially demanded to promote the spread of the standard. In sum, the comparison with the SIPRO pool cannot support the inappropriateness of the royalty demanded by Plaintiff. On the contrary, this pool license is actually more of an indication of its adequacy. (c) In its offers to Defendant and Intervenor, Plaintiff has consistently offered a worldwide portfolio license. This does not give rise to any concerns. Defendant and Intervenor have raised no objections to the bundling of the AMR-WB standard-relevant patents in one portfolio license; in fact, the counteroffers submitted by Intervenor include the entire German portfolio of Plaintiff. The objections by Intervenor against a worldwide license cannot be accepted on the other hand. As stated above, it may be permissible in principle to offer a worldwide license. In the experience of the Chamber, worldwide license agreements are concluded in the mobile industry as a rule, each comprising an entire corporate group and an entire intellectual property portfolio. This is confirmed by Plaintiff's submission that of 55 press releases on license agreements in electronics and mobile communications, 53 apply worldwide. The same can also be established for the specific patent in suit, since the other license agreements concluded by Plaintiff for the patent in suit and its portfolio are also worldwide. That there are particularities regarding Intervenor in the present case that require a deviation from this established practice is not apparent. On the contrary: Intervenor is indisputably active worldwide and concludes worldwide license agreements on at least a regular basis. Thus, Intervenor has concluded license agreements with five affiliated companies of Plaintiff that are valid worldwide. This is confirmed by the press releases submitted by Plaintiff in Exhibit A-K66 concerning Intervenor, which regularly explicitly state or at least allow the inference that they pertain to a globally effective license agreement in each case. Intervenor has not sufficiently argued to the contrary. In fact, in the letter of 9 December 2014 to Plaintiff (Exhibit A-K55), a

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request to negotiations on "the patents in suit and/or the [BB] patent portfolio as a whole." Furthermore, Plaintiff has submitted that it holds parallel protective rights in all material jurisdictions, as evidenced by "Appendix B" to Exhibit A-K57. This has not been sufficiently countered by Intervenor. Accordingly, a global license also appears to be FRAND-compliant. According to Plaintiff's offer, the license fees are to be incurred only for those mobile phones that are manufactured or sold in a country where a patent from the licensed portfolio is in force. In this respect, no license fees are charged without consideration, which Intervenor and Defendants have not claimed thus far, either. To the extent Intervenor argues that the parallel protective rights in the portfolio offered by Plaintiff do not belong to Plaintiff, this is unpersuasive. Plaintiff offers consolidated license agreements; the parallel protective rights belong to companies that are associated with it. Such consolidated licensing agreements are common in the industry and thus FRAND. Although Plaintiff can only enforce the patent in suit in the present case, it may in principle also demand the licensing of the foreign protective rights in its portfolio. With its requirements, the intent of the CJEU is for the proprietor of an SEP and the patent user to conclude a licensing agreement as in free negotiations, since such an agreement is generally FRAND. This would be contravened if the proprietor of the SEP would ultimately be forced to offer a license agreement for only one country, contrary to the globally valid licenses that are customary in the industry as established above. Nor has Intervenor put forward any factual grounds for license restricted to Germany, but only civil procedural grounds. However, the validity of the patent in suit in Germany only is a separate issue from the appropriateness of a global license. dd) According to the CJEU judgment, Plaintiff must also specify the manner of calculation of the royalties it is demanding with the FRAND offer. (1) This initially includes information that allow the royalty that is payable to be determined – for example a (quota) royalty rate and the specification of which product in which situation (manufacturing/marketing) it is payable for. It is disputed whether further information must be provided (implicitly negative, Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 – para. 225). This additional information could in particular be an explanation of why the

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license offer is on FRAND terms, which can also take place by a separate document that is provided at the same time (thus Kühnen, op. cit., margin no. E.288). Even if more extensive information is required of the patent holder, the demands placed on the information obligations may not be all too strict in the opinion of the Chamber. The proprietor of an SEP is not required to provide any mathematical derivation of the royalties it is demanding, especially since there is generally not a single license fee that is exclusively FRAND, but rather a range of values that will be fair, reasonable, and non-discriminatory. Nor is it apparent to the Chamber that such derivations are common in "free license negotiations," which is of course the ideal model of the CJEU. Accordingly, even given a more strict interpretation of "the manner of calculation," it must suffice if the proprietor of the SEP names the material considerations which establish the FRAND conformity of the license fee being demanded. (2) According to this, Plaintiff has provided sufficient information. It referenced standard royalty rates and their market acceptance. As seen above, this already allows the indicative conclusion that the terms offered are FRAND. In the proceedings, it also discussed the SIPRO pool license, which enables a further classification of the required license fees. That this only occurred during the proceedings to some extent seems harmless here, at least in view of the negotiation process and the at best hesitantly declared willingness to take a license. f) Contrary to its obligations (para. 66 CJEU judgment), Defendant did not respond to the FRAND-compliant offer of Plaintiff within a short period with a specific counteroffer that was also FRAND. aa) If a patent user does not accept a (FRAND) offer of Plaintiff, it must make a FRAND counteroffer within a short period. If the patent user entirely fails to make a counteroffer, the claim for injunctive relief under the patent in suit is enforceable against it, since in order to rely on the FRAND objection, the patent user must be willing to take a license and participate in a swift licensing. As part of the counteroffer, the patent user may reserve the right to examine the essential nature to the standard and the validity of the SEP (para. 69 CJEU judgment). However, this does not mean that the conclusion of the contract per se may be postponed pending clarification of the standard essentiality and validity (e.g. by a Free distribution permitted. For questions please refer to [email protected].

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court). Rather, an unconditional contract conclusion is required, where the proprietor of the SEP may not refuse or terminate the contract again if the patent user/licensee brings an action for example for a declaration of non-infringement or a nullity action. Despite such proceedings, the patent user is obliged to pay royalties. The patent user also has no right to clawback provisions, since these are uncommon in license agreements (Kühnen, op. cit., margin no. E.299). bb) Defendant has failed to fulfill its antitrust obligations under the CJEU judgment. It is not in dispute that it failed to submit a specific counteroffer. Nor has Defendant adequately demonstrated a waiver by Plaintiff of such a counteroffer. To the extent it claims Plaintiff had expressed such a waiver through its conduct, it has not demonstrated this in sufficiently concrete terms. The statement that the patent rights would be considered to be exhausted in the event of a licensing of the manufacturers, so that ultimately a license of Defendant would no longer be required, cannot be interpreted as a waiver of a counteroffer. In view of the legal consequences of a waiver, it can be assumed that such a waiver would have been expressly declared and the opposing side (in this case Defendant) would have obtained confirmation in writing for its own protection. Furthermore, it is not apparent why Plaintiff should have waived a counteroffer by Defendant and thus given up part of its rights and enforcement options. There are no identifiable economic reasons for such a waiver. This is especially true since Defendant also sells mobile phones under its own name and as such acts as a manufacturer. cc) Since no FRAND-compliant counteroffer of Defendant has been submitted, no decision is necessary as to whether the antitrust compulsory license objection can be successfully raised if Plaintiff has made an identifiably FRAND-compliant offer for licensing the relevant SEP. If this is the case, it could be argued that an abuse of a dominant position is ruled out and the proprietor of the SEP has already fulfilled its antitrust obligations by offering FRAND-compliant licensing. However, under para. 54 of the CJEU judgment, "pursuant to Art. 102 TFEU the proprietor of the patent is obliged only to grant a license on FRAND terms." It is therefore questionable whether there is an obligation to negotiate with the patent users within a range of possible FRAND licensing terms. On the other hand, in the operative provisions and in para. 65, the CJEU clearly presumes the possibility of a counteroffer after the proprietor of the SEP has first made a (FRAND) offer (thus also Kühnen, op. cit., margin no. E.304). Ultimately, this question, as already mentioned, may remain open here.

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dd) Since there is a FRAND-compliant offer of Plaintiff, moreover, the issue associated with the above question can also remain open as to whether (and if so how) a defendant must respond to an offer of the proprietor of the SEP for which it cannot be positively ascertained that it corresponds to FRAND requirements (concerning an obligation to respond only to FRAND-compliant offers: Düsseldorf Higher Regional Court, ruling of 13 January 2016 – 1-15 U 65/15 – para. 23 in Juris; Kühnen, op. cit., margin no. E.298 and E.304; dissenting Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 – para. 221 et seqq. in Juris (formally complete offer of proprietor of an SEP suffices); Mannheim Regional Court, judgment of 29 January 2016 – 70 66/15 – page 27 (offer of the SEP only needs to not prima facie violate FRAND); likewise in favor of a prima facie assessment: Müller/Henke, Mitt. 2016 62, 65). g) In addition to the counteroffer of the patent user, the CJEU also requires of it that "from the point at which its counteroffer is rejected, to provide appropriate security" and to render an account at least in respect of "the number of the past acts of use" of the SEP (margin no. 67 CJEU judgment; concerning the precise requirements in this regard, see below in the discussion of the provision of security by Intervenor). Defendant has made no counteroffer which Plaintiff could have rejected. The fact that Defendant submitted no rendering of accounts and provided no security emphasizes the fact that it cannot rely on the antitrust compulsory license objection. 4. Intervenor's compulsory licensing objection under antitrust law cannot be upheld. Regardless, an antitrust license objection by Intervenor would not be effective for the challenged embodiments marketed by Defendant under its "[HH]" brand. a) In principle, a successfully raised antitrust license objection by Intervenor for the challenged embodiments originating with it could prevent the enforcement of an order for injunctive relief. If Plaintiff fails to comply with its obligations under antitrust law with respect to the patent in suit vis-à-vis Intervenor as a producer and supplier of a portion of the challenged embodiments, these embodiments cannot be challenged with a prohibitory injunction (ultimately likely concurring: Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 – para. 210 et seqq., according to which the objection by Intervenor must also be examined; Karlsruhe Free distribution permitted. For questions please refer to [email protected].

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Higher Regional Court, GRUR-RR 2015, 326, 329 [18] – FRAND objection of the dealer where the manufacturer is willing to take a license – mobile phones). The protection against an order for injunctive relief due to a successfully raised antitrust compulsory license objection remains in effect in principle on downstream distribution levels, as long as the respective supplier/manufacturer can continue to rely on the compulsory license objection. The proprietor of an SEP position would be acting abusively if it were to assert a claim for injunctive relief regarding embodiments originating from a supplier despite the successfully raised compulsory license objection of said supplier. This is because in this manner, it could circumvent its obligations under antitrust law and ultimately obtain the opportunity to significantly obstruct the supplier's access to the market (cf. also Kühnen, op. cit., margin no. E.247 for patents without FRAND declaration). It is true that the sales of the patented embodiments would still continue to be prohibited if the supplier could rely on the compulsory license objection. To that extent, no exhaustion can occur in respect of the embodiments placed on the market by the supplier – unlike in the case of licensing – since these embodiments are specifically not placed on the market with the consent of the patentee. However, as a result of the compulsory license objection, the supplier is protected against claims of the proprietor of the SEP for injunctive relief, destruction, and recall. It would be incompatible with the antitrust objective of free competition if a supplier could successfully invoke the compulsory license objection, but would nevertheless be factually prevented from selling the patented products because potential customers had to fear being sued by the proprietor of an SEP for an injunction. It is obvious that for instance a network operator will refrain from buying products from a supplier that it might be unable to resell since it must anticipate an action for a prohibitory injunction of the proprietor of the SEP. In order for the antitrust compulsory license objection to function efficiently, even downstream distribution stages must thus be able to rely on the defense of the producer or upstream supplier. b) The requirements of the CJEU apply only indirectly in terms of a supplier of challenged embodiments that has not been sued. aa) The antitrust restrictions relating to an SEP apply to all market participants, so that any interested party has a right to a FRAND license. When examining whether a non-sued third party (supplier/manufacturer) may rely on the antitrust compulsory license objection, however, the requirements established by the CJEU for the

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enforcement of injunctive relief may not be directly applied to all market participants. This is due to the fact that according to the CJEU judgment, these requirements for the proprietor of the SEP apply only with respect to the specific patent user against which action is to be taken with petition for injunctive relief (where a Group-wide perspective may be appropriate, cf. Chamber, judgment of 3 November 2015 – 4a O 144/14 – para. 143 in Juris). For unaffiliated third parties which may also use the SEP, but are not sued, these obligations to act do not apply directly, in particular as regards the notice of infringement before judicial enforcement. This applies even if the third party – as here with Intervenor – is a supplier of the challenged embodiments. Although the supplier is at least indirectly affected by an action for a prohibitory injunction, since the patent user being sued may no longer procure the challenged embodiments from the supplier or assert rights of recourse, an order for injunctive relief still only has an effect between the parties to the infringement proceedings. Since an order for the supplier to cease and desist is not under discussion, the relevant antitrust requirements do not apply directly in relation to the supplier. bb) This of course does not mean that the requirements of the CJEU may be disregarded. However, the patentee is not required – if only for practical reasons – to send notice of infringement to the supplier (in this sense likely also Mannheim Regional Court, judgment of 27 November 2015 – 2 O 106/14 – para. 211 in Juris). But if a third party/supplier notifies the patentee that it wants to take a license to the SEP, the patentee must make them a FRAND license agreement offer without delay. With this, the further sequence envisaged by the CJEU commences, although there are various particularities and deviations compared to the relationship between proprietor of an SEP and sued patent user. c) At least in the present case, a notice of infringement is not required (anymore). This would be a pointless formality, because Intervenor was unquestionably informed in August 2014 via the bringing of the action. The provision of information by Plaintiff itself was not required. To the extent Intervenor refers to margin no. 55/61 of the CJEU judgment in support of its contrary view, this cannot be upheld. Firstly, no "personal" fulfillment of obligations under antitrust law is required by the CJEU in said passages; secondly, the CJEU only discusses the relationship between patent holder and patent users to be sued. Intervenor itself is not being sued, though.

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d) Ultimately, it can remain undecided whether Intervenor has effectively declared its willingness to take a license. Its antitrust compulsory license objection fails at any rate due to the fact that in response to a FRAND-compliant offer of Plaintiff, it failed to make an adequate counteroffer. In other respects, it should be noted that the letter of 9 December 2014 (Exhibit A-K55) is not an effective declaration of willingness to take a license, as in it, Intervenor merely communicated its intent to enter into a FRAND license agreement after a judicial finding of infringement. This is not sufficient, since it contains conditions. e) Plaintiff made a FRAND-compliant offer to Intervenor to license the patent in suit. The license terms provided for here are FRAND. In support of this, reference is first made to the discussion of the FRAND objection of Defendant aa) By letter of 12 January 2015, Plaintiff sent a draft agreement to Intervenor in advance of a meeting on 23 January 2015. On 26 January 2015, it sent a slightly modified draft to Intervenor on the basis of this meeting. The offered license was the subject of negotiations on 23 January 2015 and on 9 February 2015 between Plaintiff and Intervenor, in which Plaintiff described the contract offer. bb) Plaintiff submitted an additional contract offer to Intervenor on 25 March 2015 (Exhibit A-K57). Plaintiff stated, without being challenged, that the one-off payment contained in the draft agreement of 25 March 2015 was due to a request by Intervenor and was based in substance on the projected sales volume and the standard royalty rates. Intervenor has put forward no arguments against this. (1) This offer provides for a royalty fixed by Plaintiff, with the option that its amount may be reviewed by Intervenor in accordance with Section 315 para. 3 of the German Civil Code code (BGB) through the Mannheim Regional Court (cf. Clause 4.1/4.2 of the draft agreement). In addition to the considerations that also give rise to the FRAND conformity of Plaintiff's offer to Defendant (cf. above), the possibility of judicial review of the fixed royalties here means that it is an offer with which Plaintiff has sufficiently complied

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with its obligations under antitrust law. The review option is largely capable of preventing abusive royalties and, in the Chamber's view, represents a generally reasonable way to issue a FRAND offer insofar as the determination of royalties already takes place with the submission of the offer. The CJEU requires "a specific, written offer for a license on FRAND terms" "specifying, in particular, the amount of the royalty and the way in which that royalty is to be calculated" (para. 63 CJEU judgment). Such an offer is not given if it simply stipulates that the proprietor of the SEP can determine the license fee in accordance with FRAND. However, if there is a concrete offer that corresponds to these specifications since the amount has already been set, the provision of a judicial review of the license amount is not harmful. (2) Such an offer has the advantage for the patentee that it is highly probable that it is thereby making a FRAND-compliant offer and thus fulfilling its obligations under antitrust law. If the patent user fails to comply with its obligations under the CJEU judgment in response to such an offer, the proprietor of the SEP may bring an action for a prohibitory injunction and be quite sure in this respect that it's complaint will not be rejected by the court on the grounds that it did not submit a FRAND offer. The infringement proceedings is thus relieved of determining in detail which license fee is FRAND, thereby enabling rapid enforceability of the claim for injunctive relief against a patent user that is unwilling to take a license (Müller/Henke, Mitt. 2016 62 65; cf. also Mannheim Regional Court, judgment of 29 January 2016 – 7 O 66/15 – page 23). In the Orange Book Standard decision, the BGH also viewed Section 315 BGB as a way to relieve the patent infringement proceedings of the difficult determination of reasonable license fees under antitrust law (BGH, GRUR 2009, 694, 697 para. [39] – Orange Book Standard). In its judgment of 16 July 2015, the CJEU refers to the possibility of having the license terms determined by a third party "where no agreement is reached on the details of the FRAND terms following the counteroffer by the alleged infringer" (para. 68 CJEU judgment). Thus, it must a fortiori be permitted according to the concept of the CJEU to already provide for the opportunity in the offer of the proprietor of the SEP for a review of the demanded license fees by an independent third party. (3) On the other hand, the possibility of judicial review of the fixed royalties advantageously provides the patent user with protection against abusively excessive demands of the proprietor of the SEP. If such a review option is provided for, a license agreement offer can be abusive only in exceptional cases, especially if the required fees are manifestly excessive. Free distribution permitted. For questions please refer to [email protected].

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If Plaintiff sets unreasonably excessive royalties, Intervenor may challenge this in court. If the required fees are not FRAND, the determination of the royalty rate is provisionally effective and binding until a judicial finding to the contrary, but without liability (Würdinger in MüKo BGB, 7th Ed. 2016, Section 315 margin no. 44; Palandt/Grüneberg, 74th Ed. 2015 Section 315 margin no. 16). By means of a license agreement offer that provides for a review under Section 315 para. 3 BGB, Intervenor receives on the one hand the protection against patent infringement claims of Plaintiff that is associated with the licensing, and, on the other, the additional possibility of contesting the amount of royalties in court and ultimately recovering excessive royalties under Section 812 para. 1 sentence 1 clause 2 BGB (cf. Palandt/Grüneberg, 74th Ed. 2015, Section 315 margin no. 16). That this entails an insolvency risk does not mean that the possibility of review is not ultimately advantageous for Intervenor. In the final result, the granting of a judicial review option precludes the patent user from having to pay excessive royalties. (4) Insofar as Intervenor is of the opinion that Section 315 para. 3 BGB does not satisfy FRAND because Plaintiff can thus set maximum license terms, this certainly cannot be accepted in the present case. The uncertainty as to the amount in which the proprietor of the SEP sets royalties does not exist at least in the case in dispute, because together with the offer, Plaintiff made the determination required in this respect in that the contract offer contains a specifically quantified one-time payment as a license fee in Clause 4.1. Before a determination has been made, the offer need not be accepted anyway, because this means that no "specific offer" exists within the meaning of the CJEU. Hence, no fixing of excessive royalties can be found; rather, the fixed royalties, based on which the one-time payment offered was calculated, correspond to FRAND criteria (cf. the foregoing remarks). f) Regardless of the question of whether a FRAND-compliant license agreement offer of the patentee – as here Plaintiff – still leaves room for a counteroffer, Intervenor certainly cannot successfully invoke the antitrust compulsory license objection for this reason, since it failed to comply with its obligations pursuant to the CJEU judgment.

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aa) The proposals of Intervenor of 23 February 2015 (Exhibit A-K67) and of 2 April 2015 (Exhibit A-K68) are substantively inadequate. It can therefore be left open whether they were still submitted in time. (1) Firstly, these counteroffers did not provide for a specific royalty rate, so that the royalty is ultimately neither determined nor determinable from the contract offer. However, the CJEU demands a "specific counteroffer" from the patent user (para. 66 CJEU judgment), which implies a license fee defined in the agreement or at least determined in good time and rules out proposals in which the license fee must first be determined by a third party. Such a contractual configuration discriminates against the proprietor of the SEP, which is why it is not obliged under antitrust law to accept such an offer: If the proprietor of the SEP accepts the offer containing a clause for the determination by a third party, it will be unable to enforce its claim for injunctive relief, at least until a determination has been made. In the event of a determination by third parties, the patent user may be able under certain circumstances to draw out the proceedings. The possibility mentioned by the CJEU of a determination by third parties is in contrast only given after rejection of the counteroffer (which forces the patent user to provide security, para. 67 CJEU judgment) and by common agreement of the parties (para. 68 CJEU judgment). The determination by third parties therefore cannot be brought forward to the counteroffer. Nor does the above-discussed possibility of granting a judicial review pursuant to Section 315 para. 3 BGB in the offer allow the conclusion of the admissibility of a determination by third parties in the counteroffer. This is because in Section 315 BGB, the determination of the license fee is undertaken by a party to the agreement and not by a third party. The determination must also have already taken place in order to present a specific FRAND offer, as required by the CJEU. (2) As stated in the discussion of Plaintiff's offer, a global portfolio license agreement as required by Plaintiff is FRAND. By contrast, the license agreement offers of Intervenor are limited to Germany. At least in the context of the offer (which in this respect may indicative of the framework of the licensing) and the licensing practice of both Plaintiff and Intervenor, Plaintiff is not required to accept such a territorial restriction. It seems unfair if Intervenor wishes to conclude a license agreement for Germany – thereby ending the present proceedings – while the unauthorized use of the patent

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in suit continues in other countries, including those of the EPC in which other national parts of the patent in suit are in force. bb) Intervenor submitted an additional counteroffer dated 24 September 2015 (Exhibit HL(Kart)22a), which includes only the protective rights in force in Germany and provides for a concrete license fee of USD 0.033 per device (for all six patents) in one alternative, so that unlike the previous offers, this represents a "specific" counteroffer within the meaning of margin no. 66 CJEU judgment (this was not the case in March 2014 when Intervenor did in fact propose such a royalty, but did not actually specifically offer it). This counteroffer is nevertheless not FRAND. (1) The offer of 24 September 2015 is already out of time. To be able to rely on the antitrust objection (para. 66 CJEU judgment), the patent user must "promptly" make the counteroffer following the rejection of Plaintiff's offer. This is clearly not the case here, especially since the offer was only submitted after the oral hearing in the Mannheim parallel proceedings. Due to the sequence of the contract negotiations, in which various offers have already been submitted by the parties, an offer at this time seems to be a manifestation of a delaying tactic. (2) In addition, the substance of this counteroffer is not FRAND, either, because firstly – like the offers of 23 February 2015 and 2 April 2015 – it is limited to the territory of Germany. As stated above, such a territorial limitation is not permitted here. Secondly, the offered royalty rate of USD 0.033 per device seems to be too low. This royalty rate is justified by Intervenor with a comparison to the SIPRO pool, for which it calculated a royalty of USD 0.0055 per patent family, resulting in the royalty rate offered of USD 0.033 for six patents (cf. the explanations in Exhibit HL(Kart)22). As shown above, the royalty rate in the SIPRO pool cannot be transferred to the disputed portfolio. Rather, an increase over the SIPRO pool seems appropriate. Moreover, a license limited to Germany – as opposed to the global SIPRO pool license – would force Plaintiff to conclude further license agreements, which would entail additional effort. Accordingly, for a license restricted to Germany, a higher royalty rate will correspond to FRAND specifications a priori. Finally, the underlying royalty rate of USD 0.033 per device of the counteroffer of 24 September 2015 (Exhibit HL(Kart)22a) is far below the standard royalty rates of Plaintiff that are accepted by the market. Consequently, the conclusion of the offer would not be "non-discriminatory." Free distribution permitted. For questions please refer to [email protected].

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g) Intervenor also cannot rely on the antitrust compulsory license objection because it failed to sufficiently comply with its obligations in terms of the rendering of accounts and the provision of security pursuant to para. 67 of the CJEU judgment. aa) In addition to the obligation to make a FRAND-compliant counteroffer, according to the CJEU judgment (para. 67), the patent user is required "from the point at which its counteroffer is rejected, to provide appropriate security, in accordance with recognized commercial practices in the field, for example by providing a bank guarantee or by placing the amounts necessary on deposit. The calculation of that security must include, inter alia, the number of the past acts of use of the SEP, and the alleged infringer must be able to render an account in respect of those acts of use." Hence, according to the requirements of the CJEU, the obligation to provide security and to render accounts for (past) acts of use must follow the date of rejection of the counteroffer. A relevant delay in the rendering of accounts and provision of security therefore conflicts with the assertion of the compulsory licensing obligation under antitrust law. Without the provision of security, the patentee is exposed to the risk of insolvency of the patent user that is making use of the protected teaching without authorization. The timing of the rendering of accounts and the provision of security was accordingly clearly set out by the CJEU. This fits in with the concept of the CJEU, in which the patent user endeavors or must endeavor to bring about rapid licensing. Accordingly, the CJEU specifically requires in the judgment of 16 July 2015 that the infringer, when responding to the patent holder's offer, does not "pursue any delaying tactics" and that a counteroffer must be submitted "within a short period of time" (para. 65/66 CJEU judgment). The patent user is therefore required to already prepare the rendering of accounts and provision of security at the time it is preparing its counteroffer. This does not constitute an undue burden for the alleged patent infringer, because it must always expect that the counter offer will be rejected. In addition, accounts must be rendered even if the patent holder accepts the counteroffer. The fact that other counteroffers are made also does not release the alleged patent infringer from the obligation to render an account for the patent holder and to provide security from the time the first counteroffer is rejected. It is true that the alleged patent infringer is in principle free to modify its counteroffer after it has been rejected by the patent holder in order to come to an agreement. The obligation to Free distribution permitted. For questions please refer to [email protected].

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provide security and render an account already arises, however, when the first counteroffer is rejected. Otherwise, the patent user could continue to delay the fulfillment of its obligation by repeatedly making new offers. This, however, would contradict the expectation for a patent user willing to license, which the CJEU assumes in its decision (Chamber, judgment of 3 November 2015 – 4a O 144/14 – margin no. 156 in Juris). bb) In the first two counteroffers of Intervenor pursuant to Exhibits A-K67 and A-K68, the opportunity was provided to apply for the order for provision of security from a arbitration body or an English court, which was to decide in each case on the amount of the license fee. This is not a sufficient provision of security, because its time is in the future and it is moreover dependent on the discretion of the arbitration body or the court. Moreover, this does not correspond to the "recognized commercial practices in the field" (para. 67 CJEU judgment). cc) Intervenor presented a payment guarantee from a bank on 3 September 2015, which was amended on 10 November 2015 (Exhibits HL(Kart)24/24a). This is out of time, because it only took place well after the second counteroffer, and is moreover substantively inadequate. (1) Plaintiff rejected the counteroffers of Intervenor of 23 February 2015 and of 2 April 2015. At the latest with the adoption of the CJEU judgment, Intervenor was aware that it was required to provide security to be able to invoke the compulsory license objection (which was incidentally also the case under the previous Orange Book case law). The resulting delay in the provision of the security of several months, at least in this particular case, can no longer be regarded as "from the point." The CJEU did not provide for a cure with the result that Intervenor may again rely on the compulsory license objection. While the proprietor of the SEP remains continually obliged to license the SEP on FRAND terms, it can nevertheless enforce the claim for injunctive relief until the FRAND license agreement is concluded. (2) In addition, the amount of the payment guarantee is insufficiently low. This is already precluded in the present case due to the fact that only mobile phones sold in Free distribution permitted. For questions please refer to [email protected].

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Germany are used to calculate the provision of security. Although this corresponds to the counteroffers of Intervenor, it is nevertheless not FRAND here, since Plaintiff is allowed to demand a worldwide license. 5. It does not contravene antitrust law in the present case that in this case – as in the Mannheim parallel proceedings – Plaintiff is suing a network operator as the purchaser and reseller of the challenged mobile phones, although its ultimate objective may possibly be to conclude licensing agreements with the manufacturers of the challenged embodiments. It is in principle always at the discretion of the patentee to choose the distribution stage at which to enforce its property rights (BGH, GRUR 2009, 856, 862 [61] – Tripp-Trapp-Stuhl; Karlsruhe Higher Regional Court, GRUR-RR 2015, 326, 329 [18] – FRAND objection of the dealer where the manufacturer is willing to take a license – mobile phones). For both the manufacturer and the network operators as the seller of the challenged embodiments to end customers are engaging in acts that are reserved to the patentee in accordance with Sections 9 et seq. PatG. The right of the patentee to decide for itself which infringers to take action against is in principle not limited for a SEP under antitrust law (this may be different in the case of selective enforcement, cf. Kühnen, op. cit., margin no. E.219). The Chamber does not fail to recognize that the action against the network operator puts pressure on the manufacturers as their suppliers to enter into licensing agreements with Plaintiff in order not to jeopardize the customer relationships with the network operators. The latter are being employed as a lever so to speak, thereby increasing the possibility that competition will be restricted by the market power conferred by the SEP (cf. Karlsruhe Higher Regional Court, GRUR-RR 2015, 326, 329 [18] – FRAND objection of the dealer where the manufacturer is willing to take a license – mobile phones). However, this is largely compensated in that Plaintiff is obligated to act in compliance with antitrust law vis-à-vis the manufacturers as well and they consequently also have a right to a FRAND license to the patent in suit. If the proprietor of the SEP nevertheless refuses this, the manufacturer is entitled to an antitrust compulsory license objection with effect for subsequent distribution stages as well (such as network operators, distributors, end users, etc.), as was stated in more detail above. In this respect, a balance is struck: Plaintiff can choose against whom it wishes to assert its patent law claims; Defendant and Intervenor can decide on what level of distribution they take a license or raise the antitrust compulsory license objection.

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In other respects, the action against present Defendant was unobjectionable under antitrust law simply because Defendant sells challenged embodiments under its own [HH] brand and acts as a manufacturer in this regard. 6. The FRAND objection also cannot be upheld because of a discriminatory licensing practice of Plaintiff. For the question of whether a discriminatory licensing practice exists, the examination of an independent discriminatory abuse is subject to the same conditions as the examination of non-discrimination when granting licenses under an exploitative abuse (Kühnen, op. cit., margin no. E.281). Defendant bears the burden of proof and the duty to furnish information for a discriminatory licensing practice of Plaintiff. It has not sufficiently demonstrated that the licensing practice of Plaintiff discriminates against Defendant and/or Intervenor compared to other companies. The SIPRO pool containing the patents in suit includes a number of other property rights and is not administered by Plaintiff, so that this cannot establish a discriminatory licensing practice. In addition, no decisive influence by Plaintiff on this pool is apparent. 7. A stay of the proceedings pursuant to Art. 16 para. 1 sentence 3 of Regulation (EC) no. 1/2003 is not required, since it is not clear whether and, if so, what decision the Commission will reach. Nor is a reference to the CJEU for a ruling necessary, since the majority of questions have been clarified by the Huawei Technologies/ZTE decision ("the CJEU judgment") and the outstanding issues are ultimately not decisive here. V. The assertion of the claims in dispute does not constitute a case of inadmissible assertion of rights according to Sec. 242 BGB. […] VI. The patent infringement therefore leads to the following asserted claims: […]

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VII. A stay of the proceedings according to Sec. 148 ZPO is not necessary. The consideration of the interests of both of the parties conflicts with a stay until the first instance decision about the parallel nullity action of Intervenor. […] VIII. The decision on costs is based on Sec. 92 para. 1, 269 para. 3 ZPO. […] IX. The pleadings of the parties dated 27 January 2016 and 4 February 2016 handed in after the end of the hearing were not taken into account in the decision. Reopening the hearing is not appropriate, Sections 296a, 156 ZPO.

Dr. Crummenerl

Dr. Büttner

Reich

Presiding Judge

Regional Court Judge

Regional Court Judge

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