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Following a decision on 18 December 2024, the Munich Local Division of the UPC has granted Huawei a seven-country injunction against Netgear over infringement of their European patent no. EP3611989. We explore the case and what it means for SEP holders.
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As reported here, in a decision issued on 18 December 2024, the Munich Local Division of the UPC granted Huawei a seven-country injunction against Netgear over infringement of their European patent no. EP3611989. The patent was treated as a standard essential patent for the Wi-Fi 6 standard for communication in wireless networks.
A standard essential patent (SEP) is a patent that protects an invention deemed essential to implementing a technical standard. SEPs are special: as claiming that a commercial product meets the standard is tantamount to admitting use of technology protected in an SEP, a practice has developed to prevent market abuse by SEP holders. In particular, holders of a SEP must provide licences on fair, reasonable and non-discriminatory (FRAND) terms to others.
Since the UPC first granted a SEP injunction, the question has been raised as to how the UPC would approach FRAND issues.
Case background
It was taken as read that Netgear needed a license to the patent. Netgear’s defence against Huawei’s infringement action was that they were working on it: it was Huawei’s fault that the negotiations had not been concluded. More formally, this included two factors:
- a FRAND defence based on European antitrust law, and
- an IEEE-LOA defence based on contract law.
An alleged infringer can use a FRAND defence if they had the right to a license and were willing to obtain a FRAND license, but that right was not upheld by the patent holder.
An IEEE-LOA defence similarly relates to the obligations of patent holders regarding patents that are essential to Institute of Electrical and Electronic Engineers (IEEE) standards (such as Wi-Fi 6) and the requirement to license them on FRAND terms.
Neither defence worked. In particular, the court noted that Huawei are known for providing reasonable licensing terms, making less aggressive royalty demands than other companies. They already had a number of licensees for their Wi-Fi 6 SEPs. On the other hand, the Court stated that “the defendants (Netgear) did not signal sufficient willingness to license, delayed the negotiations and, after their counteroffer was rejected, did not provide security or sufficient information”. Additionally, Netgear had failed to provide “anything substantive” as to why the defendant considered that the licenses offered by Huawei did not meet FRAND principles.
The Court therefore concluded that:
“the established patent infringement by the defendants…justifies the legal consequences sought by the plaintiff. The injunction sought by the plaintiff with regard to the patent-infringing actions…must be issued because there is a risk of repetition in the contracting states…due to the defendant’s past infringements.”
The injunction was granted covering Germany, France, Italy, Belgium, Denmark, Finland and Sweden.
Summary
This decision highlights the effect of conduct and reputation. Huawei’s good reputation as a reasonable licensor was a considerable factor in their favour, while Netgear’s conduct during negotiations counted against them. The decision is likely to encourage SEP holders who have licenses in place to consider UPC action as part of their strategy should they encounter standard implementers who are unwilling or slow to conclude license negotiations. It may also cause licensees to revaluate the extent to which they can drag their feet during such negotiations.
Our UPC experts would be delighted to discuss the implications of this decision (or any other aspect of litigation strategy or practice before the UPC) with you. To arrange a call, drop us a line at upc@hlk-ip.com or contact your usual HLK advisor.
This is for general information only and does not constitute legal advice. Should you require advice on this or any other topic then please contact hlk@hlk-ip.com or your usual HLK advisor.
