European Courts’ “Inconsistency” Will Not Be Solved by “Waiting and Seeing” – Case Study VoiceAgeEVS v. HMD
- Marta Beckwith
- 5 days ago
- 6 min read
The European Commission (“EC”) Study focused on European Courts’ “inconsistency” in the application of the Directive on the Enforcement of Intellectual Property Rights (“IPRED”) and advocated a “wait and see” “soft law” approach to solving the problem. See, "Inconsistency" - Europe Dithers Some More). But, this “inconsistency” is not a failure to understand how to apply the IPRED properly but a willful refusal to follow it based on German and German-influenced Unified Patent Court (“UPC”) judges’ biased views of patent rights.
The recent decision of the highest court in Germany in VoiceAgeEVS v. HMD illustrates some of the “priority” problems identified in the EC Study: NPEs seeking and obtaining injunctions against practicing entities on standard essential patents; the failure to apply the proportionality principle; the failure of transparency. Of course, VoiceAgeEVS v. HMD takes place in Germany and demonstrates that the problem is not one amenable to “soft law” solutions and “waiting and seeing.” Rather, concrete solutions are needed because German courts and the German-influenced UPC have purposefully decided to reject settled EU law. The solution to this serious issue requires much more active and purposeful solutions such as the ones proposed here and here: The EU Study – Europe Needs Concrete Solutions (Some are Proposed Here).
1. The Parties
VoiceAgeEVS LLC appears to be a purchase-in non-practicing entity (e.g. it appears it bought the patents from the original owner for the purpose of licensing). According to its website, VoiceAgeEVS (whose name, probably on purpose, is confusingly similar to the allegedly practicing, originating entity VoiceAge Corporation) is focused “on licensing a global, standard-essential patent portfolio relating to voice and audio technologies for both mobile wireless and fixed wireline applications essential to the Enhanced Voice Services (“EVS”) industry standard.” See VoiceAge EVS (emphasis added). VoiceAgeEVS does not make or sell any useful products. They appear only to exist in order to license SEPs.
Human Mobile Devices (“HMD”) on the other hand is the “largest European mobile phone manufacturer.” HMD’s goal is to create devices that “put people first, using technology to make everyday life easier and to solve real-world challenges through meaningful, human innovation.” About HMD. In other words, HMD makes and sells products that people in Europe use every day.
2. Case History
VoiceAgeEVS sued HMD in, of course, Germany, alleging infringement of a SEP patent. The German court found that HMD had infringed the asserted patent and, of course, was an unwilling licensee. I say “of course” because German courts never find accused infringers to be willing licensees (see The FRAND Commitment and Courts That Just Don’t Get It).
In 2024, the European Commission intervened and filed an amicus brief urging that German courts align their interpretation of willing/unwilling with the decision of the Court of Justice of the European Union (“CJEU” or “ECJ”)[1] in Huawei v. ZTE (you can find the EC briefs here in German, Amicus curiae observations - Competition Policy - European Commission, and an unofficial translation into English here, (14) Post | LinkedIn).[2] In other words, the EC urged the Germany courts to follow EU law on SEP licensing.
The German court refused and instead released a legal note explaining its own views on how to interpret Huawei v. ZTE. In Germany, according to the legal note, a SEP holder need not make a FRAND offer to be considered a willing licensor. A SEP owner need only submit an offer that is, in the SEP owner’s own good faith subjective estimation, within the FRAND range. And the legal note also made clear that in such an event, there is almost nothing the prospective licensee can do to be considered a willing licensee except put up a security deposit in the amount demanded by the licensor (even if such offer is not, in fact, FRAND).
The note does not explain how a prospective licensee or the Court itself can assess the SEP owner’s subjective good faith in making an offer, particularly given the extremely limited discovery available in Germany. It seems to be assumed that any offer will meet this requirement if the licensor expresses a willingness to enter into negotiations with the prospective licensee.
So, according to the German legal note, all a SEP holder needs to do is offer something (no matter how ridiculously un-FRAND as long as they claim good faith) and enter into negotiations while a prospective licensee needs to put up surety in whatever ridiculously un-FRAND amount is sought by the SEP holder. If the prospective licensee cannot or will not do so, they will be enjoined no matter how willing they are to take a license on FRAND terms.
HMD reasonably appealed the lower court decision not only to the Higher Regional Court in Munich but also to the Federal Court of Justice, Germany’s highest civil court. HMD also requested that the German Federal Court of Justice refer certain questions to the Court of Justice of the European Union for resolution.
3. Germany’s Highest Court Rejects European Consistency in SEP Related Matters
According to published reports, the European Commission once again intervened and sent a new amicus curiae brief to the German Federal Court of Justice with similar arguments to its original amicus.[3] HMD stated that the European Commission filing “expressly urged referral of these questions, consistent with HMD’s position that the ECJ, as the competent court to interpret EU law, should provide authoritative guidance to ensure uniform application of EU law across the European Union.”[4]
But the German Federal Court of Justice showed it was not interested in consistency when it comes to European law. It refused referral to the CJEU/ECJ. It refused the European Commission’s reading of Huawei v. ZTE, upholding the injunction and ruling that prospective licensees must give prompt security at an amount set by the SEP holder. It refused to find that a non-FRAND offer makes a SEP licensor unwilling. It refused to find that a non-FRAND offer is an abuse of market dominance by the SEP owner. It refused to acknowledge that VoiceAgeEVS is a non-practicing entity whose business is licensing and therefore a license, rather than an injunction, would be the appropriate remedy.
Instead, the highest court in Germany continued the German court tradition of not even examining whether a SEP holder’s offer is FRAND. It put its thumb on the side of SEP owners by finding that injunctions are necessary to motivate implementers to take a license.[5] In other words, the highest court in Germany has refused proportionality, refused to consider the meaning of FRAND and refused to adopt a balanced and fair approach to SEP licensing.
Conclusion
The European Union had an opportunity for consistency in SEP matters. It could — and still can — adopt the EU Proposal on SEPs (see EU Proposal). It could — and still can — make changes to the proportionality principle to ensure that fairness and the public good must be considered in determining whether an injunction should be granted. It could — and still can — more actively investigate and police SEP purchases under its competition authority, not allowing purchase-in non-practicing entities to acquire SEPs, make non-FRAND offers and then harm competition by obtaining injunctions. It could — and still can — require more transparency in court filings and the publication of all decisions.
What it should not do is adopt the milquetoast suggestions of the EC Study. It is obvious to all that “waiting and seeing” and "discussions" will not fix these priority problems. Significant changes are needed to “ensure” fairness and consistency.
[2] I will note that even the EC appears to suffer from the lack of transparency in German court filings mentioned in my previous post, "Inconsistency" - Europe Dithers Some More. In para. 19 of the amicus brief, the EC states (in the unofficial translation): “The European Commission has not yet been granted access to the file and therefore only knows the wording of the various letters between the parties to the extent that it is reproduced in the first instance judgements . . .”
