Schoen Court's “Guidelines” Get A Chutzpah Award - No Process, No Transparency
How did the myth that standard development is more important than implementation come to be such a dominant force in certain legal circles? Case in point: Judge Schöen and his cohorts (Judges Schweyer and Tözsér) of the 7th Civil Chamber of the Munich Regional Court (“Schoen Court”) recently released so-called FRAND Guidelines (“guidelines”) for cases in their court.[1] There are so many things wrong with the guidelines and the assumptions underpinning them that I am awarding the Schoen Court, and the guidelines themselves, a Chutzpah Award.
For those who don’t know what chutzpah is, it is a Yiddish word that connotes brazenness, shameless audacity and impudence. There was a period of time in which certain U.S. courts, including the Federal Circuit Court of Appeals (the U.S. Court that hears all patent law appeals) and even the U.S. Supreme Court, issued “Chutzpah Awards” to parties making clearly incorrect legal arguments in a brash and bold manner.[2] To draw a more modern comparison, a chutzpah award is sort of like a Razzie, an award given to the worst contenders in an industry.[3]
Having recognized the Schoen Court with this dubious honor, here is the start of a new series about all the many ways the guidelines got it wrong in an unreasonable and excessive way. This week’s post focuses on the lack of any process or transparency by the Schoen Court in coming up with the guidelines.
The Schoen Court did not provide public notice of its intent to issue guidelines. Nor, as far as we know, did the Schoen Court seek input from any stakeholders (whether implementers, users, SEP holders or consumers), economic experts, standardization bodies (ETSI, IEEE, 3GPP, etc) or from any members of the bar, the public or any regulatory or legislative bodies. It is possible that the Schoen Court did, in fact, take input from a select set of people. But if so, the Schoen Court failed to disclose that it had received such input and from whom.
Nor apparently did the Schoen Court seek consensus about the guidelines even from within the German Court system or other chambers within its own Munich Court – or perhaps it did but failed to obtain it. There’s an interesting note in the preamble to the guidelines about the 21st Civil Chamber of the Munich Court:
The 21st Civil Chamber has been informed of these guidelines. Due to the large number of issues addressed and the associated level of detail, it is not possible to draft joint guidelines. It is assumed that both chambers share the view that, in a wide range of scenarios, a substantive review of the patent holder’s offers must be conducted.
In other words, the Schoen Court could not even get a different chamber within the Munich Court to sign on to these guidelines. The Schoen Court had to "assume" that the 21st Civil Chamber shared its thoughts. Of course, it would have been easy to simply walk down the hall to confirm with the 21st Civil Chamber if it agreed. But, the Schoen Court apparently prefers assumptions to evidence and proof.
Nor did the Schoen Court make the guidelines available in an open, public manner. Rather than publishing them to all, the Schoen Court instead provided them only to parties with active SEP cases in the court. The rest of us were left scrambling to find a copy through other means.
As the saying goes: “Democracy Dies in Darkness.” Here, the process of crafting the guidelines was done in darkness with no public notice, no expert input, no consensus building and no transparency. Just a small cabal of individuals working in secret to unbalance the scales of justice. Clearly, the Schoen Court is not interested in a reasoned, rational set of guidelines or it would have engaged in an open, balanced and fair process taking information from stakeholders, economic experts and other German courts before issuing such "guidelines."
In sum, the guidelines are the thinking of a handful of individuals who have no expertise in technology, no expertise in economics nor in standard development, who (as far as I am aware) have not themselves negotiated any actual SEP portfolio licenses, and who did not receive (or if they did, did not disclose that they received) any input or apparent buy-in from any stakeholders, experts, or from regulators or other chambers even within their own Munich Court or from other regional courts.
The Schoen Court appears to have issued the guidelines in order to do more of what it always does in SEP cases: (i) provide excuses as to why it is not following and does not need to follow European and German law on injunctions (see note [2] in Courts that “FRAND” Differently Part 2: Lessons To Be Learned) and (ii) attempt to justify the imposition of injunctions in all SEP cases regardless of whether the SEP holder is seeking a supra-FRAND rate and the implementer a FRAND rate.
By all measures, the Schoen Court and its “guidelines” merit a legal Razzie/ Chutzpah Award.
[1] There’s lots of talk about the guidelines and everyone seems to have a copy of it (including me and an English translation that I will be using for this piece) but I still can’t find it online, anywhere. Can you?
[2] See, https://bannerwitcoff.com/media/_docs/library/articles/chutzpah.pdf; Jewish Law - Commentary/Opinion - The Supreme Chutzpah; "The Evolution of Chutzpah as a Legal Term" by Jack Achiezer Guggenheim.
[3] If you don’t know what a Razzie is, here’s the Wiki page about it: Golden Raspberry Awards - Wikipedia
