Dutch Court Rejects Preliminary Injunction On Balancing Of Interests In FRAND Licensing Dispute

Author:Mr Ruud Van Der Velden
Profession:Hogan Lovells
 
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The Provisions Judge of the District Court of The Hague has refused to grant a preliminary injunction against Chinese mobile phone manufacturer Xiaomi based on two alleged Standard Essential Patents (SEPs) of Sisvel. The Judge ruled that Sisvel's claims lacked sufficient urgency, taking into account the pending proceedings on the merits between the parties in the UK and the complexity of the underlying issues relating to FRAND license negotiations.

Background

Sisvel is the owner of a large patent portfolio relating to various wireless communications technologies. It is a member of the European Telecommunications Standards Institute (ETSI), and some of its patents are considered to be SEPs. The ETSI IPR Policy requires Sisvel, as a SEP holder, to be willing to grant a license to third parties under its SEPs on fair, reasonable and non-discriminatory (FRAND) terms. In October 2013, Sisvel notified Xiaomi that certain Xiaomi products fell within the scope of protection of certain Sisvel SEPs. Sisvel invited Xiaomi to enter into a license agreement, but so far no license agreement has been concluded.

In April 2019, Sisvel initiated proceedings against Xiaomi in the UK, requesting the UK High Court to rule on a global FRAND royalty rate between the parties. Sisvel then initiated preliminary injunction ("PI") proceedings in the Netherlands on 29 May 2019, requesting a preliminary injunction against Xiaomi with respect to two of its SEPs.

Assessment by the Court

Xiaomi argued that this case is unsuitable for PI proceedings, due to the complexity of the case and the balancing of (urgent) interests. The Judge accepted this argument on the basis of the following facts and circumstances.

The nature of the dispute

The Judge considered that the need for the parties to enter into a FRAND license agreement is at the heart of this dispute. This means that the patentee's damages do not concern an involuntary loss of monopoly - which is normally the case in an IP dispute and which is normally irreparable and thus urgent - but the absence of the conclusion of a FRAND license agreement between the parties and the related payment of royalties by the SEP user. According to the Judge, this dispute would be more comparable to a claim related to unpaid royalties than to a continuous infringement of an IP monopoly. Disputes regarding monetary claims are only considered urgent in exceptional cases. The Judge considered that he realizes that this case is not actually...

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