29 July 2024

Panasonic cases: Clarification on the production of comparable licenses before UPC (orders to produce evidence)

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Lamp, œuvre de Juan Gris.
Juan Gris, Lamp, 1916. — Source · Public domain.


This week we reported on the case between Huawei and Netgear, in which the defendant had obtained a production order for a comparable license granted by Huawei to Qualcomm, the production of which Netgear had obtained via a decision of the Munich local division on 24 April 2024. It is interesting to note that this case is not the only one of its kind, and that these cases, which focus on the production of comparable licenses in disputes relating to SEPs, seem to constitute the embryo of the UPC SEP/FRAND jurisprudence.

So, a few months after this first decision, it was the turn of the local Mannheim division to rule on a request to produce comparable licenses in the cases pitting Panasonic against Xiaomi and Oppo. At the end of July 2023, Panasonic brought infringement actions against Xiaomi and Oppo, invoking 4 SEP patents declared essential to the WCDMA and LTE standards. The plaintiff has brought no fewer than twelve actions against the two defendants before UPC’s local divisions in Mannheim and Munich, in parallel with litigation already underway in Great Britain and new national litigation filed in Germany.

On April 30 and May 16, 2024, the local Mannheim division handed down two important decisions concerning requests for the production of evidence, in this case comparable licenses, as was already the case in the Huawei case. The Panasonic cases, however, have the particularity of providing more details on the framework for the production of comparable licenses before UPC.

Comparable licences and the UPC rules on evidence

A request to obtain comparable licences before the Unified Patent Court is governed by Article 59 of the Agreement on a Unified Patent Court, which allows the Court to order a party to produce evidence in its control, and by Rule 190 of the Rules of Procedure. The applicant must identify the evidence sought, explain why it is relevant to the issues in dispute and show that it lies within the other party’s control. The Court weighs that request against the burden imposed on the producing party. Rule 190 also allows the Court to order production by a third party, and the Court may draw adverse inferences where a party fails to comply with an order without proper justification.

Confidentiality is managed, not avoided. Article 58 UPCA allows the Court to restrict access to information in order to protect trade secrets, and Rule 262A provides the mechanism, by limiting disclosure to a defined circle of named representatives and experts. Membership of that circle is usually limited to representatives and to a small number of in house persons, and the Court may order that only a redacted version be placed on the file.

What a request for comparable licences must establish

The relevance test is where these applications succeed or fail. In a dispute over a standard essential patent, the undertaking given under the ETSI intellectual property rights policy requires licences on fair, reasonable and non discriminatory terms. Assessing whether an offer meets that standard involves looking at what the patentee charged others for comparable scope, which is precisely what the requested agreements reveal. Redaction of the commercial terms of the agreements produced is therefore the norm rather than the exception, and the sorting of what remains visible is itself a contested step.

Three elements make the difference in practice : a precise description of the agreements sought rather than a general category, an explanation of the comparability criteria relied on, and a workable confidentiality regime proposed by the applicant itself. Such agreements are not produced to inform the market, only to answer a defined valuation question. A request drafted as a general demand for every agreement concluded on the portfolio is likely to be refused, since neither relevance nor proportionality can be assessed on that basis.

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Further reading


First decision

The first decision was handed down in the case opposing Panasonic against Xiaomi. In this case, the President of the Court recalls the importance of transparency in FRAND disputes and therefore the need to produce existing SEP licenses that have been entered into by the plaintiff with third parties (UPC_CFI_218/2023, UPC_CFI_219/2023, UPC_CFI_223/2023). In this case, the request came from Panasonic, which wished to be authorized to disclose licenses signed with third parties. The Court accepted this request on condition that certain third-party confidential information be protected.

Second decision

In the second case, Panasonic v. Oppo, the presiding judge refused to allow the production of comparable licenses (UPC_CFI_216/2023). In this case, it was the defendant, not Panasonic, who was requesting the production of licenses concluded or to be concluded by the plaintiff concerning 3G and 4G for mobile devices. The request was rejected as too vague and too broad, and therefore resembled a measure of expedition. The Court noted that Oppo’s request did indeed seem to denote a willingness to delve into the patentee’s licensing practice, while pointing out that the order to produce evidence would probably not be granted if the defendant were seen as an unwilling licensee from the outset.

UPC and FRAND

In general terms, we can note that the Court here affirms its willingness to take part in the debates on FRAND licenses. But in the April 30 decision in particular, the Court analyzes the need for an order to produce documents in the light of the idea that an SEP is subject to EU competition law, in particular Articles 101 and 102 TFEU, as developed in the CJEU’s case law in Huawei v. ZTE. As a reminder, in this case, the Court of Justice established a procedural framework to balance the interests and obligations of intellectual property rights holders and implementers in FRAND negotiations. This reminder from UPC is noteworthy, as it serves as a reminder that the case law of the Court of Justice must be applied by UPC, so that the Court of Justice will continue to impose the framework for FRAND disputes. This comes as no surprise, particularly in view of Article 20 UPCA and Article 326 TFEU on enhanced cooperation, but it is a reminder that sets the scene from the outset: SEP holders will have to continue to comply with the principles laid down by CJEU case law before attempting to assert their rights before UPC.

However, somewhat paradoxically, while logically accepting the CJEU’s tutelage, the Court also seems to be doing so to better position itself in the SEP/FRAND debates. While the European Commission has taken up the issue of FRAND licenses, with a view to harmonization, UPC claims that certain practical necessities, such as transparency in FRAND license negotiations, can already be addressed via UPC itself. Perhaps if the development of a SEP/FRAND dispute harmonized European positions on the matter, the Commission would abandon its much-debated project? UPC would still have to answer several questions, which I’ll address (in part) in my next paper.

Author : Dhenne Avocats.