Read the article OPPO's FRAND licensing strategy: "You get a ban? OK, I'm leaving".

Nokia obtained several injunctions against OPPO: two in Mannheim in June and two in Munich in August. However, even before the execution of these injunctions, OPPO preferred to withdraw its products from the German market. However, it continued to fight both in Germany and in the many other parallel proceedings (to my knowledge: France, Great Britain, the Netherlands, Spain, China, Sweden, Finland, India, Indonesia, and even an action in Russia that was withdrawn following the war with Ukraine).

Instead of folding to Nokia, OPPO preferred to leave Germany. This strategy, which is the result of a fine calculation of opportunity costs, does not however prevent OPPO from continuing to hold a very strong position against its adversary in the numerous procedures that oppose them, while continuing, it seems, to negotiate licenses for other territories.

The threat to withdraw tous ses produits et indéfiniment from a market is nothing new; carrying it out, and doing so before any injunction is enforced, is.

Recently, HMD temporarily withdrew some, but not all, of its smartphones following injunctions obtained by VoiceAge EVS.

Précédemment, Qualcomm obtained the withdrawal of certain Apple products (the iPhone 7 and 8). But while Apple was temporarily unable to sell them directly in its Apple Stores or online, those devices remained available from resellers, who were not covered by the injunctions. Apple ultimately solved the problem by fitting Qualcomm rather than Intel chips into its iPhone 7 and 8. Finally, the absence of any settlement between Apple and Qualcomm was surely explained by the absence of any real stake — and the Court of Appeal duly lifted the injunction.

L’année dernière, Apple threatened to leave the UK market if the court set too high a global royalty rate, but ultimately accepted the English court’s decision.

De fait, en matière de FRAND licences, negotiators often face this threat from the other side should a case be lost: to leave the market in question rather than negotiate a global royalty. Such statements usually look less than serious, and the examples cited above — which are not legion — show that where withdrawal does occur it is very narrowly confined.

Until now we had only seen:

• sales bans temporarily affecting limited parts of a given smartphone maker’s range,
• temporary removals of features, and
• stated intentions to withdraw from a market rather than yield to a patentee’s demands — but in none of those cases did withdrawal actually follow once matters deteriorated.

The attitude of OPPO in these proceedings – which withdrew its products from the German market even before any injunction was enforced –, that will certainly tend to disrupt the negotiation strategies of patentees. In other words, and I must insist, this text is only a perspective of the situation seen from France.

En tout cas, de mon point de vue, cthis strategy tends to redeal the cards in FRAND negotiations. Staying within the current paradigm, obtaining injunctions in a single country will not be enough to set a global royalty rate. In the light of recent French and English case law, this points in particular to a contractual (or global) analysis of the FRAND undertaking, centred on the commitment given to ETSI.

I have already discussed on this blog, on several occasions, these deux approches antagonistes de la nature de l’engagement FRAND. OPPO’s stance appears to make the choice of the former more questionable.

By way of reminder, under the competition-law approach, the FRAND undertaking is analysed solely against the criteria of that discipline: this is the approach taken by the CJEU in Huawei. The question, in substance, is whether the patentee’s conduct degenerated into an abuse of a dominant position during the negotiation of the FRAND terms of the licence. If it did not, the implementer will be treated as acting in bad faith and may, for example, be made subject to an injunction on German territory. The German courts apply that approach strictly, so as to be able to grant injunctions, which negotiators then use to induce implementers to agree global royalties.

The contractual approach focuses on the very nature of the FRAND undertaking, which is a stipulation pour autrui for the benefit of future licensees, and under which licences relating to standard-essential patents seront FRAND. As ETSI is located in France, the French court alone would have jurisdiction to set a global royalty rate. On that view there is no need to multiply applications for preliminary injunctions in various countries, as the OPPO precedent might otherwise compel.

That contractual approach has recently been recognised twice by the French courts (TCL and Huawei cases), which accepted jurisdiction, as well as by the UK Supreme Court in Unwired Planet, and then in Optis which applies that decision, while the German Federal Court of Justice appears to leave the door ajar in FRAND-Einwand II.

While the contractual, or global, approach is much critiquée as regards the English courts, for want of territorial jurisdiction, that does not appear to be so in France, where the objection seems inadmissible because ETSI has its seat in France. As was already noted by the Professeur Chiariny : « Given that ETSI is located on French territory (in Nice), the jurisdiction of the French courts to set a global royalty rate seems natural. Questionably, however, the English court has already taken the view that it too may do so.”. That jurisdiction of the French courts was recently reinforced by an interview with Judge Nathalie Sabotier (President of the Third Chamber of the Paris Judicial Court, which has exclusive jurisdiction in patent matters): “ The French courts are in a particular position, in that the European Telecommunications Standards Institute (ETSI) is based in France and subject to French law, so that the obligations entered into within that framework should likewise be governed by French law.« .

It becomes easier to see how OPPO’s stance could redeal the cards for FRAND strategies: if injunctions are enforced in one country, if disputes patent law keep proliferating around the world, would patentees not be better served by a global approach — anchored in a contractual analysis — centralising their actions in the very place where ETSI is located: France?

Our point is not to claim that OPPO’s stance will sweep away the competition-law approach. It is simply to show that patentees’ strategies could change in the light of the other side’s behaviour. For OPPO, economically, it was more advantageous to give up sales in Germany than to lose competitiveness across all its global markets by paying royalties. OPPO apparently generates only around 1% of its worldwide sales on the German market.

Faced with this unprecedented stance, strategies will doubtless have to evolve. It is to be feared that the escalation of litigation will not abate any time soon, and that patentees will show still greater imagination. For instance: bringing injunction proceedings in one or more countries coupled with a central action in France; or bringing a single central action in France.