Sisvel International S.A. et al v. VeriFone, Inc.
- Filed: 05/15/2020
- Case Updated Daily
- Latest Docket Entry: 02/16/2021
May 25, 2020
NPE litigation in the Automotive market sector during the first four months of 2020 was up nearly threefold from the same time period last year. Most recently, 21ST CENTURY GARAGE LLC and Sisvel International S.A. (d/b/a Sisvel Group) have taken aim at companies operating in the sector, but the year so far has seen new campaigns launched by plaintiffs ranging from relatively recent entrants to patent monetization (e.g., Quartz Auto Technologies, LLC) to established players (e.g., Conversant Wireless Licensing, S.à.r.l.), as well as additional cases filed in existing campaigns waged by inventor-controlled Omega Patents, L.L.C. and frequent plaintiff Leigh M. Rothschild. From wireless connectivity to more traditional automotive technologies, something about 2020 has drawn more litigation to the sector.
May 25, 2020
The German Federal Court of Justice (Bundesgerichtshof) has issued a long-awaited decision on fair, reasonable, and nondiscriminatory (FRAND) patent licensing, ruling in favor of patent pool administrator Sisvel International S.A. earlier this month in a long-running standard essential patent (SEP) dispute with Haier over mobile devices. The Sisvel v. Haier decision reportedly sets a higher bar for accused infringers hoping to show that their prior licensing behavior had been FRAND-compliant. It is also the first FRAND ruling by Germany’s highest patent court since the Court of Justice of the European Union’s (CJEU’s) 2015 decision in Huawei v. ZTE, which established a framework for injunctive relief in SEP litigation.
Sisvel filed the underlying infringement litigation against Haier in late 2014 following a series of licensing negotiations over two patents (EP 1 264 504, EP 0 852 885) allegedly essential to the UMTS and GPRS cellular networking standards. During the pendency of the litigation, the CJEU issued its decision in Huawei v. ZTE, holding that “SEP holders may not seek injunctions against users willing to enter into a licence on FRAND terms” and addressing how courts may determine whether or not a potential licensee has shown the requisite willingness to do so. The decision also laid out the criteria for a FRAND defense, which arises under antitrust law and is available in part when the SEP-holder has a market-dominant position and the accused infringer has made a FRAND counter-offer, has provided an accounting of past sales, and has provided payment for past royalties (through, for example, a security). To rely on the defense, under Huawei v. ZTE, an alleged infringer must have negotiated in good faith and without undue delay.
The Regional Court of Düsseldorf found that Haier was not entitled to the FRAND defense because it did not submit sales data for the accused devices or provide a bond until just before the oral hearing in September 2015. Finding that Sisvel had complied with its requirements as the SEP holder, the court held that Haier’s conduct constituted improper delay under Huawei v. ZTE, thereby obligating Haier to respond to Sisvel’s offer without delay because it had refused the NPE’s original licensing offer. However, that decision was reversed in March 2017 by the Higher Regional Court of Düsseldorf, which held that Sisvel’s offers had not been FRAND because they were discriminatory against Haier compared to agreements with other licensees—and found that Sisvel had not met its burden of proof to show that there was an objective reason for the highlighted differences. The court declined to reinstate injunctive relief but ordered Haier to pay damages and provide an accounting of specific sales information.
The Federal Court of Justice then announced its ruling on appeal on May 5, the same day that it heard the case. While the decision has not yet been published in written form, media coverage from publications like Juve Patent describe a reversal of the Higher Regional Court’s decision that applied the Huawei v. ZTE factors and largely reinstates the Regional Court’s 2015 judgment. Presiding Judge Peter Meier-Beck reportedly held that under CJEU law, an accused infringer is “obliged to make a concrete licence offer” and “must subsequently demonstrate this through its overall conduct in negotiations with the SEP holder”, as summarized by Juve Patent. Judge Meier-Beck is quoted as explaining, “It is not enough to simply declare your willingness to take a licence. You have to be more specific”, further underscoring that “the potential licensee has to make clear it seeks for a FRAND licence, whatever FRAND means”. To that end, the court purportedly expressed skepticism that Haier had done enough to convey a willingness to take a license.
On the other hand, the court reportedly underscored that under Huawei v. ZTE, a SEP holder may violate its FRAND commitment by declining a FRAND offer from an accused infringer. A SEP holder must also provide an implementer with enough information to evaluate whether the SEP holder’s own offer is FRAND or to make its own FRAND offer, including details on existing licenses and the rationale for treating the accused infringer differently, the court held.
While the court’s full reasoning will not be apparent until the release of its written opinion, the Sisvel v. Haier decision has already been touted as providing some much-needed standardization in this area of FRAND law, as German courts have struggled to uniformly apply the Huawei v. ZTE factors—diverging on the appropriate procedural and substantive requirements for determining FRAND compliance.
Meanwhile, Sisvel continues to litigate other patents allegedly essential to various cellular standards in the US. On May 15, three Sisvel entities launched a new campaign targeting a wide variety of products offering 3G and/or 4G networking, including connected cars from Tesla as well as a host of other products, including wireless adapters, cellular modems, computers, payment terminals, routers, smartphones, and vehicle tracking devices. For more details, see “Sisvel Files Slew of Networking Cases, Many Against Defendants in Suit Since Last Summer” (May 2020).
May 16, 2020
Sisvel International S.A. (d/b/a Sisvel Group); Sisvel S.p.A.; and 3G Licensing S.A. (collectively, Sisvel)—all subsidiaries of Fineur International S.A.—have sued BBK Electronics (OnePlus) (1:20-cv-00653), CradlePoint (1:20-cv-00649), Dell (1:20-cv-00651), Honeywell (1:20-cv-00652), TCL (1:20-cv-00654), Tesla (1:20-cv-00655), Tinno Mobile (Wiko) (1:20-cv-00658), VeriFone (1:20-cv-00656), and Xirgo Technologies (1:20-cv-00659) in the District of Delaware and BLU Products (1:20-cv-22050), HMD Global (1:20-cv-22051), and Sun Cupid Technology (Noetic) (1:20-cv-22054) in the Southern District of Florida, all over the provision of automobiles and a variety of devices (e.g., adapters, cellular modems, computers, payment terminals, routers, smartphones, vehicle tracking devices, etc.). At issue are the products’ compliance with the 3G and 4G cellular network standards.
The nine asserted patents (7,215,653; 7,319,718; 7,551,625; 7,580,388; 7,869,396; 7,979,070; 8,189,611; 8,600,383; 8,971,279)—originating with either BlackBerry, LG Electronics (LGE), or Nokia—generally relate to various aspects of telecommunication networks, with Sisvel alleging that the patents “relate to technology for cellular communication networks, including variations or generations of cellular communication network technology such as, but not limited to 3G, and 4G”. Each defendant is accused of infringing all nine patents except for TCL (which is accused of infringing all of them except for the ‘070 patent) and BLU Products (which is accused of infringing only the ‘070, ‘396, and ‘279 patents).
Last June, Sisvel launched a litigation campaign that has since hit many of the same defendants sued here, including BLU Products, Dell, Honeywell, Tesla, and Xirgo, as well as AnyDATA and ZTE. Sisvel has since filed multiple amended complaints, to which all the defendants have yet to respond. Each of those suits was filed in the District of Delaware, except the case against ZTE, which was filed in the Northern District of Texas, and the case against BLU Products, which has since been transferred to the Southern District of Florida. In mid-March, u-blox added a complaint to the campaign seeking declaratory judgments of unenforceability of two of Sisvel’s patents (7,433,698; 8,364,196) based on alleged failures by prior owner Nokia to disclose the patents to standards setting organizations, and of failure to offer u-blox (or its customer Xirgo) “fair, reasonable, and non-discriminatory” (FRAND) licensing terms, in addition to pleading claims for breach of contract and antitrust violations based on that same failure.
Additional background concerning these earlier suits can be read at “Sisvel Expands Networking Campaign by One Defendant but Many More Patents” (July 2019), with a one-page assessment available for download from RPX Insight here.
Founded in 1982 as a spin-off to manage and license a portfolio of television-related patents developed by Italian electronics manufacturer Indesit, Sisvel has evolved into a prominent patent pool administrator. Currently domiciled in Luxembourg with offices in Europe, Asia, and the US, Sisvel has partnered with joint licensors such as Philips, Panasonic, and Electronics and Telecommunications Research Institute (ETRI) to offer SEP (i.e., standard essential patent) pools related to technologies including wireless cellular communications, digital audio and video encoding, DSL, and Wi-Fi. In the late 1990s and early 2000s, the entity managed an Audio MPEG pool related to the MP3 standard, which it enforced with over 600 civil lawsuits or customs detention requests across Europe. Since at least 2011, Sisvel has also acquired assets outright from operating companies such as Nokia, Panasonic, and Sanyo for assertion and licensing purposes. Sisvel has recently disclosed Fineur International S.A. as its corporate parent.
In December 2018, RPX acquired rights to over 720 worldwide assets from Sisvel, including roughly 500 patents that make up Sisvel’s SEP 802.11 Wi-Fi Joint Licensing Program. Further details about the deal that can be reviewed on RPX Insight here. 5/15, BBK Electronics (OnePlus), CradlePoint, Dell, Honeywell, TCL, Tesla, Tinno Mobile (Wiko), VeriFone, Xirgo Technologies, District of Delaware; 5/15, BLU Products, HMD Global, Sun Cupid Technology (Noetic), Southern District of Florida.