Brinkhof successfully defends Xiaomi in PI proceedings on Standard Essential Patent

18 maart 2020

In the first ruling of its kind in the Netherlands, the Hague Court of Appeal denied a preliminary injunction based on the alleged infringement of a Standard Essential Patent (SEP). The Court found in favor of defendant Xiaomi, considering that even if – arguendo – the patent in suit were to be preliminarily held valid and infringed and Xiaomi’s FRAND defense would preliminarily be held insufficient, the balance of interests still weighs in favor of Xiaomi. The ruling confirms the August 2019 first instance judgment.

Sisvel is a company that manages its own as well as third party intellectual property rights. In that capacity, it manages two patent portfolios of SEPs. The patents in these portfolios have been declared by the patentees to be essential for the implementation of, inter alia, telecommunication standards GSM and LTE. As part of the essentiality declaration, Sisvel committed to granting licenses to anyone under these patents under Fair, Reasonable and Non-Discriminatory (FRAND) terms.

Sisvel is engaged in litigation with the world’s fourth-largest mobile phone manufacturer Xiaomi in the UK and in China with respect to the determination of FRAND license terms for Sisvel’s patent portfolios. In parallel, Sisvel initiated preliminary injunction proceedings in the Netherlands based on two SEPs from its portfolios, arguing that Xiaomi necessarily infringes these patents, while it is not willing to take a license from Sisvel on FRAND terms, and asking for an injunction covering the Netherlands.

The Court rules that Sisvel’s interest in a Dutch preliminary injunction is limited. In view of Sisvel’s business model (it is a non-practicing entity), continued infringement does not lead to loss of market exclusivity, but rather to loss of easily calculated license income. Xiaomi’s interest in preventing a preliminary injunction on the other hand, is significant, in view of the irreparable nature of the damages caused by an injunction, and the expected difficulties in calculating such damages after the fact. The balance of interests therefore weighs in favor of Xiaomi. Sisvel’s alternative claim to force Xiaomi to engage in arbitration to determine worldwide FRAND terms is denied; allowing such a claim would deprive Xiaomi of its fundamental right to access to a national court. All claims are therefore dismissed.

A public version of the decision is expected next week.

The case was handled for Xiaomi by lead partners Richard Ebbink and Daan de Lange, technical specialist Rien Broekstra, competition law specialist Gaëlle Béquet, and associates Boukje van der Maazen and Jonathan Santman.