UPC Refuses Ericsson Injunction Against ASUS on FRAND

Ericsson won on infringement at the Unified Patent Court but did not get an injunction. On 6 November the Milan Local Division ruled at first instance in Ericsson v ASUSTeK Computer Inc. and its logistics provider Arvato Netherlands (UPC_CFI_318/2024 and 730/2024): HEVC/H.265 video coding patent EP 2 727 342 is valid and indirectly infringed, and ASUSTeK is liable for damages. But ASUSTeK's FRAND defence succeeded, and the court refused Ericsson's requests for an injunction, recall and destruction. The decision can be appealed.

Why no injunction

The court first found Ericsson dominant on the relevant market.

Owning an SEP does not create a presumption of dominance; the market must be defined and all circumstances assessed. But HEVC is widely used in streaming, devices without it cannot stay competitive and no equivalent alternative exists, so Ericsson was held dominant (paras 297-304). Under the CJEU's Huawei v ZTE judgment, a dominant SEP holder must identify the patent and explain the infringement before seeking an injunction, giving the implementer a chance to negotiate. Before lodging its Statement of Claim on 14 June 2024, Ericsson gave no details of its HEVC SEPs and opened no concrete licensing negotiations (paras 320, 329, 332).

Notice given on or after filing cannot cure the omission, and neither the public ITU declaration registers nor a request for a conditional injunction can replace it (paras 330, 335, 341). Ericsson argued that ASUSTeK had encouraged affiliated entities to sue its customer AT&T in the US, making its UPC action a defensive response; the court found no objective justification (paras 343-346).

What the FRAND defence did and did not block

• Blocked: the injunction, and the recall and destruction of infringing products (paras 358, 381).
• Not blocked: the declaration of infringement and of ASUSTeK's liability for past and continuing damage; the amount and the compensable period are reserved for later proceedings.
• Information: within four weeks of Ericsson's request for enforcement, ASUSTeK and Arvato must provide a statement signed by an independent auditor or similar professional covering origin and distribution channels, stock, and sales, costs, prices and net profit since 29 June 2016, under a penalty of EUR 1,000 per day up to EUR 1 million.

Ericsson's principal request for a declaration that the patent is essential to HEVC/H.265 was dismissed for lack of jurisdiction, the revocation counterclaim was dismissed and the defendants bear 67.5% of the costs. Infringement was indirect because the accused computers practise the patent only after users install the HEVC Video Extension, so there was no direct infringement, but the conditions of Article 26 UPCA were met (paras 236, 248).

J&C recommends: SEP holders planning to seek an injunction at the UPC should first send the implementer a specific notice identifying the patent and how it is infringed, ideally with claim charts, and allow time for a response and negotiation; notice given on or after filing does not count. Implementers who receive notice should promptly state in writing their willingness to take a FRAND licence and keep a record of the negotiations. Even a successful FRAND defence leaves infringement, damages and disclosure in place, so sales, cost and profit data should be organised early.

Source: www.unifiedpatentcourt.org