FRAND Defences and Non-Disclosure Agreements: A Consolidated View from Mannheim
The Mannheim Local Division has clarified how strict non-disclosure agreements impact the assessment of a party's willingness to license in SEP disputes. This consolidated decision addresses both infringement and revocation.
The intersection of strict non-disclosure agreements and mandatory FRAND negotiation obligations has presented a persistent structural tension since the Court of Justice of the European Union established its licensing framework in Huawei v. ZTE. In a consolidated ruling addressing both an infringement action (UPC_CFI_86-2025) and a counterclaim for revocation (UPC_CFI_490/2025), the Mannheim Local Division has now clarified how a party's reliance on a prior confidentiality regime impacts the assessment of its willingness to take a license. The panel also provided precise guidance on claim construction where the patent specification acts as its own lexicon, ultimately granting an injunction and ordering the recall of infringing products.
Why did the panel uphold the determination of chroma partition types over the AVC standard?
The patent at issue, EP 2 465 265, relates to an improved and more flexible method for intra chroma coding of video data. The defendants argued that the claims lacked novelty and an inventive step over several prior art documents, including the H.264/AVC standard. The technical dispute centered on whether the prior art disclosed a method where multiple partition types are supported for intra prediction chroma coding, and where a particular chroma partition type is determined in response to a luma partition type.
The panel found that the prior art approaches either used identical partition types for both luma and chroma coding, as seen in the 4:4:4 sampling common mode, or fixed the chroma partition type to a single 8x8 block regardless of the luma partition type, as seen in the 4:2:0 sampling mode. Crucially, the panel relied on paragraph [0025] of the patent description, which defined the phrase "multiple partition types are supported for intra chroma coding" to mean that the set of chroma partition types must differ from the set of luma partition types. Treating the patent specification as its own lexicon, the panel read this definition into the claims. Because the prior art did not disclose different sets of partition types where the chroma type is determined in response to the luma type, the claims were found to be novel and inventive (reasons 126 and 164).
How does an existing non-disclosure agreement affect the Huawei v. ZTE negotiation framework?
Assuming for the sake of argument that the patent conferred a dominant market position as a de facto standard, the panel evaluated the defendants' FRAND defence. The claimant had offered a license covering the patent, but the details of this offer were shielded by a non-disclosure agreement concluded at the defendants' request. This agreement explicitly prohibited using the substance of any offers as evidence regarding willingness to license.
When the defendants raised a FRAND defence in the infringement action, the claimant requested an agreement to present the full negotiation history to the Court of First Instance. The defendants failed to respond substantively to this request. The panel held that the defendants were unwilling licensees because they effectively used the previous confidentiality regime to prevent the claimant from fully explaining the license negotiations during the written procedure. The panel noted that an implementer cannot allege a lack of FRAND compliance while simultaneously invoking an agreement to prevent the patentee from substantiating its offer. Furthermore, the defendants' mere assertion that the offer was made on a discriminatory basis, without providing substantive criticism that would enable the claimant to amend its offer, confirmed their unwillingness to obtain a license (reasons 240 and 247).
When must a defendant request confidentiality for information ordered under Article 67 UPCA?
Having established infringement, the panel ordered the communication of information pursuant to Article 67 UPCA. The defendants requested that this order be made conditional upon a strict confidentiality regime restricting access to the claimant's outside counsel and two named representatives.
The panel rejected the request to make the operative order conditional. Citing the Court of Appeal, the panel noted that confidentiality issues generally do not stay the time period set for compliance with a penalty-reinforced order. However, the panel granted the defendants the opportunity to file a reasoned request under Rule 262A RoP when the respective information is actually submitted. The panel reasoned that a full assessment of confidentiality during the main proceedings would risk burdening the infringement action with facts that might prove irrelevant, and that the necessity of access restrictions can only be properly evaluated once the specific information is presented (reasons 190 and 192).
What must implementers change when negotiating standard-essential patents under an NDA?
The consolidated decision in UPC_CFI_86-2025 and UPC_CFI_490/2025 establishes a clear procedural boundary for implementers relying on non-disclosure agreements during licensing negotiations. Implementers can no longer use restrictive confidentiality clauses as a shield to prevent a patentee from demonstrating FRAND compliance in court. If a patentee requests to lift or amend an agreement to present the negotiation history to the Unified Patent Court, the implementer must cooperate properly. Failing to do so will result in the implementer being classified as an unwilling licensee. Furthermore, implementers must respond to licensing offers with substantive criticism rather than generic rejections. A failure to engage substantively, combined with procedural obstruction regarding the negotiation history, clears the path for the court to grant an injunction and order the recall of infringing products.