Background

The holder of two alleged SEPs to the UMTS and LTE standards (the SEP holder) sued an alleged implementer of these standards (the implementer) for patent infringement. The case on the merits was brought before the District Court of The Hague and was conducted in accordance with the Accelerated Regime in Patent cases. The implementer subsequently filed a motion for disclosure of the license and settlement agreements that the SEP holder had concluded with third parties in relation to its SEPs. The SEP holder defended itself against the disclosure claim and filed a similar motion for disclosure against the implementer. The disclosure claims also included any side letters, annexes and addenda to the license agreements. The purpose of these claims was for each party to gain an understanding of the other party’s licensing practices in relation to SEPs. The SEP holder wished to use the documents to show that the implementer failed to meet its obligations to act as a willing licensee, whereas the implementer wished to use the documents to show that the SEP holder did not comply with its obligations to offer a license under fair, reasonable and non-discriminatory (FRAND) conditions.

Discretionary powers

The parties had filed disclosure claims on the basis Article 843a and Article 22 of the Dutch Code of Civil Proceedings (DCCP). For a claim on the basis of Article 843a DCCP, a party must show that it has a legitimate interest in the disclosure of specific documents, which documents must be specified and pertain to a legal relationship. Article 22 DCCP provides discretionary powers to the Court to order disclosure of documents that are relevant to the case.

In this case, the Court did not decide on the claim based on Article 843a DCCP but instead opted to make use of its discretionary powers under Article 22 DCCP to order disclosure of documents. The Court considered that in order to make use of these powers the requirements of Article 843a DCCP do not have to be fulfilled. According to the Court, the principles of truth finding and efficient dispute resolution provide the Court with the discretion to apply its powers under Article 22 DCCP. The Court further considered that the application of these powers is not precluded by the fact that it is not yet certain that the Court’s decision will turn on the FRAND aspects of the case rather than other aspects (such as infringement or validity of the patents at issue in the proceedings). Deciding on the motions for disclosure only after all other issues have been resolved would lead to too much delay of the accelerated proceedings.

For making use of its powers under Article 22 DCCP, the Court held that it is required that the documents to be disclosed are of relevance to the dispute. In this respect, the Court considered that a proper FRAND assessment can only take place after disclosure of the licenses and settlements concluded by the SEP holder. The Court held that it is important for a substantive FRAND assessment to find out which royalty percentages and royalty conditions each of the parties have agreed with competitors of the other party. In this respect, the Court attributed value to the circumstance that the implementer argued that the SEP holder’s offer is not FRAND, whereas the SEP holder argued that the implementer’s counter offer is not FRAND.

The Court took into account that its disclosure order may cover licenses that the SEP holder concluded with licensees that are difficult to compare with the implementer in this particular case. According to the Court, these licenses may be of less relevance to the assessment of the non-discrimination requirement, but it cannot be said that these licenses lack overall relevance. Furthermore, the Court held that it would not only be difficult to filter out these licenses from the disclosure, but that these licenses can also shed some light on the reasonableness of the license proposals that the SEP holder and implementer made to each other.

The Court considered that the licenses and settlements concluded by the implementer are of equal importance. According to the Court, these can be used to gain a better understanding of whether the SEP holder’s license offer and the implementer’s counter offer were FRAND. In addition, it can also be assessed on the basis of these documents whether the implementer acted as a willing licensee.

Confidentiality club

The Court ordered that the disclosure of documents should take place swiftly in order to prevent a delay of proceedings. As the parties agreed that the documents constitute trade secrets, the Court ordered a confidentiality club to maintain confidentiality. Under the confidentiality club, disclosure of the documents was restricted to a limited number of persons, particularly two individuals of each party who do not have a commercial position, the parties’ experts and the parties’ lawyers. The confidentiality club was made subject to a penalty payment of 1 million euro per breach. As a confidentiality club was set up, the Court saw no need to allow for anonymization of the documents. The Court refused to determine that the documents may also be used in foreign proceedings, as it considered that this would be for the foreign Courts to decide on.

Comment

This is the first time that the Dutch Court made use of its discretionary powers under Article 22 DCCP to order disclosure of license and settlement agreements in a FRAND case, without assessing the strengths and weaknesses of the parties’ positions on the merits. The decision shows that the Court attributes great importance to truth finding and efficient dispute resolution, while seeking to protect confidentiality by setting up a confidentiality club.

Authored by Ruud van der Velden and Dirk-Jan Ridderinkhof.