Case of the Week: Up the Anti – Munich Courts Issue Germany’s First Anti-Anti-Suit Injunction in Nokia v. Continental

The Munich District Court (Landgericht München I) has issued, and the Munich Court of Appeals (Oberlandesgericht München) has confirmed in a judgment dated 12 December 2019 what appears to be Germany’s first anti-anti-suit injunction.

In the time-honoured tradition of German case reporting, the judgment is anonymized. However, read in conjunction with press reports and the reported US cases, it is clear that the injunction was issued for the benefit of Nokia of Finland against German automotive supplier Continental in the context of a patent war around connected cars and fair, reasonable, and non-discriminatory (FRAND) licenses.

Procedural Background

Nokia owns a portfolio of standard essential oatents (SEPs) relevant to the connectivity of cars. Daimler apparently incorporates this technology in its cars through so-called telematics control units (TCUs). These, in turn, are sourced from third-party suppliers such as Continental. From press reports, it appears that the parties, Nokia on the one hand, Daimler and its suppliers on the other hand, cannot agree, among other things, on who the licensee of Nokia’s patents should be: Nokia wants to license Daimler, whereas Daimler and Continental believe Nokia should license its patents directly to the TCU suppliers.

Relying on this patent portfolio, on 21 March 2019 Nokia commenced a total of ten patent infringement cases against Daimler in the district courts (Landgerichte) in Düsseldorf, Mannheim and Munich. In these proceedings, Daimler joined two Continental group companies (Streitverkündung; third party joinder). Continental, on its part, on 12 June 2019 applied for, and subsequently obtained an anti-suit injunction from the US District Court for the Northern District of California designed to stop Nokia’s infringement actions in Germany. This application was made in support of its own FRAND litigation against Nokia commenced on 10 May 2019 in the same court. The anit-suit injunction enjoined Nokia from prosecuting the patent infringement actions filed in Germany against Daimler.

Nokia countered with an application for an anti-anti-suit injunction in the Munich court, which ultimately prevailed. The Munich court issued the following order, in the wording customary for a German injunction, starting, as courts traditionally do, by setting out the sanctions for breach of the order:

“The respondent shall be prohibited – subject to a fine of up to EUR 250,000 – alternatively subject to the penalty of administrative detention (Ordnungshaft) of up to six months’ detention, in the event of repeated offences up to a total of two years, with the administrative detention be executed against a member of the respondent’s Board of Directors –  from applying for an anti-suit injunction, the purpose of which is, directly or indirectly, to prohibit the applicants from bringing one or more of the following patent infringement proceedings in Germany, namely

1. District Court Munich I, file no. 21 O 3889/19;
2. District Court Munich I, file no. 21 O 3891/19;
3. District Court Munich I, file no. 7 O 3890/19
4. District Court Düsseldorf, file no. 4a O 27/19;
5. District Court Düsseldorf, file no. 4a O 26/19;
6. District Court Düsseldorf, file no. 4c O 17/19;
7. District Court Mannheim, file no. 2 O 37/39;
8. District court Mannheim, file no. 2 O 36/19;
9. District Court Mannheim, file no. 2 O 35/19;
10. District court Mannheim, file no. 2 O 34/19;

if such application is pursued as in the case of the application for an anti-suit injunction dated 12 June 2019 in the proceedings, file no. 5:19-cv-02520-LHK before the United States District Court for the Northern District of California, whereby this obligation to cease and desist shall also include in particular

• an order that the application for an anti-suit injunction of 12 June 2019 in the proceedings before the United States District Court – Northern District of California, file number 5:19-cv-02520-LHK, be withdrawn immediately after service of this order; and

• the prohibition to continue this anti-suit injection procedure except for the purpose of withdrawing the application.”

When the injunction was issued by the Munich district court, Continental withdrew its anti-suit injunction in the US, but expressly reserve the right to refile it, should the German injunction be set aside upon appeal. The decision of the Munich Court of Appeals is final and cannot be appealed further.

Reasons

The Munich District Court found that the anti-suit injunction applied for in the US did infringe upon the exclusive property rights conferred by the patents. It therefore held that Continental, as the infringer, was obliged to cease and desist based on Sections 1004, 823 German Civil Code (BGB). In particular, it relied on the argument that the injunction did not stop Continental from commencing litigation in the US, emphasising that Continental was free to pursue its main action in the US, as only the interfering anti-suit injunction had to be withdrawn. The court then discussed, and dismissed, Continental’s arguments that its finding would violate German constitutional law, European law and international law.

The Munich Court of Appeals did uphold the injunction, but disagreed with the reasoning of the first instance court. In the higher court’s opinion, one cannot distinguish between main proceedings, which are not interfered with, and injunctive proceedings, which a German court can interfere with by way of an anti-anti-suit injunction, since both types of proceedings, are legitimate under applicable US law. It based its decision to uphold the anti-anti-suit injunction on the argument that two rights that equally enjoy constitutional protection, namely on the one hand Nokia’s property right to the patent (grundrechtlich geschütztes eigentumsähnliches Recht an Patenten) and Continental’s general freedom to act (allgemeine Handlungsfreiheit) pursuant to Article 2 Basic Law (GG) on the other hand needed to be balanced. In balancing these two, the court concluded that the interest of Continental to bring in a permissible application for an anti-suit injunction under US law had to give to the property right of Nokia. In essence, the court assessed the impact of the US anti-suit injunction on Nokia’s legal position to be more damaging than the impact of the German anti-suit-injunction on Continental’s legal position.

Comment

It appears that the Munich courts are in good company, and anti-anti-suit injunctions are becoming fashionable across Europe: On 8 November 2019, both the High Court of Justice in London and the Tribunal de Grande Instance de Paris issued anti-anti-suit injunctions in reaction to anti-suit injunctions originating from FRAND litigation in the United States. We will revisit this decision for a more comprehensive analysis, as this case no doubt raises a whole host of interesting questions, so watch this space.

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Landgericht München I, final judgment (Endurteil) dated 2 October 2019, file no. 21 O 9333/19

Oberlandesgericht München, judgment (Urteil) dated 12 December 2019, file no. 6 U 5689/19