LESI: FRAND DISPUTES
was not shared by other courts in Europe, most notably the District Court of the Hague, which explicitly distanced itself from the German Orange Book judgment when asked to decide the same case between the same parties.
The European Commission’s decisions in Samsung and Motorola On April 29, 2014, the European Commission issued decisions in two investigations against Samsung and Motorola for a possible abuse of dominance in a FRAND context. Samsung and Motorola had been accused by standard- implementer Apple of abusing their dominant positions by refusing to license their SEPs on FRAND terms and seeking injunctive relief, even though Apple claimed to be “willing” to take a FRAND licence. T e commission decided that the owner of a FRAND-encumbered SEP commits an abuse of dominance within the meaning of article 102 TFEU if it seeks injunctive relief against a standard-implementer that is “willing” to take a FRAND licence to this SEP. Contrary to the German Supreme Court, the commission insisted that the standard-implementer should always be at liberty to challenge the validity and infringement of the SEP, even while negotiating a FRAND licence. It is in the public interest for anyone, including
licensees, to challenge patent rights to make sure that no-one pays for intellectual property that should not have been granted in the fi rst place. Further evidence of “willingness” is the agreement of the standard-implementer to submit to a third party a determination of the FRAND terms by a court or an arbitration tribunal. Even aſt er the commission’s decisions, the
questions of under which specifi c conditions a standard-implementer can be
“willing”, who should take the initiative for a FRAND negotiation, and how detailed the off er and the counter-off er should be, remain a concern.
The AG’s opinion in Huawei v ZTE T ese issues came up again in the Huawei v ZTE patent litigation before the Düsseldorf Regional Court (Landgericht Düsseldorf) in Germany, which referred a number of questions to the CJEU. AG Wathelet responded to these questions in his opinion of November 20, 2014. In a diplomatic attempt not to off end the
German Supreme Court, the AG noted that the reasoning of the German Orange Book judgment could not apply in the present case as Orange Book concerned a de facto standard rather than a formal FRAND-encumbered standard. Regarding the commission’s position in Samsung and Motorola, the AG considered that
considered
necessary, submit to the SEP owner a reasonable counter-off er. If the parties are unable to agree, the standard-
“THE AG FIRST REMARKED
THAT THE MERE OWNERSHIP OF AN SEP DOES NOT AUTOMATICALLY
CREATE A DOMINANT POSITION.”
implementer can ask for a third party determination of the FRAND terms, although in that case it may have to provide a bank guarantee or place funds in escrow to cover the past and future use of the SEP. In line with what the commission said, the standard-implementer cannot
be considered
“unwilling” if it reserves the right to challenge the validity or infringement of the SEP. T e AG noted that these principles apply
only when an SEP owner seeks injunctive relief or recall of the products in question, since these remedies actually result in the exclusion of such products from the market (as opposed to a request for damages or a rendering of accounts).
mere willingness on the part of the standard-
implementer to negotiate “in a highly vague and non-binding fashion” was not suffi cient to limit the SEP owner’s right to seek injunctive relief. T e AG claimed to choose a “middle path”, which in fact is largely in line with the position of the commission. T e AG fi rst remarked that the mere ownership
of an SEP does not automatically create a dominant position. Since the Düsseldorf court had not asked any questions about the existence of dominance, the AG did not elaborate on this point. Wathelet then tried to strike the right balance
between the right to IP, the right of access to the courts, and the freedom to conduct one’s business and enjoy unrestricted competition, concluding that
the patentee’s relief can be
circumstances. In light of
right to seek injunctive restricted only in exceptional the technological and economic
dependence of standard-implementers on SEP owners, the SEP owner’s attempt to seek injunctive relief constitutes a FRAND violation and an abuse of dominance contrary to article 102 TFEU if the standard-implementer is “objectively ready, willing and able to conclude such a licensing agreement” and to pay an appropriate royalty. In those circumstances, before bringing an
action for injunctive relief, the SEP owner must alert the standard-implementer in writing to the fact that it may be infringing one or more of its SEPs—which the SEP owner must specifi cally identify. Also, the SEP owner must make the fi rst FRAND off er that contains all the terms normally included in a licence in the relevant sector, including the precise amount of
the
royalty and the way it is calculated. In return, the standard-implementer must respond in a diligent and serious manner to the off er, and if
32 World Intellectual Property Review Annual 2015 World Intellectual Property Review November/December 2014
Patricia Cappuyns is a LESI contributor and has worked as a patent
litigator for 15
years, representing clients in the life sciences, mechanical engineering, biotechnology and telecoms industries. She has been involved in a number of investigations conducted by the European Commission concerning SEPs. She can be contacted at:
patriciacappuyns@skynet.be
Next steps T e AG’s opinion is not binding. T e CJEU’s judgment is expected in the coming months; it is likely, although not certain, that the CJEU will follow the AG’s opinion. T e Düsseldorf court will then have to apply the principles set forth by the CJEU to the facts at hand. T e AG’s opinion provides a satisfying answer
to a lot of questions that had been troubling FRAND afi cionados for years. As always, some questions remain unanswered, such as whether the standard-implementer is
still “willing” if
it insists on taking a licence only to individual SEPs in particular countries, as opposed to a worldwide portfolio licence. And so the FRAND saga continues.
www.worldipreview.com
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SHUTTERSTOCK.COM
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