Cabinet Beau de Loménie
In response to requests for a preliminary ruling presented by the Düsseldorf Landgericht (Germany) in a case opposing the owner of a standard-essential patent against a third party who wished to implement the corresponding technology, the Court of Justice of the European Union (hereafter, the “CJEU”) will soon have to rule on whether it is an abuse of a dominant position the owner of a standard-essential patent (hereafter, a “SEP”) to introduce an infringement action against such a third party who wants to use the patent.
When establishing technical standards, the issue of making available the patents implemented by the standard is a crucial concern and, generally, the standardization organizations require the owners of SEP to give an undertaking to grant licenses on these SEP under FRAND terms, i.e. fair, reasonable and non-discriminatory conditions.
In a press release relating to the highly-publicised Apple / Samsung dispute, the European Commission indicated that the fact that an entity who has given an undertaking to grant licenses under FRAND conditions brings an infringement action relating to a SEP against an entity who is willing to negotiate a licensing agreement was liable to constitute an abuse of a dominant position (European Commission press release IP/12/1448 of December 21, 2012 and Commission Memorandum 12/1021 of December 21, 2012).
The CJEU will now have to rule on how to evaluate a possible abuse of a dominant position which may be committed by the owner of a SEP in such a case (C-170/13, Huawei Technologies Co. Ltd Vs. ZTE Corp. and ZTE Deutschland GmbH).
In the matter which has been submitted to the Court, the owner of a patent declared essential to the “Long Term Evolution” (LTE) standard, established by the European Telecommunications Standards Institute (ETSI), and a third party wishing to implement this technology had entered into negotiations regarding the terms of a possible licensing agreement on this SEP patent. Further to the failure of the negotiations between the parties, the owner of the SEP had introduced an infringement action against the third party interested by the licensing agreement, who had argued that such an action was an abuse of dominant position, in particular because of the undertaking of the owner of the SEP to grant licenses under FRAND terms.
It is in this context that the Düsseldorf Landgericht (Germany) has asked the CJUE for a preliminary ruling on several questions regarding the modalities of assessment of the abuse of dominant position which may potentially be committed by the owner of a SEP when it introduces an infringement action against a third party wishing to implement the corresponding technology.
In his opinion of November 20, 2014, the Advocate General of the CJUE, Mr Melchior Wathelet, has indicated the conditions under which he considers the owner of a SEP could legally introduce an infringement action against a third party which has shown itself to be objectively ready, willing and able to conclude a licensing agreement, in particular:
- unless it is established that the alleged infringer is fully aware of the infringement, the owner of the SEP has to alert it to that fact in writing, giving reasons, and specifying the SEP concerned and the way in which it has been infringed;
- in any event, it has to present to the alleged infringer a written offer for a license under FRAND terms that contains all the terms normally included in a licensing agreement in the sector in question, in particular the precise amount of the royalty and the way in which that amount is calculated.
The Advocate General considered that the third party wishing to implement the standardized technology also has certain obligations. In particular, this third party has to respond in a diligent and genuine manner to the offer made by the owner of the SEP and, if it refuses the offer, it must promptly submit to the owner of the SEP, in writing, a reasonable counter-offer relating to the clauses with which it disagrees.
According to the Advocate General, if the infringer’s conduct is purely tactical and/or dilatory and/or frivolous, the owner of the SEP may then legally introduce an infringement action. However, the Advocate General indicates that the conduct of the alleged infringer cannot be regarded as dilatory or as frivolous (i) if it requests that FRAND terms be fixed either by a court or by an arbitration tribunal or (ii) if it reserves the right, after concluding an agreement for such a license, to challenge before a court or arbitration tribunal the validity of that patent, the supposed use of the teaching of the patent or the essential nature of the SEP in question.
We will see in the following weeks if the opinion of the Advocate General is followed by the CJEU.
The CJEU should in any event specify the conditions under which the owner of a SEP may legally introduce an infringement action against a third party who wishes to implement the technology corresponding to the standard and having shown itself to be objectively ready, willing and able to conclude a licensing agreement.