The European Commissioner for Competition (“the Commissioner”) has threatened sanctions against companies using ‘standard-essential patents’ to litigate against one another. The Commissioner’s speech on competition and antitrust law is seen by many to be directed at the smartphone industry where well known technology companies are involved in a number of high value patent disputes.
Standard setting bodies such as the European Telecommunications Standards Institute set certain industry wide technical standards to ensure manufacturers can produce products capable of being interoperable with one another. Devices seeking to meet these standards inevitably require the use of certain patents, which in turn involves procuring licensing rights from rights holders. The organisations that set these standards generally require their members to grant irrevocable licenses to companies seeking to meet the standard on fair, reasonable and non discriminatory terms (“FRAND”).
Some of these standard-essential patents are at the heart of a number of legal battles between the leading players in the smartphone market. In January the Commissioner opened a formal investigation into whether Samsung had used its essential patents (specifically those to do with 3G mobile and wireless technology) to distort competition in the smartphone market by seeking injunctive relief against rival mobile phone manufacturers it claimed were infringing on its patents. Indeed, on the day of the Commissioner’s speech Motorola were unsuccessful in a German case in which it alleged Apple had infringed 3G essential patents Motorola claimed to hold.
The Commissioner stressed that the powers conferred by essential patents must not be misused. He is “determined to use antitrust enforcement to prevent the misuse of patent rights to the detriment of a vigorous and accessible market”. The warning will not go unheard by the technology sector who won’t have forgotten the record €1 billion fine handed down by the EU to Intel in 2009 for anti competitive practices.