The Marseille Commercial Court recently ruled that the sending of letters to the customers of a smartphone creator and seller warning them against possible infringement constituted offers for a fair, reasonable and non-discriminatory (FRAND) licence and was thus not considered unfair competition.(1)
The case is the first French FRAND case to be initiated after the ruling in Huawei v ZTE by the European Court of Justice (ECJ) on July 16 2015.(2)
The key discussion was not patent infringement, but rather unfair competition due to the sending of letters by a non-exclusive licensee enforcing a standard-essential patent (SEP) to clients of a smartphone conceiver and seller.
SISVEL – the entity in charge of enforcing the patent rights of some owners of SEPs for 4G long-term evolution (LTE) technology – sent letters to several French retailers, customers of the Marseille-based smartphone company Wiko, regarding said LTE technology.
Wiko then sued SISVEL before the Marseille Commercial Court, holding that the sending of these letters constituted an act of unfair competition.
The Commercial Court stated that in Huawei v ZTE, the ECJ had ruled on whether the proprietor of a patent may bring an action to enjoin the use of its SEP by a third-party manufacturer offering or selling products complying with the standard.
In particular, the French court pointed to Paragraph 61 of the ECJ decision, according to which the holder of an SEP which believes that it is the subject of infringement cannot initiate, without prior notice or consultation, an action for the injunction or recall of goods against the alleged infringer, despite the fact that the SEP has already been implemented by the alleged infringer, as this would breach Article 102 of the Treaty on the Functioning of the European Union (prohibition of abuse of dominant position).
Interestingly, and as compared to the steps offered by the ECJ, the Marseille Commercial Court noted SISVEL's indication that it had made available to the recipients of the letters a table compiling the date of filing for each patent at issue. The letters from SISVEL also set out the consequences of the unauthorised use of the patents in question.
SISVEL also informed the recipients of the letters that they could challenge the information in the letters and the validity of the patents in question.
SISVEL further attached, in a form sheet, framework and basic clauses of the proposed licence, including a per use and per number of patent licensing scheme.
Even if the Marseille Commercial Court did not detail this, it appears that SISVEL, following the FRAND steps set out by the ECJ in Huawei v ZTE, made a proper offer for a licence after being alerted of the third parties with SEP rights.
The Marseille Commercial Court thus found that SISVEL's letters conformed to ECJ case law. Consequently, they did not constitute an act of unfair competition.
For further information on this topic please contact Stanislas Roux-Vaillard at Hogan Lovells International LLP by telephone (+33 1 53 67 47 47) or email ([email protected]). The Hogan Lovells International LLP can be accessed at www.hoganlovells.com.