Following the hearing on 11 September 2014, which was attended by Taylor Wessing, the opinion of Advocate-General Wathelet in the significant referral by the Landgericht Düsseldorf (District Court) to the CJEU in case C-170/13 (Huawei Technologies) has been published today (20 November 2014).
The five questions referred in April 2013 for a preliminary ruling were directed to the seeking of an injunction by the proprietor of a standard essential patent, who has giving a commitment to a standard setting organisation to grant licences on Fair Reasonable and Non-Discriminatory ("FRAND") terms.
The approach of courts and regulators in Europe to the availability of injunctions for infringement of standard essential patents has to date diverged.
Applying the decision of the Bundesgerichthof (German Federal Supreme Court) in 2009 in the so-called "Orange Book" case to standard essential patent cases, the German courts' position had been that an alleged infringer could defend itself against a claim for an injunction by pleading that the patentee had abused its dominant position by refusing to conclude a patent licence agreement, but only if the alleged infringer had made an unconditional offer to conclude a licence which the patentee could not reject without violating the prohibition of discrimination or anti-competitive behaviour and, while using the subject matter of the patent, has complied with the obligations of the licence terms offered as if the licence agreement had been concluded.
The European Commission, however, has repeatedly taken the position that where the proprietor of a standard essential patent has given a FRAND commitment and where the company against which an injunction is sought is "willing" to enter into a FRAND licence agreement, the seeking of an injunction on the basis of the standard essential patent can constitute an abuse of a dominant position. A crucial question in this context is what is meant by "willing". The Commission considers that there should be no injunction on the basis of standard essential patents against companies which, in case of dispute, are willing to have FRAND terms determined by a court or arbitrators (if agreed between the parties) and to be bound by such a determination.
View today's press release summarising the Advocate General's opinion (20 November 2014)
Important quotes from the press release are:
"It constitutes an abuse of a dominant position to...seek an injunction against a company…where it is shown that the SEP holder has not honoured its commitment even though the offending company has shown itself to be objectively ready, willing and able to enter into such a licensing agreement.
...the SEP holder must, before making a request for corrective measures or seeking an injunction, alert the offending company to the infringement at issue in writing, giving reasons and specifying the SEP concerned and the way in which it has been infringed by that company, unless it has been established that the allegedly offending company is fully aware of the infringement. The SEP holder must, in any event, present the allegedly offending company with a written offer of a licence on FRAND terms and that offer must contain all the terms normally included in a licence in the sector in question, including the precise amount of the royalty and the way in which that amount is calculated.
The offending company must provide a considered and serious response to that offer. If it does not accept the SEP holder's offer, it must promptly present the latter with a reasonable counter-offer, in writing, in relation to the clauses with which it disagrees. An application for corrective measures or for an injunction does not constitute an abuse of a dominant position if the conduct of the offending company is purely tactical and/or dilatory and/or not serious.
If negotiations are not opened or are unsuccessful, the conduct of the allegedly offending company cannot be regarded as dilatory or as not serious if it requests that FRAND terms be fixed either by a court or by an arbitration tribunal. In that event, it is legitimate for the SEP holder to ask the offending company either to provide a bank guarantee for the payment of royalties or to deposit a provisional sum at the court or arbitration tribunal in respect of its past and future use of the patent."
Now all eyes will be on the CJEU, to see whether it follows the Advocate General.