On 29 April 2014, the European Commission (EC) handed down two decisions dealing with the application of EU competition law to the enforcement of “standard essential patents” (SEPs). The principles outlined in the cases are relevant to any industry in which standards are used.
SEPs are patents that are technically essential to implementing a specific standard; in practical terms, it is not possible to manufacture products, such as mobile phones or tablets, that comply with the standard without using such patents. In order to comply with competition law, holders of SEPs who are willing to be included in a standard must commit to giving access to their technology and to doing so on fair, reasonable and nondiscriminatory (FRAND) terms.
The two decisions relate to enforcement of SEPs in the telecommunications sector by, respectively, Motorola Mobility and Samsung Electronics. They confirm that, for the purposes of EU competition law, recourse to injunctions is generally a legitimate remedy for patent infringements. However, the seeking of injunctions may be an abuse of dominance, and therefore illegal, when two conditions are met: First, an SEP holder has given a commitment to license on FRAND terms during standard-setting; and second, the potential licensee is willing to enter into a licence on FRAND terms.
These cases won’t be the end of the story on SEP enforcement. In the future, patent owners no doubt will argue that their particular cases are, on the facts, different. For example, it probably will not be abusive to seek an injunction if the potential licensee cannot pay, doesn’t have the assets to exploit the innovation or is unwilling to negotiate. There is still considerable room to play and to argue.