The Regional Court of Düsseldorf, Germany, has asked the Court of Justice of the European Union ("CJEU") to clarify a number of questions at the intersection of EU and German antitrust laws and patent law.  The Düsseldorf court hears the greatest number of patent cases in Germany and is one of the most important patent courts in the European Union.  Its questions relate to whether the holder of a FRAND-encumbered standards-essential patent ("SEP") may obtain injunctive relief against a business infringing its patent.  The answers of the CJEU may provide clarity to this hotly contested topic sooner than expected.

The issue

In most significant jurisdictions around the world, the plaintiff in a patent infringement action can seek an injunction preventing the accused infringer from continuing to practice the inventions claimed in the patent.  However, recently defendants have argued that, when an asserted patent is a SEP and encumbered with a fair, reasonable and non-discriminatory ("FRAND") licensing commitment, the patent holder should be prevented from obtaining injunctive relief.

U.S. federal district courts may deny an injunction based on the public interest.  By contrast, in Germany, the issuance of an injunction is (almost) automatic once infringement is proved.  But if the asserted patent is a FRAND-encumbered SEP, a German court may invoke a narrow limitation on the issuance of injunctions in exceptional cases based on principles of EU and German antitrust law.

In 2009, the German Federal Supreme Court ("FSC") for the first time allowed a patent user to defend itself against an injunction claim by arguing that it is entitled to a FRAND license according to antitrust law.  The case involved a de facto standard for CD-R and CD-RW.  The plaintiff owned a patent for recordable and rewritable optical data carriers.  The defendant marketed CD-Rs and CD-RWs in Europe.  The plaintiff alleged that CD-Rs and CD-RWs must comply with the specifications set out in the so-called "Orange Book Standard" such that the defendant had to obtain a license under plaintiff’s patent.

The FSC decision in Orange Book defined three requirements for a FRAND defense to be successful: (i) the plaintiff has a dominant market position; (ii) the defendant has offered a license on "acceptable" contract terms to plaintiff; and (iii) the defendant behaved from the point of its offer as if the plaintiff had accepted the offer (e.g., the defendant must have paid or put into escrow a sufficient amount of money as license fee).  The defendant bears the burden of proof for all three requirements.

At EU level, several EU investigations are pending but very little is known about their possible outcomes.  Circumstantial evidence suggests that the European Commission ("EC") is likely to interpret the antitrust restrictions more broadly and to assume that the owner of FRAND-encumbered IP can start litigation if the parties’ negotiations of FRAND terms have broken down.

For instance, the EC is investigating whether Samsung infringed Article 102 TFEU by seeking injunctive relief in member state courts and thereby failing to honor FRAND commitments it gave to ETSI for certain UMTS (3G) patents it declared to be SEPs.  In December 2012, the EC announced that it has sent a Statement of Objections to Samsung in this matter.  It follows from the EC’s press releases that it is likely to find Article 102 TFEU violated if an owner of FRAND-encumbered SEPs seeks injunctive relief when the implementer is "willing" to enter into a license.

Given that the investigations of the EC are still at their early stage, and that any decision, if appealed, would have to wind itself through the two instances of the European Court of Justice, the current request of the Regional Court of Düsseldorf is fast-forwarding the legal discussion.

The request of the Regional Court of Düsseldorf

In the Düsseldorf case, a patentee is seeking to enforce a patent relating to the Long Term Evolution ("LTE") mobile telecommunication standard.  The Düsseldorf court found that the patent at issue is essential for the LTE standard.  On this basis, the court could have granted the injunction under the Orange Book criteria.  Instead, the court stayed its proceedings and raised five questions with the CJEU (three of which are quoted below).  The TFEU provides for the possibility of national courts to seek legal guidance under EU law where the national court feels EU law is unclear but relevant to the matter on which the court has to decide. 

In essence, the Düsseldorf court requests a ruling on whether the (narrow) Orange Book criteria apply or whether a (wider) compulsory license defense applies under the EU prohibition on abuse of dominance:

  1.  Does the owner of a standard-essential patent abuse his dominant position if he has committed to a standard setting organization his willingness to grant every third party a license to fair, reasonable and non-discriminatory terms, and if he nonetheless enforces in court an injunction claim against a patent infringer, even though the patent infringer has indicated his willingness to negotiate such a license

or

  1. can an abuse of a dominant position only be found if the patent infringer has submitted to the patentee of the standard-essential patent an unconditional offer ready for acceptance for the conclusion of a license agreement, which the patentee may not reject without unduly restricting the patent infringer or by violating the non-discrimination rule, and if the patent infringer has, in anticipation of the license to be granted, complied with the contractual obligations for use that has already occurred?
  2.  In case an abuse of a dominant position has to be found already if the patent infringer is willing to negotiate a license:  Does Art. 102 TFEU set any qualitative or timing requirements on the willingness to negotiate a license? Can such willingness in particular already be assumed if the patent infringer has only in general terms (orally) stated to be prepared to enter into negotiations, or has the patent infringer already have entered into negotiations, for example by stating specific conditions under which he would be willing to conclude a license agreement?
  3. In case the prerequisite for the abuse of a dominant position is that an unconditional offer ready for acceptance for the conclusion of a license agreement has been submitted:  Does Article 102 TFEU set any qualitative or timing requirements on such offer? Does the offer have to include all provisions, that are typically contained in license agreements in the technical field at issue? May the offer in particular be conditioned on the standard-essential patent being used and/or it being found valid?

Timeline and Take-away

It is to be expected that the Advocate General of the CJEU will render an opinion on the questions within a year and a half, and a judgment is expected within the next two years.  It remains to be seen whether the EC will hold its decision in the Samsung case until the CJEU has rendered its opinion on the questions raised by the Düsseldorf court.  In any event, a decision of the CJEU will now come much earlier than it would have come following the pending antitrust investigations of the EC and subsequent appeals.  The industry can hope to receive legal guidance within two years on this disputed issue.