A letter to the customers of a handset conceiver and seller, warning them against possible infringement, may constitute an offer for a Fair Reasonable And Non-Discriminatory (“FRAND”) license and is not constitutive of unfair competition.

Wiko v. SISVEL, Commercial Court of Marseille, France 20/09/2016

The case reported is the first French FRAND-case initiated after the Huawei/ZTE ruling by the Court of Justice of the European Union (“CJEU”) on 16 July 2015 (Case C-170/13).

The key discussion was not patent infringement but rather unfair competition due to the sending of letters by a SEP enforcing non-exclusive licensee to clients of a smartphone conceiver/seller.

SISVEL, the entity in charge of enforcing the patent rights of some of the owners of Standard Essential Patents (“SEP”) over the LTE technology (4g), had sent letters to several French retailers, customers of Marseille based smartphone company Wiko, regarding said LTE technology.

Wiko then sued SISVEL before the Commercial Court of Marseilles, holding that the sending of these letters constituted acts of unfair competition.

The Commercial Court states that in the Huawei/ZTE case, the CJEU ruled on the question whether the proprietor of a patent may bring an action to enjoin the use of his SEP by a third party manufacturer offering or selling products complying with the standard.

The French Court points in particular to paragraph 61 of the CJEU decision: the holder of a SEP which considers that it is the subject of an infringement cannot initiate, without prior notice or consultation, an action for the injunction or recall of goods against the alleged infringer, even though said SEP has already been implemented by the alleged infringer, as this would breach of 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 CJEU, the Commercial Court of Marseille noted that SISVEL indicated that it had made available to the recipient of the letter, a table compiling the date of filing for each patent at stake. The letter from SISVEL also recalled the consequences of the unauthorized use of the teachings of the patents in question.

SISVEL also informed the recipients of the letter that they could challenge the information in the letter and the validity of the patents in question.

SISVEL further attached, in a form sheet, “framework and basic clauses” of the proposed license, showing a per use and per number of patent licensing scheme.

Even if the Commercial Court of Marseille did not detail this, it appears that SISVEL was, following the FRAND steps set by the CJEU in the Huawei/ZTE decision, making a proper offer for a license at the same time it was alerting third parties on SEP rights.

The Commercial Court of Marseille thus considers that the letters sent by SISVEL are in conformity with the case law of the CJEU.

Consequently, the letters sent by SISVEL did not constitute an act of unfair competition.