A New Front in The Patent Wars: The Court of Justice of the European Union (CJEU) Asked for Guidance on Limits to Injunctive Relief
The patent wars between large technology companies continue unabated. The Court of Justice of the European Union (CJEU) is set to provide guidance on the antitrust rules when holders of standard essential patents seek injunctive relief.
The patent wars between large technology companies continue unabated and the battle lines are once again being re-drawn. This time they will take into account the seeking of injunctive relief by holders of standard essential patents (SEPs). While injunctions are a legitimate mechanism to protect SEPs, injunctive relief can, in certain circumstances, attract antitrust scrutiny.
In this context, and in connection with a patent dispute between two Chinese electronics companies, on 21 March 2013, the Regional Court of Düsseldorf, Germany, asked the CJEU to provide guidance on whether or not seeking injunctions can constitute an abuse under Article 102 of the Treaty on the Functioning of the European Union (TFEU) where they are sought against an alleged patent infringer who is willing to negotiate a licence and pay a reasonable royalty fee.
The CJEU’s response will hopefully clarify the rights that can be invoked by SEP holders and third parties alike. Whatever the outcome, it will have ramifications beyond the legal position in Germany. The CJEU’s judgment will be binding for all EU Member State courts, national competition authorities and the European Commission.
In addition, the questions from the Düsseldorf Court may stall the Commission’s ongoing investigation into Samsung (alleged abuse of dominance in relation to some of its SEPs in the European mobile device market), which has at its heart the same issues the Düsseldorf Court is currently grappling with.
Although the Commission is not prevented from continuing with its case against Samsung, it may decide to postpone setting out its views as to when and how the seeking of injunctions may breach antitrust rules until the CJEU has returned its decision.
Once a standard is adopted by industry, the proprietor of relevant SEPs is potentially able to foreclose entry by competitors via the strategic use of injunctions. Recent antitrust investigations involving major ICT companies coupled with recent high-level policy developments, bear testimony to this.
The Chief Economists from the US Federal Trade Commission, the US Department of Justice and the EU Directorate General for Competition have pointed out recently that certain limitations should be placed on SEP owners seeking to exclude licensees from the market through injunctions. They state that limiting a licensor’s ability to exclude, or threaten to exclude, a product from the market via injunctions will reduce its ability to demand royalties on terms that are not fair, reasonable and non-discriminatory (FRAND). The Chief Economists suggest therefore that seeking injunctions as a remedy should only be available where a company implementing the standard is unwilling to have a third party determine the appropriate licensing terms, or is unwilling to accept licensing terms approved by a third party.
Access to technology by third parties is clearly in the interests of consumers as it leads to innovation and lower prices. On the other hand, patent holders should be able to protect their investments, which can sometimes be very significant. Third parties and patent holders therefore have a strong interest in knowing what the boundaries of their rights are. Most want to know if there is any legal harm in seeking an injunction (and if so, why), and do SEPs really confer significant market power? Will SEP holders in the future be able to pursue companies that are genuinely believed to infringe a patent in the face of potential antitrust sanctions? The patent wars continue.