Brussels, 17/07/2015 (Agence Europe) - A company which holds a standard-essential patent and which has undertaken in advance to grant third parties a licence on fair, reasonable and non-discriminatory terms is not abusing its dominant position in bringing of an action for a prohibitory injunction against an alleged infringer of its patent if it has presented a specific offer to the alleged infringer to conclude a licence.
That is the key point of the ruling delivered by the court of Justice of the EU on Thursday 16 July. The case (C-170/13) differs from existing case law in that it relates to a “standard-essential patent” (SEP). In the case at issue, such a patent is held by Chinese telecommunications company Huawei and is indispensable for next generation mobile communications (4G). This company undertook to grant licences to third parties on fair, reasonable and non-discriminatory terms (FRAND terms).
The Court reached a similar conclusion to the Advocate General (see EUROPE 11202) though it took a slightly different route. The judges set out the conditions under which a company, such as Huawei, which holds a dominant position would abuse this position in lodging an action for infringement, but making a distinction between actions seeking a prohibitory injunction or the recall of products from those seeking the rendering of accounts and an award of damages.
With regard to the first type of actions, the proprietor of a patent may lodge an action seeking a prohibitory injunction or the recall of products if prior to the lodging of this action the alleged infringer has been specifically alerted of the infringement complained about. If the alleged infringer expresses a willingness to conclude a licensing agreement on FRAND terms, a specific, written offer must be presented. The alleged infringer may reject this offer but must submit, promptly and in writing, a specific counter-offer that corresponds to FRAND terms, failing which the alleged infringer may not thereafter invoke the abusive nature of an action for a prohibitory injunction or for the recall of products.
The Court states that, in the event of failure of negotiations between the two parties and where the alleged infringer continues to use the patent in question, the patent holder may lodge an action for infringement but must demonstrate objectively that the alleged infringer has not diligently responded to that offer, in accordance with recognised commercial practices in the field and in good faith.
With regard to the second type of actions, the Court notes that there is nothing to prevent a company in the same situation as Huawei from bringing an action for infringement against the alleged infringer of its patent with a view to obtaining the rendering of accounts in relation to past acts of use of that patent or an award of damages in respect of those acts of use. Such actions do not have a direct impact on standard-compliant products manufactured by competitors appearing or remaining on the market. (Jan Kordys)