In adopting what he regards as a “middle path” approach between over- and under-protecting intellectual property rights, Advocate General Wathelet’s Opinion in the Huawei v ZTE1 litigation provides our first hint as to the Court of Justice of the European Union’s (CJEU) likely stance on the availability of injunctive relief in standard essential patent (SEP) disputes.
The ultimate decision of the CJEU is likely to be of significance to SEP owners, standards implementers and consumers alike, as it will inevitably impact the overall negotiating position of SEP owners, in turn affecting the royalties paid by implementers and the prices paid by consumers.
The reference to the CJEU came from the Landgericht Dusseldorf2 (Dusseldorf Regional Court) in the context of a patent dispute between China’s two largest telecommunications hardware makers – Huawei and ZTE. Having sued ZTE for infringement of a patent for 4G technology, Huawei sought an injunction to stop ZTE selling infringing products. As a result, the German courts had to consider the compatibility of their own Orange Book Standard case law with the position adopted by the EU Commission in the context of its Samsung investigation. The CJEU was then ultimately tasked with deciding whether, and in what circumstances, an application for injunctive relief (amongst other things) made by an SEP-holder will constitute an abuse of a dominant position.
Advocate General Wathelet’s Opinion attempts to strike a balance between the various positions taken in this debate, providing general guidance as to the precursor steps that an SEP holder must undertake before seeking an injunction, in order to comply with its FRAND commitments (and hence avoid the risk of abusing a dominant position). Similarly, he indicates some steps that might be taken by an alleged infringer in order to show that it is not being “purely tactical and/or dilatory and/or not serious” and hence at risk of an injunction claim.
If adopted by the CJEU, the Advocate General’s recommendations are likely to trigger a degree of evolution in the approach taken to patent licensing negotiations in the telecoms sector. In particular, the Advocate General’s approach would impose greater transparency on the parties at the outset – particularly on patentees, who would have to specify the manner in which the SEP had been infringed and provide “the precise amount of the royalty and the way in which that amount is calculated”. The Advocate General’s approach would also incentivise the use of court and arbitral proceedings to adjudicate on the FRAND issue itself.
Further litigation is however guaranteed, since the issue of dominance, as well as the difficult question of FRAND, would remain to be determined on a case-by-case basis by the national courts or, as appropriate, arbitral tribunals.
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1 Case C-170/13 (Huawei Technologies)
2 Order dated 21 March 2013 (file no. 4b O 104/12, GRUR-RR, 196 – LTE-Standard
