FRAND Defence in German Courts: Remedy Against Standard-Essential Patents?

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Standard setting is considered an inevitable process nowadays. It enables the interoperability of products and services from different vendors. The telecommunication sector, for example, is heavily penetrated by standards, including USB, 3G, 4G, USTM and many others. Standards make it possible for telecommunication devices, such as smart phones, to work almost anywhere in the world and run applications from a plurality of software developers. If a standard cannot be applied without using a patent, the industry terms such a patent a “standard-essential patent”. Such patents may conflict with the need for market participants or entrants to have access to standards. This situation is particularly critical in areas where standards have obtained market- or industry-wide recognition and where products that do not provide “standard compliance” may therefore be unsalable. This is an important issue, particularly given the ongoing patent wars relating to smart phones and tablets taking place in the German courts and elsewhere.

Potential Solution to the Conflict

In 2004, the German Supreme Court was faced with such a conflict for the first time (Standard Tight-Head Drum: Spundfass). An Italian manufacturer of barrels for chemical liquids argued that the patentee’s refusal to grant the manufacturer a licence constituted an abuse of a market-dominating position by discriminating against the manufacturer in the face of other manufacturers to whom licences had been granted by the patentee. Indeed, a refusal of that licence would have kept the manufacturer away from a particular market. The German Supreme Court recognised that in such a situation, it is the patentee’s duty to grant a licence and that, furthermore, the accused infringer may rely on a defence against an injunction requested by the patentee in patent litigation.

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