Europe’s courts take sides in standards patent disputes

When a patent becomes essential for a product to operate according to industry standards—say, for a cellphone to connect to a 3G network—patent protection can start looking a bit like monopoly power. To avoid antitrust trouble, holders of these patents regularly pledge to license them on fair, reasonable, and nondiscriminatory (FRAND) terms to competitors.

Disagreements over what constitutes a FRAND fee have contributed to a patent and antitrust litigation war. Which side has the edge depends on which side of the Atlantic you’re on. In American courts, judges have generally resisted granting patent-holders’ requests for injunctions against companies that won’t agree to their desired fee, says Morrison & Foerster partner Jeff Jaeckel. That’s especially true if an injunction would force the would-be licensee to pull products from the market.

Instead, the emerging trend suggests that judges are more likely to attempt to force the parties to come to a monetary settlement or to set the terms of a FRAND royalty themselves, says Jaeckel, head of litigation in the firm’s D.C. and Virginia offices.

Injunctions are much more common in Europe, especially in Germany, notes Morrison & Foerster attorney Rufus Pichler. Earlier this year, a court granted Motorola’s motion to block sales of the Xbox 360 in Germany, on the grounds that Microsoft’s game system infringed Motorola’s patents.

“In the U.S., judges are looking at it more from the perspective of promoting competition, and to issue an injunction, courts must find a risk of irreparable harm,” says Pichler. “In Europe, the public sentiment may be the same, but judges don’t have the same kind of discretion they do in the U.S.” As a result, he suggests, Europe will likely continue to be a hotspot for FRAND-related litigation.