Unanswered questions after Huawei v ZTE, say lawyers
The Court of Justice of the European Union’s judgment in Huawei v ZTE provides a balance between standard-essential patent (SEP) owners’ and implementers’ interests, but has left questions unanswered, lawyers have told WIPR.
In yesterday’s, July 16, judgment, the CJEU said that if a SEP owner has made an “irrevocable undertaking” to grant a licence to third parties on fair reasonable and non-discriminatory (FRAND) terms, it would not be an abuse of dominance to seek an injunction.
But the court said this can only be done as long as, before bringing the action, the patent owner has alerted the other party about the alleged infringement and, secondly, presented a specific FRAND licensing proposal.
If the alleged infringer continues to use the patent in question, the court said, it will be viewed as not having “diligently responded” to that offer.
The court added that an alleged infringer that has not accepted a licensing offer may claim that the action is abusive only if it has submitted, in writing, a specific counter-offer that it believes corresponds to FRAND terms.
Speaking to WIPR, Laëtitia Bernard, partner at law firm Allen & Overy in Paris, said that the court has obviously “sought to find a balance” between the interests of innovative SEP owners and implementers and consumers.
But Bernard said that although the ruling provides useful guidelines, it “does not go much further”.
“Overall, while the CJEU decision appears prima facie well-balanced and sets the basic guidelines for SEP litigation, the ruling remains very general (and even sometimes vague) such that FRAND disputes will certainly continue to flourish. It leaves room for further clarifications and some essential questions remain unanswered,” she said.
“In particular, the decision does not provide any detail as to the exact content of the obligation for the SEP holder to present an ‘offer on FRAND terms’. In other words, could an injunction be blocked on the mere allegation by the alleged infringer that the terms are not FRAND?”
Jonathan Radcliffe, partner at law firm Charles Russell Speechlys in London, said that the judgment will impose a “harmonised structure” on what has been a diverse landscape to date.
Radcliffe added that although the CJEU’s approach could eradicate SEP holders’ ability to obtain quick interim injunctions, it will not eliminate SEP and FRAND-related litigation altogether.
Axel Walz, partner at law firm King & Wood Mallesons in Munich, added: “The decision is another milestone in the bid to balance the protection of innovation on the one side, and the freedom of competition on the other side.
“What the court did not address … is the question of whether and, under which circumstances, holding a SEP amounts to a dominant position of its owner.”
