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27 July 2015Patents

WIPR survey: FRAND rules now clearer, say lawyers

The Court of Justice of the European Union’s (CJEU) judgment in Huawei v ZTE has cleared up the rules on licensing of standard-essential patents (SEPs) in the EU, readers have said.

In response to WIPR’s latest survey, 60% of respondents said the court’s judgment sufficiently clarified when an SEP owner can seek an injunction based on alleged patent infringement.

SEPs have to licensed on fair, reasonable and non-discriminatory (FRAND) terms.

In its judgment on July 16, the CJEU said that if a SEP owner has made an “irrevocable undertaking” to grant a licence to third parties on 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 to 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.

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, the court said.

Despite agreeing that the judgment will, on the whole, make the rules on FRAND disputes clearer, one respondent said that what constitutes “fair and reasonable” will still be hard to judge.

“While non-discriminatory may be relatively easy to judge, if licensors are open about existing licences, fair and reasonable are much trickier to assess.”

This week we also heard from Lorna Brazell, partner at law firm Osborne Clarke, who in an article for our website said there are still questions remaining.

Specifically, said Brazell, the decision does not make it clear when a disagreement over the proposed terms of a licence ceases to be good faith and becomes a delaying tactic.

“In particular, the court’s acceptance that an alleged infringer cannot be criticised for challenging the validity of the patent or indeed questioning whether it is in reality essential to the standard opens the door to lengthy disputes over the rights and wrongs of those issues before any licence can be finalised,” she added.

This week WIPR asks: “The English High Court has quashed a provision that had made it legal to transfer legitimately purchased music from CDs onto devices including laptops, smart phones and MP3 players for personal use. Should copyright laws allow such private copying?”

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16 July 2015   Europe’s highest court has said that owners of standard-essential patents should make a specific licensing offer on fair, reasonable and non-discriminatory terms before seeking an injunction against the alleged infringement of a SEP.