The SEP minefield in Europe

Vague terms in the CJEU’s decision in Huawei v ZTE leave parties with little guidance on how to act when negotiating SEP licences, particularly from an alleged infringer’s perspective. Natalia Porto of Preiskel & Co reports.

The Court of Justice of the European Union’s (CJEU) decision in Huawei v ZTE introduced new guidelines on abuse of a dominant position where a prohibitory injunction is sought by a dominant owner of a standard-essential patent (SEP). Although the decision certainly sheds light on what is expected from dominant SEP owners and alleged infringers, many uncertainties remain to be clarified and potential legal challenges are likely to arise for both parties.

The decision, issued on July 16, held that the use of intellectual property rights (such as an SEP) requires a licence and SEP owners have the right to bring actions to enforce their exclusive IP rights against alleged infringers. However, there may be an abuse of a dominant position where a dominant SEP owner refuses to grant licences on fair, reasonable and non-discriminatory (FRAND) terms to its competitors, as competitors need to use the SEP to remain on the market for the relevant products.

The decision also held that an action seeking the rendering of accounts and damages related to past use of the SEP would not infringe article 102 of the Treaty on the Functioning of the European Union (TFEU), as it would not prevent competitors from remaining on the market for the relevant products.