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Courtesy of CJEU
20 November 2014Patents

CJEU weighs in on standard-essential patents dispute

Europe’s highest court has issued a preliminary judgement in a case that could limit the power of companies who want to impose injunctions on others for the alleged infringement of standard-essential patents (SEPs).

In a decision issued today, (November 20), the Advocate General (AG) made recommendations to the Court of Justice of the European Union (CJEU) that was based on a dispute between Chinese phone makers Huawei and ZTE.

Huawei, China’s largest phonemaker, sued ZTE at the Regional Court of Düsseldorf last year. It was seeking an injunction over the alleged infringement of an SEP related to long term evolution, a standard technology which provides radio-access.

SEPs are required to be licenced using fair, reasonable and non-discriminatory (FRAND) terms.

But ZTE criticised the demands. It cited a European directive (Article 102, TFEU), which claimed that an application for an injunction based on an SEP would be an abuse of a dominant position.

ZTE added that, because it was willing to negotiate a licence agreement to use the patent, no injunction could be issued against it.

According to the AG, the CJEU should adopt a ruling that is a “middle course” between the arguments.

The AG admitted that seeking an injunction on a FRAND-based patent can amount to an abuse of dominance.

But, tThe AG also confirmed that an implementer should be free to challenge the validity, use and essentiality of a disputed patent without being labelled an ‘unwilling licensee’.

Pat Treacy, partner at Bristows, said neither party would be too disappointed with the AG’s opinion.

The CJEU follows the AG’s opinion in around 80% of circumstances. A final decision from the court is expected early next year.

But Treacy said that the judgment would be unlikely to spell the end of the “patent wars”.

“So far, the European courts have generally given judgment only on issues relating to injunctive relief.  We are yet to see firm guidance on how a rate-setting body is to set FRAND royalties,” Treacy said.

“Given the volume of litigation on these issues, this is a question which may well end up back before the CJEU in the not too distant future,” she added.

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More on this story

Patents
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.