Monday, January 18, 2016

Some European Scholarship on Huawei v. ZTE, Part 1

On July 16, 2015, the Court of Justice for the European Union (CJEU) issued its judgment in Huawei v. ZTE, setting out certain conditions under which E.U. competition law precludes the owner of a FRAND-committed standard-essential patent (SEP) from seeking injunctive relief for the unauthorized use of the patent.  (Recently, by the way, the CJEU issued a correction to the German version of the judgment, clarifying the conditions the owner of a FRAND-committed SEP must fulfill if it is to obtain an injunction--namely, that the owner must both inform the alleged infringer of the alleged infringement and make a concrete offer on FRAND conditions; for discussion, see this post from the Kluwer Patent Blog.  Previously the German text was ambiguous on whether both conditions needed to be fulfilled because of the placement in paragraph 71 of the words "vor Erhebung des Klages," meaning "before asserting the claim"; it now conforms to the French and English versions.)  

My initial write-up on the case, from this past July, is here.  Since then there have been a couple of cases applying Huawei (see here, here, and here), and several papers have been published on the case.  Some of the latter--including Nicolas Petit's paper Huawei v. ZTE:  Judicial Conservatism at the Patent-Antitrust Intersection, which questions whether the Huawei framework applies at all in a case in which the SEP owner does not sell products in the downstream market--I've mentioned on this blog previously, see here and here.  I also enjoyed hearing Professor Alison Jones' and Professor Josef Drexl's thoughts on the case at TILEC's December 2015 conference in Amsterdam.  Since then, Norman Siebrasse and I have been discussing some of the procedural issues arising from the court's analytical framework, and we hope to post something on this topic in the near future.  Meanwhile, here are some other recent papers on the case:  

 1. Christoph Cordes and Olaf Gelhausen have published a paper titled Zwischen „Orange-Book-Standard und „Samsung—Was bringt die EuGH Entscheidung „Huawei Technologies/ZTE u.a. (C-170/13) für Patentverletzungsprozesse, die auf standardessentielle Patent gestüzt werden? ("Between Orange-Book-Standard and Samsung:  What Does the CJEU's Decision in Huawei v. ZTE Promise for Patent Infringement Actions Based on Standard-Essential Patents?"), Mitteilungen der deutschen Patentanwälte, 2015, 426.  Here is the abstract (my translation from the German):
"Patent Wars" involving mobile devices have affected the public perception of patent actions in Germany.  The main focus:  standard-essential patents.  These are patents the teaching of which a standard-compliant product necessarily makes use.  On July 16, 2015, the CJEU announced a judgment in Case No. C-170/13 (Huawei Technologies v. ZTE), which addresses the question under what conditions the assertion of a patent infringement claim based on a standard-essential patent constitutes an abuse of dominant position under article 102 of the TFEU.  The referral had resulted in the stay of numerous parallel actions involving standard-essential patents. The judgment of the CJEU takes a middle position between the leading BGH decision in "Orange-Book-Standard" and the interpretation represented by the European Commission in the Samsung and Motorola proceedings.  This article attempts an initial analysis and evaluation of the consequences of the decision.
2.  Andreas Heinemann has published a paper titled Standardessenzielle Patente in Normenorganisationen:  Kartellrechtliche Vorgaben für die Einlösung von Lizenzierungsversprechen ("Standard-Essential Patents in SSOs:  Competition Law Requirements for Complying with Licensing Commitments"), GRUR 2015, 855.  From the conclusion (my somewhat free translation from the German):
The Huawei judgment of the CJEU is a new leading decision for the relationship between IP and competition law.  It illustrates that an innovation-friendly solution is to be attained not by screening IP law from competition law, but rather through the recognition of the complementarity of both bodies of law.  The judgment will deeply affect dealings with standard-essential patents, even if it directly concerns only the unilateral conduct of market dominant firms.  The court has given us a general direction, but the roadmap remains relatively rough.  As far as practical operations are concerned, the decision poses many unique questions, which must be resolved by parties, SSOs, (arbitration) courts, and even competition authorities.
3.  Torsten Körber has published a paper titled Orange-Book-Standard Revisited, Wettbewerb in Recht und Praxis (WRP) 2015, 1167.  Despite the title, the article is in German.  From the conclusion:
The CJEU's decision is to be greeted without qualification.  It leads to a case-by-case weighing of interests between patent owners and patent users (implementers).  It shuts the door on the abusive hindrance of competition through claims for injunctive relief and the setting of unreasonably high license rates (so-called hold up), without neglecting the rightful IP interests of the patent owner or encouraging the setting of unreasonably low rates (reverse hold-up) by patent users.  Legal certainty is created for cases in which both parties are fundamentally willing to negotiate, such as the dispute on which the referral was based, as well as (with a view to the scope of article 102 of the TFEU) for the practice of competition authorities--which in the end benefits all good faith business participants. The German patent courts now have an obligation carefully to regard the competition boundaries established by the judgment. 
More to come in a future post. 

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