Monday, January 20, 2014

Petit on Injunctions for FRAND-Pledged SEPs

I mentioned Nicolas Petit's article Injunctions for FRAND-Pledged SEPs:  The Quest for an Appropriate Test of Abuse Under Article 102 TFEU , 9 Euro. Comp. J. 677 in a recent post, while noting that I hadn't yet finished reading it.  I now have, and although I don't agree with everything the author says (what fun would that be?), I certainly recommend taking a look at Professor Petit's very interesting paper.  His thesis is that, under European competition law, it generally should not be an abuse of dominant position for the owner of a FRAND-encumbered SEP to seek injunctive relief.  In reaching this conclusion, Professor Petit surveys the circumstances under which EU law to date has found an abuse of dominant position premised on abusive refusals to supply, abusive litigation, or abusive anticompetitive foreclosure; and he concludes that in most cases the act of seeking an injunction for the infringement of a FRAND-encumbered SEP does not comfortably fit within any of these theories.  Of course, the possibility remains of fashioning a new theory of abuse--which could be some version of the German "Orange Book Standard" defense, or the standard the European Commission has articulated in its proceedings against Samsung and Google, or something else.  In this regard, Professor Petit argues that a useful criterion for selecting among competing theories or proposals is "consistency," which as he sees it has four dimensions:  internal consistency (consistency with existing tests of abuse); transversal consistency (consistency with "legal principles adopted in the other areas of EU competition law"); constitutional consistency; and economic consistency.  Professor Petit concludes that none of the new theories under which the act of seeking an injunction for the infringement of a FRAND-encumbered SEP would qualify as an abuse are sufficiently "consistent" along these different dimensions.

I agree with Professor Petit that competition law is not the ideal vehicle for addressing the sort of conduct that is at issue in FRAND/SEP cases, and I have reached conclusions similar to Professor Petit's under U.S. antitrust law (see here).  I am not as skeptical as he is, however, about the existence of patent holdup (see Professor Petit's article, p.714), and I am more skeptical than he about the ability of standard users to design around an SEP (see p.716).  As I have argued in my own work, though, I think the better option is to interpret the law of remedies as permitting courts to grant prospective royalties rather than permanent injunctions in cases in which there is a substantial risk of holdup or royalty stacking, i.e., in cases in which the patentee's bargaining power ex post is largely attributable to the incorporation of its technology into a standard.  To the extent that solution is not at present a realistic one under most European nations' patent laws, however, I'm moderately inclined to think that purely on a policy basis it may be acceptable to (in effect) achieve the same result by means of competition law (though I think the doctrinal issues Professor Petit has highlighted are indeed serious ones).

The article is also interesting in presenting (at p.715) patentee win rates in the field of telecommunications and electronic communications patents from 2000-13 in different European countries. 

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