The ECJ's Huawei/ZTE judgment (C-170/13) Thomas Kramler DG Competition, European Commission (The views expressed are not necessarily those of the European Commission) Please edit the Master Layout to include information specific to the presentation. For slides for the DG/DeputyDG, delete “[Directorate], [Unit]”. (1) Slides (i) View… Master… Slide Master, (ii) On the first slide, add the Conference, Venue and Date in the box in the top left corner, (iii) On both the first and second slides, in the bottom left text box, add the Directorate and Unit information, (iv) Close Master View (2) Handout pages (i) View… Master… Handout Master, (ii) In the bottom left text box, add the Directorate and Unit information, (iii) Close Master View (3) Notes pages (i) View… Master… Notes Master, (ii) In the bottom left text box, add the Directorate and Unit information, (iii) Close Master View

Overview of EU patent litigation Source: Kühnen & Claessen, Die Durchsetzung von Patenten in der EU, GRUR 2013, 592

SEP-based injunctions Examples for diverging views in national courts Contractual rights for 3rd parties from FRAND commitment? DE: (-); NL: no licence but pre-contractual good faith Applicable law? For ETSI standard: DE: German law; NL: French law Proportionality/equity test for injunctions UK: (+); DE: (-); NL: abuse of right test Application of competition law? DE: (+) "Orange Book"; NL (-); FR (?)

FRAND Defences-UPC ARTICLE 32 UPC AGREEMENT Competence of the Court (1) The Court shall have exclusive competence in respect of: (a) actions for actual or threatened infringements of patents and supplementary protection certificates and related defences, including counterclaims concerning licences; ARTICLE 24 Sources of law (1) In full compliance with Article 20, when hearing a case brought before it under this Agreement, the Court shall base its decisions on: (a) Union law, including Regulation (EU) No 1257/2012 and Regulation (EU) No 1260/20121;[…] (e) national law.

Huawei/ZTE judgment (Facts) March 2013, request for a preliminary ruling under Article 267 TFEU from the Landgericht Düsseldorf Under which condititions are SEP-based injunctions anti-competitive ? One LTE patent 2 competitors in the downstream product market

SEPs and market power SEPs may mean market power Commercial indispensability of standard Lock-in to standard May mean market power which would not have existed absent the standard Depends on ex ante alternatives

Huawei/ZTE judgment Exercise of IP right cannot in itself constitute an abuse of a dominant position, only in exceptional circumstances (paras 46 and 47): Indispensability of the use of the SEP (para 49) Legitimate expectations by third parties in accordance with FRAND commitment given to standardisation body (para 53)

Huawei/ZTE judgment (Process) Notice to alleged infringer Alleged infringer must be willing to conclude a FRAND licence Written offer by SEP holder, specifying royalty Written counter-offer by alleged infringer Alleged infringer to provide security (bank guarantee/deposit) Third party determination possible (para 68)

Huawei/ZTE judgment (Invalidity/Essentiality) Alleged infringer can challenge, in parallel to the negotiations, the validity of the patents and/or the essential nature of the patents and/or their actual use, or reserve the right to do so in the future (para 69) Damages remain available

Conclusion Need to strike a balance between maintaining free competition — in respect of which primary law and, in particular, Article 102 TFEU prohibit abuses of a dominant position — and the requirement to safeguard proprietor’s intellectual-property rights and its right to effective judicial protection, guaranteed by Article 17(2) and Article 47 of the Charter (paras 42 and 59).