Saturday, 1 February 2020

Abuse of dominant position by SEP owner not a matter for summary treatment


Standards Essential Patents and FRAND licences are in fashion, it seems - and so perhaps they should be. In Optis and Unwired Planet v Apple [2014 ]EWHC 3538 (Pat) (17 December 2019 ) the Patents Court (Nugee J) considered Apple's application to strike out, and rejected it .

The claimants had brought the action to compel Apple to take a FRAND licence from Optis. Apple answered that with an allegation that Optis had abused its dominant position, contrary to Article 102 TFEU.

Ownership of a Standards Essential Patent puts the patentee in a dominant position as a licensor of that patent, that much is clear, but whether that is the same as a dominant position in the relevant market depends on an analysis of substitute technologies. Life is rarely simple where competition rules are involved .

There has been a lot of judicial consideration of FRAND licensing and Article 102 recently. The Court of Justice looked at the matter in Huawei v ZTE  (Case C170/13) ECLI:EU:C:2015:477, [2016] RPC 4, and the English courts in Unwired Planet Unwired Planet International Ltd v Huawei Technologies Co Ltd) (Birss J) [2017] EWHC 2988 (Pat) and a lengthy decision of the Court of Appeal given by Lord K itchin at [2018] EWCA 2344 (not yet on Bailii, and if not yet will it ever be?); and Conversant Wireless Licensing SARL v Huawei Technologies Co Ltd  (Henry Carr J) [2018] EWHC 808 (Pat), and [2019] EWCA Civ 38 (judgment given by Floyd LJ). Unwired Planet v Huawei is currently awaiting a ruling from the Supremes.

The EU case law sets out two requirements for an SEP owner to avoid committing an abuse: they must alert alleged infringers and, if the alleged infringer is willing to conclude a FRAND licence, the patentee must offer one, in writing.

According to the Patents Court, UK case law tells ut that these two requirements are not both mandatory. (When is a requirement not mandatory? Isn't it an inherent part of the definiition?) The first one is, but the second is more of a safe harbour, not itself determinative of an abuse. Making the offer means you aren't behaving abusively, but not making itdoesn't mean you are abusing a dominant position . Beware the logical fallacy of the undisthtuted muddle, as Lord Diplock warned us in Catnic.

Apple contended that negotiatious had been going on for a long time, indicating presumably that the allegedly requered offer had . nor really been made . But to strike the claim out summarily was not on: the court was not in a position to say that the claimants had no reasonable prospect of avoiding a finding of abuse (excuse the plethora of negatives).

The court also explained that English practice is to establish whether there has beca an infringement,
them to assess whether ang terms put forward qualified as FRAND. Until the court reached that
stage, it would not be granting injunctions.

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