That is the view of CJEU Advocate General Melchior Wathelet (right), who issued his Opinion in the Huawei Technologies v ZTE case (C-170/13), referred from the German courts, today. The Opinion is not binding on the Court, which is expected to give its ruling in the next few months.
The dispute concerns a European patent that Huawei owns, which is essential to the LTE (4G) mobile phone standard. Huawei made a commitment to the standard-setting body ETSI to license the patent on FRAND terms.
ZTE makes software for base stations sold in Germany, which make use of Huawei’s patent. When the two companies failed to agree a licence, Huawei sought an injunction before the Dusseldorf Regional Court.
ZTE claimed it was willing to negotiate a licence, and alleged that Huawei’s action constituted an abuse of a dominant position.
Five questions referred
The Dusseldorf court referred five questions to the CJEU, on the important issue of whether, and when, seeking an injunction breaches EU competition law.
In his opinion today, the Advocate General set a high bar for owners of SEPs to jump when seeking an injunction, but also provided detailed guidance on specific acts that should be allowed.
He said that a SEP owner abuses its dominant position where it does not honour its commitment to licence on FRAND terms even though the infringer is “objectively ready, willing and able” to enter into such a licence.
Making that commitment involves alerting the infringer in writing, and presenting a written licence offer on FRAND terms, including the precise amount of the royalty and details of how it is calculated. The infringer must provide “a diligent and serious” response including a reasonable counter-offer, if appropriate.
The Advocate General says that an injunction request is not an abuse of a dominant position if the infringer’s conduct is “purely tactical and/or dilatory and/or not serious”.
However the infringer may request that the FRAND terms be fixed by a court or arbitration tribunal, and it may also reserve the right to challenge in court “the validity of the patent, the use of the teaching of the patent and the patent essentiality to the standard in question”. These acts would not be considered dilatory or not serious.
The Advocate General provided some solace to SEP owners by stating that neither asking for accounting information from the infringer nor requesting damages for past acts would be abuse of a dominant position.
As the opinion is not yet available in English, the above quotes are not official.
More analysis will follow soon.
For more background on the case, see “What Huawei will mean for IP owners” by James Marshall, published in March this year.
