Huawei v ZTE – analysis from across Europe

The decision, published on July 16, says that the owner of a standard essential patent who seeks an injunction must have alerted the alleged infringer and made a specific, written licence offer specifying the royalty and the way it is to be calculated. Read our report here.

The first reactions from IP practitioners suggest that there are many questions still to be answered, and much scope for further litigation over SEPs in Europe.

"It is to be feared that the Court’s ruling will not at all put an end to the wave of SEP litigation."

“While this ruling provides useful guidelines to SEP owners and implementers alike, it leaves some essential questions unanswered: – When does ownership of an SEP confer a dominant position in the first place? How much is a FRAND rate and how should it be calculated? – and raises additional issues of its own. It is therefore to be feared that the Court’s ruling will not at all put an end to the wave of SEP litigation.”

Extract from an article on the firm’s website.

"The CJEU’s decision will certainly have a significant impact on the way patent owners as well as standard users will approach FRAND-encumbered SEPs"

“The CJEU’s decision will certainly have a significant impact on the way patent owners as well as standard users will approach FRAND-encumbered SEPs in the future. The core approach that has now been set is that it is the patent owner’s obligation to alert the infringer and to provide a FRAND offer prior to seeking an injunction. This, as well as the standard user’s obligation to react diligently and in good faith makes it indispensable for both, patent owners and standard users, to deal with these requirements thoroughly, not only during already pending patent infringement proceedings, but first and foremost well in advance of a potential litigation.”

Extracted from an article by Tilman Müller-Stoy on the firm’s website

“It needs to be seen how the national patent infringement courts throughout the EU will apply the CJEU Huawei/ZTE decision. In any case, both patent owners and standard users will in future have to consider the competition law implications of SEPs even more thoroughly and should closely monitor the development of further case law by national courts.”

From an article by Christian Harmsen and Jörg Witting on the firm's website.

"The patent infringer has to respond carefully and seriously to the licence offer."

“The patent infringer has to respond carefully and seriously to the license offer. If he declines the offer, he must submit a written counter-offer to the patentee in the short term and give security for the royalties. However, if the behaviour of the patent infringer is considered to be purely tactical, reluctant or not serious, an application for injunction on the part of the patentee does not then mean that he is abusing his market-dominating position. Legal action by the patent holder for accounting as well as for damages for past uses of the patent shall of course also not constitute an abuse of a market-dominating position. Whether the respective measures are appropriate is to be decided by the responsible court.”

From an email sent by the firm.

"If the alleged infringer adopts 'delaying tactics', then it will lose the right to object to a claim for injunctive relief as an abuse of a dominant position.”

“The CJEU has adopted and simplified the framework from Advocate General Wathelet's opinion in Huawei Technologies C-170/13. An owner of standard essential patents (SEPs) who has given a FRAND undertaking, may be abusing its dominant position by seeking an injunction against an alleged infringer, unless the SEP holder alerts the alleged infringer - designating the SEPs in question and specifying how they have been infringed; and provides a specific written offer for a licence on FRAND terms - specifying the royalty and the way it is to be calculated. However, if the SEP holder follows these steps, then the SEP holder may seek an injunction if the other party continues to use the SEPs in question and fails to respond "diligently" to the SEP holder's offer "in accordance with recognised commercial practices in the field" and "in good faith". If the alleged infringer adopts "delaying tactics", then it will lose the right to object to a claim for injunctive relief as an abuse of a dominant position.”

From an article written by Kyriakos Fountoukakos, David Wilson and Andrew Moir.

“The Court has distinguished between actions seeking a prohibitory injunction or the recall of products from those seeking the rendering of accounts and an award of damages.”

From an email authored by Martin Fähndrich and Martin Sura, who act for ZTE in this case.

"The Court ... has made it very clear that its decision applies to the specific situation of SEPs only."

“Today’s decision is another milestone in relation to the challenge of balancing the interests of protecting innovation and freedom of competition. The Court, however, has made it very clear that its decision applies to the specific situation of SEPs only. What the Court has not addressed - in contrast to Advocate General Wathelet - is the question of whether and under what circumstances holding a SEP amounts to a dominant position of its owner. This question, therefore, will doubtless be argued in the future.”

From an article published by Axel Walz and Cameron Firth.

"The court's decision should assist willing parties to progress licensing negotiations towards a swifter conclusion"

"The decision is to be welcomed as it appears to redress the imbalance between the patentee and prospective licensee resulting from the decision in Motorola and, by virtue of requiring the payment of security, has helped to clarify what constitutes an "unwilling" licensee. It also provides the parties with improved guidance as to the way that negotiations should be conducted.

While much of the detail remains to be determined, and in particular the key question of what actually will constitute FRAND terms, the court's decision should assist willing parties to progress licensing negotiations towards a swifter conclusion, while preserving the rights of SEP holders to seek redress where, as is so often the case, a prospective licensee engages in delaying tactics.”

From an article by Antony Craggs on the firm’s website.