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THE EUROPEAN COURT OF JUSTICE DECIDES THE HUAWEI CASE ON STANDARD ESSENTIAL PATENTS

HuaweyThe European Court of Justice delivered, on 16 July, its judgment on the preliminary ruling regarding the Huawei case, stating that an action brought by an undertaking in dominant position, seeking injunction and compensation against an alleged infringer of a SEP, not necessarily infringes Article 102 TFEU.

Huawei Technologies Co. Ltd (‘Huawei’) owns – inter alia – a patent that is registered in Europe and which is ‘essential’ to the Long Term Evolution (LTE) standard. Huawei regularly notified this patent to the European Telecommunications Standards Institute (‘ETSI’) and committed, at the same time, to grant licences to third parties on fair, reasonable and nondiscriminatory terms (‘FRAND terms’). At the same time, ZTE Corp., another multinational group active in the telecommunication sector, was using Huawei’s patent without being licensed. After a foundered attempt to reach an agreement based on FRAND terms, Huawei filed the case before the Düsseldorf Regional Court, in order to obtain an injunction against ZTE Corp. prohibiting the use of the essential patent and the compensation of the damages caused. According to ZTE, that action for a prohibitory injunction constituted an abuse of a dominant position, since ZTE was willing to negotiate a license.

The Düsseldorf Regional Court lodged a request for preliminary ruling asking whether — and, if so, in what circumstances — an action for infringement brought by the SEPholder against an undertaking which manufactures products in accordance with that standard constitutes an abuse of a dominant position.

With its judgment, dated 16 July, the CJEU observed that the use of the injunction to prohibit the infringement of a patent does not amount to an abuse of dominant position if: i) the proprietor of the SEP has alerted the alleged infringer of the infringement complained about and has offered a licensing agreement on FRAND terms; ii) the alleged infringer has not diligently responded to that offer, continuing to use the patent in question.

Therefore, the CJEU commented that Article 102 TFEU must be interpreted as not prohibiting, in such circumstances, an undertaking in dominant position and holding a SEP from bringing an action for infringement against the alleged infringer to seek injunctive and compensatory relief.

Source: Curia

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