New paper on ‘Injunctions for FRAND-pledged SEPs: the quest for an appropriate test of abuse under Article 102’

13.01.2014

For those particularly interested in the current industry debate about when it can be abusive to seek injunctions for FRAND encumbered SEPs, a recent paper here by Nicolas Petit (one of the authors of the excellent Chillin’ Competition blog and Professor of Law at University of Liege) is well worth a read.
The paper discusses various (existing and proposed) legal tests under which owners of SEPs can be held to have abused a dominant position under Article 102 TFEU by seeking injunctions. Professor Petit explains the concept underlying each legal test in turn. The proposed tests he identifies are: (a) refusal to supply – Magill / IMS Health, (b) abusive litigation – ITT Promedia / Protégé International, (c) abusive ‘anticompetitive foreclosure’ – Post Danmark, (d) willing licensee test – OrangeBook Standard & Commission’s current test, and (e) abusive bargaining – Mariniello.
Petit then proposes criteria to help select the most appropriate legal standard to apply when assessing whether seeking or threatening to seek an injunction for FRAND encumbered SEPs complies with Article 102. His preferred criterion for use when selecting a legal test is based on the notion of ‘consistency’ which he breaks into four aspects: internal consistency (i.e. with Article 102 case law), transversal consistency (i.e. with other areas of EU competition law), constitutional consistency (i.e. with constitutional EU law principles), and economic consistency.
Applying this intellectual approach, he concludes that the abusive litigation standard (as applied in ITT Promedia / Protégé International) is the best candidate. Interestingly, he also concludes that the ‘willing licensee’ standard would be by far the worst performer on grounds of consistency. This the standard which appears to underpin the Commission’s approach to these issues – various public statements by Commission officials and Commissioner Almunia suggest that injunctions for FRAND encumbered SEPs should not be sought against ‘willing licensees’. The exact scope of the willing licensee test, and its relation to Article 102 TFEU, is also the subject of the recent CJEU reference by the Düsseldorf Court in Huawei v ZTE.
Petit’s conclusion seems to be sensible and based on coherent principles. As he points out, the right of access to court is the ‘mother’ of all fundamental rights (without which none of the other fundamental rights could exist). Given the fundamental nature of access to court, it has been held by the General Court that the abusive litigation standard (already a high threshold) ‘must be construed and applied strictly’. Against this background, it is surely sensible to avoid undermining the ability of the Courts to exercise a primary judicial function by ruling on the availability of injunctions for breaches of Intellectual Property rights, not least as the Courts are already able (and obliged) to have regard to competition law issues when doing so. These considerations add considerable weight to arguments that the ‘abusive litigation’ standard is appropriate and that it should only be abusive to seek injunctions for FRAND encumbered SEPs in ‘wholly exceptional circumstances’.
On a more minor point, Professor Petit comments that FRAND has evolved without any antitrust context (page 29 – footnote 121). This may be correct for (F)RAND at large but, at least in the ETSI sphere, the treatment of IP in ETSI standards has evolved against a background of considerable Commission involvement on the part of DG Comp as well as others. The ETSI IPR Policy was discussed regularly with the Commission both before and after its final adoption 1993 and was subjected to considerable antitrust scrutiny during its evolution. The treatment of IP within ETSI and related competition law considerations were discussed in various Commission green papers and communications on EU telecoms and standardisation. Finally, the ETSI IPR Policy first implemented in 1994 (which has survived in much the same form to date) was cleared by the Commission.
However, this is only a minor quibble about a thought provoking contribution to the current heated debate.