Huawei v ZTE: ECJ rules on injunction possibility of SEP owner against alleged infringer after a FRAND licensing proposal – a…

The European Court of Justice (“ECJ”) handed down its decision on July 16, 2015 in the case Huawei v. ZTE (C-170/13). It clarified the possibility for owners of a standard-essential patent (“SEP”) to seek an injunction against alleged infringers.

Also available in French and Dutch.

The case concerns a request for preliminary ruling by the Dusseldorf Regional Court, who requests the ECJ to answer to the question whether Huawei is abusing its dominant position as an SEP owner by seeking an injunction against ZTE for the use of Huawei’s LTE patented technology without paying royalties to the latter.

According to the ECJ, an SEP owner who seeks an injunction as a result of the alleged unauthorized use of its patented technology by a third party does not abuse its dominant position, in the sense of Article 102 of the Treaty on the Functioning of the EU (“TFEU”), if:

  1. The SEP owner has  notified the third party about the alleged infringement;
  2. The SEP owner has presented a Fair, Reasonable, and Non Discriminatory (“FRAND”) licensing proposal to said third party;
  3. After having received the notice and proposal (mentioned in 1 and 2 above), the alleged infringer continues to use the SEP owner’s patented technology without responding to the SEP owner that it is willing to enter into FRAND licensing negotiations.

The ECJ further clarified that an alleged infringer that has not accepted a licensing offer can only assert that the SEP owner is abusing its dominant position if the alleged infringer has actually responded to the FRAND licensing offer with a written counter-offer.

Although this decision gives some clarification on the matter, several questions remain unanswered. For example, the ECJ did not clarify what can be considered as a FRAND licensing offer. Further, if the parties have submitted a FRAND offer and counter-offer, but they cannot come to an agreement, litigation concerning unauthorized use of the patent will still be inevitable.