Brussels, July 17, 2020 – The Fair Standards Alliance (FSA) welcomes the call of the German competition authority, the Bundeskartellamt (BKartA), to national courts to refer legal questions on licensing of standard essential patents (SEPs) to the Court of Justice of the EU (CJEU).
The FSA could not agree more with the BKartA that questions on SEP licensing are of great economic and legal significance. The FSA also agrees that although the CJEU ruling in the Huawei vs ZTE case brought about important clarifications, many questions remain unresolved. The CJEU is well placed to provide the much-desired legal certainty and avert the divergence in national case law across Europe.
In June, the BKartA sent a letter to the Regional Court of Mannheim, the Landgericht Mannheim, urging the Landgericht to refer to the CJEU for a so-called ‘preliminary ruling’ on several legal questions, including on SEP licence availability across the production chain. The letter was also sent to the Regional Court of Munich, the Landgericht Munich.
The BKartA suggests referring to the CJEU the following questions:
- Whether an SEP holder is abusing its dominant position in breach of Article 102 TFEU by pursuing injunctive relief against an end-product manufacturer, having refused to grant full SEP licence to its suppliers of intermediate products – where the patented technology is used only in such intermediate products provided by suppliers who had sought such a licence in vain?
- Whether an SEP holder is entirely free to choose against which companies at which level in the production chain to bring a potential patent infringement claim or whether it must comply with certain criteria for that?
- Whether an SEP holder is abusing its dominant position if it refuses to grant licences to any operator within the production chain that is willing to take a licence, despite having irrevocably committed to grant SEP licences to any third party on FRAND terms?
- If the answers to Questions 1 to 3 are in the negative: Whether an SEP holder, having irrevocably committed to grant SEP licences to any third party on FRAND terms, is free under competition law to choose to grant full licences exclusively at a specific level in the production chain.
FSA fully agrees with the BKartA that “it is not readily apparent what are the competitive aims pursued by the SEP holder” that seeks an injunction against end-product manufacturers, having refused a full SEP licence to companies upstream, in the same production chain that are willing to take a licence.
FSA notes that there is a significant body of legal doctrine, soft law, judicial and academic commentary showing that the practice of selectively granting SEP licenses only to companies at the end-device level in the production chain, and refusing to license any of their suppliers, raises competition concerns. This is also apparent from the recently published FSA paper that outlines references to case law and policy statements in support of the principle that SEP licences should be available to all companies in a production chain that want a licence for SEPs implemented in their products, and that such licenses must be available on fair, reasonable and non-discriminatory (FRAND) terms.
Indeed, the answers to the legal questions related to SEP licensing are of considerable economic and legal significance going beyond an individual case and beyond the automotive industry. The uncertainties arising from the continued refusal by SEP holders to grant licences to many upstream market participants is stifling innovation and stalling the uptake of the IoT in Europe. FSA therefore applauds the BKartA’s pursuit for legal certainty.
About the Fair Standards Alliance (FSA)
FSA is an alliance of 47 European and global companies, large and small, that advocates fairer licensing of standardised technology in the development and rollout of the IoT. FSA members significantly contribute to European innovation and the European economy. Annually, the aggregate turnover of FSA members is more than EUR 2 trillion, and in aggregate our members spend more than EUR 140 billion on R&D and innovation. Alliance members directly employ just over 2.5 million people within Europe alone, and have more than 500,000 patents, including SEPs, that are either granted or pending.