EU: High court rules that FRAND patent owners may be abusing dominance

A German court which is currently handling a patent dispute between Huawei Technologies Co. Ltd. and ZTE Corp was advised by the European Court of Justice of several steps that a patent holding company must follow before blocking rivals who may be infringing on the patents prior to blocking the rivals’ sales.

“Although the irrevocable undertaking to grant licenses on FRAND terms given to the standardization body by the proprietor of an SEP cannot negate the substance of the rights guaranteed to that proprietor, … it does, none the less, justify the imposition on that proprietor of an obligation to comply with specific requirements when bringing actions against alleged infringers for a prohibitory injunction or for the recall of products,” the court reasoned.

Following this reasoning, the court noted that an SEP owner cannot sue before giving notice to the rival, even if the rival has already used the patent.

In the current case, Huawei owns a patent for 4G LTE technology that has been incorporated into telecommunications standards and has promised to to license the patent on FRAND standards, but has been unable to reach an agreement with ZTE.

The German court asked for the ECJ to rule on whether a FRAND patent holder abuses its dominant position when filing an infringement action, and under what circumstances this could be true.

Full content: Law360

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