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FRAND COMMITMENTSAND
EU COMPETITION LAW
Thomas KramlerEuropean Commission, DG Competition
• (The views expressed are not necessarily those of the European Commission)
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General legal/economic analysis of standardisation agreements
Agreements between competitors but clear benefits of standardisation
- Interoperability, follow-on innovation
Subject to conditions- Transparency of process- Unrestricted participation - Access to all who wish to work the standard
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Legislative Framework
• Ongoing revision of the general framework for European Standardisation Policy (Directive 98/34/EC)
- Referencing in public procurement of selected ICT standards
• 2011 Guidelines on Horizontal Agreements
- Guidance on competition law and standard setting
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Horizontal Guidelines"287. FRAND commitments are designed to ensure that essential IPR protected technology incorporated in a standard is accessible to the users of that standard on fair, reasonable and non-discriminatory terms and conditions. In particular, FRAND commitments can prevent IPR holders from making the implementation of a standard difficult by refusing to license or by requesting unfair or unreasonable fees (in other words excessive fees) after the industry has been locked-in to the standard or by charging discriminatory royalty fees."
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Hot Topics
• - Transfer of FRAND commitments
• - Reciprocity
• - Injunctions
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Transfer of FRAND commitmentsHorizontal Guidelines•"285. […] To ensure the effectiveness of the FRAND commitment, there would also need to be a requirement on all participating IPR holders who provide such a commitment to ensure that any company to which the IPR owner transfers its IPR (including the right to license that IPR) is bound by that commitment, for example through a contractual clause between buyer and seller."•- IPcom case
•- Injunctions
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Reciprocity
Google/Motorola merger decision (para 107)
- Concern that SEP holder may force a holder of non-SEPs to cross-license those non-SEPs to it in return for a licence of the SEPs.
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Injunctions- Directive 2004/48 on the enforcement of intellectual
property rights ("the Enforcement Directive") - Article 3(2) remedies shall: "[…] be effective,
proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse".
- European Court of Justice, C‑70/10, Scarlet Extended:- When granting injunctions a fair balance between the protection of the intellectual property right and the
freedom to conduct a business must be struck.(para 46)
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- Many cases in Member States' courts
For example, German Federal Supreme Court, (KZR 39/06), Orange Book Standard:
"A defendant sued based on a patent is able to defend himself against the claim for injunctive relief asserted by the patent proprietor filing the action, by pleading that the latter abuses a dominant position on the market if he refuses to conclude a patent license agreement with the defendant on non-discriminatory and non-restrictive terms and conditions."
- Risk of diverging views
Injunctions
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- Pending Commission antitrust investigations (formal proceedings opened in 2012)
- Apple/Samsung; Apple/ Motorola; Microsoft/Motorola
- Google/Motorola merger decision
By threatening to use injunctions, holders of standard-essential patents could make demands that their commercial partners would not accept under normal circumstances.
- Higher royalties- Onerous cross-licensing terms- Exclusion
Injunctions
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InjunctionsGoogle/ Motorola merger decision (para 141):
"[…] the problem of a SEP holder not making a 'true' FRAND offer can be prevented if a potential licensee has the opportunity to have the terms of the cash-only option licence assessed by an independent third party (whether a court or arbitrator) without the threat of immediately being excluded from the market. […] Without such a possibility, FRAND negotiations may be distorted to the detriment of potential licensees and ultimately consumers who might be faced with less choice and innovation."
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Conclusion
VP Almunia: "Legal battles like these may put the standardisation process at risk and hold up innovation in the entire industry.
[…] I am willing to provide clarity to the market through our enforcement.
[…] I am also convinced that the industry needs to do its homework too." (Fordham conference, September 2012)
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