Licenses in European Patent Litigation
Category : Publications
GENERAL OVERVIEW OF FRAND ISSUES RELEVANT TO PATENT
LITIGATION IN FRANCE
In the matter of FRAND licensing in France, two main decisions are relevant today. The firstone is the Samsung/Apple litigation.21 In this case, Qualcomm and Samsung had signed anagreement that expressly indicated that it was not to be considered as a license. The object of theagreement was the making of chips by Qualcomm and it covered certain Samsung SEPs(EP1188269 and EP1097516).
In line with competition law that prevents “interdiction to sell”, the agreement between Qualcomm and Samsung (31 August 1993, as amended on the 30 March 2004 and 1 January 2009) does not prevent Qualcomm from selling the chips to any other party and has a worldwide effect. In this agreement, Samsung undertakes to not enforce its patents against Qualcomm’s clients implementing its patent rights “as long as such clients do not enforce their own patents against Samsung”. Samsung sought a preliminary injunction in France against Apple.
Apple was using chips made by Qualcomm covered by Samsung’s patents. What do we learn from this decision that is cardinal to keep in mind for FRAND licenses drafting if to be implemented in France?
According to the judge, in spite of the contradictory express mention, the agreement consisted in an authorization to implement the patents and should be interpreted as a license, even if Samsung does not receive royalties as a compensation for the implementation of its patents, since it benefits from Qualcomm’s technology as a result of the license. Under the ETSI rules, the judge held the agreement to be an irrevocable license.
It is worth pointing out that the judge opens the road for litigation on the validity of SEP patents declaring that ETSI does not check whether the patents which are declared essential are valid and indeed essential to the standard. The judge also considered that the rules of the ETSI IPR policy, according to which the granted license shall be irrevocable and the royalty rate shall be FRAND, are intended to prevent the holder of essential patents from abusing a dominant position. When assessing the effects of an amendment to the license signed after the patents at issue had been declared essential to the UMTS standard, the decision holds that, from the date of this declaration, the license could neither be revoked nor be limited to prevent the sale of chips to some of Qualcomm’s clients. The judge held that Samsung’s request was “obviously disproportionate” on the ground that Samsung’s patent rights on the chips integrated in the iPhones 4S are exhausted by the license between Samsung and Qualcomm. Hence, the judge concluded that the condition of article 615-3 of the French Intellectual Property Code for a preliminary injunction, requiring infringement to be likely, was not met and ordered Samsung to pay €100,000 to Apple as recovery of costs.
The second important case in France is the litigation between Ericsson and TCT Mobile at the Tribunal de Grande Instance de Paris (“TGI Paris”). Ericsson tried to renew its licensing agreement with TCT Mobile for 2-2.5-3G GSM technology –Adaptive Multi-rate (AMR) Codec which was to end on 8 March 2014. On 29 June 2012, an arbitration procedure for the implementation of the 2007 license began. The arbitral decision was due in spring 2014. TCT Mobile agreed with the scope of protection and the technological coverage for the license but considered excessive the royalties asked by Ericsson. Ericsson therefore began an infringement proceeding in front of TGI Paris against TCT Mobile.
As preliminary step in the infringement procedure Ericsson requested a preliminary injunction based on article L. 615-3 of the French Intellectual Property Code on the basis of three SEPs. By an interim order, TGI Paris refused the injunctive relief since: “The injunctive relief is to be 12 proportionate to present interests and named in consideration with the background of this agreement between the parties.” (page 9), “considering this very particular contextual elements, an eventual injunctive relief would distort the current negotiations between the parties, such that one would be obtaining an undue advantage in the frame of contractual negotiations of a license based on standard essential patents”, “Therefore any demand to forbid the sale of these products in France by Ericsson is disproportionate.” 22 (Emphasis added.)
Hence, FRAND negotiators shall keep in mind that in France, requesting an injunction in the context of the negotiation, even if the validity and the territorial scope of the patents are agreed, in the absence of agreement on the financial terms, would probably be rejected since it would favor the patentee and therefore distort the principle of FRAND licenses, by putting pressure on the future licensee.
However, this ruling is to be properly applied to the particular circumstances of a SEP holder and a current licensee. It obviously does not imply that SEP holders would not be able to seek injunctive relief against another party that would not be dealing a license agreement. This French decision is broadly aligned with the Commission’s approach outlined above in the Samsung and Motorola decisions23 and is likely to be affected by the outcome of the CJEU reference in Huawei v ZTE.