EU Antitrust Pitfalls for Patent Holders Seeking Injunctive Relief

March 26, 2013

As fierce competition among the IT/Technology powerhouses continues to strengthen, the European Commission (EC) must find a way to reconcile the enforcement of EU competition law with intellectual property rights.  Unfortunately, to date, the EC has had little precedent to rely on and it may just have to forge ahead as best as it can.

On December 6, 2012, the European Court of Justice (ECJ) in AstraZeneca (Case C-457/10) examined in what way utilization of administrative procedures—and by extension judicial proceedings—may amount to an antitrust violation.  According to the ECJ, recourse to administrative or judicial means to enforce one’s rights is legitimate only when this falls within the scope of “competition on the merits.”  The ECJ does not provide much guidance on the interpretation of “competition on the merits,” a seemingly broad and fuzzy concept.  However, recourse to such means will be considered unlawful when used “in such a way as to prevent or make more difficult the entry of competitors on the market, in the absence of grounds relating to the defense of the legitimate interest of an undertaking engaged in competition on the merits or in the absence of objective justification.”

Standard Essential Patents (SEPs) are at the heart of the ongoing smartphone wars.  The slew of patent infringements suits that have mushroomed globally have raised the question whether seeking court injunctions against violators of SEPs may amount to an abuse of a dominant position, especially when the SEPs’ owner has made a prior commitment to grant licenses under FRAND terms to willing licensees.

Relying on AstraZeneca, the question whether injunctive relief may amount to an antitrust violation could be framed as follows: does the conduct of a SEP holder—bound by FRAND commitments—consisting of seeking injunctive relief in courts against willing licensees qualify as “competition on the merits?”  The SEP holder’s conduct, particularly during the licensing negotiations, should be closely examined.  According to the effect-based approach in the European Commission’s Guidance on Article 102 TFEU, in order to be captured by the provision the questionable practices should also carry the risk of anticompetitive foreclosure:  an “equally efficient competitor” is being denied access to SEPs and, as a result has to withdraw from the market.

To read more about this subject, please refer to our recent article in CPI Antitrust Chronicle.