Shearman And Sterling

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July 23, 2015

The Court of Justice’s Preliminary Ruling in Huawei v. ZTE: The Final Word?


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The application of competition law to standard essential patents (SEPs) has been the subject of significant debate. The latest instalment was provided by the Court of Justice on 16 July 2015 with its much-anticipated preliminary ruling in Huawei v. ZTE, which concerns the circumstances in which an (presumptively dominant) SEP-holder who has given a FRAND commitment may seek injunctive relief without infringing EU competition law.

Given that the conduct at issue concerns allegedly abusive use of the processes of EU national courts, it is both surprising and disappointing that the ruling from Europe’s highest court ignores the established EU competition law standard on abusive litigation. It would seem that the Court of Justice has also conflated the questions of when an injunction should be granted with when it would be abusive merely to request one from a national judge. Instead, the Court of Justice has designed a novel legal standard that firms involved in licensing will likely find both incomplete and detached from reality, and which will result in significant uncertainty.

This note explains and analyses briefly the license negotiation procedure for SEPs in respect of which a FRAND commitment has been given proposed by the Court of Justice. It also explains and analyses some of the more obvious shortcomings of the ruling.

View full memo, The Court of Justice’s Preliminary Ruling in Huawei v. ZTE: The Final Word?