Browsing by Author "Rekola, Krista"

Legal scholars have extensively debated the merits of the monopolistic nature of patent rights in contrast to the public interest objectives of competition law. Recently, the discussion has turned to standard essential patents and patent holders’ right to seek and enforce injunctions ex-post making a commitment to license essential patents under FRAND (fair, reasonable, and non- discriminatory) terms and conditions. Although lacking a common definition thereof, FRAND commitments significantly impact the remedies available to standard essential patent (SEP) holders, particularly their right to seek and enforce injunctions and the amount of damages potentially awarded. In fact, based on a risk of patent hold-up, which largely lacks empirical support, recourse to injunctive relief after making a FRAND commitment has alternatively been characterized as a breach of contract as well as abuse of dominance. Nonetheless, some scholars continue to posit that patent law norms are alone sufficient to police the anticompetitive impacts potentially associated with seeking and enforcing injunctions in the standard essential patent context. Seeking and enforcing injunctions after making a FRAND commitment has recently been characterized as abuse of dominance under Article 102 TFEU by the European Commission in two landmark cases regarding the exclusionary behavior of Samsung and Motorola. Extending arguments introduced in the so-called “refusal to license” case law and delineating the standard setting process and the existence of a FRAND commitment as exceptional circumstances, the Commission stated that SEP-holders may not seek injunctive relief if the prospective licensee is willing to enter into a licensing agreement on FRAND terms. The Commission’s test is, however, highly subjective and thus likely to generate more legal uncertainty than it is to resolve the FRAND debate. Seeking and enforcing injunctions in the SEP context has also been characterized as a breach of contract law, although the application of contract law norms is problematic due to a lack of common understanding of either the meaning or contractual nature of FRAND commitments. Specifically, FRAND commitments have alternatively been described as binding contracts on behalf of third-party beneficiaries, promises to license, and mere agreements to negotiate. Focusing on FRAND commitments made to ETSI, this research indicates strong support for considering FRAND commitments binding contracts with all prospective standards-implementers third-party beneficiaries thereof. Even though recent EU-level decisions regarding seeking and enforcing injunctions ex-post making a FRAND commitment have provided some clarity to the legal framework surrounding standard essential patents and FRAND licensing, the determination of a FRAND royalty rate in itself remains highly debated and uncertain. Failure to adequately reflect the value of a patent when courts set FRAND royalties may discourage either essential patent holders or prospective licensees from participating in standards- setting. Accordingly, distinguishing appropriate measures for determining FRAND royalties should represent a core focus area for both academia and courts alike. Although the excessive pricing test established in United Brands represents an upper boundary for FRAND royalties, the test alone is insufficient and overtly strict. Absent EU-level case law regarding FRAND royalty setting, this study reviews recent United States case law in order to determine the key issues that distinguish rate determinations for FRAND- encumbered standard essential patents from non-essential patents. Matters of particular concern relate to distinguishing patent value from value created by a standard, the risk of royalty stacking, and the identification of an appropriate royalty base. Although some, albeit limited, progress has recently been made with regard to addressing the availability of injunctive relief in the standard essential patent context, the FRAND debate remains far from resolved. Until the CJEU renders a decision in the matter, the use of the competition law defense against essential patent holders’ recourse to injunctive relief will remain somewhat uncertain in the European Union. Nevertheless, establishing guidelines for determining FRAND royalties should be a key priority, wherein practices already applied in the United States can be leveraged. In fact, in order to ensure a fair balance between the interests of standard essential patent holders and prospective standards-implementers and accordingly safeguard standards- setting in its current form, the main future questions pertain to the judicial determination of FRAND royalties and the empirical assessment of the risks of patent hold-up and reverse hold-up.