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FR – Ericsson v. TCT Mobile (standard essential patents; injunction)

10 Feb 2014

Ericsson v. TCT Mobile : tribunal de grande instance de Paris, 29 November 2013, Docket № 12/14922, with thanks to Pierre Véron, Sabine Agé and Amandine Métier, Véron & Associés, for sending in the case, a translation in English as well as a summary of the case

A preliminary injunction cannot be granted for standard essential patents (SEP) when the parties are engaged in negotiations for a license where they agree on the geographical and technological scope of the license, the only disagreement being on the financial terms; such a measure would confer an unjustified advantage on the patentee.

The judgment handed down on 29 November 2013 by the tribunal de grande instance de Paris deals with preliminary injunction proceedings based on standard essential patents (SEP) in the telecom industry
In France, it is only the second decision on such a legal issue in the same industry after the Samsung v. Apple judgment dated 8 December 2011 of the same court which denied Samsung’s request for an injunction in view of Apple’s argument that the chips of the allegedly infringing smartphones had been manufactured by Qualcomm under a licence of Samsung’s patents, the patentee’s rights being thereby exhausted.

Ericsson holds three standard essential patents (SEP) for the implementation of the 3G standards (UMTS) declared as such to the European Telecommunications Standards Institute (ETSI); the patent numbers are EP 1 058 927, EP 1 114 413 and EP 1 114 415; this technology can also be used in the implementation of 2G standards.

Ericsson accused TCT Mobile of infringing the French designations of these patents by marketing product ranges of mobile phones suitable and intended for use on the 3G network. It commenced proceedings on the merits before the tribunal de grande instance de Paris, the court having jurisdiction for the whole of France for patent matters.

In the course of these proceedings, Ericsson sought a preliminary injunction against TCT Mobile on the basis of Article L. 615-3 of the French Intellectual Property Code which reads:

“Any person with authority to bring an action for infringement may, in preliminary proceedings request the competent civil court to order, under a penalty of a daily fine if necessary, against the alleged infringer or intermediaries whose services it uses, any measure aimed at preventing an infringement about to be committed against rights conferred by the title or aimed at stopping any further allegedly infringing act. The competent civil court may also order ex parte urgent measures when the circumstances require that such measures should not be taken in the presence of both parties, in particular when any delay would be likely to cause an irreparable damage to the claimant. The court, in preliminary or ex parte proceedings, may order the requested measures only if evidence, reasonably accessible to the claimant, make it likely that its rights are infringed or that such infringement is about to be committed.”

On 29 November 2013, the judge in charge of the preparation of the case dismissed Ericsson’s injunction request. The judge reminded that, by declaring its patents as standard essential, the patent owner commits itself to grant a license to the parties who want to implement the standard under fair, reasonable and non discriminatory (FRAND) conditions.

In the case in point, the parties entered into a licence agreement relating to the SEPs at suite on the 2G standards, and were currently negotiating a new licence agreement, applicable when the first one expires. They agreed on the geographical and technological scope, but did not reach an agreement on financial terms: only money stood between them.

The judge held that any remedy must be proportionate to the interests involved and can be granted only with regard to the contractual context between the parties.She noted that the parties should be able to negotiate the renewal of the existing licence without the balance of power being impaired.
In her view, granting an injunction in the context of the case would unduly favour the patentee and therefore distort the principle of FRAND licences, by putting unjustified pressure on the future licensee.

This ruling does not question the availability of injunctive relief for SEP holders outside the specific circumstances of this matter, for example in the case of a third party not willing to enter into a license agreement.

This decision is in line with the European Commission’s position (press release of 21 December 2012 and Statement of Objections to Motorola Mobility on potential misuse of mobile phone standard-essential patents of 6 May 2013)  that dominant patent holders should not have recourse to injunctions when SEPs are concerned and the potential licensee is willing to enter into a licence on FRAND terms. And it gives an indication that, on the merits, the approach of French courts is likely to be close to the Dutch courts’ position, in particular in the Samsung v. Apple case dealt with by the Rechtbank Den Haag on 14 March 2012, which held that, in view of the negotiations on the terms of a FRAND licence between the parties, Samsung’s request for an injunction should be seen as an abuse of authority and contrary to the pre-contractual obligation to negotiate in good faith.

The German courts’ position is more favourable to standard essential patent holders, because it applies the Orange Book Standard case law of the German Bundesgerichtshof, according to which, to avoid an injunction, the competitor:

– has to make, before being sued, an unconditional licence offer;

– has to act like a licensee and pay what he considers to be FRAND royalties on an escrow account.

However, the Landgericht Dusseldorf decided, in Huawei v. ZTE, on 21 March 2013, to request the CJEU to clarify questions related to standard essential patent cases: this may lead to harmonisation of national legal positions among European Member States on the availability of injunctive relief for standard essential patents.

Read the decision (in French) here

Read the decision (in English) here