Huaweï v ZTE – Judicial Conservatism at the Antitrust and IP Intersection Professor Nicolas Petit, University of Liege, @CompetitionProf ITU meeting of the TSB Director’s AHG on IPR, 29 September 2015
Huaweï v ZTE in legal context Case Case Law Law Case Case Law Law � Case C Case C- -170/13 170/13, , Huawei Huawei � Article 102 TFEU (more or Article 102 TFEU (more or less less Case C Case C - - 170/13 170/13 , , Huawei Huawei Article 102 TFEU (more or Article 102 TFEU (more or less less Technologies Co. Ltd Technologies Co. Technologies Co. Technologies Co. Ltd Ltd Ltd v ZTE v ZTE v ZTE v ZTE equivalent equivalent equivalent equivalent to Section 2 to Section 2 to Section 2 to Section 2 Corp., Corp Corp Corp ., ZTE ., ., ZTE ZTE ZTE Deutschland Deutschland Deutschland GmbH Deutschland GmbH GmbH GmbH Sherman Act Sherman Sherman Sherman Act) Act Act ) ) ) � Preliminary ruling procedure Preliminary ruling procedure Preliminary ruling procedure Preliminary ruling procedure � Abuse of dominance Abuse of dominance Abuse of dominance Abuse of dominance � Is it an Is it an abuse of dominance for Is it an Is it an abuse of dominance for abuse of dominance for abuse of dominance for � CJEU CJEU CJEU CJEU holders of FRAND pledged holders of FRAND pledged holders of FRAND pledged holders of FRAND pledged « SCOTEU » � SEPS to apply for injunction or SEPS to apply for injunction or SEPS to apply for injunction or SEPS to apply for injunction or On issues of law, not facts � product recall against product recall against product recall against product recall against Court distant from policy � unlicensed implementers of unlicensed implementers of unlicensed implementers of unlicensed implementers of circles their technology? their their their technology? technology? technology? www.lcii.eu www.lcii.eu www.lcii.eu www.lcii.eu
Outline and goals From From From From Existence of Abuse, to Existence of Abuse, to Existence of Abuse, to Existence of Abuse, to � Very Very Very Very marginal extension of marginal extension of marginal extension of marginal extension of 1. 1. 1. 1. Absence of Abuse? Absence of Abuse? Absence of Abuse? Absence of Abuse? antitrust liability antitrust antitrust antitrust liability liability against liability against against against FRAND FRAND- FRAND FRAND -pledged - - pledged pledged SEPS pledged SEPS holders SEPS SEPS holders holders holders Antitrust liability Antitrust liability Antitrust liability Antitrust liability for for for for 2. 2. 2. 2. Practicing Entities, Immunity Practicing Entities, Immunity Practicing Entities, Immunity Practicing Entities, Immunity � Conservative Conservative Conservative Conservative reading reading reading of Article reading of Article of Article of Article for Non Practicing Entities? for Non Practicing Entities? 102 TFEU 102 TFEU for Non Practicing for Non Practicing Entities? Entities? 102 TFEU 102 TFEU Antitrust liability Antitrust liability vis a vis Antitrust liability Antitrust liability vis a vis vis a vis vis a vis � Practical Practical Practical Practical consequences consequences consequences consequences limited limited limited limited 3. 3. 3. 3. Competitors only? Competitors only? Competitors only? Competitors only? for for SEPs for for SEPs SEPs holders SEPs holders holders holders Antitrust Antitrust Antitrust Antitrust Liability for Liability for Liability for Liability for 4. 4. 4. 4. Exclusion of Competitors, not Exclusion of Competitors, not Exclusion of Competitors, not Exclusion of Competitors, not Exploitation? Exploitation? Exploitation? Exploitation? Patentee Patentee Patentee Patentee (antitrust) or (antitrust) or (antitrust) or (antitrust) or 5. 5. 5. 5. Implementer (IP) Liability for Implementer (IP) Liability for Implementer (IP) Liability for Implementer (IP) Liability for Negotiation Breakdown? Negotiation Negotiation Negotiation Breakdown? Breakdown? Breakdown? FRAND as a Range, not a FRAND as a Range, not a Pixel? Pixel? FRAND as a Range, not a FRAND as a Range, not a Pixel? Pixel? 6. 6. 6. 6. www.lcii.eu www.lcii.eu www.lcii.eu www.lcii.eu
From Existence of Abuse, to Absence of Abuse? � Paragraph Paragraph 55, the Court talks about how “ 55, the Court talks about how “ the proprietor of an the proprietor of an Paragraph Paragraph 55, the Court talks about how “ 55, the Court talks about how “ the proprietor of an the proprietor of an SEP SEP ” can “ SEP SEP ” can “ ” can “ ” can “ prevent an action for a prohibitory injunction or for prevent an action for a prohibitory injunction or for prevent an action for a prohibitory injunction or for prevent an action for a prohibitory injunction or for the recall of products from being regarded as abusive the recall of products from being regarded as abusive ” the recall of products from being regarded as abusive the recall of products from being regarded as abusive ” ” ” � Paragraph 71: a Paragraph 71: a SEP holder that complies with Paragraph 71: a Paragraph 71: a SEP holder that complies with SEP holder that complies with SEP holder that complies with specific conduct specific conduct specific conduct specific conduct conditions “ do conditions “ do not abuse its dominant position … by bringing an not abuse its dominant position … by bringing an conditions “ conditions “ do do not abuse its dominant position … by bringing an not abuse its dominant position … by bringing an action for infringement ” action for infringement action for infringement action for infringement ” ” ” German question: tell me what is abuse? � EU reply: let me tell you what is NOT abuse � Safe harbor for SEPs holder � www.lcii.eu www.lcii.eu www.lcii.eu www.lcii.eu
Liability for Practicing Entities, Immunity for Non Practicing Entities? � Paragraph 52: a SEP proprietor “ Paragraph 52: a SEP proprietor “ Paragraph 52: a SEP proprietor “ can prevent products Paragraph 52: a SEP proprietor “ can prevent products can prevent products can prevent products manufactured by competitors from appearing or remaining on manufactured by competitors from appearing or remaining on manufactured by competitors from appearing or remaining on manufactured by competitors from appearing or remaining on the market and thereby reserve to itself the manufacture of the the market and thereby reserve to itself the manufacture of the the market and thereby reserve to itself the manufacture of the the market and thereby reserve to itself the manufacture of the product in question product in question ” product in question product in question ” ” ” � Practical implication: Non Practicing Entities (“NPEs”) remain at Practical implication: Non Practicing Entities (“NPEs”) remain at Practical implication: Non Practicing Entities (“NPEs”) remain at Practical implication: Non Practicing Entities (“NPEs”) remain at bay from Article 102 TFEU liability bay from Article 102 TFEU liability bay from Article 102 TFEU liability bay from Article 102 TFEU liability � The flawed paragraph 53 argument: The flawed paragraph 53 argument: The flawed paragraph 53 argument: The flawed paragraph 53 argument: “ […] an undertaking to grant licences on FRAND terms creates legitimate � expectations on the part of third parties ” such that a “ refusal by the proprietor of the SEP to grant a licence on those terms may, in principle, constitute an abuse within the meaning of Article 102 TFEU ” Forgets the introduction of the paragraph: “ In those circumstances ” � www.lcii.eu www.lcii.eu www.lcii.eu www.lcii.eu
Antitrust Liability vis a vis Competitors � Only Only abusive for a SEP holder to seek an injunction abusive for a SEP holder to seek an injunction Only Only abusive for a SEP holder to seek an injunction abusive for a SEP holder to seek an injunction and/or product recall against an implementer with and/or product recall against an implementer with and/or product recall against an implementer with and/or product recall against an implementer with whom it does (or will) compete in a whom it does (or will) compete in a market whom it does (or will) compete in a whom it does (or will) compete in a market market market � Network equipment supplier can seek injunction Network equipment supplier can seek injunction Network equipment supplier can seek injunction Network equipment supplier can seek injunction against handset provider? against handset provider? against handset provider? against handset provider? www.lcii.eu www.lcii.eu www.lcii.eu www.lcii.eu
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