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6 Injunctive Relief for SEPs Subject to FRAND
Pages 95-112

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From page 95...
... The question then arises as to whether a SEP owner that has stated its willingness to license should be permitted to petition for injunctions or exclusion orders against implementers. This chapter considers the current debate as to how a FRAND commitment should affect a SEP owner's ability to seek, or threaten to seek, injunctive relief.
From page 96...
... royalty negotiation that occurs under threat of an injunction or an exclusion order may be weighted heavily in favor of the patent holder in a way that is in tension with the RAND commitment." As the court in Apple v. Motorola observed, "…once a patent becomes essential to a standard, the patentee's bargaining power surges because a prospective licensee has no alternative to licensing the patent; he is at the patentee's mercy."3 Consumers may be harmed by this practice, whether through higher royalty payments passed on to them in the form of higher prices or fewer products on the market as a result of injunctive relief.
From page 97...
... Others claim that such an implementer may also have interests in delaying negotiation and licensing costs and in having the SEP owner incur expenses in commencing an infringement action. The competition agencies' position that a FRAND commitment limits, but does not ban, injunctive relief has led to a debate over when injunctions for a FRAND-encumbered patent may be sought.
From page 98...
... The preliminary view expressed in today's Statement of Objections does not question the availa bility of injunctive relief for SEP holders outside the specific circumstanc es present in this case, for example in the case of unwilling licensees. In addition, on May 6, 2013, DG Competition sent a formal complaint to Motorola Mobility.
From page 99...
... If the FRAND commitments are so vague and ill-defined as to have little meaning, then consumers may not realize all the benefits of the standard… As suggested by the statements quoted above, an important issue in these cases is who is a willing licensee and how that may be determined, an inquiry revolving around different facts patterns. As noted above, some regulatory agencies have taken the position that the prospective licensee has to state that it is willing to enter into a truly FRAND license and that the SEP holder must refrain from seeking injunctive relief, if there are any related disputes between the parties, until such disputes have been fully adjudicated by a court of competent jurisdiction.
From page 100...
... .9 Former chief economists of the DOJ's Antitrust Division and the FTC, together with a DG Competition spokesperson (Kühn, et al., 2013) , have suggested that SSOs clarify that The FRAND commitment should include a process that SEP owners must follow before they can seek an injunction or exclusion order by the licensor.
From page 101...
... Companies defending against infringement actions based on SEPs have argued that seeking such relief violated the SEP owner's earlier assurance to license implementers on FRAND terms. These cases have highlighted that the SEP holders were seeking injunctive relief at the same time that disputes regarding FRAND terms and conditions were being litigated in a different venue.
From page 102...
... Posner wrote: To begin with Motorola's injunctive claim, I don't see how, given FRAND, I would be justified in enjoining Apple from infringing the ‘898 unless Ap ple refuses to pay a royalty that meets the FRAND requirement. By commit ting to license its patents on FRAND terms, Motorola committed to license the ‘898 to anyone willing to pay a FRAND royalty and thus implicitly acknowledged that a royalty is adequate compensation for a license to use that patent.
From page 103...
... Within this framework, a FRAND commitment is one fact that may weigh against a finding of "irreparable harm" or "inadequacy of damages as a remedy" and, hence, an eBay review would operate against an injunction. However, in other instances, these factors may be weighed differently.18 Further complex issues arise in judicial deliberations over the appropriateness of injunctions when FRAND commitments have been made.
From page 104...
... Others, more sympathetic to SEP owners, contend that, whether in arbitration or litigation, permitting an open-ended presentation of all factors risks injurious delay. Moreover, there may be concerns about the costs and prejudice to the SEP owner if every issue must be resolved before a determination can be made as to whether it has complied with its FRAND commitment.
From page 105...
... The defendants have responded with arguments that an exclusion order based on a FRANDencumbered SEP is inconsistent with the public interest. Section 337 allows the ITC to consider a number of "public interest factors" when determining whether to grant an exclusion order or a cease-and-desist order, such as the public health and welfare, competitive conditions in the United States economy, and United States consumers.22 Similar to the cases in district court, defendants have argued that a SEP owner's FRAND promise forecloses its ability to seek injunctive relief.23 The FTC has encouraged the ITC to adopt such a rule, but the ITC has so far not done so.
From page 106...
... The Commission, among other grounds, found that Apple did not show that a FRAND commitment precludes exclusion orders under Section 337; that Apple failed to "provide a proper legal interpretation of the FRAND declarations at issue"; and that Apple did not show that the claims at issue were SEPs and that a FRAND commitment was warranted and, if it was, that Samsung had failed to comply with the commitment. On August 3, 2013, the Obama Administration through a letter from the U.S.
From page 107...
... I will look for these ele ments in any future decisions involving FRAND-encumbered SEPs that are presented for policy review.28 In short, jurisprudence is developing in this area, as more cases addressing the intersection of FRAND and injunctive relief arise. European Courts Similar to the United States, SEP owners have filed lawsuits seeking injunctions for patent infringement in various national courts in EU member states.
From page 108...
... The Orange Book defense is established by a ruling of the German Supreme Court which found that an owner of a FRAND-encumbered SEP abuses its dominant position if it refuses to grant a license or seeks injunctive relief when certain conditions are satisfied, including inter alia that a potential licensee has made an irrevocable, unconditional and binding royalty offer to the SEP owner to conclude a license agreement and the potential licensee pays this amount to the SEP owner or into escrow. The Mannheim court's interpretation of the Orange Book test does not require that a potential licensee's monetary offer be based on FRAND.
From page 109...
... Thus, regulatory agencies and implementers are seeking legal means by which the FRAND commitment limits that premise. Because this case involves one jurisdiction and one set of specific facts, it is unclear what practical effects this decision will have on European injunctions where the SEP owner has a FRAND licensing commitment or, more generally, on how injunctions in one country may be viewed by courts in other countries.36 It is worth noting in this context that similar ambiguity exists regarding whether courts of various nations feel bound by particular IPR policies of SSOs.
From page 110...
... They also argue that implementers would otherwise be unfairly pressured to accept non-FRAND terms to avoid the threat of injunctive relief or an exclusion order, particularly those authorized by tribunals that arguably cannot fully adjudicate disputes as to whether the SEP holder breached its FRAND commitment and set a FRAND royalty rate. Other companies have taken the somewhat weaker position that, while injunctive relief should never be sought against a willing licensee, it may be needed in situations involving recalcitrant behavior by licensees.
From page 111...
... They may opt instead to seek higher returns on their R&D investment in other non-standard technologies or avoid participation in the standard development process, which could adversely impact the benefits of standards to the industry and the consumer. 6.5 Recommendations to SSOs, Courts, and Government Agencies The committee believes that a FRAND commitment limits a licensor's ability to seek injunctive relief, including exclusion orders, and recommends the following steps to help avoid or resolve disputes, prevent anti-competitive conduct, and ensure reasonable compensation to SEP holders whose patents are infringed.
From page 112...
... 39 A minority of committee members endorse this alternative recommendation: SSOs should clarify that a SEP owner that has made an offer and offered to negotiate, with a prospective licensee, a license that will embody FRAND terms should be allowed to include injunctive relief in its pleadings when a FRAND dispute is brought to a court, agency, arbitration, or other tribunal that can consider equities, party conduct, reciprocity, and FRAND factors (including FRAND rates and terms)


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