The Interaction Between Intellectual Property Law and Competition Law in the EU: Necessity of Convergent Interpretation with the Principles Established by the Relevant Case Law

Abstract

The interaction between competition law and intellectual property law continues to raise new questions, and gives rise to several interesting topics to debate. The European Commission’s intention ought to be twofold. On the one hand to free resources for the proactive appraisal of new policy areas, and on the other hand to ensure the uniform application of EU Competition Law through procedural guidance and economic, effect-based substantive rules. European Commission Guidelines note and explain the reasons for which market participants and competition watchdogs have accepted standard-setting because of its beneficial effects. Intellectual property law and competition law rules share the same objectives of promoting innovation and enhancing consumer welfare. Furthermore, Intellectual Property Rights (IPR) promotes dynamic competition by encouraging undertakings to invest in developing either new and/or improved products and processes. This is the reason why IPR are considered to be in general pro-competitive. Due to standardization agreements, efficiency gains may be achieved; market integration can be facilitated, transactions costs can be reduced, the necessary time for innovative products offered to end users can be minimized, and the interoperability between network and products can be reduced. For these reasons the question of market power can only be assessed on a case by case basis. Even if the establishment of a standard can create or increase the market power of IPR holders possessing IPR essential to the standard, there is no presumption that holding or exercising IPR essential to a standard equates to the possession or exercise of market power. It is estimated that this concept explains the ‘careful’ approach of the Commission in the Motorola and Samsung cases. The success story of the Huawei v. ZTE judgment followed, establishing the reasonable demand of balancing the bargaining powers between owners of so-called “SEP owners” and makers of smart phones and other tele-communications devices relying upon these patents (“makers”). However, in the spring of 2017, the Commission indicated it might publish a formal policy document in order to clarify the rules on patent ownership and licensing. It is hoped that any guidance by the Commission will build at least on the Huawei/ZTE judgment.

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

1 Introduction

The fact that the interaction between competition law and intellectual property (IP) law continues to raise new questions and give rise to opportunities for debates is not something novel. However, the European Commission’s hope is considered crystal clear: On the one hand to free resources for the proactive estimated value of new policy areas, and on the other hand to secure and guarantee ‘the uniform application of European Union’s (EU) Competition Law through procedural guidance and economic, effect-based substantive rules’.¹ This is the reason why the European Commission (EC) does not favor a per se approach regarding this specific issue.² Therefore, it is not incidental that not only market participants but also competition watchdogs have accepted, ‘sometimes even fostered’, standard setting because of its beneficial effects: inter alia, standardization ensures interoperability of standard-based products, it renders these products more comparable for consumers³ and it can help to select the ‘best’ available technical solution for a given task.⁴ An individual who uses, for instance, a smartphone or a laptop can easily understand the reasons for standardization.

2 The Adequacy (or Inadequacy?) of the European Commission’s Soft Law

2.1 Main Provisions in the Horizontal Cooperation Guidelines 2011/C 11/01: The Rule (IPR Are Pro-competitive) and the Exceptions

IP laws and competition laws share two main targets: promotion of innovation and enhancement of consumer welfare. According to para 269 of the Horizontal Cooperation Guidelines, Intellectual Property Rights (IPRs) ‘promote dynamic competition by encouraging undertakings to invest in developing either new or improved products and processes’. This is the reason why IPR are considered ‘in general pro-competitive’.⁵ Nevertheless, because of IPR, ‘a participant holding IPR essential for implementing the standard,⁶ could, in the specific context of standard-setting, also acquire control over the use of a standard’.⁷ In cases where ‘the standard constitutes a barrier to entry’,⁸ Standard Essential Patent (SEP) holder ‘could thereby control the product or service market to which the standard relates’.⁹ This situation, when it happens, could allow SEP holder to behave in anticompetitive ways: for instance, by ‘holding up’ users after the adoption of the standard either by refusing to license the necessary IPR or by extracting excessive¹⁰ royalty fees, it can prevent effective access to the standard.¹¹ However, there should not be a misunderstanding: even if the establishment of a standard is in a position to create or increase the market power of IPR holders possessing IPR essential to the standard, there is no presumption that holding exercising IPR essential to a standard equates to the possession or exercise of market power.¹² The EC recognizes that the question of market power cannot be answered by per se ruling; a contrario, it can only be assessed on a case-by-case analysis.

2.2 Preconditions for Pro-competitive Standard-Setting

2.2.1 The Central Issue of Access to the Standard

According to the Horizontal Cooperation Guidelines,¹³ where participation in standard-setting is unrestricted and the procedure for adopting the standard in question is transparent, standardization agreements which contain no obligation to comply with the standard and provide access to the standard on fair, reasonable, and non-discriminatory (FRAND) terms will normally not restrict competition within the meaning of Article 101 para 1 TFEU. At this point, it must be clarified that any standard-setting agreement which makes a discrimination or even distinction against any of either the participating or potential members could have as a result a restriction of competition. For instance, in a case that because of a standard setting organization (SSO) upstream only companies are explicitly excluded (i.e. companies which are not active on the downstream production market), this could lead to an exclusion of potentially better technologies.¹⁴

Furthermore, para 280 ought to be read in combination with para 293 of the same Guidelines. According to this last paragraph, whether standardization agreements may raise concerns about restrictive effects on competition may depend on whether the members of a SSO remain (or not remain) free to develop alternative standards or products that do not meet the requirements demanded by the agreed standard.¹⁵ For instance, in case that the standard-setting agreement binds the members to only produce products in compliance with the standard, the risk of a likely negative effect on competition is significantly increased and could in certain circumstances give rise to a restriction of competition by object.¹⁶ A contrario, standards only covering aspects of minor importance or parts of the end-product are considered less likely to give rise to competition concerns than more comprehensive standards.

In addition, the assessment whether the agreement restricts or not competition will also focus on the central issue of access to the standard. In case that the result of a standard (i.e. according to Horizontal Cooperation Guidelines, para 294, the:

specification of how to comply with the standard and, if relevant, the essential IPR for implementing the standard’) is not at all accessible, or only accessible on discriminatory terms, for members or third parties (non-members of the relevant standard-setting organization)

This barrier to entry¹⁷ and/or segmentation ‘may discriminate or foreclose or departmentalize markets according to their geographic scope of application and thereby possibly restrict competition’. Nevertheless, ‘in the case of several competing standards or in the case of effective competition between the standardized solution and non-standardized solution’¹⁸ a case-by-case analysis is demanded: even a limitation of access may not produce restrictive effects on competition.¹⁹

Supposing that participation in the standard-setting process is open, in the sense that it allows all competitors (active or potential and/or stakeholders) in the market affected by the standard to participate in choosing and elaborating the standard, this will eliminate the risks of a likely restrictive effect on competition by not excluding certain undertakings from the ability and the opportunity to influence the choice and elaboration of the standard.²⁰ The greater the likely market impact of the standard, and the wider its potential fields of application, the more important it is to allow equal access to the standard-setting process. However, if the facts of the case show that there is competition between several such standards and SSOs (and not necessarily the same standards are applied by the whole industry) perhaps there will not be any anticompetitive effects. Furthermore, according to Horizontal Cooperation Guidelines, para 295, ‘if in the absence of a limitation on the number of participants it would not have been possible to adopt the standard, the agreement would not be likely to lead to any restrictive effect on competition under Article [101 para 1 TFEU]’. Or if the adoption of the standard would have been heavily delayed by an inefficient process, any initial restriction could be counterbalanced by efficiencies which should be considered more significant under Article 101 para 3 TFEU.²¹ According to the same para of the Horizontal Cooperation Guidelines:

[i]n certain situations the potential negative effects of restricted participation may be overcome or at least restricted by ensuring that stakeholders are kept informed and consulted on the work in progress’.²² The rule is that ‘the more transparent the procedure for adopting the standard, the more likely it is that the adopted standard will take into account the interests of all stakeholders’.²³

2.2.2 The Significance of Market Shares of the Goods or Services Based on the Standard

To assess the effects of a standard-setting agreement, the market shares of the goods or services based on the standard ought to be considered. One of the main problems is that, according to Horizontal Cooperation Guidelines, para 296:

it might not always be possible to assess with a minimum of certainty at an early stage whether the standard will in practice be adopted by a large part of the industry, or whether it will only be used by a very small part of the industry’. Therefore, ‘in many cases the relevant market shares of the companies having participated in developing the standard could be used as a sign or indication for assessing the likely market share of the standard; the reason is that the companies participating in setting the standard would in most cases have an interest in implementing the standard.²⁴

Nevertheless, according to the same para of the Horizontal Cooperation Guidelines:

as the effectiveness of [standardization] agreements is often proportional to the share of the industry involved in setting and/or applying the standard, high market shares held by the parties in the market or markets affected by the standard will not necessarily lead to the conclusion that the standard is likely to give rise to restrictive effects on competition.²⁵

So, a case-by-case analysis is demanded. Market shares provide a useful first indication of the market structure and of the relative importance of the various undertakings active on the market.²⁶ However, the EC and the national competition authorities will assess market shares in the light of the relevant market conditions, and the dynamics of the market and of the extent to which there is a product differentiation (if there is such and to which extent there is). In addition, the trend or development of market shares over time may also be considered in volatile markets or in markets where auctions take place.²⁷

2.2.3 Result of Standardization Agreements

Standardization agreements frequently create the necessary preconditions for significant static²⁸ and dynamic efficiency gains.²⁹ For instance, Union wide standards may facilitate market integration³⁰ and allow companies to market their goods and services in all Member States, leading on the one hand to increased consumer choice and on the other hand decreasing prices.³¹ More specifically, market integration cannot only be facilitated but also enhanced—the creation of a common market lay at the heart of the EU project, transaction costs can be reduced, the necessary time for innovative products offered to end users can be minimized, interoperability between network and products can be reduced etc. According to the Horizontal Cooperation Guidelines para 308, ‘standards which establish technical interoperability and compatibility often encourage competition on the merits between technologies from different enterprises and help prevent lock-into one supplier’.³² In addition, transaction costs may be reduced due to standards in a very profitable way not only for sellers but also for buyers. For example, standards regarding safety, quality or/and environmental aspects of a product (a ship, for instance) may also facilitate consumers’ choice and can lead to increased product quality. Furthermore, standards play a significant role for innovation (it is about the so-called dynamic efficiency). According to the Horizontal Cooperation Guidelines paras 308 and 309, these standards:

can reduce the time it takes to bring a new technology to the market and facilitate innovation by allowing undertakings to build on top of agreed solutions. To achieve those efficiency gains in the case of standardization agreements, the information necessary to apply the standard must be effectively available to those potentially wishing to enter the market.

In this regard, the Commission’s Decision in Case IV/31.458, X/Open Group is characteristic: ‘The Commission considers that the willingness of the Group to make available the results as quickly as possible is an essential element in its decision to grant an exemption’.³³

It is useful to be clarified that dissemination of a standard may be enforced by marks or logos which certify compliance thereby providing the demanded certainty to customers. However, agreements for testing and certification go beyond the primary objective of defining the standard; this is the reason why they usually constitute a distinct, separate paragraph not only agreement but also market.³⁴

From the above-mentioned analysis, it is clear that the effects on innovation ought to be analyzed on a case-by-case basis. Nevertheless, there is rebuttable presumption that standards creating compatibility on a horizontal level between different technology platforms are considered to be likely to give rise to efficiency gains.³⁵

2.3 Main Provisions in the Commission Notice Guidelines on the Application of Article 101 TFEU to Technology Transfer Agreements

2.3.1 The Principle of Union Exhaustion

According to the Commission Notice Guidelines on the Application of Article 101 TFEU to technology transfer agreements,³⁶ IP laws give exclusive rights on holders of patents, copyrights, design rights, trademarks and other legally protected rights. The owner of IP is protected under IP laws that prevent its unauthorized use and exploitation, for instance, by licensing it to third parties. However, according to the principle of Union exhaustion,³⁷ once a product incorporating an IPR, with the exception of performance rights (rental rights are also included³⁸), has been put on the market inside the European Economic Area (EEA) by the holder or with its approval, the IPR is exhausted in the sense that the holder can no longer use it to control the sale of the product. This principle of Union exhaustion is for instance enclosed in Article 7 para 1 of Directive 2008/95/EC to approximate the laws of the Member States relating to trademarks,³⁹ according to its provision, the trademark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Union under that trademark by the proprietor or with its approval. The same principle is also enshrined in Article 4 para 2 of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs⁴⁰ where there is the provision that the first sale in the Union of a copy of a program by the right holder or with its approval will exhaust the distribution right within the Union of that copy (except for the right to control further rental of the program or a copy thereof).⁴¹ The holder of an IPR has no right under IP laws to prevent sales by licensees or buyers of such products incorporating the licensed technology. Against the backdrop of this rule, the principle of Union exhaustion is considered compatible with the essential function of IPRs, which is to grant the holder the right to exclude others from exploiting its IP without its consent.⁴²

2.3.2 No Immunity from Competition Law Intervention

In general, it is acceptable that IP laws grant exclusive rights of exploitation.⁴³ Nevertheless, this fact does not entail that IPRs enjoy a kind of immunity from competition law intervention. The application of Article 101 TFEU is possible regarding agreements whereby the holder licenses another undertaking to exploit its IPRs.⁴⁴ ‘Nor does it imply that there is an inherent conflict between IPRs and the Union competition rules’.⁴⁵ In reality, both bodies of law have the same twofold basic objective: on the one hand promoting consumer welfare and on the other hand an efficient allocation of resources. Innovation constitutes perhaps the most essential and dynamic component of an open and competitive market economy. Dynamic competition is promoted by IPRs, since undertakings are encouraged to invest in developing new or improved products and processes. Competition is the main factor that creates conditions of pressure on undertakings to innovate. This is the reason why, both IPRs and competition are important for promoting innovation and ensuring a competitive exploitation thereof.

For the assessment of license agreements under Article 101 TFEU it must be kept in mind that the creation of IPRs often requires substantial investment, and that all rarely constitutes a risky effort with serious sunk costs. In order not to reduce dynamic competition and to maintain the incentive to innovate, the innovator must not be improperly restricted regarding the exploitation of IPRs that turn out to be valuable. For the abovementioned reasons the innovator ought to be free to seek appropriate financial remuneration for successful projects which is sufficient to maintain investment incentives, taking also failed projects into account. Furthermore, technology rights licensing may require the licensee to make significant sunk costs in the licensed technology and production assets necessary to exploit it. Sunk costs mean that in case that the licensee leaves that particular field of activity, the investment cannot be used by the licensee for other activities or sold other than at a significant loss. Article 101 TFEU cannot be applied without taking into account such ex-ante investments made by the parties and the risks relating to it. The risk that the parties face and the sunk cost that ought to be committed may thus lead to the agreement falling outside the scope of Article 101 para 1 TFEU or fulfilling the conditions of Article 101 para 3 TFEU, as the case may be, for the period of time required to recover the investment.

According to the Commission Notice Guidelines on the Application of Article 101 TFEU to technology transfer agreements,⁴⁶ in assessing licensing agreements under Article 101 TFEU, ‘the existing analytical framework is sufficiently flexible to take due account of the dynamic aspects of technology rights licensing’. A presumption that IPRs and license agreements as such give rise to competition concerns simply does not exist. More specifically, ‘most license agreements do not restrict competition and create pro-competitive efficiencies’.⁴⁷ The truth is that licensing as such is pro-competitive, because it leads to dissemination of technology and promotes innovation by the licensor and the licensee(s). Furthermore, license agreements that restrict competition may often give rise to pro-competitive efficiencies, which must be assessed under Article 101 para 3 TFEU and balanced against the negative effects on competition.⁴⁸ This is the reason why the great majority of license agreements are compatible with Article 101 TFEU.

2.4 The Necessity of Considering the Guidance in Applying Article [102 TFEU] to Abusive Exclusionary Conduct by Dominant Undertakings

Both the above-mentioned Guidelines (about Horizontal Cooperation and Technology Transfer) ought to be read and analysed together with the content of the Guidance in Applying Article [102 TFEU] to Abusive Exclusionary Conduct by Dominant Undertakings. According to this last Guidance about abuse of dominance, the (basic) aim of the Commission’s enforcement activity is to ensure that dominant undertakings do not impair effective competition by foreclosing their competitors in an anticompetitive way.

However, according to the Guidance in Applying Article [102 TFEU] to Abusive Exclusionary Conduct by Dominant Undertakings, para 7:

conduct which is directly exploitative of consumers, for example charging excessively high prices or including certain behavior that undermines the efforts to achieve an integrated internal market, is also liable to infringe Article [102 TFEU]. The Commission may decide to intervene in relation to such conduct, where the protection of consumers and the proper functioning of the internal market cannot otherwise be adequately ensured.

3 The Dynamic Relationship Between Antitrust Law and Intellectual Property Law

See relatively Jean-Yves Art, ‘Competition and Intellectual Property: Friends or Foes—The Case of SEPs’ in Raffaelli (ed), Antitrust Between EU Law and National Law (Brussels/Milan 2015) 190.

3.1 Competition and Intellectual Property:The US and EU Convergence Regarding the Exercise of SEPs

The above-mentioned provisions show that the relationship between antitrust and IP law is ‘law in the making’, which means that it is not something static; on the contrary it is about something dynamic. In the Information and Communications Technologies (ICT) industry, the exercise of SEPs constitutes the area where the most recent developments are observed.

Furthermore, it ought to be underlined that US and EU authorities finally have reached similar positions on the main principles governing the solution to questions raised by the exercise of SEPs, despite the fact they started from different legal positions.⁴⁹ The truth is that several issues remain open. Courts and competition regulators from both sides of the Atlantic have already set out guidance to the patent holders and potential licensees with such a level of clarity that should enable them to reach agreed solutions and further reduce the risks of patent hold-up or patent hold-out. In EU, the principles have been set out by courts (i.e. settled or established case law). Further, (self-binding) guidelines laid by competition regulators/watchdogs,⁵⁰ has enabled both patent holders and potential licensees to achieve workable solutions and further reduce the above-mentioned risks.⁵¹

3.2 The Commission’s Practice: The Motorola and Samsung Decisions as Basic Examples

Regarding SEPs, in 2014 the Commission adopted two decisions. The Motorola⁵² and Samsung ⁵³ decisions outlined that there should be some limits to SEP rights precisely because of the competition context in which the standardization process takes place. The Commission was able to act not only quickly but also effectively in both cases on a general issue which had broader market relevance.⁵⁴

Regarding Samsung, the Commission accepted binding commitments that Samsung will not seek injunctions⁵⁵ against Apple in relation to SEPs where certain conditions are met. Regarding Motorola, the Commission found that this company had infringed Article 102 TFEU by seeking and enforcing injunctions against Apple in relation to SEPs. The Commission emphasized the importance of protecting IPRs and highlighted the exceptional nature of its intervention in these two cases, reflecting the fact that the use of technology covered by SEPs is essential for entry into certain markets.

At this point it ought to be underlined that although both the Samsung and Motorola cases concerned patents essential to mobile telecommunications standards, and the decision of the Commission in both cases has the intention of establishing more general principles, applicable to all SEPS that are crucial for the assurance of interoperability across not only the communications and IT sectors, but also more widely in sectors, like, for example, the maritime transports sector, the automotive sector⁵⁶ and the renewable energy, which are also characterized by innovation and standardization.

In the above-mentioned cases, the behavior of Motorola and the behavior of Samsung were considered abusive by the Commission for the following main reasons: first of all, because they could result in a temporary ban on online sales of Apple mobile products, secondly, because they could force Apple into accepting disadvantageous terms as the price of settlement, and finally because they could cause harm to the standard development process.

So, in few words, the purpose/effect of the settlement was that Apple’s continued (and constant) presence in the market ought to be ensured. However, it is remarkable that the final solution that the EC decided in these two cases as preferable was the acceptance of binding commitments instead of the ascertainment of abusive exploitation of a dominant position and the imposition of a high fine to each company. Consequently, a very careful approach by the Commission is detected and endorsed, which shows that the peculiarities of the Motorola and Samsung cases were correctly recognized and considered as the crucial reason for the special treatment of both companies. After the Motorola and Samsung cases, an interesting development in European case law took place.

3.3 Did the European Case Law Follow the Commission’s Approach?

3.3.1 Assessment of the Case Huawei/ZTE (C-170/2013) and Criticism

In the Huawei v ZTE ruling the Court of Justice of the European Union (CJEU) confirmed not only according to the Commission’s point of view,⁵⁷ but also according to a significant part of theory,⁵⁸ the position of the Commission in the Motorola and Samsung cases on two main points. The first, that SEPs are different from other patents because of the commitments to license on FRAND terms, and the second is that in cases where there is a company willing to take a license on FRAND terms, ‘injunctions should be off the table’.⁵⁹

However, even if the judgement of the CJEU does partially or indirectly confirm the EC's approach to the same issues in the Motorola and Samsung cases, its approach is considered narrower,⁶⁰ which means that there are still unresolved issues.⁶¹ Furthermore, there is a part in theory which gives the impression that it is even more severe against the Commission’s approach in the Motorola and Samsung cases,⁶² considering that even before the Huawei/ZTE judgement, it was doubtful whether the Commission’s actions in the Motorola and Samsung cases were consistent with its own enforcement guidance (about the application of Article [102 TFEU]). For the reasons that were analyzed above in 2.4 of this chapter,⁶³ this approach may be considered as undue; the self-binding Guidance of the Commission in Applying Article [102 TFEU] to Abusive Exclusionary Conduct by Dominant Undertakings cannot be interpreted in such a narrow sense, according to which, the intervention of the Commission would be excused only in cases of anticompetitive foreclosure of competitors. In such a scenario, excessive pricing cases, for instance, would be excluded from the Commission’s abuse of dominance ‘radar’.⁶⁴

More specifically, according to para 42 of the Huawei v ZTE judgement: ‘[t]he court must strike a balance between maintaining free competition […] and the requirement to safeguard that proprietor’s IPRs and its right to effective judicial protection’. The court should strike not just a balance, but also the right balance. So, the honest effort made to establish a fair balance between patent law and competition law is demonstrated by the CJEU in the Huawei v ZTE case.⁶⁵

Perhaps, there is some doubt about the CJEU’s intent with regard to the higher foreclosure standard in Magill and the so-called essential facilities cases that followed on from Magill by the statement earlier in the CJEU’s judgement that ‘it must be pointed out, as the Advocate General has observed in point 70 of his Opinion, that the particular circumstances of the case in the main proceedings distinguish that case from [the Magill case law]’.⁶⁶ Nevertheless, the CJEU had no real intention of distinguishing these cases completely. In para 70 of his Opinion, to which the CJEU refers, AG Wathelet expressly stated that the Magill case law remains ‘partially relevant’. In this context, it must be acceptable that, as in the refusal to supply cases, SEP cases involve—as the CJEU specifically recognized—a delicate balancing of competing rights and interests. As Andreas Heinemann pointed out correctly in his final remarks,

[t]he Huawei judgement of the CJEU provides new guidance for the relationship between intellectual property law and competition law. It clarifies that a solution conducive to innovation cannot be achieved by protecting intellectual property rights against competition law, but, rather, only by embracing the complementary nature of both areas of law.⁶⁷

3.3.2 Results and Consequences of the CJEU’s Decision in Huawei/ZTE Case

The success story of the Huawei v ZTE judgement is constituted on successfully balancing the bargaining powers between owners of so-called ‘SEP owners’ and producers of smart phones and other telecommunications devices relying upon these patents. As Torsten Körber quoted:

[t]he ECJ’s judgement in Huawei v ZTE marked the outcome of an important battle in the so-called ‘patent wars’ between the makers of smart phones and other telecommunications equipment. In its judgement, the ECJ balanced the bargaining powers between owners of so-called ‘standard essential patents’ (‘SEP owners’) and makers of smart phones and other telecommunications devices relying upon these patents (‘makers’).⁶⁸

The truth is that the CJEU in its Huawei v ZTE was extremely prudent and made very careful steps. However, the potential consequence of the ECJ’s judgement in Huawei v ZTE is that in the future, SEP owners who bring abusive actions against good faith licensees cannot count on a lack of severity because the European Court of Justice (ECJ) has already clarified the SEP owners’ obligations under Article 102 TFEU in this specific judgement of preliminary ruling, according to Article 267 TFEU. In any case, the CJEU decision in the Huawei v ZTE case constitutes a ‘road-map’ for FRAND cases.⁶⁹

3.3.3 Unanswered Questions

The CJEU did not answer the question whether SEP owners enjoy a dominant position per se, despite the fact that the Advocate General (Melchior Wathelet) had questioned a per se assumption.⁷⁰ Nevertheless, according to a rebuttable presumption, in practice SEP owners are almost always dominant.

The CJEU based the licensing obligation of the SEP owner (as well as the compulsory licensing defense of the alleged infringer) on both Article 102 TFEU and the FRAND commitment. This leaves room for the question whether the Huawei v ZTE decision also applies to cases in which the SEP owner is not bound by a FRAND commitment (for example, in the case that the SEP owner has acquired the SEP from the original owner without submitting to the FRAND commitment). It is doubtful whether the answer to this question could be affirmative.⁷¹ Perhaps, this will be one of the issues that the forthcoming Guidelines prepared by the EC are going to clarify.⁷²

The CJΕU distinguished the facts of the Huawei v ZTE case (a SEP situation) from those of the German Orange Book-Standard case (non-SEP situation). So, a crucial question is whether the test applied in Huawei v ZTE case can still be applied to non-SEP cases. Making use of the teachings of a de facto standard (like in the German case) can be as indispensable for market access as making use of a SEP (like in the Huawei v ZTE case). If the requirements of the Magill decision⁷³ are fulfilled, the owner of an indispensable IPR (either it is a SEP or a non-essential patent) is under a licensing obligation due to Article 102 TFEU. Hence, in principle, the same rules (i.e. the Huawei v ZTE test) could be applied.

The CJEU did not clarify the meaning of ‘FRAND’. The court left this task to the parties which may request the help of a court or an arbitration panel. This appears to be correct in principle, because general rules regarding the very diverse and dynamic telecommunications sector, for example, is not realistic to find.⁷⁴ This is the reason why the author’s hope is that this issue will not be one of the issues that the forthcoming Guidelines prepared by the EC are going to clarify.⁷⁵

It ought to be mentioned that some lower German patent courts seem to somehow ignore the CJEU’s Huawei v ZTE decision; these courts still seem to be somewhat reluctant to rethink their traditional lines of reasoning (which are IPR-holder friendly).⁷⁶ Nevertheless, according to Regulation 1/2003, the national courts are bound by the ECJ’s interpretation of Article 102 TFEU (and Article 101 TFEU).

4 Conclusion: The Forthcoming Guidance—Should We Expect Undesirable Surprises?

Everybody who is involved in the issue about the interaction between IP Law and Competition Law accepts that consumers must gain access to a wide range of innovative and creative goods and services at reasonable prices. The relevant—and mainly the recent—case law, seems that it satisfies the need for predictability. In any case, the undisputable truth is that competition policy and IP policy ought to ‘work hand in glove in order to promote economic growth’.⁷⁷

Due to the Huawei v ZTE judgement, the successful effort made by the CJEU to establish a fair balance between patent law and competition law is demonstrated with emphasis. It is characteristic and indicative that in Japan, for example, the specific judgement was used in order to create relevant Guidelines.⁷⁸ However, in April 2017, the Commission indicated it might publish a formal policy document in order to clarify the rules on patent ownership and licensing. Any guidance by the Commission ought to build on the Huawei v ZTE judgement and must not undermine it.

According to unconfirmed information, an EU ‘guidance’ document on how companies can manage the licensing of technology to connect devices to the internet was expected before the end of 2017. It would be about a document that would try to balance the interests of companies that license patents (for example, Ericsson, Nokia and Qualcomm) with those that use the patents to create Internet-connected products. ‘There have been ongoing debates on all different kind of levels on how to strike a balance between providers and implementers, to ensure that all sides feel there is a level playing field where certain basic rules are shared’.⁷⁹ However, the publication of the Commission’s Notice (or Guidelines?) has already been delayed for several reasons because there were different views in the Commission itself, i.e. between the internal divisions involved. Furthermore, there was a significant interest and reaction from the industry, which was concerned that its point of view was not sufficiently considered. Opposing interests are present in the case examined: the undisputable truth is that patent owners are seeking to continue the current licensing model, ‘which allows them to license to the ‘end user,’ such as smartphone makers’.⁸⁰ On the other hand, device manufacturers have the intention of accessing 5G technology through components set inside their products, without being obliged to license the technology. One of the Commission’s main concerns is that the next generation of technology ought to be available also for small and medium-sized enterprises (SMEs). This is the challenge that the Commission faces: the diffusion of technology should really take place throughout the value chain. For now, unfortunately it seems that SMEs are not able to really find their way, without the Commission’s help. However, in general, the European policy about the SMEs is considered quite protective. Therefore, in combination with the ‘rulings’ by the ECJ in its Huawei v ZTE judgement and also several competition cases involving SEPs, it is considered that ‘a certain ‘holistic’ vision’,

constitutes a desideratum in the debate in process over licensing.⁸¹ The good news is that the waters are not unchartered, the already existing case law combined with the relevant soft law and practice created by the EC simply confirms this point.