To address these concerns, Samsung has proposed to commit for a period of five years not to seek any injunctions on the basis of any of its SEPs, present and future, that relate to technologies implemented in smartphones and tablets ("Mobile SEPs") against any company that agrees to a particular licensing framework.
The licensing framework consists of: (i) a negotiation period of up to 12 months and (ii) if no agreement is reached, a third party determination of FRAND terms by either a court or an arbitrator, as agreed by the parties. If the parties cannot agree on either submitting to court or arbitration, the parties will have to submit to arbitration.
The proposed commitments would cover the EEA. An independent trustee would advise the Commission in overseeing the proper implementation of the commitments.
|There must be something wrong in this picture...|
3. Nothing herein shall:
f. preclude Samsung Electronics from terminating a Unilateral or a Cross-License concluded in the context of the Licensing Framework in the event the Potential Licensee files a claim for Injunctive Relief before any court or tribunal in the EEA against Samsung Electronics based on alleged infringement of any of the Potential Licensee's Mobile SEPs, where Samsung Electronics has offered or offers to be bound by the same process as set out in the Licensing Framework applied to it as licensee of such Mobile SEPs by signing and delivering the Annex B Invitation to Negotiate.This mechanism should presumably kick into action when the potential (cross-)licensee, within the same 30-day period mentioned in clause 1, does not withdraw the action for injunctive relief, entering into negotiations under the licensing framework detailed in the proposed commitments. However, in light of the Commission's recent adversity towards strategic termination clauses, as highlighted by the draft proposal for a revised Technology Transfer Block Exemption Regulation (which proposes to exclude, from the safe harbour of the TTBER, any clauses that permit the licensor to terminate an agreement if the licensee challenges the validity of the licensed IPRs), there is reason to doubt that the potential licensee's recourse to injunctions, in the same situation in which Samsung agreed not to seek injunctive relief, may be a sufficient reason to relieve the latter from its obligations. Although Samsung's concern is understandable from a strategic and commercial perspective, such considerations should have no impact on the application of Article 102 TFEU.
|Tired of SEPs? Try a good movie!|
Florian Mueller, in his timely review of Samsung's proposal, highlighted similar issues concerning the arbitration/court adjudication mechanism, while also noting that 'a fundamental drawback of arbitration is that it's usually private -- under Samsung's proposal, it would be "conducted in strict confidence" --, so it does not result in the creation and refinement of a body of case law that gradually increases clarity'. This observation is particularly persuasive in light of the recent judgments of two US courts (Judge Robart here, Judge Holderman here), which provided long sought-after guidance on the determination of F/RAND royalty rates. The confidentiality surrounding arbitration would plausibly prevent the arbitral decisions from contributing directly to the debate on F/RAND licensing, although the licensing agreements incorporating F/RAND terms established by the arbitrators would still be examined, and their disclosure required, in judicial proceedings related to the same or comparable standard-essential patents (e.g. in the US, under Georgia Pacific factors n. 1, 2 and 12).
Other provisions of the proposed commitments concern the procedure for court adjudication (before 'the Patents Court, High Court of England and Wales (or any successor court), or the UPC, as is agreed between the Parties' - clause 10), further obligations with regard to non-circumvention (clauses 15-16), and the institution of a monitoring trustee (clauses 17-28). Clause 13 expressly states that the Commission may, on its own initiative or on the request of Samsung, reopen the proceedings to take into account the guidance given by the Court of Justice in case C-170/13, where a German court referred several questions concerning the issuance of injunctions against willing potential licensees (IPKat post here).
|Joaquin Almunia, Commission Vice President|
I am looking forward to receiving the feedback of other market players on Samsung’s proposals. Enforcing patents through injunctions can be perfectly legitimate. However, when patents are standard-essential, abuses must be prevented so that standard-setting works properly and consumers do not have to suffer negative consequences from the so-called patent wars. If we reach a good solution in this case, it will bring clarity to the industry.