Recent Developments in The Interface of Competition Law, Patent Law and Standardization

Abstract: Standardization plays a key role in modern industries. Standards provide compatibility and interoperability of products, thus increasing their value for consumers. In fact, standards go beyond that and positively affect market integration, consumer safety, environment issues etc. The European Union actively supports standardization run by Standard Setting Organizations. These organizations operate on voluntarily participation. However, benefits generated by standards to businesses, attract companies to take part in the adoption of such standards. Standards, especially in ICT market, are usually sophisticated and consisting of hundreds or thousands technologies subject to Intellectual Property rights of different companies. Once technology is included into a standard and covers key functionalities for the standard to work effectively, patent covering the technology gains status of Standardessential patent. This means, standard implementers cannot design around it, and must get access from the proprietor of such patent. Owners of such patents receive plenty of benefits from their technology inclusion into a standard and in exchange are required, by SSO, to commit to license their SEPs on fair, reasonable and non-discriminatory terms (FRAND). However, Intellectual Property law grants exclusionary rights to patent owners to seek for patent injunctions against alleged infringers. Assessing these rights without limitations would endanger competition and the efficiency of standard-setting process. Therefore, competition law is entitled to provide restrictions on the freedom of SEP owners right to seek for patent injunctions. In 2015, the European Court of Justice delivered a long awaited ruling in the case Huawei v ZTE. The Court aimed to strike a balance between maintaining free competition, under Article 102 TFEU, and the requirements to safeguard SEP proprietor’s rights guaranteed by the Charter of Fundamental Rights of the European Union. The ruling led to many discussions, whether the requirements provided in Huawei are sufficient to prevent SEP owners from premature seeking of injunctions.